Online travel agencies have made billions from the hotel industry, which has led hoteliers to ask where OTAs have been during the COVID-19 pandemic and what that says about the nature of partnerships.
*26 August 2020: This article has been updated to include statements from online travel agency channels Booking.com and Expedia.
REPORT FROM THE UNITED KINGDOM—Hoteliers say one channel has been almost completely absent during the COVID-19 pandemic—online travel agencies.
Sources said that OTAs share a responsibility for the industry’s recovery after making a great deal of money from selling hotel rooms they never owned.
Oxsana Hospitality has created a quarterly action plan for members to use in their dealings with OTAs during the economic crisis, according to Chairman Al Malik, owner and managing director of Remarkable Hotels and a director of Best Western Hotels (Great Britain).
“The government is helping and brands and banks are making concessions, but OTAs have not said one word of kindness, and certainly offered no concessions. (OTAs) are a major stakeholder in this industry,” Malik said. “I am not anti-OTA. I recognize they play a major part of our business, but while brands could do more, they have done a lot. OTAs? Nothing.”
Thomas Magnuson, co-founder and CEO of Magnuson Hotels, said OTAs should have asked hoteliers how they could help at the start of the pandemic.
“OTAs are so big, public bodies, beholden to their shareholders,” he said. “They are thinking if they give something away now, they are diluting their profit, so they are not giving anything away. OTAs need to forget that idea right now.”
Nadeem Boghani, owner and chairman of Splendid Hospitality Group, said the silence of the OTAs raises concerns.
“Everyone needs to share the pain, make sacrifices,” he said. “In any partnership, there has to be give-and-take, and the OTAs have been very quiet, silent. A lot of our stock is branded, so often I will rely on the brands to come up with those partnerships. It would have been nice to hear from the OTAs.”
Boghani added if OTAs only offered a 5% discount, owners would be grateful and the gesture would be an encouraging statement.
Amin Merali, owner of Capital Hotels—which has three hotels in London—described hotels’ relationship with OTAs as a partnership.
“Working with OTAs is working in partnership with someone. We had customers who were booked, asking for refunds, and (the OTA’s) attitude was not helpful,” Merali said. “We need to ask what they are going to do for us. They are certainly not holding our hand in anyway.
“A partnership is a partnership is a partnership. Always remember that. As we will. All told, I am a bit annoyed from all of this.”
During InterContinental Hotels Group’s half-year 2020 earnings conference call, CEO Keith Barr spoke about the OTAs, albeit diplomatically.
“With the OTAs, it is difficult to see a trend as occupancy levels have been so low. It is hard to say we have seen a material shift in channels to OTAs,” he said.
Malik said that hoteliers he has spoken to are surprised by the behavior of OTAs, noting there is an opportunity now for the often-maligned channel to foster some goodwill. He added that owners and operators have said that if they have the money, landlords will get their rents.
“It might take some time, but you will get it. That process would be helped by lower OTA commissions,” Malik said, adding that hotels simply cannot afford marketing campaigns at the moment, and that absence further strengthens the OTAs.
Oxsana has written an open letting to Booking.com about the issue and plans to start roundtable discussions with all major brands as to what approach hoteliers can take against the OTAs, Malik said.
“Look, this is not going to go away,” Malik said. “If we do not do this now, rebalance our relationship with OTAs, then when can it be done?”
He said his biggest concern is that OTAs might use the pandemic to raise commissions.
“This will be a six-year recovery, so OTAs can help,” he said. “Everywhere things are pretty lean, so potential sales from balanced relationships with OTAs will definitely help, but at the right commissions levels.”
Boghani agreed. “It is about time someone asked these questions (of OTAs),” he said. “The bottom line is we’re in this together.”
Booking.com said in a statement that it was “doing everything we can to support our property partners through this challenging time … focusing our efforts on bringing them the tools and tailored insights they need to effectively respond to the evolving travel environment and rebuild their business.”
It added it has devised its Pricing Foundations Toolkit to help hoteliers in pricing, availability and flexibility and its Rebook Campaign to “incentivize those customers who had to cancel their bookings within their own country as a result of government travel restrictions to book a future stay at the same property.”
Expedia also responded, referring back to its May announcement that it has committed $275 million to helping hoteliers and other partners.
It said its financial help includes extending payment terms for bookings made via the OTA; reinvesting 25% of compensation earned in 2019 from any property into marketing credits; and reducing its compensation on all new bookings made within a three-month program period designated after the pandemic started, regardless of actual stay dates.