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Creating strategic relationships with online travel agents to drive hotel room
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Article  in  Journal of Hospitality and Tourism Technology · January 2018

DOI: 10.1108/JHTT-10-2016-0069

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 Journal of Hospitality and Tourism Technology
Creating strategic relationships with online travel agents to drive hotel room
revenue: An OTA perspective
Carola Raab, Orie Berezan, Natasa Christodoulidou, Lan Jiang, Stowe Shoemaker,
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Carola Raab, Orie Berezan, Natasa Christodoulidou, Lan Jiang, Stowe Shoemaker, (2018) "Creating
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Creating
Creating strategic relationships strategic
with online travel agents to drive relationships

hotel room revenue

An OTA perspective 121
Carola Raab Received 8 October 2016
Revised 7 February 2017
Department of Food and Beverage and Event Management, 30 September 2017
University of Nevada Las Vegas, Las Vegas, Nevada, USA 25 November 2017
Accepted 26 November 2017
Orie Berezan and Natasa Christodoulidou
Downloaded by Florida Gulf Coast University At 07:19 22 March 2018 (PT)

Department of Management and Marketing,

California State University Dominguez Hills, Carson, California, USA
Lan Jiang
School of Resort and Hospitality Management, Florida Gulf Coast University,
Fort Myers, Florida, USA, and
Stowe Shoemaker
University of Nevada Las Vegas, Las Vegas, Nevada, USA

Abstract
Purpose – Hoteliers are often frustrated by the significant fees charged for bookings by Online Travel
Agents (OTAs), and they try to encourage more direct bookings that circumvent the OTA system. However,
there are billions of dollars of room revenues generated by OTAs every year; and many companies in other
industries sell their products through multiple channels. The purpose of this study is to investigate how hotel
revenue managers can collaborate successfully with OTAs.
Design/methodology/approach – Qualitative methods are applied in this study, specifically focus
groups and in-person interviews with market managers of a leading OTA. Content analysis is performed,
using ATLASti 5, to discover emerging themes and categories from the transcripts.
Findings – This study highlights several OTA value propositions and how hotels can benefit from them.
Additionally, the findings of this study reveal that effective two-way communication between OTAs and
revenue managers is the key to success. An “optimization loop” is established, which specifies that
partnership and collaboration between OTAs and hotels must occur in a circular sequence of communication,
engagement, collaboration and strategy.
Research limitations/implications – A major limitation for this study is that interviews were
conducted only with market managers, limiting the perspective to that of OTAs.
Originality/value – There is a paucity of research and dialogue discussing productive relationships
between OTAs and hotel firms. Through in-depth in-person interviews with a diverse set of market managers
from a leading OTA, this study brings to light an array of perspectives of what is required to optimize the
OTA/hotelier relationship.
Keywords Strategy, Revenue management, Expedia, Online travel agents, OTAs,
Strategic relationship
Journal of Hospitality and
Tourism Technology
Paper type Research paper Vol. 9 No. 1, 2018
pp. 121-135
© Emerald Publishing Limited
1757-9880
The authors thank Danielle Susz for her assistance. DOI 10.1108/JHTT-10-2016-0069
 JHTT Introduction
9,1 Hotel revenue managers are continually challenged to distribute their room inventory in a way
to maximize revenue and ultimately increase profitability. From hotel websites and call centers
to social media and online travel agents (OTAs), revenue managers are offered a multitude of
channels to work with. With the internet increasingly utilized for distribution, the US online
travel market alone is estimated to grow to $200.43bn in 2017 (eMarketer.com, 2016). Therefore,
122 adopting an effective electronic commerce strategy for hotel room distribution through the
internet is vital to the hotel industry (Law et al., 2014). Companies such as Expedia and
Booking.com are two of the most popular and powerful OTAs in an ever-changing competitive
landscape. Hotel managers are often hesitant to develop relationships with OTAs, because they
frequently hold beliefs that OTAs are more expensive relative to other channels and produce
the lowest Average Daily Rates (ADRs) (Toh et al., 2011). Also, hotel managers from branded
hotel firms tend to maintain more skeptical attitudes towards the use of OTAs as worthwhile
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distribution channels (Lee et al., 2013). Contrary to this, there are several compelling reasons
why hotel managers should pursue strategic relationships with OTAs (Erdem and Jiang, 2016).
First, every year, billions of dollars in room revenues are generated by OTAs (STR Distribution
Channels Analysis Report, 2016). Second, hotel managers may want to consider that many
companies in other industries sell their products successfully through multiple channels (e.g.
Sony, Samsung). In addition, previous research established that OTAs contribute greatly to
increased room sales and competition power (Caliskan et al., 2013). Therefore, despite their
skepticism, it may indeed be beneficial for hoteliers to focus on building more strategic
partnerships with OTAs (Kimes, 2016).
Literature on distribution channels and hotel revenue management discusses mainly
hotel managers’ concerns with the impact of online channels on room rates. Lee et al. (2013)
argued that hotels must find ways to effectively utilize their distribution channels. In
addition, recent research (Inversini and Masiero, 2014; Jiang and Erdem, 2017; Leung et al.,
2017) highlighted the need for hotels to maintain a presence on social media and with OTAs
for marketing purposes. On the other hand, business websites discuss the fact that OTAs
are bad business in general because of problems such as so-called “mirror marketing”
effects, when OTAs pay search engines to appear above hotel websites, which increases
hotels’ Pay Per Click (PPC) costs (Tnooz.com, 2014). However, few answers were provided
about how best to use OTAs to increase room profitability. Koestler (2014) states that hotels
can use OTAs to enhance marketing efforts and sales revenues. On the contrary, Law and
Lau (2004) emphasized an increased demand for OTAs, mainly because of the convenience
OTAs provide to travelers. Hotel managers need to find ways to achieve a balance among
certain distribution channels they use along with the optimization of their own websites
(Toh et al., 2011).
Therefore, the purpose of this research is to explore these issues and investigates how
hotel revenue managers can create successful strategic relationships with OTAs. To be
specific, the following questions are answered:
Q1. What makes a successful OTA–hotel relationship from a market manager’s point of
view?
Q2. How should hotel revenue managers use market managers (OTAs) to help drive
profitable business to their hotels?
Q3. What information should revenue managers request from their market managers?

