How To Quickly Assess The Value Of An OTA/Listing Site
In the short-term rental industry, new listing sites are constantly popping up. The sales team, who gets paid on commission and likely doesn't care about your ROI, is incentivized to get you on the platform with little regard to your profits or overall business health.
All of us have been on the convention floor of a conference and been told something like this:
We concentrate on Search Engine Marketing and have a dedicated team completing this work at a high level. Our brand promotes our website for the most competitive terms in this industry.
The money our customers invest in our platform is wisely reinvested in marketing tools and on SEO to procure traffic.
OTA Salesperson
Now, you may be thinking "That sounds really good! Where do I sign up?" Hang on a second. There is a quick test we can do to make sure this is a good idea.
2. Add the website you are considering working with (i.e. brandname.com) and hit search.
3. After hitting search, you are now on the domain overview page. At the very top of this page, you can see the total traffic (not per listing, total number of visitors for the whole website) this OTA/listing site gets per month.
4. At this point, you can click the ‘organic keywords’ tab and see the type of keywords the site ranks for. However, with this site, there isn’t a point. This traffic is so low anything they rank for is low-volume and doesn’t matter.
5. The next step is to run a very simple analysis to determine the potential bookings this listing site might send us.
6. Run the math - does it make sense?
For example, this listing site has math that looks like this:
(204/1000) * 01 = .002 Bookings Annually
The sample site we evaluated has approximately 1,000 properties and only 199 total website visitors per month with an assumed conversion rate of 1%. At this rate, you will receive one booking every five-hundred months.
7. Expand the math to analyze cost and number of bookings at the aggregate level for your company:
(Number of Properties)(Cost Per Listing) = Total Annual Cost
(Annual Bookings)(Number of Listings) = Total Annual Bookings
For example, if you have a cost per listing of $100 and 50 listings the math would look like this:
(50)(100) = $5,000 annual cost
(.002)(50) = .1 bookings annually
Now, we can divide the annual cost by the annual bookings to determine the cost per booking:
$5,000 annual cost / total annual bookings 0.1 = $50,000 cost per booking
Well, hopefully, this sheds some light on how to assess the cost per booking of new OTA relationships. Don't count on a salesperson being honest... Instead, depend on a data-based process.
