OTA Reliance - A Strategy Destined For Failure....All Your Eggs in One Basket Spring To Mind ?

As the future landscape of Short Term Rentals continues to evolve, its clear that Property Managers who are not working on reducing their reliance of bookings through OTA'S such as Airbnb, Booking.Com, VRBO, Expedia are heading into the ICEBERG

Chris MAUGHAN from I-PRAC who has built a 100% direct booking Short Term Rental business, outlined " Its may look like you have a business when you are looking at revenue each month, however the true strength of a business is calculated over the percentage of control you have "

We have seen it for years the OTA"S say JUMP the property managers say HOW HIGH ! So when any of these platforms can

1. Cancel your account without reason.
2. Cancel a booking and refund the guest unto 24 hours prior to arrival.
3. Refund a guest booking fees if they complain about the property on arrival.
4. Increase commission fees as they wish.
5. decide where you feature on search results.
6. Once bad review can damage your whole profile reputation.

The question is " Where is the CONTROL in this ? If you are NOT working on reducing your OTA reliance, within 18 months that ICE BERG will look so much closer.

Airbnb and other booking platforms, has become a popular platform for travelers to book accommodations and for property owners to rent out their spaces. While the platform has brought convenience to both parties, relying solely on Airbnb for bookings can be a dangerous strategy for property owners. In this article, we will explore the reasons why relying solely on Airbnb for bookings can be risky and what property owners can do to mitigate these risks.

Dependence on a single platform

Relying solely on Airbnb for bookings means that property owners are dependent on a single platform for their business. While Airbnb has become a dominant player in the short-term rental market, there are other platforms such as VRBO, HomeAway, and Booking.com that can also generate bookings. By relying solely on Airbnb, property owners are putting all their eggs in one basket, leaving themselves vulnerable if anything happens to the platform.

For example, if Airbnb changes its policies, algorithms, or fees, property owners may find themselves negatively impacted. In 2020, Airbnb introduced new policies in response to the COVID-19 pandemic, which led to a significant decrease in bookings for some property owners. In addition, if Airbnb experiences technical issues or a security breach, property owners may not be able to access their bookings, resulting in lost revenue.

Lack of control

Airbnb’s policies and rules can be strict, and property owners may find themselves at the mercy of the platform. For example, Airbnb has a strict cancellation policy that can result in penalties for property owners if guests cancel their reservations. In addition, Airbnb has the power to remove listings from its platform if it deems them non-compliant with its policies.

Property owners who rely solely on Airbnb for bookings may find themselves with limited control over their business. They may not be able to set their own cancellation policies or have the flexibility to make changes to their listings without going through the platform.

Limited visibility

Airbnb’s search algorithm can be unpredictable, and property owners may find themselves struggling to get their listings noticed. With over 7 million listings worldwide, it can be challenging for property owners to stand out among the competition. Airbnb’s algorithm takes into account factors such as pricing, availability, and reviews when ranking listings, and property owners may find themselves struggling to maintain a high rank.

Property owners who rely solely on Airbnb for bookings may find that their visibility is limited, resulting in fewer bookings and lost revenue.

Increased competition

As Airbnb has grown in popularity, more and more property owners have joined the platform, resulting in increased competition. Property owners who rely solely on Airbnb for bookings may find themselves competing with other listings in their area, which can result in lower prices and reduced revenue.

In addition, Airbnb has introduced new features such as “Experiences” and “Adventures,” which allow travelers to book unique experiences in addition to accommodations. While these features can be a great way for property owners to generate additional revenue, they also increase competition and make it harder for property owners to stand out.

Risk of bad reviews

Reviews are an important part of Airbnb’s platform, and property owners who rely solely on Airbnb for bookings may find themselves at risk of receiving bad reviews. While good reviews can boost a property’s visibility and generate more bookings, bad reviews can have the opposite effect.

A single bad review can have a significant impact on a property’s ranking, resulting in fewer bookings and lost revenue. In addition, Airbnb’s strict cancellation policies can result in penalties for property owners if guests cancel their reservations due to bad reviews.

Mitigating the risks of relying solely on Airbnb and OTA'S for bookings.

While relying solely on Airbnb for bookings can be risky, there are steps that property owners can take to mitigate these risks.

Here are some additional steps that property owners can take to mitigate the risks of relying solely on Airbnb for bookings:

Build a strong brand and online presence (TRUST MARKETING )

Before customers will even think about ditching a reliable trusted OTA, they will need to know they can book direct with a company and brand they can trust, This is why thousands of STR Operators have invested in I-PRAC the global TRUST ACCREDITATION for short Term Rentals www.i-prac.com

Property owners can build a strong brand and online presence by creating a website and social media accounts for their properties. This can help them to reach a wider audience and generate more bookings. By having their own website, property owners can also set their own policies and rules, giving them more control over their business.

