What would happen if you terminated your contracts with most accommodation agencies?

Yes, obviously this idea sounds quite “out there” at first, why would you terminate a contract with such a company as long as they bring you at least one guest a year. Many hotels try to make up for lost revenue and guests by looking to contract with as many accommodation agencies as possible with the purpose of reaching more guests this way. This idea sounds good, but actually, the more accommodation agencies you have contracted with, the less revenue will stay with the hotel at the end of the year.

Where does the traffic of the accommodation agency come from?

Let’s first look at what kind of sources of traffic an accommodation agency usually has access to. We can actually divide this into two types, own traffic and purchased traffic. An example of own traffic: when a guest decides to travel, he or she immediately remembers szallas.hu and visits their website. Purchased traffic is traffic the accommodation agency pays for, for example: when the guest searches for a travel term (“hotel balaton”) and clicks on an ad that sends them to the site of accommodation agency. A banner ad on a travel portal, a TV or newspaper ad can also contribute to purchased traffic.

You have certainly noticed that that there is no real ongoing competition between accommodation agencies anymore, with the market having been almost monopolised. In Hungary, besides booking.com and szallas.hu, there are only one or two other sites which you can expect bookings to arrive from (depending on which region of the country we are talking about). This is because the leading accommodation agencies have already won the competition in terms of innovation and price. They have the best professionals developing and maintaining their websites, they create the best ads and invest the most money, eliminating competition and smaller new agencies.
What about smaller accommodation agency sites then?

Because they can’t compete in terms of price, they’ll have to advertise keywords that are less competitive. For example, a click for the keyword “hotel budapest” may cost as much as 250 HUF, while for the keyword “hotel rába győr” it may be only 50 HUF. What’s more, smaller sites do not at all have or have negligible own traffic (guests who go directly to their website if they are looking for accommodation) because they cannot spend a great amount of money on TV ads or on other advertising channels.

This means that smaller accommodation systems or agencies not strongly focused on your region almost exclusively use advertising for keywords of registered hotels to earn a revenue. That is, they search for those guests who want to look specifically for your hotel: a former regular guest, a prospective guest who got a recommendation about your hotel or who did a search for your hotel based on one of your ads. They are trying to entice everyone away from the direct channels in an indiscriminate manner, along the lines of the well-proven message of “we offer the best prices and most favourable booking conditions”. So, one of the most important steps you can take towards the goal of getting more commission-free bookings is to get rid of this issue.

Which accommodation agencies should you terminate your contract with?

If your partner does not bring you more than a few dozen reservations every year, it is worth terminating the contract because it is unlikely to bring added value (since they make their living from your guests). We have a partner who had over 15 booking systems and we kept only 3 of those. As a result, the number of bookings did not decrease, but it actually even increased, as the traffic was no longer overly fragmented. Also, since the partner did not have to waste time on the admin system, they had more time left for the actually important things.

Don’t let yourself be deceived by the numbers, instead look at who gives you the truth!

Many accommodation agents and coupon companies will try to convince you that you are going to miss a huge opportunity if you don’t sign up with them because they have tens or hundreds of thousands of traffic on their website. We have good news for you: you can easily verify such claims.
Use the www.similarweb.com site to find out about the amount of traffic a website has. This site is very easy to use, you simply need to enter the partner’s website address in the top search field.

You will find a detailed description on how to select the online travel agency to contract with by using similarweb. Learn how to use similarweb for evaluating OTAs and coupon sites.

What will happen if you terminate your contract with the poorly performing accommodation agencies?

At HotelHood, we never share methods or techniques that we haven’t tested with actual hotels. If you take our advice and decide to terminate the contract with the poorly performing OTA partners, you can expect the following:

1. It will take some time to take care of the termination notice letters (it won’t be an easy process with every partner, but after a bit of correspondence, they will have to accept the situation).

2. The number of bookings will not be reduced.

3. Sales people will have more time to deal with really important issues.

4. The cost of your own ads will be lower as you will have less competition for your guests.

5. The number of direct, commission-free bookings will increase.

Are you interested in how we can improve your direct booking rate for your hotel?
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