If it is undeniable that OTAs such as GetYourGuide, Klook or Tiqets took a massive hit during this COVID period, it is less clear what role these marketplaces will play in the recovery phase for travel and tourism.
For years, OTAs have spent millions of dollars in marketing in order to attract international customers visiting your country, your region or your city. They really did a very powerful job to bring the lesser known tours and attractions in front of the public eye. At the same time, some leisure providers have built a serious dependency on the most popular OTAs, forgetting in the process to build their own marketing and sales capabilities.
The case is particularly striking for some famous museums that have been unable to re-engage with their public during the summer 2020, while international borders were closed, but local tourism was still happening. Historically, these well-recognised institutions have been counting on international tourism and the flow of people coming mechanically everyday from GetYourGuide, Musement or Tiqets to achieve their objective in terms of visitors.
Consequently, some of our customers have been really worried about the potential impacts on their business this new place for OTAs would constitute. We will try to expose our best guesses in this fourth article of our Blog Post Mini Series. Will the longstanding war between direct booking and OTA booking finally be over? Or will OTAs refocus on local tourism and absorb/capture all local reservations that are normally done directly?
What is next?
Because of COVID- 19, we have now moved on from the fast-paced transactional environment we once lived in, to a more thoughtful place where the relationship between leisure provider and guest is even more important.
We predict that more emphasis will be placed on domestic travel in the near future as people might want to avoid complicated international trips with crowded airports and unknown on-site sanitary regulations. This will change and evolve of course, but it might take a couple of years to come back to the pre-COVID normal.
In this new normal, OTAs will have a strong incentive to make local destinations the top of their priorities in order to meet consumers’ expectations. This might enter into a full confrontation with providers that are used to get most of their local reservations through direct bookings.
The cannibalisation of local experience goers by marketplace giants might come at a cost and lower the margins for providers that will be unable to match OTAs marketing spendings to acquire new customers.
We wouldn’t advise to fight back against OTAs in terms of marketing in case they would decide to focus more on local destinations. The case of hotels v/s Booking.com or Expedia has proven to be rather inefficient and would imply disproportionately huge spending costs to acquire new customers.
We would rather advise tourism and culture providers to focus on retention and building strong relationships with local audiences once they have eventually been brought by OTAs. Generally speaking, we estimate that the cost of acquiring a new customer is 5x more elevated than keeping an existing one.
And since your new visitors might be much more local, they are also more likely to come back to your museum, amusement park, tour, etc. It’s the perfect time to start building up stronger customer engagement through:
- Active communication on social media and by email updates
- Revisiting frequently your offering to bring new products/services
- Special offers for direct bookings, such as dynamic packages, occasional promotions, etc.
From an operational perspective, it means that you now need to start building an efficient marketing team with the tools and solutions to foster a higher engagement rate with your customers once they had their first visit.
If our prospective vision about the role OTAs will play in the coming years is incorrect, one thing is certain today: acquiring customers will change anyways in the coming months because of new privacy laws that are promulgated a little bit everywhere in the world and that strongly pressure targeted advertising on social media and ads networks.
In that perspective, building up a solid base of loyal customers will become even more important and required for your business. You can read in this blog post what has for instance change with FB advertisement in 2021.