Listing with an online travel agent (OTA) can be an excellent marketing strategy for tour operators. They’re experts in digital marketing, own search rankings and travelers trust them for booking activities. When you sign up with an OTA, your tour business gains exposure to an audience you might not reach otherwise.
However, an OTA’s commission fees can eat into your bottom line — which might tempt you to ignore their benefits as a marketing channel. These benefits include introducing new customers to your tour business, and incorporating your offer in a dynamic package.
To win at OTAs, you need to develop a strategy before creating an account. You shouldn’t sign up expecting it to be your answer to distribution. Instead, you must see it as a marketing opportunity — one you must track and analyze to decide whether it’s worth leveraging.
And the key to successful marketing is to learn what methods work for your tour business, and eliminate the ones that don’t. When it comes to OTAs, there are various experiments you can conduct to see whether they expand your visibility or only decrease your revenue.
Let’s explore 3 experiments you can try to decide if an OTA fits with your business:
Running a tour business comes with fixed costs — expenses that stay the same no matter how many bookings come through. There’s rent, insurance, equipment, and employee salaries (to name a few).
The best OTAs promote your tour business on a mass scale. Their large marketing budgets give them the ability to sell your tours quickly and easily. So if you need an OTA to reach full capacity — especially in your off-season or shoulder-season — they can be a valuable resource. A full tour at a low profit margin is better than an empty tour at full price because you still need to cover your ongoing payments.
What happens if you can reach full capacity on your own? Should you even go with an OTA?
Well, the immediate answer is no. Think about it this way — does it make sense to tolerate commissions when you’re able to sell out with direct bookings?
But remember, there’s always a possibility to expand your customer base with an online travel agent. You can use the OTA to find customers and then re-market to them once you have their data in your booking system. This method is especially useful if you receive a fair bit of repeat business.
As you can see, even if you’re at full capacity, you can still benefit from an OTA’s marketing reach — you’ll just have to compensate for the commission fees by increasing your volume.
In other words, offering more tours or adding more spaces will make up for the loss in revenue. We recommend increasing spaces available because there’s no added variable cost. And with the help of an OTA, you shouldn’t have a problem increasing bookings to meet the increased volume.
There are plenty of other tour operators listed on an OTA website. To stay competitive, businesses tend to lower their pricing. Creating a low-cost offer is often discouraged because it doesn’t look good to undercut your tour’s value. But you can still experiment by listing a low cost offer on an intro tour.
What do I mean? Well, you can design a tour specifically to list on an OTA’s website — one that is either shorter in time or doesn’t include all the benefits of your current tour.
A lower price may appeal to travelers looking for an incredible deal. Plus, the tour can serve as an introduction to everything they can experience with your tour business. So once the guest arrives, it should be easy to upsell them on your other offers.
That’s because a guest is more likely to purchase more products and services when the initial price doesn’t take up their budget. Often, guests see a good deal as a way of justifying spending on more.
So you should harness this common rationalization by offering merchandise, food, drinks, and other activities when they check-in. While you end up selling more, they’ll view these add-ons as sweet extras that make their experience special.
As I’ve said previously, if you’re able to reach capacity on your own, there’s no need for an OTA’s assistance — unless you’re increasing your volume. However, if you struggle to fill your tours in the low season, you should consider listing through an OTA agent.
Once again, their marketing resources and expertise make it possible to sell your tours quickly. So it’s better to get some bookings during the low season than barely any at all — even if commissions are involved — because it’ll help to cover the fixed costs you have to pay anyway.
As soon as the low season is over, you can go back to focusing on direct bookings. Applying a pattern of an on-again-off-again relationship with OTAs can help you get bookings all season long.
Keep in mind, all three of the above marketing methods are experiments. Give them a try for a full season — keeping online channel management in mind— and then decide if they work for your business. By tracking and analyzing the results, you’ll know whether commissions are worth it.