NB: This is a guest article by Sean Millar, CEO of NYC.com.
Anyone reading Andrey Spektor’s article on hotel affiliate programs could be forgiven for wondering why any established travel brand would ever work with an online travel agency.
He collectively refers to these companies - Priceline, Expedia et al - as "The Beast".
The piece lists a string of reasons and evidence, focused on commission margins, as to why you would steer clear of working with these companies if you were anything other than a start-up.
There are certainly some valid points here about the importance of keeping an eye on your commission levels and being aware how they are affecting your organization and revenue model.
However, the article does not acknowledge that the term "affiliate" can also describe a relationship that I prefer to call "partnership".
Starter
Through working closely with The Beast using white label solutions, which provide the tools, content and platform to create new travel offerings, it is possible to add significant value to an online travel brand’s site.
This can ultimately lead to a better conversion rate and a higher profit margin. In short, Spektor creates a false choice where one’s only avenues are to work with The Beast as a low margin, "cookie cutter" affiliate or to avoid them entirely.
This is a misguided and uninformed approach to what represents a significant opportunity to grow one’s business.
As the CEO of an established online travel company, which has been working with a leading OTA for over ten years, I’d like to shed some light on why an online travel brand would chose to work with an affiliate or private-label partner model.
To give some background, NYC.com has worked with Hotels.com and the Expedia Affiliate Network (EAN) for over ten years, and there is no question that having access to their inventory and technology has helped immeasurably in growing our site to where we are today.
NYC.com receives over eight million annual visitors, has eight figure annual revenue for travel-related services, and is the leading New York City travel site.
EAN understands something fundamental that many hotel brands fail to grasp. Our site visitors are OUR customers. Our brand and reputation are what is at stake.
As such they give us a platform that allows us to control the customer experience from end to end. Critically this platform also offers the technology we need to offer visitors near instant access to information, rates and inventory for over 500 hotels in the New York area.
This allows us to fulfill our mission to offer the most competitive pricing and deals on the market. Further, as one would expect of a true partner, we also have access to significant human resources in the form of dedicated account managers and access to some of the most talented minds in the travel space.
The Beast turns out to be comprised of individuals who are not, as Spektor seems to imply, engaged in some nefarious plot at world hotel domination, but travel professionals dedicated to ensuring we all deliver a compelling travel product to our customers.
Main course
In that light, NYC.com’s business is knowing what our customers want to see and experience when they visit New York. We would much rather focus on creating a compelling and exciting user experience for these customers than draining significant resources sourcing and maintaining inventory from numerous hoteliers.
With advanced tools, content and platform provided by a third party, we can focus on the more exciting areas of marketing, content creation, and all the little things that ensure our customers are happy with their user experience.
Through feeding the beast, our platform is updated and enhanced more quickly than an organization our size could ever maintain ourselves. When we recently upgraded to a major new version of the API it took only 100 man hours to fully implement, test and debug.
Since then, we’ve seen a 13% increase in room bookings, which easily pays for that investment. Furthermore, working with a larger company with internal teams specifically devoted to site upkeep means a reliable and stable hotel booking platform underpins our hotel booking engine.
Down-time is almost unheard of. As anyone operating an online transactional site knows, speed and reliability are essential for delivering conversions.
It’s also worth remembering that commission rates should not be seen in isolation. They need to be analyzed in relation to conversion rates and volume.
If you’re looking for large booking volumes you need assets beyond breadth of inventory.
The role of an OTA partner in helping with conversion rates is important here – user reviews from trusted sources, quality images of hotels offered, tailored deals to meet customers’ needs, late room availability and a fast, stable experience turns lookers into bookers, boosting conversion rates and the overall site profitability.
Dessert
To finish on a word of caution: I would never advise an online travel company to sit back and let their affiliate partner do all the work for them.
It is your organization’s responsibility to make sure that commissions are adding up and the site is keeping up with customer demand and competitor offerings. You should always have an ear to the ground and make sure your partner is meeting your needs.
It is this combination of understanding what the options are, what works best for your customers and where you should (and shouldn’t) be working with third parties which will help you excel beyond your competitors.
From my own experience, dismissing the role that the large OTA affiliate programs can play in achieving your goals is myopic at best and detrimental to your business at worst.
NB: This is a guest article by Sean Millar, CEO of NYC.com.
NB2: Monster eating image via Shutterstock.