As a part of its move to develop and prepare for launch early next year of its DMO as Matchmaker© program—this initiative will help DMOs maximize their ability to bring a destination’s smaller hotels and independent properties together with receptive tour operators (RTOs) and avoid the heavy fees and other practices of OTAs—the NAJ Group has sponsored research shows clearly that independent hotel properties have a clear advantage on matters related to margins, inventory control and integrity of bookings when they take advantage of the RTOs vs. OTAs. The data illustrated in the table below were researched through interviews with a half-dozen revenue managers from independent properties who are part of small management groups.
“During my recent visits with receptive operators, I learned that their main interest for hotel contracting has moved to independent hotel properties,” said Jake Steinman, founder and CEO of the NAJ Group (it also publishes the Inbound Report). This, he explained, is happening for 3 reasons:
- More chain hotels are opting to go independent once their chain contracts lapse as owners realize they are able to replace bookings from chain hotels with OTA’s without the dictates issued by the corporate chains.
- While operators are looking for independent hotels as a way to offer new product they are not able to find them at trade shows such as IPW as they have limited budgets and their management knows very little about the international inbound opportunity.
- The OTAs are generally loathed by independents due to their commission structure and their ability to force rate parity that limit hotels to offering the same rates to the public as the OTA’s. Not to mention massive cancellation rates (40 percent for Booking.com; 28 percent for Expedia) and, in Booking.com’s case, frequent instances of fraudulent bookings.
We believe the sentiment among independent hotels towards OTA’s creates an opening for RTOs and, since these hoteliers are not found at trade shows the DMO’s, who know both the independent hotels in their communities and the RTO’s are uniquely positioned to serve as matchmakers. To facilitate this further, NAJ will be offering incentives to DMO’s attending next year’s RTO Summits to bring lists of independent hotels and serve as the “Matchmaker” by facilitating introductions following the event.
To help our DMO clients educate independent hotels, we will share a power point presentation that will explain the receptive channel and include side by side comparisons such as the table below.
Look for news of additional features of NAJ’s DMO as Matchmaker© program in future issues of the Inbound Report prior to program’s official launch early next year.