Q4. What are the differences between working with OTAs for independent versus
branded properties?
 Q5. What are the major challenges that prevent market managers from effectively Creating
supporting revenue managers? strategic
relationships
Literature review
Before the boom of ecommerce, Middleton and Clarke (2001) accurately projected that hotels
will eventually have to use a variety of channels to distribute their rooms most efficiently.
Brewer et al. (2005) emphasized that hotel revenue managers must consider the costs 123
associated with using distribution channels and the levels of business activity at which they
should be using certain channels. In addition, Carroll and Siguaw (2003) point to a gap in the
literature discussing the reasons for problematic OTA–hotel relationships. Sun et al. (2016)
established that there are variations in hotel rooms offered by OTAs and that bundle pricing
may be more price effective for the travelers than purchasing each item, such as breakfast,
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separately. Law and Lau (2004) found that for the service of hotel reservations, the internet
will perform traditional travel agency services best. Controversially, OTA customers are
expected to do everything themselves without the benefit of an experienced travel agent
(Kaynama and Black, 2000). Therefore, it is crucial that online distribution channels are
most efficient and convenient for customers. However, to successfully replace the role of
traditional agencies, OTAs will have to strive to provide enhanced websites that are more
humanized, uncomplicated, secure and offer more customized services (Kim et al., 2007).
Christodoulidou et al. (2010) researched the challenges associated with the allocation of
rooms through various electronic distribution channels. The top challenges identified were:
 non-proprietary real-time connectivity;
 losing control of the distribution channel; and
 rate parity and rate erosion.

