The relationship between the hotel industry and online travel agents (OTAs) continues to develop and deepen, as customers increasingly use electronic distribution channels to search out and purchase hotel rooms.

While OTAs have substantial sales, it turns out that a major use of search engines, online travel agents, and other internet sites is to gather information regarding a room purchase. Quite frequently, that purchase is made on the hotel chain’s own site.

Consequently, hotels need to think strategically in terms of rate setting and market differentiation.

The OTAs have numerous tools and policies that enable hotels to distribute rooms at various prices while also maintaining rate integrity and improving revenue. Perhaps most important is for hotels to use their relationship with an OTA as an ongoing business alliance, which helps sell rooms in both high times and low periods.

Opaque sites in particular allow hotels to sell rooms at various prices without connecting the price directly to the brand. Understanding how the opaque sites operate allows hotels to set their rate and distribution strategy.

Being listed on OTAs also creates a billboard effect, whereby sales at the supplier’s website pick up when a hotel is listed on the OTA.

Most critically, a hotel needs a strategic revenue management function that includes effective forecasting and an understanding of how varioius business segments respond to price promotions.

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