The number of hotel suppliers you work with can make or break your business
Choosing the right mix of suppliers can make or break your online travel agency (OTA). But did you know that the amount of suppliers you connect with has just as much of an impact?
The online travel industry is a cut-throat business. Customers want to receive the best offer for what they’re seeking. If they aren’t satisfied all it takes for them to leave an OTA’s site is one click - this little click represents hundreds of dollars of missed revenue. To offer customers the best possible offerings and beat out the competition, OTAs need to have access to the inventory their customers want. And in order for OTAs to offer a diverse set of properties that appeal to their customers, they need to be connected to multiple suppliers. It is critical to choose the right mix and number of suppliers for an OTA to be competitive.
Why one supplier can’t cover all your needs
There is not one supplier that will cover all of your needs. Why? The answer is surprisingly simple: The world is just too big, and suppliers don’t have the capacities to cover all of the properties across the globe. While yes, there are major players in the industry that lead in market share, they still can’t independently cover all of an OTA’s variety, specializations and rate needs. Our internal insights have shown that aside from a handful of giants, most suppliers only cover 2 - 3% of worldwide inventory, many having specializations like regions, rate, room, or property types.
How many suppliers do you need?
Bearing this in mind, we can see that the number of suppliers an OTA connects with is one of their key success factors. With this insight, internally collected data, and years of experience, we can draw a clear picture as to how many suppliers an OTA needs to achieve the highest amount of booking conversions, customer retention and revenue. The number varies depending on your goals and whether you want to be:
- Regionally competitive: you need at least 15 suppliers
- Semi-globally competitive: you need at least 20 suppliers
- Globally competitive: you need at least 30 suppliers
Of course these suppliers have to be chosen wisely, always keeping in mind a good combination of suppliers with various specialties should be selected.
It’s important to keep up
In the travel industry, where being competitive will make or break your business, you must have access to the inventory and rates your customers want. Working with less than the above recommended number of suppliers may save you a few dollars on integrations in the short term, but the revenue you’ll miss out on will be much greater than those minor savings. Only supplier variety will allow you to reach critical mass and boost your conversions, retention, and revenue. You simply cannot afford NOT to sign with this many suppliers.