OTAs cannibalising direct hotel sales isn't surprising, and boils down to two things: the range of offers and the ability to put huge marketing clout into driving custom.
But, last week's article (Broken down, how OTAs are eating hotel business) really resonated because it reflects a growing feeling that we've detected among our hotelier partners that OTAs really are eating into the sales that hotels would like to be making direct.
NB: This is a viewpoint from Alex Saint, co-founder and chief executive of Secret Escapes.
It's fair to say that there is some debate around that point because clearly OTAs serve a purpose that the hotels' own websites don't themselves. That purpose is choice and choice is something you can't provide comprehensively with a single offering.
However, there is no doubt that some proportion of consumers would use an OTA for convenience and value for money even when they know which hotel they are likely to book. That is unquestionably cannibalisation of direct sales.
Clearly it's a sensitive issue because the loss of commission on sales routed through OTAs is a chunk of the margin made by the hotel on each room.
It's a debate that will continue to rage and clearly it's not a slam dunk for either side, however, the OTAs are here to stay so I would argue that the current challenge in hotel distribution is to find marketing channels that complement the OTAs rather than spend time and energy fighting the inevitable.
Of course I'd advocate a better CRM programme and a slick website for hotels but that would only go so far in helping a hotel combat huge OTAs eating away sales, so I'd argue more strongly to look to the discretionary marketplace.
The low hanging fruit here is the (approximately) 30% of room nights every year that are never sold. Imagine the dramatic change to a hotel's balance sheet as a result of selling just 5% of those.
The key to unlocking this opportunity is audience segmentation.
Provided that a hotel can create different price points and packages that it can sell to discrete audiences there is every chance it can use discounts to sell empty rooms without risk of cannibalising its 'full price' trade.
However, the gotcha here is in the last part of that sentence. Until recently it has been very tough for hotels to be sure they can get discounted prices to new customers without touching the existing group.
We firmly believe that the consumer's wallet has two distinct segments that don't cross over each other: we call them 'retail' and 'discretionary'.
Retail spend is that which the consumer drives entirely himself, it is the end result of the need to book a specific destination on a predefined date range.
Discretionary is almost the opposite, it's a desire that is stimulated entirely by an external influence - in this case the presence of an amazing hotel deal.
When we started the business we hypothesised that when a consumer is made aware of an opportunity to stay in a beautiful hotel, in a great location at an amazing price, there is a great chance of influencing their behaviour and creating an incremental purchase.
After three years of running the model, our research clearly proves this to be the case. Our post-booking survey tells us that nearly nine out of ten of our members would not have booked the stay that they did if they hadn't seen us promoting the deal.
What's more our hotel partners tell us that they see no discernible drop off in any of their marketing channels when they run a sale with Secret Escapes (so clearly we're not hitting the 'retail' audience).
In fact if anything hotels are likely to pick up an additional smattering of direct bookings from the cynics who want to check out the deal themselves.
Our established hotel partners don't need convincing of this, more than two thirds of the hotels on the site at any given time are repeat features, and that's in an environment where we never feature a hotel more than once per quarter.
Yes, they pay us commission just as they do the OTAs but that doesn't stick in the throat when they can be confident they are selling the 30% of their room nights that would otherwise have lain empty.
NB: This is a viewpoint from Alex Saint, co-founder and chief executive of Secret Escapes.
NB2: Toy soldiers image via Shutterstock.