O’Connor and Frew (2004) stated that operational and technical issues as well as initial
capital costs were primary concerns for the initial adoption stage. O’Connor and Murphy
(2008) found that none of the hotels closed third-party intermediaries in response to high
demand; Inversini and Masiero (2014) suggested that in the near future, hotels may leverage
social media tools to sell rooms online and decrease the use of what they perceive to be
costly OTAs. The utilization of mobile commerce is also of importance to stay competitive
and to increase booking revenues in the hotel industry (Ozturk et al., 2016).
On the other hand, other authors highlighted the unavoidability of OTA use for hotels
(Anderson and Xie, 2011; Lee et al., 2013). Anderson and Xie (2011) actively supports the
idea that OTAs should always be an active part of hotels’ distressed inventory strategies.
This idea is also supported by Masiero and Law (2016), where customers’ selection of
different sales channels for booking hotel rooms were investigated; direct channels, such as
the hotel’s website, and indirect channels, such as OTAs (including destination marketing
websites), were taken into consideration.
Lee et al. (2013) investigated online comments discussing the issues of problematic
relationships between hotels and OTAs. The authors concluded that hotels should have a
balanced approach and must find ways to effectively use their distribution channels.
This research is an extension of Lee et al. (2013) research and attempts to create a model
that may contribute to potentially beneficial relationships between hotels and OTAs.

Methodology
Qualitative methods are applied in this study. This study applied the Grounded Theory
approach by which an explanatory framework will be discovered grounded in the data. This
 JHTT method does not follow established theories but discovers explanatory frameworks for
9,1 theories from the examined data (Starks and Trinidad, 2007). Data collection strategies in
this study were focus groups and interviews, which are appropriate methods for qualitative
analysis (Starks and Trinidad, 2007). Six focus group sessions with a total of 50 participants
were conducted, in which each focus group included seven to ten participants. All focus
groups incorporated market managers from OTAs under Expedia Inc., which represents the
124 majority of existing OTAs in the USA and includes numerous companies, such as Hotwire.
com, Travelocity and many others. Focus group questions were inductive and naturalistic.
Open-ended questions centering on the study’s research questions were used in the focus
group discussions. Open-ended questions can reveal the world as seen by respondents
(Patton, 2002). The results of the focus groups were used to construct questions that were
incorporated in 15 interviews conducted with OTA market managers under the Expedia
umbrella from various regions in the USA, including senior- and corporate-level managers.
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Data coding and analysis of the audio recordings and notes of the discussions were
carried out by two co-principle investigators to develop a categorization scheme. All
researchers participated in this data analysis to ensure the high credibility of the process
and the interpretation.
Content analysis was performed, using ATLASti 5, to discover emerging themes and
categories from the interview transcripts. Content analysis is a time-consuming process that
can provide rich results, as researchers are required to immerse themselves in the data.
Content analysis has been used successfully to analyze web-based content from travel-
related websites (Yang and Peterson, 2004), interviews (Qu et al., 2008) and many other
applications. Content analysis involved three phases:
(1) identifying codes within categories;
(2) relating codes to one another to identify emergent themes; and
(3) constructing a paradigm model of market managers’ perspectives of strategic
relationships with hotel revenue managers and detecting new constructs and
patterns associated with these relationships.

The paradigm model (Appendix) displays the relationships among the categories. Validity
of the outcome was achieved by obtaining endorsement from four executives of the revenue
management profession who were not employees of Expedia Inc. and did not work for the
same organization.

Results
The study revealed several core categories and the subcategories that they emerged from, as
displayed in Table I. The following three overarching themes emerged, representing crucial
issues between OTAs and hotels: OTA value propositions (technology, marketing and big
data); the Optimization Loop (communication, engagement and partnership/collaboration)
and the Efficiency Path (differences between independent and branded hotels). As displayed
in Figure 1, these themes are interrelated in their impact on the OTA/hotel relationship and,
therefore, are not mutually exclusive. Next, these themes are discussed with the most
representative examples of participant views being presented in quotation marks.

