A recent Travel News poll revealed growing frustration among travel agents over pricing, with 82 of the 100 travel agents surveyed saying they had noticed a decline in beneficial preferred rates from hotels.
The findings point to growing pressure in the relationship between hotels and the travel trade, as properties increasingly prioritise dynamic pricing, direct bookings and OTA distribution strategies over traditional agent agreements.
As David van den Heever-Liebenberg, Travel Director and Co-Founder at Mr and Mr Jones Boutique Travel Management, put it, the sentiment on the ground is often "take it or leave it", leading many agents to wonder if hotel-trade allegiance has become a thing of the past.
“Even if agents book specific hotels frequently and directly, the hotels don’t offer an agent rate any more. If an agent finds it’s cheaper to book through an online website or OTA, than what is offered to them in their agreement with the hotel, they should just book it that way. I don’t think hotels care if our clients find cheaper bookings themselves because, either way, they are going to sell the room to the guest. There is no allegiance to the travel industry any more,” said Van den Heever-Liebenberg.
However, hospitality industry leaders suggest that what we are witnessing isn’t the death of the partnership, but the evolution of distribution dynamics, driven by digital transformation, rising operational costs, and total revenue mindsets.
Preferred rates become dynamic
“The hospitality sector is undergoing a significant distribution shift globally, driven by changing consumer booking behaviour, digital transformation, and increased pressure on hotel margins,” Brett Tungay, National Chairperson of FEDHASA, told Travel News. “While some of the current tension may be linked to post-pandemic recovery dynamics and strong demand in certain markets, there is also a broader structural evolution taking place in how hotels are managing their inventory and distribution partnerships.”
Rosemary Anderson, a FEDHASA Inland Board Member, explained that hotels were facing significantly rising input costs, from energy, staffing and food inflation to compliance and operating expenses, placing increasing pressure on already tight margins. As a result, she notes that many hoteliers are reassessing traditional preferential rate structures and legacy trade agreements.
Jaques Coetsee, BON Hotels’ Sales Director, said hotels were increasingly evaluating partnerships based on total revenue contribution rather than room-rate discounts alone.
“It’s no longer about who receives a discount, it’s about what delivers the right business, at the right time, at the right acquisition cost and with the highest total guest value. Preferred rates are no longer static but rather dynamic, revenue-managed strategies applied based on demand patterns, performance, and strategic contribution.”
The OTA factor
The growth of OTA channels was being driven by several factors, including their scale, technology integration, global reach, data-driven marketing capabilities, and consumer convenience, agreed the experts.
“However, the growth of OTAs was not a deliberate move by hotels to prioritise volume, it was a direct response to how demand has evolved and where that demand is now being captured digitally,” emphasised Coetsee.
Anderson expanded on this, explaining that the demand for digital distribution was not unique to South Africa but part of an international trend where hotels were increasingly focusing on direct bookings, dynamic pricing and digital distribution channels, while travellers themselves were becoming more price-conscious and comfortable booking directly online.
“The reality is that both travellers and hotels now have far greater ability to transact directly through digital platforms, loyalty programmes, mobile technology and online booking systems, often making the process financially more attractive for both parties by reducing intermediary costs,” said Anderson.
That said, Tungay admitted that there was recognition within the hospitality sector that over-reliance on OTAs carried risks, including higher commission costs and reduced direct customer relationships.
“OTAs and traditional travel agents serve different market segments and traveller needs,” he said. “Because of this, FEDHASA does not believe the traditional hotel-agent relationship is broken.”
The changing role of agents
While agency bookings previously drove brand loyalty, hotels are attempting to pursue these consumer relationships by themselves through direct booking channels, changing the value proposition and role of travel agents in the hospitality distribution chain.
“The challenge is that the value proposition on both sides is changing, and the industry needs to adapt collaboratively,” said Tungay. “That said, there remains substantial value in the consultative role that travel advisers provide, particularly for experiential travel, destination expertise, crisis management, corporate travel and personalised service.”
Coetsee highlighted that agents still offered unique value by giving access to markets that hotels did not naturally reach or fully capture and by opening up markets where hotels weren’t yet well established, bringing in demand that didn’t convert through direct channels.
Other factors that keep travel agents relevant include their ability to drive shoulder season bookings, encourage clients to extend the length of their stays and by packaging more complex and all-inclusive experiences that increase travellers’ total spend.
“Hotels are increasingly prioritising partners based on their nett contribution to total revenue performance, including RevPAR contribution after acquisition cost, guest segmentation quality, ancillary spend, and the ability to influence demand timing and seasonality,” said Coetsee.
“To stay relevant in this environment, travel agents will need to transition from rate intermediaries to demand architects. In this, agents are not becoming less relevant they are becoming more defined. Those who align will become more important to hotels and not less.”
