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OTAs gain from Bali hotel rate war

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Volume by any means necessary amid fierce competition

Bali’s substantial room supply is changing the way hotels regard their relationship with online travel agencies, TTG Asia reports. Many hotels say that online distribution channels are now a means to drive occupancy rather than yield, and that price cuts to secure more bookings are symptomatic of this trend.

Anton Adijaya, general manager of the Bali Rani, counted 10 new hotels opening on the same street as his hotel last year.

“Competition is really fierce,” he said. “The number of new hotels coming up in Bali has outstripped the increase in arrivals to the destination. OTAs were once used to increase yield [but] newcomers are all now using [this channel] to grab volume instead of growing yield.”

Illustrating OTAs’ effective market reach, Ismullah Lahsin, director of Sun Island Bali Hotels & Resorts, said an online promotion blast for the Sun Island Legian hotel on December 10 succeeded in snagging bookings for its opening five days later.

“The fact is, hotels with the lowest price will be placed at the top of the OTAs’ list. The challenge therefore is to maintain a volume-yield balance. For us, as long as our GOP is achieved, it is fine,” Lahsin said.

Guido Andriano, Santika Indonesia Hotels & Resorts’ general manager, corporate sales and marketing, blamed the price war in Bali on both the tough competition among hotels and OTAs’ persistent push for low rates to maintain their own market share in the online distribution arena.

This, he said, has left a bad taste in the mouth for traditional travel agencies, who are stuck with contracted room rates.

TTG Asia

[pictured: Sun Island Hotel Kuta]

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