The hidden battle over hotel pricing with OTAs

Hotels allowing OTAs to undercut their direct rates experience significantly higher pay-per-click (PPC) advertising costs, new research reveals

Hotels often rely on online travel agencies (OTAs) to attract more guests, but a recent study reveals a steep price. When OTAs undercut hotels' direct rates, the cost of online advertising for hotels can increase by nearly 50%. According to SHR's Digital Strategy Secrets for Hospitality report, hotels where OTAs undercut direct rates face higher costs per click, averaging $0.97 compared to $0.66 for those with the best direct rates.

Key takeaways

• Increased competition for branded keywords: OTAs raise bids when offering lower rates, confident that their price advantage will drive conversions;
• Higher costs despite rate parity: Even with identical rates on direct sites and OTAs, the average cost per click remains high at $0.89 (£0.73);
• Visibility vs. financial trade-offs: While OTAs expand reach, the findings highlight the financial challenges for hotels;
• Strategic recommendations: SHR advises hotels to focus on direct bookings and maintain balanced OTA relationships to reduce costs and drive sustainable growth.

Get the full story at GlobalData