During a panel called “Make Love Not War – Embrace OTAs for a Brighter Future” at the Annual Hotel Conference in Manchester, UK, this week, Magnuson Worldwide CEO Thomas Magnuson claimed that the 16-year-long “demonization” of OTAs had been originally manufactured by the hotel franchise industry.
“The OTAs are not the baddies,” Magnuson said during the session, when panel moderator Michael McCartan, managing director of Duetto, asked if the war between hotel owners and OTAs was over.
“What most people do not realize is that the negative characterization of OTAs as having too much power and charging excessive commissions had been originally manufactured by the hotel franchise industry. After the slowdown of 9/11, hoteliers took to the new online travel agencies and were amazed how much business they delivered. After the OTA booking volumes increased so quickly, franchises were rocked when hotel owners asked ‘why do I need a franchise when I could use Expedia?’”
Magnuson added that the “evil OTA” label was subsequently perpetuated to draw attention away from much higher franchise costs—including an average 12.5 percent gross fees, large scale standardization costs borne by hoteliers and the cost of rewards/frequent guest programs which now count for 30 percent of franchise revenues.
“There are far bigger concerns for hoteliers than OTA commissions,” Magnuson said during the panel. “OTAs are as critical to each hotelier’s success as the electricity company, they are just one component of an effective platform strategy.”
Panel participants included Michael McCartan, Managing Director, Duetto; Thomas Magnuson, CEO & Co-Founder, Magnuson Hotels; James Osmond, COO, Triptease; Ryan Pearson, UK Area Manager, Booking.com; David Taylor, Chief Commercial Officer, glh Hotels.