Concerned about the millions of dollars being taken out of the local economy by overseas-based online travel agents (OTA’s), a new industry co-operative venture where property owners are the shareholders is being launched. This is a world first and a partial answer to the huge growth being shown by the OTA’s where a new one seems to spring up every month and the big simply get bigger and dominate the market.
Hoteliers work vigorously to increase their bookings and the development of the commission agent OTA operations has spread the accommodation word but generally attracted customers out of the existing pool – at a cost of generally accepted 15 percent and likely to increase. Creating a New Zealand-based OTA owned by the industry could stop this hijacking of local customers who account for at least 50 percent of the bed-nights, according to the man behind the proposal, Gordon McGregor, one of the owners of the popular Resort Brokers operation.
“Because I believe that OTA’s are a cancer in the industry, it was time to stop the rot setting in and demonstrate to the world just what can be done. While the major few hotels catering to the international market might not be interested in our ideas, there are over 3000 motels and small accommodation players who could be part of this programme that will in a short time, return their investment and put the profits back in their pockets,” said McGregor.
McGregor believes, as do many others, that the internationally owned OTA’s are taking several hundred million dollars out of New Zealand every year in commissions, paying no tax or GST and starting to control the fortunes of small businesses. “We are simply setting up a non-profit organisation owned by the industry that will first of all undercut the commissions charged by then OTA’s and once the set-up costs have been returned we could get down to perhaps a 5 percent commission that would fund the ongoing work,” he said.
The estimated costs to set up the organisation with software, marketing and staff would be around $2m and McGregor is hopeful that the Government will chip in a contribution to eliminate some of the current cash outflow to overseas owners. The projected cost of owning a piece of the co-operative could be as low as $1500 with this being returned quickly on reduced commissions and eventual rebates.
OTA’s are growing quickly and adding new features but a number of major hotel players have upped their marketing using television and print to attract direct bookings. The new proposed co-operative made just find a chink in the big OTAs’ armour and the results are expected to make an impact internationally.
Gordon McGregor can be reached on 021 998 810.