In recent discussions at the national market regulation conference, the Market Regulation Administration emphasized its commitment to expediting the development of compliance guidelines regarding service fees on online trading platformsThe goal is to alleviate the financial burdens on merchants using these platforms and ensure that the fee structures set by the platforms are reasonableThis initiative aims to foster a more mutually beneficial ecosystem in the realm of platform economies, allowing various stakeholders to thrive alongside one another.

Looking ahead, the administration plans to draft regulatory measures for monitoring platform rules and to take legal action against violations within this domainThere is a growing focus on addressing issues that undermine fair competition and infringe upon the legitimate rights of merchants and consumers operating within these platforms

The ultimate objective remains to cultivate a transparent and equitable framework for rules guiding these platforms.

Commissions, a long-standing sore point for the hotel sector, are receiving closer scrutiny as the rise of Online Travel Agencies (OTAs) notably alters distribution channels within the tourism and hospitality industryWith advances in internet technology, an increasing number of consumers are opting to book their accommodations through OTA platformsAccording to research from the Forward Industry Research Institute, the online travel industry in China is projected to exceed a staggering 20 trillion yuan by 2026.

Statista highlights the meteoric rise of the online travel market, which has evolved into a billion-dollar industry in less than three decades, revolutionizing how individuals plan, book, and experience their travelsThe global online travel market alone was estimated to be worth around $600 billion in 2023, with expectations of steady growth over the next several years

• Challenges and Responses in Tongwei's Solar Business
• Nvidia, TSMC Mull US AI Chip Production
• Bitcoin Reaches New Heights
• Dollar Rises Despite $36 Trillion US Debt
• China's Innovative Drugs Go Global

Online markets have contributed to approximately two-thirds of the industry's revenue; notably, around 70% of Chinese consumers use platforms like Trip.com to book hotels.

While OTAs have indeed brought significant exposure and traffic to hotels, the financial tug-of-war surrounding commission fees has been a contentious issueCurrently, major OTAs in China charge commissions typically ranging from 10% to 15%, with some platforms even increasing their rates this year, placing added financial strain on hotel operatorsWhen faced with economic adversities, such rises seem particularly burdensome, especially as hotel metrics like the Revenue Per Available Room (RevPAR) and Average Daily Rate (ADR) show signs of pressure, while the revenue of leading OTAs continues to surgeMany hotel owners lament feeling as though they are merely working for these platforms.

In September this year, the founder of a prominent domestic hotel chain voiced frustration in an internal memo regarding performance pressures that led managers to cut deals with OTAs to maintain occupancy, with some properties generating over 50% of their business from OTA sources.

The situation isn't isolated to China

In November, Booking.com faced legal action from Greek hotel owners, citing high commission rates and platform feesNumerous international OTAs have been similarly scrutinized and sanctioned due to exorbitant commission structures by various countries and regions.

Within the ongoing negotiations between hotels and OTAs, most hotel businesses appear to be at a disadvantage, often lacking sufficient negotiating powerConsequently, there is a growing outcry among hotel owners for more transparent and equitable terms of engagement, with hopes of alleviating the financial burdens imposed by high commission charges.

In response to the escalating pressure from commission fees, hotels are experimenting with diverse strategies to reduce their dependence on OTAs while enhancing their profitabilityA key tactic involves the development of direct sales channels, especially as hotel chains become increasingly prevalent

Many hotel groups are fortifying their direct booking platforms, such as official websites, mobile apps, and telephone bookings, encouraging guests to engage directly with hotelsThis approach not only diminishes commission costs but also allows hotels to maintain better control over customer data and increase guest loyalty.

Data reveals that in 2023, hotel chains like Huazhu and Atour achieved an online direct booking rate through Central Reservation Systems (CRS) of 62.6% and 63.4%, respectivelyThe Dossen Group also saw its CRS contributions rise by 8.5% from 2020 to 2022, hitting 36.5%. According to the latest report from Skift titled "2024 Hotel Distribution Outlook," it is anticipated that by 2030, direct bookings through digital channels will replace OTAs as the main channel for hotels.

