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What We Can Learn from Southwest

Why don't hotels have the same confidence to stand up to OTAs?

Friday, January 07, 2011
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Southwest Airlines recently launched a television ad campaign focusing on one issue. Not service, not value, not even a word about their Bags Fly Free policy. The sole message? If you want to fly Southwest, you’re going to have to go to southwest.com.

It isn’t a cutting edge ad, but the underlying message is revolutionary.

It goes something like this: “Dear Travelers: Southwest Airlines can’t be booked on Expedia, Travelocity or any other OTA. If you book a flight on those sites, you have no reassurance you’ve received the best schedule or best value. To do that, you’ll need to make the herculean effort to check our website. Yes, we’re that good. What we have to offer sets us apart. We don’t need to sacrifice profits by allowing someone else the privilege of selling our product. If you think we’re just another airline offering the same product and value as all other airlines, go ahead and book without checking our site. But we bet you don’t, and you won’t.”

What gives Southwest this confidence that hotel companies apparently lack?

When you think about it, the willingness of the major hotel companies to give up up to 20 percent of their rate through OTAs is in direct contrast to the claims made by their marketing efforts. Hotels sell experience first and foremost.

“Dear Travelers: Sure, there are numerous competitors to choose from, but your experience with us will be so unique, you really can’t book anyone else. Except you might, because we really aren’t that special, so we list ourselves in the OTAs alongside every other hotel on the planet in order to ensure we have a shot at getting your business. It’s not like you’re going to go looking for us if we’re not on the OTAs. We only have hundreds or thousands of hotels to offer, and if we didn’t put them on the OTAs, we assume you’re willing to forgo awareness of those hotels to save yourself the 60-second effort of checking our website.”

The number one argument as to why a hotel company has to be in the OTAs is exposure. This argument is usually provided by the hotel’s marketing person or the OTAs themselves. No one knows how many bookings generated through other channels were initiated by the traveler first finding the hotel on an OTA. I understand that argument for lesser-known brands and independents. But Marriott? Hilton? IHG? If Southwest can stand on its own, you would think at least the largest hotel companies would enjoy sufficient brand awareness to do the same. And in my experience, the majority of the smaller players would love to pull out but can’t afford to do so as long as the big guys are there.

Simultaneous to providing our inventory to the OTAs , we’re putting all kinds of efforts into on our online booking engines to try and entice buyers away from booking us on the OTAs. Not sure how to define that strategy, but it definitely isn’t the stance Southwest chose.


Jil Larson is president of Dynamic Revenue Management Ltd.

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