Discussion
OTA value propositions
Technology. Despite the importance OTAs stress on interpersonal relationships, in this
study, they felt that most revenue managers perceive OTAs solely as technology companies.
 Core categories Subcategories
Creating
strategic
OTA Value propositions OTA marketing: relationships
OTA is a marketing channel; decreases hotel’s marketing
spending; marketing reach; international exposure;
package availability; customers’ website experie nces;
billboard effects; no upfront cost for hotels; and OTAs
can provide advice to hotels. 125
OTA technology:
Helps drive value; mobile apps, customer websites; and
sharing information.
OTA big data:
Can assist in customer segmentation and targeting and
trend spotting
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Efficiency path (advantages and Independent hotels:

disadvantages for independent and branded Flexible for marketing purposes; OTA can be creative
hotels) with marketing; need OTAs because of lack of brand
fallback; need OTAs for global reach; are in need of OTA
data; however, they lack the resources to successfully
utilize the information.
Brands:
Complex lines of communication; revenue managers have
complex and busy jobs that leave little time to be
engaged with their OTAs; high burnout and turnover of
revenue managers; have potentially more resources to
utilize data they can potentially obtain from OTAs
Optimization loop Communication between hotels and OTAs, awareness of Table I.
resources and needs, engagements, partnership/ Core categories and
collaboration, goals, strategy subcategories

Despite the importance technology plays to the success of the relationship, part of the value
that OTAs offer is lost when hotels only perceive them as technology firms and feel there is
no need to engage with OTAs otherwise. Many hotels feel that the technology is everything
OTAs do, but OTA participants stress that “there is so much to what we do on the back
end”. “Revenue managers have a lot on their plate”. “Consequently, they are looking for a
“plug and play” solution” which takes away from hotels’ willingness to engage with OTAs
and, ultimately, the success of the relationship. Although technology is the center of OTAs’
unique value proposition when marketing to hoteliers, OTAs should also emphasize the
importance of the work OTAs do behind the scenes and the significance of an engaging
relationship between themselves and hotels.
Marketing. Generally, OTAs are perceived to be supply channels only, but OTAs view
themselves as marketing channels “allowing hotels to capture many segments they may not
have even thought about”. The ability to reach and market to worldwide market segments
cannot be matched by individual hotels. According to study participants: “We (OTAs)
spend over a billion dollars in marketing per year”. The cost that many hoteliers are
complaining about is offset by the marketing power of the OTAs, which is not necessarily
apparent to the revenue manager, who is typically focused only on numbers. OTAs mention
that they “spend this amount up front, which is not the case with hotels who usually only
have to pay after hotel rooms are actually sold”. Hotels need to consider that OTA costs are
a cost of doing business and to acquire new customers. Market managers state: “when you
break it down, we are not expensive”. Additionally, a perception of reduced risk should
 JHTT
9,1

126
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Figure 1.
Emergent
relationships

result if hotels understand that marketing managers actually can assist hotels in performing
their marketing function, if that is what they desire. Furthermore, many market managers
mentioned the “billboard effect”, which is the value hoteliers receive from marketing
exposure provided by the OTAs, specifically when a customer is made aware of the hotel
through OTA websites but books directly through the hotel website. Market managers
should emphasize this fact to revenue managers. OTAs also stress that they “have extensive
marketing rates” and can provide less sophisticated and/or independent properties with
revenue management assistance.
According to market managers, OTAs are more in tune with general consumer behavior.
They provide multiple booking media, such as mobile applications commonly not used by
all hotels, specifically smaller and independent properties. For example, some OTAs also
own opaque channels, which cannot be offered by hotels, as they cannot lower their rates
dramatically without jeopardizing their rate integrity. As mentioned by participants, opaque
channels are an opportunity that “protects the hotel but it also allows them to use last
minute room filler strategies”. Overall, market managers also stressed that: “in terms of
marketing for independent hotels, OTAs can get more creative”, which provides competitive
advantages for such properties.
Big data. As previously mentioned, OTAs stress that they are generally more in tune
with the customer than the typical hotelier is. OTAs point out that they “have a 360-degree
view of the market – we can see the trends happening at the market level that not many
hotels can see”. Market managers have insight and access to data about the industry in
general, also trends and economic impacts. OTAs therefore are not only marketing channels
but also an often-unutilized marketing research resource. As market managers’ state: “We
have data we like to share with partners but we have partners (revenue managers) that just
do not care”. Market managers also stress that: “every OTA customer that checks into a
hotel is generally brand agnostic”, which means that the hotels have the opportunity to
 make them loyal customers. This, in turn, not only results in more room nights but also Creating
allows for the opportunity to collect more customer data via loyalty programs. strategic
According to study participants, there are many other ways OTAs create value: “A lot of
value can be uncovered through working with an OTA”. When market managers were
relationships
asked what they would like to communicate to revenue managers, they stated: “We are not
just a discount website – reach out to your market manager and challenge them, you may be
surprised what can come out of it”. Market managers also stressed that they “have a lot of
things (that) hotels cannot do on their own”. In addition, revenue managers are often hard 127
pressed for time and cannot reach out to their customers, which is something OTAs can do.
Furthermore, independent operators may find more value from OTAs because they have no
“brand fallback and brand reliance” to support their independent brand. Nevertheless,
branded properties will profit from the above-mentioned value OTAs provide.
The optimization loop
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Communication. The above-discussed OTA value propositions need to be communicated to

