Hey there, founder of Virtue Cycle Kaelin here.

One of the most common discussions in the Tours & Activities industry centers around OTAs.

OTAs are here to stay, but your relationship with them can always change.

In this article, I’ll be outlining 3 points that’ll explain exactly how you should think about them in a way that actually benefits your business.

1) These marketplaces are here to stay…

To be completely honest, as someone who has worked across many different industries… their model is pretty standard.

https://www.houzz.com/ for contractors.

Fiverr and Upwork for marketing services.

And of course, Amazon, for e-commerce.

They are here to stay simply because they are a better overall customer experience.

Savvy customers will almost always end up preferring the customer experience of a marketplace because of the ease of seeing ALL of their options in one place. It’s the easiest and simplest way of doing due diligence.

And the truth is their percentage model is actually reasonable. 25% for customer acquisition is extremely reasonable! 25% for marketing is pretty standard.

The 25% isn’t the real downside…

The reality is you won’t see any company, across any industry, scale in a predictable way with a marketplace as their primarily selling mechanism.

In e-commerce, the companies that see the most success ARE never the ones reliant upon Amazon. (The keyword is RELIANT… remember this. They still gladly sell on Amazon.)

E-commerce is by far the most competitive industry out there… because of the low barrier to entry coupled with the fact that anyone anywhere can do it.

As a result, there is no shortage of case studies, and ALL of them blew up because they focused on growing their own brands through paid and organic socials. In fact basically, every single e-commerce company scales entirely through paid ads and organic social.

Cuts, Curology, Nood, Disco, True Classic, Dr. Squatch, Magic Spoon… the list goes on.

Really what makes e-commerce companies more successful than travel companies is this singular belief:

E-commerce companies expect to pay customer acquisition costs SO they budget it accordingly.

They are even okay with LOSING money to acquire a customer… because they know the customer’s LTV is worth it in the long run.

The odd expectation in the travel industry that customer acquisition should cost 0% is completely unrealistic, and it’s actually a belief that is stopping you from scaling.

E-commerce companies scale by relying on a 3x return on ad spend (ROAS) minimum on their Facebook and TikTok ads.

A 3:1 return on ad spend is a….

25% customer acquisition cost.

Exactly what your OTA's are taking from you.

This should tell you something.

What’s funny is you’ll see all of these companies on Amazon as well…

Sound familiar? (And really, would you rather compete with Viator or Amazon?)

Simply put, you need to reframe how you view your OTAs to how e-commerce companies view Amazon:

Amazon is a partner and competitor that provides steady supplementary income and marketing without you lifting a finger. It’s supplementary income that is a “nice to have.”

In the travel world, they can help you out with filling up spots, last minute or otherwise.

The truth is, we at Virtue Cycle are never going to tell you to ditch OTAs.

The same way we’d never tell these e-commerce companies to ditch Amazon.

But, for some reason, travel companies routinely refuse to spend money on paid social or organic marketing & still find ways to be angry at their OTAs.

You simply can’t have it both ways. The truth is… a profitable business spends money to make money.

You’ll either pay it in the front end or the back end, it’s your choice.

After all. the largest brands in the world still gladly pay millions for 30-second Super Bowl slots. And they also gladly pay distributors and marketplaces who sell for them.

2) The real value you’re missing out on when using an OTA isn’t the 25%…

In any marketplace, the aggregators end up as the only winners.

And the 25% is more of a red herring than anything else.

There are far more concerning reasons to stop relying on OTAs. And far more subtle.

Here’s what it is…

The main reason aggregator sites have taken over the industry is because they provide the audience.

This means they can and will take half your profit margins.

And, by removing your branding and identity and placing you alongside all of your competitors as “equals”, the only outcome is a commoditized marketplace.

It’s a race to the bottom, where the cheapest service wins, leaving you with weaker and weaker margins as time goes by.

To make matters worse, these sites attract price shoppers… who end up being the clients who complain more, tip less, and leave poor reviews more often.

Delivering the best service you can is actually completely dependent on your clients.

If you can’t charge higher prices with higher margins, you can’t deliver the best amenities, guides, and accommodations…

It means that relying on OTA’s is a vicious cycle towards business death.

OTAs are taking 25% AND forcing the marketplace to survive on lower and lower margins…

3) Clients need to want YOUR SERVICE or LOCATION… NOT just any service or location that fulfills a similar niche.

For a company in the marketing sphere (we’re not an agency!), there’s a reason we don’t market our services on aggregators like Fiverr or Upwork.

Simply put, we don’t work AND don’t want to work with clients who want to pay rock-bottom prices for inferior and second-class services. And we don’t even want to compete with the people willing to sell their services for that price point.

We market ourselves & build an audience of our IDEAL clients who want the best service.

And that’s exactly what we help our clients do.

The only way you’re going to have your ideal clients coming inbound to you, the clients willing to pay premium prices for premium services… is by building a brand.

More importantly, it’s about building an audience.

Your clients need to want YOU, not just anyone.

And in this day and age, the only way to do that reliably is with…

CONTENT & GUARANTEED ATTENTION.

If you’d like to learn more about how we accomplish this for our clients, click the button below.