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Beyond channel mix management: Building within online travel agencies (OTA) metrics and strategies

Author

Listed:
  • Cathy A. Enz

    (Cornell University)

  • Elizabeth C. James

    (Travel Tripper)

Abstract

This article uses a simple scenario in the hotel industry to illustrate how the mix of online travel agencies (OTAs) based on a merchant (net) versus a retail (gross) pricing model will impact and distort the reporting of traditional top-line performance metrics such as gross rooms revenue and average daily rate, along with the costs of commissions in the profit and loss statement. We show how overstating and understating may result from failing to fully account for the pricing model. To assure that operators and senior decision makers fully understand the revenues and costs within the OTA channel, we advise augmenting aggregate channel contribution with additional statistical analysis. In particular, we encourage practitioners to “gross up” their merchant top-line sales and commission costs when making across channel analyses, and further to map within channel performance by OTA pricing model.

Suggested Citation

  • Cathy A. Enz & Elizabeth C. James, 2017. "Beyond channel mix management: Building within online travel agencies (OTA) metrics and strategies," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(2), pages 109-114, April.
    • Handle: RePEc:pal:jorapm:v:16:y:2017:i:2:d:10.1057_s41272-016-0033-5
    DOI: 10.1057/s41272-016-0033-5
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    References listed on IDEAS

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    1. Sheryl E Kimes, 2016. "The evolution of hotel revenue management," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 15(3), pages 247-251, July.
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    Cited by:

    1. Xiangping Wang & Ivan Kai Wai Lai & Huajun Tang & Chuan Pang, 2022. "Coordination Analysis of Sustainable Dual-Channel Tourism Supply Chain with the Consideration of the Effect of Service Quality," Sustainability, MDPI, vol. 14(11), pages 1-24, May.

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