hoteliers. If there is no communication, then none of the information hotel revenue managers
and OTAs have is shared and utilized for common benefits. Market managers stressed the
importance of “someone there (OTAs) that knows their hotel and understands what they are
going through day-to-day”. However, miscommunication must also be considered. For
example, if a hotel plans a strategy to attract certain market segments and OTAs do not
know about this strategy, then obviously OTAs cannot assist the hotel with this strategy.
Furthermore, effective two-way communication is a key to success. As expressed by study
participants, “Market managers and revenue managers offer complimentary information”.
Awareness. Communication influences awareness both ways for OTAs and hotels.
Awareness influences engagement, and engagement affects the relationship (Carnwell and
Carson, 2008). Awareness lessens perceived risk and, therefore, increases engagement. For
example, OTAs have to be aware of the hotel’s needs and limitations, and the hotel has to be
aware of the advantages it can gain from OTAs. However, study participants made it clear
that hotels’ characteristics and affiliations will determine their often-unique needs and
limitations. The study revealed that needs differ between independent properties and
branded hotels. For the brand affiliated properties, challenges include: corporate restrictions
and requirements, increased risks of miscommunication because of complex lines of
communication, and high turnover of revenue managers, as market managers state: “It is
difficult to maintain partnerships because revenue managers in hotels turn over constantly”.
The challenges for independent properties are: training, education, standards, ability to
attract strong talent such as dedicated revenue managers and marketing. The advantages of
an independent are simpler lines of communication and flexibility for business and
marketing decisions, which furthers engagement with OTAs.
Engagement. The findings of this study also revealed that successful engagement and
communication between OTAs and revenue managers are crucial elements for a fruitful
cooperation, coinciding with previous research (Henneman et al., 1995). As was expressed by
market managers: “The core strategy working closer with hotels involves improving
communication on a daily basis, and back and forth communication is the key to mutual
success”.
According to market managers, engagement depends on the savviness of the partner.
Some partners would like to be engaged but do not have the time to be engaged with their
OTAs. Market managers express this notion as follows: “They love the data, they
sometimes do not have time to process it so they are more engaged with the OTAs”.
Another way of engagement is fewer accounts for market managers, as one OTA
manager states: “we have fewer accounts per market manager, which helps engagement
 JHTT with revenue managers”. As mentioned earlier, independent properties are more in need of
9,1 OTA assistance, and the lines of communications are simpler; therefore, they are more
engaged with OTAs. Overall, according to market managers, engagement is vital to the
optimization of OTA products and services.
Partnership/collaboration and strategy. In this study partnership, collaboration and
strategy emerged as major themes. Previous research found that engagement and
128 collaboration are interrelated (Henneman et al., 1995). Collaboration is an essential part
of good partnerships, which requires effective understanding of the roles of the
participants and the sharing of visions for outcomes (Gajda, 2004). Attributes of
partnerships include empathy, reciprocity and transparent lines of communication
(Carnwell and Carson, 2008). Communication influences relationships and relationships
impact the communication that occurs. According to market managers, trust between
OTAs and hoteliers is vital to “reducing tension and increasing collaboration”.
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However, without a collaborative relationship, information is not shared and market

