OTAs’ ‘Bad Boy’ Rep is Industry’s Fake News, Suggests Magnuson CEO

MANCHESTER, ENGLAND—In his comments here to a panel called “Make Love, Not War—Embrace OTAs for a Brighter Future” at the area’s Annual Hotel Conference, Magnuson Worldwide CEO Thomas Magnuson stated the 16-year-long “demonization” of online travel agencies (OTAs), such as Expedia and Booking.com, had been originally manufactured by the hotel-franchise industry.

Asked by panel moderator Michael McCartan, managing director of Duetto, “Is the war between hotel owners and OTAs over?” Magnuson responded: “The OTAs are not the baddies. 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 claimed the “evil OTA” label was subsequently perpetuated to draw attention away from much higher franchise costs. He cited an average 12.5% gross fee, large-scale standardization costs borne by hoteliers and the cost of rewards/frequent-guest loyalty programs that he said now count for 30% of franchise revenues.

“There are far bigger concerns for hoteliers than OTA commissions,” said Magnuson. “OTAs are as critical to each hotelier’s success as the electricity company; they are just one component of an effective platform strategy.”

In addition to Magnuson and McCartan, others on the panel included James Osmond, COO, Triptease; Ryan Pearson, U.K, area manager, Booking.com; and David Taylor, chief commercial officer, glh Hotels.

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