According to an article in today’s Wall Street Journal the total pay package for Dara Khosrowshahi, the CEO for Expedia is $93.6 million. This is nearly ten times his compensation just two years ago and makes him the highest paid CEO in the S&P 500.
Granted much of the compensation is due to stock options tied to Expedia’s stock price, but it still adds up to an astronomical sum.
The bottom line is Expedia is making tremendous profits. In fact the stock price jumped 8% last Friday when last quarter’s better-than-expected profits were announced.
So now that the online travel behemoth seems to be on a profit binge here are several questions for hoteliers:
- How happy are you paying 20 – 25% commissions to the OTAs?
- Are you planning on increasing the commissions paid to Expedia by participating in its Accelerator program?
- What CRM programs are you using to increase direct bookings?
- How effective have those CRM programs been?
Nearly a year ago Hospitality Marketing Blog published “The New Hotel Mantra – “Drive Profitable Direct Bookings” which outlines six strategies hotels can use to drive more profitable direct bookings.
A good place to start is to determine just how much revenue your hotel is leaking to the OTAs. To this end Hospitality Marketing Blog published an OTA Cost Calculater back in January 2011. You can use it to determine just how much revenue your hotel is paying the OTAs.
You may be surprised at just how much revenue the OTAs are costing your hotel. Research from Phocuswright and h2c indicates that 58% of all online revenue for independent US hotels comes from OTAs. That shoots up to 74% for independent European hotels.
Is it time your hotel to break its addiction to OTAs?
What do you think?