managers and revenue managers are not aware of what they need from each other.
Market managers expressed this notion as follows: “We are here to collaborate
together”. However, participants mentioned that hotels do not view market managers
as valuable resources for market information. Rather, “revenue managers focused on
the framework of a particular hotel and driving revenue”. If revenue managers do not
utilize market managers, then they may not have comprehensive knowledge of the
entire market. This may include knowledge about what markets are being searched in
addition to their own markets, whether there is demand that is not being recognized or
what the booking windows are for both domestic and international travelers.
One of the biggest challenges for both relationships is the industry phenomenon of
high turnovers in the hotel business, which means that these valuable relationships
have to be re-built continuously. As market managers discussed: “A new revenue
director needs time to settle in and plan his strategy calendar [. . .] a new GM can come
in and completely change the hotel’s strategy”. Therefore, the relationship between
market managers and hotels is always dynamic and at potential risk, which impacts
efficiency in general, the effectiveness of the strategy and hotels hold OTAs responsible
for their success.
Participants stressed that, without communication, partnerships cannot exist:
“Partnership is communication. We are here to work collectively and to collaborate together
[. . .] to come up with strategies to allow you to not only meet but exceed your goals”. The
OTAs’ relationship with hotels is obviously vital to the success of both parties. OTA market
managers express their passion to make the relationship work: “It’s really about getting to
know someone”. This suggests that no matter how powerful an OTA’s technology is,
humanizing the experience between OTAs and hotel revenue managers is vital to
developing a partnership. As market managers elaborate: “Partnerships are developed
between people, not between tools and websites”.
One of the main problems that emerged between hotels and OTAs is that many hotels do
not have a strategic partnership (commitment to a shared vision) with OTAs. One of the
reasons mentioned by market managers that addressed this concern is that hotels do not
fully comprehend the value of OTAs. Market managers feel that “many hoteliers don’t
understand the value behind us”; therefore, “it’s not a relationship, and it’s not a partnership.
OTAs and hotels should naturally be partners because they are sharing the same goal,
driving profits and revenues”. As study participants state: “We share those goals”.
Interview respondents suggested that a partnership can be nurtured by hoteliers if they
realize the value of OTAs. For example, it was recommended that hotels should view OTA
 costs as a way of profit sharing rather than an expense: “I think the challenge is that the cost Creating
of an OTA does not come out of their marketing budgets (hotels)”. strategic
Respondents further mentioned:
relationships
At the end of the day, each of us brings an insight into the markets we work in, and, collectively,
when we are talking and sharing what we know and strategizing, pairing an OTA market
manager with the hotel revenue manager, GM, whomever, is a beautiful thing. There is a lot of
knowledge right there between those two people, and it makes for great relationships and
comfortable partnerships, too. We each bring our own lens to the table.
129
This includes data that are collected by OTAs through every transaction made on their
sites. In addition to being a distribution channel, OTAs can assist with hotels’ strategic
planning processes because of their access to data stored on their servers. For example,
hotels do not get basic information (registration information, frequency of travel, where else
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they stay) from OTA guests unless they know to request these data from OTAs:
OTAs also have updated market information, such as foreign exchange trends, airline trends,
submarket trends they can share with hotels, and in return, hotels can share guest specific
information such as guests wants and needs.
In the end, participants stressed that hotels need to transmit their strategies to their OTAs to
get maximum benefit from them, as was communicated by market managers: “We can
support your strategy if we know what it is”.
The efficiency path – branded hotels versus independent hotels. The data in this study
revealed that the efficiency of the OTA/hotel partnership is affected by several differences in
hotel characteristics, such as brand affiliation. Distinct advantages and disadvantages were
identified for OTAs when working with branded hotels versus independent hotels. First,
communication and, therefore awareness, is easier to achieve with independent properties,
because a more direct line of communication exists. In general, managers from independent
hotels have more flexibility when it comes to marketing and business decisions; however,
this flexibility is often limited by resource constraints. OTAs can be more creative and
resourceful, with marketing efforts for independent hotels, which have greater dependencies
on OTAs for their marketing reach because they lack the brand support. OTA market
managers working with independent hotels find lines of communication less frustrating and
more efficient in contrast to working with brands. The lines of communication between
brands and OTAs are more multifaceted and, therefore, more difficult. In general,
independent hotels have more satisfying relationships with OTAs. This study discovered
that some revenue managers (independent and branded hotels) encounter many obstacles
that prevent them from being engaged with OTA market managers. For example, revenue
managers from branded hotels have complex and busy jobs that leave little time to be
engaged with their OTAs. On the other hand, managers from independent hotels simply do
not have time to engage with OTAs because they are too engaged in daily operation
activities. Another difference between independent properties and branded hotels is the use
of data that OTAs can provide to them. Brands potentially have more resources to analyze
such data and, therefore, more opportunity to exploit the data to drive profitable business to
their hotels. Independent properties are actually more in need of OTA data; however, they
lack the resources to successfully use the information. Both independent and branded hotels
miss out on the opportunity to segment OTA guests without OTA data and, therefore, are
not able to forecast accurately, which impacts pricing practices. OTAs provide hotels in
general with the ability to reach and market to worldwide market segments that cannot be
matched by individual hotels. This again is particularly true for independent hotels. In
addition, OTAs can put together great promotional packages and also offer different types
 JHTT of rates, and so deliver revenue management aid to independent properties that may not
9,1 have revenue management and marketing departments.
Moreover, the study identified that brand affiliated properties face stringent corporate
restrictions and requirements, which leaves them less flexible than independent hotels.
Branded hotels also run an increased risk of miscommunication with OTAs, because of
complex lines of communication within their firms and a high turnover of revenue
130 managers. On the other hand, the challenges encountered by independent properties are
often a lack of resources which result in deficits in training and education opportunities for
employees. Furthermore, commonly, a lack of uniform standards and an inability to attract
strong talent, such as dedicated revenue managers and marketing professionals, are
prevalent conditions for independents. The advantages of the branded properties are often
the disadvantages of the independent properties and vice-versa.
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Practical implications
Several practical and theoretical implications emerged from this study. Practical
implications will be discussed first. First, even though technology is the focus of unique
value propositions of OTAs when marketing to hoteliers, it became obvious that OTAs
need to highlight the importance of the work they do behind the scenes, such as the
marketing power they can offer to hotels. OTAs perceive themselves mostly as a
marketing resource, and they should stress this powerful value proposition to hotels. For
example, OTAs can offer OTA guest data, information about market trends, and the
ability to provide packages if hotels request them. Furthermore, OTAs have a
comprehensive view of domestic and international markets, and they can provide
marketing exposure to extensive worldwide market segments. The OTA marketing
functions are particularly important to independent hotels, and are generally
undervalued by branded hotels. OTAs suggested that hotels should view OTA costs as a
type of profit sharing with OTAs considering the comprehensive marketing assistance
they can offer to hotels.
Furthermore, the advantage of the “billboard effect”, mentioned earlier in this paper, may
offset the higher PPC costs hotels complain about. Market managers need to communicate
these facts to revenue managers. In addition, OTAs provide multiple booking media, such as
opaque channels. Finally, OTAs’ marketing resources should be aligned with hotel revenue
management for mutual success.
Next, the importance of strong relationships and interactive communications between
revenue managers and OTAs was highlighted in this study. A main implication that
emerged is that hotel revenue managers should improve communication with OTAs to be
able to form strategic relationships to maximize profits. Therefore, it is of utmost
importance for revenue managers and market managers to communicate more effectively
with each other. In addition, successful engagement between OTAs and revenue
managers is a critical component for a prolific cooperation. The level of engagement
depends on hotel managers’ knowledge of OTAs’ resources, such as data, and market
managers’ ability to transmit this knowledge. OTAs can improve engagement with hotel
managers by showcasing their resources better for branded hotels and by making it
simpler to use them for independent properties. Engagement and communication
between OTAs and revenue managers potentially could also be improved by reducing
hotel revenue manager turnover, which is not in the OTAs’ market managers’ control.
However, OTAs can extend already existing education programs to revenue managers to
continuously inform and entice them to become more engaged in a relationship that is
based on empathy and reciprocity. In summary, successful OTA-hotel engagement will
 depend on OTAs’ knowledge of the nature of the hotels they are dealing with and the Creating
hotel managers’ ability to extract all resources from their OTAs. However, it needs to be strategic
noted here that the authors recognize that the value proposition of OTAs constantly
evolves. For example, OTAs now offer services such as “real time feedback,” which
relationships
allows hotels to learn in real time about guests’ check-in experiences and their room
satisfaction levels. Furthermore, OTAs now provide “market watch” – a service
delivering valuable information to hotels about their competitive set. Finally, the
importance of OTAs may have become pronounced as unconventional inventory has 131
emerged on the accommodation market via firms, such as Airbnb. However, the
fundamental themes discovered in this study remain relevant.

