QOTW: Something about doing business like - and with - locals

Hotels are local businesses, and this is a major advantage over the OTAs when selecting and contracting local tour and activity operators.

Quote from Max Starkov, president and CEO of HEBS Digital, in an article on PhocusWire this week.

Why offering local tours and activities is a huge revenue opportunity for hotels

Numerous strategies have been put into play to give hotels a leg up over online travel agencies – viewed as a necessary evil by hoteliers, particularly those that operate independent properties.

The OTAs may gobble up fees, but their reach is such that hotels are dependent on them for exposure and revenue.

One - perhaps not obvious - way to take back ownership from the Bookings and Expedias of the industry and recapture lost distribution fees is for hotels to enter the tours and activities game.

But why tours and activities - a market that, while massively growing, is still highly fragmented with low online penetration?

Precisely because of this, hotels have an advantage. Compared to OTAs, which are behemoth tech platforms that operate with customers at a distance, hotels, as Starkov notes, are local businesses uniquely positioned to work with other local businesses.

The local businesses in this case are tours and activities providers that conduct business offline – meaning, for most, their inventory isn’t bookable on the OTAs, likely due to a lack of resources for tech infrastructure and/or the knowledge that travelers still book the majority of experiences in-destination.

Thus hotels can help bridge the gap between tour operators and travelers by serving as a different kind of middleman - one with knowledge of its customer base and preferences and of available activities and providers in the area.

It’s an interesting example of thinking - and acting - local. Typically, hotels try and capture local flavor through their restaurant offerings or decor (a la Airbnb), but targeting tours and activities providers takes the local idea a step further by not only bringing in new sources of hotel revenue but also helping experiences operators grow their business.

And of course, working directly with tours and activities providers helps in hotels’ efforts to outsmart the OTAs.

While it’s not enough to help them sever those ties completely, it does show there’s room for new ideas and tactics to help them get closer.