Invest in marketing and advertising

Property owners can invest in marketing and advertising to increase their visibility and reach a wider audience. They can advertise their properties on social media platforms such as Facebook and Instagram or use Google AdWords to target potential guests. By investing in marketing and advertising, property owners can increase their bookings and reduce their dependence on Airbnb.

Offer unique experiences and amenities

Property owners can differentiate themselves from their competition by offering unique experiences and amenities. They can offer guided tours, cooking classes, or other experiences that are tailored to their guests’ interests. They can also offer amenities such as bicycles, kayaks, or other equipment that guests can use during their stay.

Build relationships with guests

Property owners can build relationships with their guests by providing excellent customer service and going above and beyond to meet their needs. By building positive relationships with guests, property owners can generate more repeat business and positive reviews.

Monitor other platforms

While property owners should not rely solely on Airbnb for bookings, they should also be aware of what is happening on other platforms. They should monitor other platforms for trends and changes in policies and adjust their strategies accordingly.

Invest in accreditations and certifications to build trust

Validation of expertise and quality

Accreditations are typically awarded by independent organizations that have specific criteria for evaluating the expertise and quality of a business. By achieving an accreditation, a business is demonstrating that it meets or exceeds these criteria, which can be reassuring for potential customers. For example, if a property owner achieves an accreditation for sustainable tourism practices, it demonstrates that they have taken concrete steps to reduce their environmental impact and promote sustainability.

Assurance of compliance

Accreditations often require businesses to adhere to certain standards or regulations, which can provide assurance to customers that the business is compliant with important laws or regulations. For example, if a hotel achieves an accreditation for meeting fire safety regulations, customers can feel confident that the hotel has taken the necessary steps to ensure their safety.

Objective third-party evaluation

Accreditations are typically awarded by independent organizations that have no stake in the success of the business. As such, they provide an objective evaluation of the business's practices and performance. This can be particularly reassuring for potential customers who may be wary of biased or self-serving claims made by the business itself.

Competitive advantage

Achieving an accreditation can also provide a competitive advantage for a business. It can help to differentiate the business from its competitors, particularly if the accreditation is well-recognized or highly regarded. For example, if a restaurant achieves a Michelin star, it can help to set it apart from other restaurants in the area and attract customers who are seeking a high-quality dining experience.

Overall, investing in accreditations can help to build trust with potential customers by demonstrating expertise and quality, ensuring compliance with important regulations, providing objective third-party evaluation, and offering a competitive advantage. These factors can all contribute to a customer's perception of a business as trustworthy and reliable.

Conclusion

Putting all your eggs in one basket is a risky strategy because if something goes wrong with that one basket, you can lose everything. This is particularly true in business, where relying on a single source of income or a single customer can leave you vulnerable to a variety of risks. Here are some reasons why putting all your eggs in one basket is risky:

Dependence on a single source of income

If your business relies on a single source of income, such as a single customer or a single product, you are vulnerable to changes in that source of income. For example, if your business relies on a single customer for the majority of its revenue and that customer decides to take their business elsewhere, your business could be left with a significant revenue shortfall. Similarly, if your business relies on a single product and that product becomes obsolete or unpopular, your revenue could decline rapidly.

Vulnerability to external factors

If your business relies on a single source of income, it is also vulnerable to external factors that could impact that source of income. For example, if your business relies on a single supplier and that supplier experiences a disruption in their operations, your business could be left without the supplies it needs to operate. Similarly, if your business relies on a single distribution channel and that channel experiences a disruption, your business could struggle to reach its customers.

Lack of diversification

Putting all your eggs in one basket also means that you are not diversifying your business. Diversification can help to spread risk across multiple sources of income or products, reducing the impact of any one source of risk. For example, if you operate a restaurant and also offer catering services, you are less vulnerable to changes in the restaurant industry because you have another source of income.

Limited growth potential

Finally, putting all your eggs in one basket can limit your business's growth potential. If you are relying on a single source of income, you may not have the resources to invest in new products or services that could help your business to grow. Similarly, if you are relying on a single customer, you may not have the capacity to take on new customers and expand your business.

In conclusion, putting all your eggs in one basket is a risky strategy because it leaves your business vulnerable to a variety of risks, including dependence on a single source of income, vulnerability to external factors, lack of diversification, and limited growth potential. To mitigate these risks, it is important to diversify your business and seek out multiple sources of income and customers.