NB: This is a guest viewpoint by Thomas Yung, a France-based web marketing specialist in the hotel sector.
This article is an economic theory drawn from my own imagination: not based on any real data but common sense and observing the relationship in a parallel industry.
This other vertical producers and distributors in the food industry.
I'm keen to state that there are honest distributors with whom the hotelier still has a good working relationship, but unfortunately that's not the most common occurrence.
I won't name any particular company in this article but I will speak instead of OTAs generally.
No direct sale
The OTAs have already partially got distribution under their control by imposing a rate and avaibility parity. They've continued to swamp the hotel's own direct point of sale - their websites - by simple referencing and by purchasing key words.
But that isn't enough. It's very probable that they will increasingly control the market by prohibiting the hotel to have a booking engine on its own website or, indeed, even having its own internet site at all.
It's even likely that telephone booking will become bound to a commission as well (or be taxed in one way or another).
Advance commission
To have a presence on the OTAs, it's necessary to pay the costs of registration. The translation of your page will also in all likelihood cost money, putting more than ten photos on your page will also be an optional extra cost etc.
But it is especially the selling cost and the amount of advance commission that will hit most strongly.
The power of the OTAs as a promotional tool will cost more and more, to the point where they'll offer all types of accommodation, they'll reinforce their domination, and the rules of the game will change even quicker - inevitably not in the favour of hotels.
Retrospective commission
You're required to pay the OTAs a commission on your turnover. Every year, for the accounting period, you have to give back a percentage of your turnover and/or profit.
You already pay a sort of back tax, as the rooms which you've put on the OTAs - and aren't sold - negatively influence the algorithm and therefore your ranking on the site.
I also believe that commission will be sought on everything sold at the hotel - not only on breakfast, but also on all catering, the spa etc, and I'll go on to explain how I think that will end up being taken from you.
Quality control system
Just as the large food distributors impose a quality control system on their suppliers (e.g. size, colour and condition of vegetables), the OTAs gradually will want to do the same.
Their aim is to become a kind of quality control benchmark, or at least a guarantee of security. Your rooms will have to be the same size, breakfast will have to be of a particular type etc.
You won't be able to count on selling via the OTAs if you don't have a lift, or air conditioning.
Your operating and renovation costs will go through the roof in order to maintain a presence on these distribution sites. One example of a programme is called Ecoleaders on Trip Advisor: I believe that websites will more effort into these types of initiatives to bring added value.
Control of the customer, control of image...
The customer won't belong to you: that's already the case, so it's nothing new. But the OTAs are going even further.
They'll make you wear the OTA uniform with their badge on it, and their branding will be featured on everything from the paper napkin at breakfast right through to the giveaways at reception.
Because of the customer segmentation encouraged by the OTAs through their upgrading systems, you'll have to provide - at your own expense - various gifts, VIP welcomes etc.
What you can and can't do, and what you must do with the customer will be determined by the OTA: customer care rules, complaints procedures, checking in/checking out systems will all be drawn up and you'll have to adhere to them.
Store brand (PLBs)
Looking at a distributor's store brand - the famous PLBs - now you can buy "Wal-Mart's Great Value cheese" or "Costco's Kirkland soft drinks".
The same thing will happen in the hotel trade. The OTAs will put their own branding on display in the hotels and impose a whole system for them to adhere to.
To become an PLBs, all of the room stock will permanently have to be given over to the OTA, with no other distribution channel used except for personal callers and telephone booking (even then, you'd have to answer with the name of the OTA and a standardised script along the lines of "Marriott Denver, Melissa speaking, how may I help you?".
You'll be obliged to employ staff who can speak three languages.
For the permanent synchronisation of availability (prices will be fixed elsewhere, at base - Amsterdam for example), you'd have to use the PMS (computerised hotel connection interface) of the OTA.
So you'd therefore have access to the availability of all the other NDDs and be obliged to sell a night in another OTA establishment when your guest checks out.
It's by imposing the PMS system that the OTA can take a commission on everything consumed by the customer during his or her stay.
Participation in marketing
The OTA spends ridiculous amounts on promotion, as do supermarkets such as WalMart and Kmart who factor in their costs of promotional material and all other marketing expenses.
It'll be the same with the OTAs - you'll pay for your visibility.
The OTAs won't bother to bill you for keywords in Google, but take note: they do ask for a contribution towards marketing costs, just like the franchisor/franchisee relationship.
Each year a percentage of your turnover (or turnover achieved on the OTA) will go towards your participation in marketing activities.
In summary
The OTAs will become super hotel chains. He who controls distribution controls everything. All businesses focus themselves this way.
The distributor always has the power. BestWestern, Clarion, Choice, Days Inn, Crowne Plaza et al have an awful lot to worry about, even Accor (and I'm not kidding).
I invite you to re-read this article in three or four years and see how much of it has actually happened.
NB: This is a guest viewpoint by Thomas Yung, a France-based web marketing specialist in the hotel sector.
NB2:Money falling image via Shutterstock.