The brand membership system complements this direct sales approachWell-known programs like Marriott Bonvoy and Hilton Honors, as well as new partnerships such as Huazhu's collaboration with Juneyao Airlines on a co-branded membership card, have created mutual benefits and expanded member experiences

Through methods like incentive rewards and exclusive member activities, hotels can increase member engagement, enhance long-term customer relationships, stabilize revenue, and reduce the pricing fluctuations and commission pressures associated with OTAs.

Furthermore, diversifying marketing channels and establishing resilient, self-sufficient avenues is vital for hoteliersWhile these independent channels may not reach the same audience as OTAs, they hold unique potential and valueUtilizing social media platforms such as Douyin and Xiaohongshu, search engine advertising, and collaborations with travel bloggers allow hotels to funnel traffic back to their own sites or apps, thereby minimizing their reliance on OTAs.

Additionally, strengthening collaborations with travel agencies and corporate clients proves to be an effective approach in navigating commission challengesBy expanding B2B collaborations, hotels reduce their reliance on individual consumers, fostering long-term relationships with travel agencies, corporate clients, and event organizers

These business and conference clients typically exhibit greater spending capacity and longer stays, providing sustained order flow for hotels.

Lastly, the value of private domain traffic is an area of significant potential for hotelsBy converting guests into private domain users during booking, check-in, and check-out processes—such as encouraging them to follow hotel WeChat accounts or download apps—hotels can use community marketing strategies on social platforms to engage with customers, promptly delivering promotional content and tailored servicesThis strengthens long-term customer loyalty while facilitating data collection that enables service optimization and personalized marketing, ultimately enhancing brand competitiveness.

However, despite intermittent tension between hotels and OTAs, the notion that hotels can exist entirely independent of OTAs is a flawed assumption

OTAs have cemented themselves as indispensable channels for hotel sales, leveraging their extensive online traffic and user-friendly booking systemsReports from certain hotel operating platforms indicate that partner hotels typically experience at least a 30% uptick in occupancy rates.

The relationship between hotels and OTAs transcends a zero-sum gameThe future is likely to tilt toward a model of symbiosis where both parties thrive togetherThis symbiotic relationship entails a sophisticated collaboration leveraging the strengths of each urban partner and fostering shared resources to maximize mutual benefits.

Firstly, cooperative ventures that emphasize mutual enhancement will reinforce the autonomy of hotelsOTAs should strive to create a more independent operational environment for hotels while allowing the two entities' membership programs to support and complement each other

Concurrently, hotels should improve their offerings and utilize OTA resources to unlock their private customer pools, thereby attracting a broader base of consumersThis new ecosystem positions hotels as proactive participants in their growth, rather than merely passive recipients of platform rules.

Secondly, a joint membership ecosystem should be established, promoting mutual benefitBy uniting their membership programs and enhancing member offerings, both hotels and OTAs can significantly expand their membership base, delivering richer, more beneficial perks and servicesAn example can be seen in the collaboration between Feijiu and Songzan, allowing members to seamlessly access one another's services, creating increased advantages and consumer convenience.

Lastly, cultivating effective communication and collaboration to foster lasting partnerships is essentialHotels and OTAs must abandon their adversarial approaches and instead engage in consistent dialogue to establish stable collaborative frameworks

A fair distribution of benefits is paramount during negotiations, enabling both parties to confront market challenges jointlyPromotions during significant events such as “Double Eleven” can be an excellent opportunity for both hotels and OTAs to join forces and offer compelling products and discounts to meet consumer demand, thereby enhancing their competitive edge.

It is important to acknowledge that absolute balance is a myth; what the market truly requires is a dynamic equilibrium achieved through continuous negotiationMoving forward, the refinement and enhancement of regulations will be paramountObserving how hotels and OTAs discover optimal cooperative pathways within this evolving regulatory landscape will be criticalFor hotel owners, this represents both a challenge and an opportunity, while for OTAs, adopting a win-win perspective will determine their standing in the competitive marketplace of the future.