Theoretical implications
This study addressed a gap in the literature by adding to the discussion about OTA–
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hotel relationships as suggested by Carroll and Siguaw (2003). The study also agreed
with Koestler’s (2014) notion that hotels can use OTAs to increase and enhance
marketing efforts and sales revenues. Furthermore, this research extended on Lee et al.
(2013) study that examined the relationship between hotels and OTAs by providing
insights and making suggestions for improvement of OTA/Hotel relationships. This
study adds to the literature by highlighting OTAs’ value propositions and how hotels can
benefit from them. Furthermore, an optimization loop was introduced, which shows a
way of achieving a positive form of reciprocation between OTAs and hotels, as was
suggested by Lee et al. (2013). The findings of this study also reveal that effective two-
way communication between OTAs and revenue managers is the key to building trust as
a foundation for a successful strategic relationship. The importance of trust in
relationships was discussed by Lee et al. (2013), and the current study reveals underlying
themes crucial to build trust between revenue managers and OTAs. This study also
resolves that a direct relationship between collaboration and the establishment of a
mutually beneficial strategy exists – a notion that was discussed in previous literature
(Henneman et al., 1995; Inamdar; et al., 2000; Robinson and Cottrell, 2005). Henneman
et al.’s (1995) research was further enhanced by establishing antecedents that must occur
for OTAs and revenue managers to collaborate. For example, the study revealed that it is
crucial for revenue managers to have knowledge of OTA offerings to maximize their own
efforts, which were identified in this study. In addition, the findings added to the existing
literature by revealing OTAs value propositions, which complemented the key factors
important for hotels to select electronic distribution channels as identified by O’Connor
and Frew (2004). Furthermore, previous research was complemented (Robinson and
Cottrell, 2005) by recognizing the antecedents for successful collaboration as excellent
communication occurring in an environment of mutual respect and empathy. It was
concluded that revenue managers and market managers collaborate most effectively if
they know and work within their roles.

