jesstyr

Orbitz, Expedia: Stockholm Syndrome Meets the Web

While agree with the previous posters on the PR-hungry tactics of HeBS, I also agree with many of the insights Mr. Starkov presents. The OTA model has done serious damage to the hotel industry, both in their opportunistic timing and their discounted model.

OTAs spur very little incremental demand, plain and simple. There is no arguing this point. What they do is creating pricing clarity for travelers (which is a great thing, holding hoteliers accountable/responsibl... but at what cost? 15%-25% margins are unacceptable in an industry where the brick and mortar is the only way to experience the product.

Successful marketing on OTAs equals share growth for single hotels, not revenue created. When the industry is being attacked by economic collapse it is of primary importance to increase demand, and not succumb to less savvy hoteliers and their short sighted strategies. Buy those ads now - we do the same thing - but this is not a sustainable competitive advantage.

A savvy hotelier needs to look beyond the results of individual campaigns and into the long-term strategy of their business. Promote on independent or meta-search channels that do not eat away at your profit margins with high commissions. Find ways to attract new customers. Re-establish the importance of customer service in attracting loyal, repeat business.

It's easy to toss Starkov's theory aside, but don't forget it when your neighbor outbids you on TravelAds or Travelocity. When do you cross the line of paying too much?