The first quarter of 2015 was rife with OTA consolidation. Now hoteliers are building strategies to drive business where they want it.

The recent slate of online-travel-agency consolidation has hoteliers speculating on what this means for negotiating commissions and the hotel-OTA relationship moving forward.

In January, Expedia completed its purchase of Travelocity. A month later the company agreed to acquire Orbitz Worldwide. Not to be outdone, fellow OTA giant The Priceline Group countered with its February acquisition of Rocketmiles. The Orbitz and Rocketmiles acquisitions continue to make their way through legal channels. Expedia executives said on the company’s first-quarter earnings call that they expect the Orbitz acquisition review to be completed by the end of the year.

But the bigger question is: What does all this consolidation mean for hoteliers?

Who has the upper hand now?

There’s no single clear-cut answer, sources said.

It all comes down to bargaining power, said Robert Cole, founder and CEO of RockCheetah.

“The Orbitz acquisition, along with the Travelocity and Wotif acquisitions, have all given Expedia more bargaining power,” he said. “Because the hotel industry (performance) is strong right now, that would normally give hoteliers more power … but (these deals) balance that out a bit now.”

Audrey Murante, senior director of global e-business development for Carlson Rezidor Hotel Group in the Americas, said Carlson’s OTA strategy hasn’t changed.

“We remain focused on reducing acquisition costs and improving intellectual protection,” she said via e-mail. “We look to gain control of where our rates and inventory are appearing while simultaneously increasing distribution reach for our hotels.”

Still, global brands continue to focus on driving as much business as possible to lower-cost brand.com sites.

“Our role is to assist our hotels in navigating the ever-changing OTA landscape as smoothly as possible but also to make sure we are taking the right steps to ensure booking directly through us is as easy and attractive as possible for the customer,” Murante said.

But what about independent hoteliers who don’t have the brand marketing dollars to help drive direct booking business?

Bashar Wali, principal and president of Provenance Hotels, said his company definitely feels the pinch of OTA commissions but still considers companies like Expedia “absolutely an integral part of our business.” Provenance has 11 independent hotels open in its portfolio.

“Yes, these consolidations make it harder to negotiate and they give (OTAs) a lot more power,” Wali said. “We see it when we do pay-per-click (advertising)—for every dollar I spend, they spend $10.”

Managing through consolidation

Wali said his biggest concern with OTA consolidation is commission rate, but he has strategies to deal with it.

“Commissions range anywhere from 30% down to mid-teens; it’s meaningful,” he said. “Now when average daily rate is healthy we pay less attention to commissions. They’re more of an issue in a down cycle.”

The key to managing commissions for his company is to nurture relationships with OTAs.

“We want to have good relationships with OTAs now, rather than discount them now when we don’t need them as much. All these conversations become more crucial when the down cycle comes,” Wali said.

Maxine Taylor, executive VP of asset management for The Chartres Lodging Group, said during April’s Hotel Equity & Lender Perspectives Conference that the best way to deal with additional players on the distribution field is by arming yourself with as much information as possible about your own business and costs.

“I don’t think there’s anything we can do to manage these (initiatives),” she said. “You have to understand them and understand the cost. These acquisitions have been incredibly strategic. Understanding those channels and how we’re going to manage them going forward gets complicated.”

Cole agreed that the best tactic is knowledge.

“It’s up to the hotelier to be smart about all of this,” he said. “Expedia is growing their capabilities (with these acquisitions) and their bookings will go up, their share will go up and they will be aggressive to negotiate the best deals on behalf of consumers and themselves. That’s their job, but that’s a problem for hotels. Hotels have to come up with a plan.”

That plan, Cole said, is to focus on the net cost of distribution. “Maybe you can negotiate a point or two lower (commission), but overall you have to figure out the cost versus the benefits. If the OTAs were totally evil, nobody would work with them.”

What about benefits?

OTA consolidation doesn’t have to spell doom and gloom for hoteliers, Provenance Hotels’ Wali said.

One possible benefit he predicts will be better technology; as large companies consolidate, they will be forced to innovate.

“Sometimes the biggest issues with OTAs are integration and two-way flow,” he said. “We may spend a lot of time thinking about how much they’re charging us, but we also should think about the ease of doing business with them, from technology to human resources. I think we’ll see that get better as the competition heats up.”