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The Science of Sorting

Many hotel revenue managers live and die by their page position on OTA default searches. From Expedia’s Most Popular picks, to Orbitz’ Best Bets, to Agoda’s Recommended, all of these listings are at the top of search results because the specific OTA made a (very subjective) decision based on a million possible factors, including the relationship that a property has with their OTA market manager, the commission that a property is paying, payment status (paid in full, late payments, etc.), amount of inventory (including last-minute inventory) listed on the site and the pictures included in your property’s listing, among many others.

Some revenue managers (mistakenly) believe that being the top (or one of the top hotels) listed on a given OTA default search, will positively impact their bookings and revenues. They aspire to always stay in that high position, because they believe that if their competition were to overtake their page position, they would most likely also steal their customers.

In our experience working with OTAs and examining consumers’ booking habits, we have decided that we disagree with this very common belief among hoteliers.

The default search results don’t reflect consumers actual search habits

According to Expedia, 95% of all transactions on their site take place with hotels listed on the first page of a consumer’s search results (source: HotelNewsNow) ­ which is true. But what this stat doesn’t specify however, is that the hotels that show up on the customer’s sorted (not default search) results are the only properties that have a greater chance of getting the booking. Let’s look at an examples:

I did a search on one of the major OTAs for a hotel stay in Miami Beach, FL from July 20-22 and, as always, the default results showed ads first and then a list of other hotels (according to the default sort criteria). The first property was listed at $310 (4.5 stars), $89 (2 stars) and $139 (3 stars). Even to a consumer who isn’t aware of which factors affect a hotel’s page position, they will be able to see that this list of results are all over the map, and that they don’t show the property with the best value (which is the primary factor that most consumers use to select a hotel).

When I change the filter to sort by price (which is the most common sorting method for consumers), the properties are listed in ascending order according to price. After sorting, the first property is listed at $48/night (1.5 stars), $69 (2 stars), $83 (1.5 stars), $89 (2 stars) and $94 (2 stars). The next step most consumers will take to filter the results is to select the star rating(s) that they prefer and, in most cases, this will be three, four or five star hotels. From there, a consumer will search for the best combination of rate, star rating and amenities to determine which property is the best value for their specific needs.

This is the standard search method for the majority of consumers who use OTAs to book a hotel stay. While there may be a few people out there who use only the default search results, most consumers understand online searching enough to know that filtering their results will make it quicker and easier to find the property that best suits their specific needs.

In short, unless your property is listed on search results that reflect consumers’ actual search habits, you are highly unlikely to secure a higher number of bookings ­ even if you are listed first on the first page of an OTA’s default search results.

So how can you improve your page position on sorted search results?

While we would never advocate for discounting, price is the most important factor in securing a higher page position on the sorted search results ­ and therefore, obtaining the most bookings from potential customers. Instead of discounting, ensure that you are constantly monitoring your competition’s room rates, the demand in your destination and your inventory levels and adjust your prices regularly according to that info. Because you will automatically earn a higher page position if your rates are better than the majority of other properties in your destination, this will be an effective solution to generating more bookings and increasing revenues.

And of course, the best way to monitor all of the ever-changing factors that affect what entails the best price at any given time is an automated revenue management system. A sophisticated RMS will monitor all of these factors in real-time, will analyze the data, suggest the best rate and then update all OTAs with that price. In short, a sophisticated RMS will help a property to generate more bookings and revenue through the online channel, without the revenue manager being overburdened with the constant, tedious processes necessary to do so.

6 thoughts on “The Science of Sorting

  1. This is one of the better articles I have read regarding OTA’s – very helpful way to consider that segment of our business. thanks!

  2. Very interesting article. There are some points which I (dis)agree with.

    A vast majority of consumers will select hotels based on price, star rating and value. I run a small hotel in Amsterdam and we used to be a “Preferred member” (an extra 3% commission to be paid) from a specific OTA Partner. Hotel rank was 110 out of 600.

    Now I stepped out of the “Preferred member” to reduce commission costs. What we saw was that the hotel bookings declined significantly from this OTA Partner. We only receive bookings based on lowest price available (Hotel rank is now 500 out of 700).
    The competition increased significantly. We saw that our average room rate declined by average 13 Euros.

    A good balance with price ratio and keeping an eye on the competitor is a must. But do not underestimate the power of higher search results from OTA. It will definitely increase the hotel visibility (against higher commission). But this can be partly compensated with higher pricing (make sure that your hotel value is still good rating (7,5+), otherwise the guests will not pay high(er) rates.
    And more traffic can also lead to smart-shoppers. People can find your hotel on your own hotel website. Create a promotion (but always have respect with the rate-parity). Add value why guests should book at your website.
    Only then you can make as much profit with working together with OTA and a good pricing strategy.

  3. Once again, a very interesting article.

    One thing I may point out is that you are only really looking at customers whom use the OTA’s to make a final booking/purchase. Conversion rates on OTA’s barely ever peak above 5% per property.

    The vast majority of consumers looking at OTA’s are in-fact seeing the generic listing first, which is often the launching point to their purchase. If they are planning to book on the OTA, they will define the searches, and condense their results. (Unless they see a value proposition in the form of a promotion or call-out which directs them straight to one specific property)

    We circle back to the “Billboard effect” argument, which shows direct consumer traffic increasing tenfold for properties that join Large OTA’s. The new Meta war supports this trend, and the OTA’s themselves are now practically existing mainly as meta searches for direct hotel bookings.

    What this means, is that OTA bookings may not be as affected by a lower organic sort listing, but your direct bookings will suffer severely.

  4. A agree with the point that being on the top of the default search is not the only solution, being a frequent traveler myself I also choose my stay options through filter options.
    However I also constantly look at the room rates offered by competitors on the OTA and the arrangement of the hotels is not in ascending or descending order as such. Unless the customer specifically further filters the option of looking at the options as per price range.

  5. Very interesting that the conclusion of the article is essentially an advert for the publisher’s services. The overall conclusion should actually read along the lines of “sell at as competitve a rate as possible, taking into account your relevant costs and relative position of the competition, and ensure all of your other ducks are in a row where it comes to OTAs (primarily using those features that don’t add to your costs)”. Ignoring your placement seems foolish when many of these elements, whilst they take time, are free to use, and most will improve either your relationship with your OTA (e.g. paying your bills on time) or your overall attractiveness to the consumer (e.g. providing more photos to give a better impression of your hotel).

  6. Verry interesting article as an owner of a hotel im also agree with point.

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