Conclusions
In summary, this study addressed a gap in the literature by adding to the discussion about
the OTA–hotel relationships as suggested by Carroll and Siguaw (2003). A main implication
that emerged is that hotel revenue managers should improve communication with OTAs
and seek to form strategic relationships to maximize profits. The study also provided a
pathway for a mutually beneficial relationship between OTAs and hotels, supporting the
notion that great industries are built on great partnerships. Finally, the information derived
from this study can have a major positive impact on the sadly common “frenemy”
 JHTT relationships between OTAs and hotels and thereby improve efficiency and profitability of
9,1 the industry.

Limitations and future research

A major limitation for this exploratory study was that interviews were conducted
exclusively with market managers under the Expedia umbrella. Although Expedia Inc.
132 is composed of numerous OTAs with varying cultures, markets and strategies,
potential bias still may have resulted from this limited sample. Future studies should
include interviewing market managers from competing OTAs and hotel revenue
managers to gain a broader perspective on the topic. Additionally, conducting a
quantitative analysis by using a questionnaire based on the qualitative information
gathered in this research would provide further insight into the issue of OTA and hotel
collaboration.
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Further reading
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 Appendix Creating
strategic
relationships

135
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Figure A1.
Paradigm model

Corresponding author
Orie Berezan can be contacted at: Oberezan@csudh.edu

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