FLAUNTING THEIR ATTRIBUTES
For hotels, promising the best possible guest experience starts at the time of booking, before a guest even steps past their doors.
IHG and Marriott are employing attribute-based guest reservations systems that give users some control over the types of attributes they’d like in their rooms, such as the number of beds or bed types; balconies; distance from the elevator, etc.
Choosing certain attributes will generate searches that only show rooms that have that unique combination of features a guest wants so they can start customising their stay from the very beginning.
OTAs, too, will receive an initial set of very basic attributes that categorise the room inventories that they advertise on their platforms. But hotel brands like Marriott and IHG will retain control of the thousands of possible attributes and combinations that a guest can have, giving guests even more incentive to book direct with the hotel brand than with an OTA.
The OTAs can’t sell every attribute or every combination of attributes, but the hotel can. Once consumers get used to this type of customisation, they may be more likely to book direct than with OTAs.
This tactic, however, has limits for smaller hotel chains or independents who don’t have the resources to overhaul their guest reservations systems to offer this customisable booking experience.
USING OTAS TO THEIR ADVANTAGE
For independents – and even for the world’s largest hotel company – sometimes there’s a benefit in partnering with OTAs or at least leveraging their tech and marketing budgets to their advantage.
While the commission fees may be steeper, the net revenue made from bookings – without having to spend additional money on marketing and soft brand fees – could potentially be higher than if that independent joined a soft brand or flagged itself with a brand.
In recent years, OTAs like Booking Holdings and Expedia have increasingly offered more business tools and services for independent hotels, including but not limited to marketing. One example of this is Expedia Partner Central, which launched in 2016.
In some ways, both OTAs and major hotel conglomerates like Marriott and its peers are not just fighting for bookings from consumers, they’re fighting to win over independent hotel owners, too.
Last autumn, Marriott announced an exclusive partnership with Expedia, naming the OTA as its preferred global distributor of Marriott’s wholesale and promotional room rates, curtailing the power of another third-party distribution channel – bedbanks, such as HotelBeds, WebBeds and MG Bedbank. Since October, these bedbanks have had to work directly with Expedia Partner Solutions in order to have access to its more than 7,000 hotels worldwide.
TECH PLATFORMS FLEX THEIR MUSCLES
Direct booking war or not, the truth is that hotels and OTAs fundamentally rely on one another in a number of ways.
A guest may book her room on an OTA, but once she checks into her hotel, it’s up to the hotel to give her the best hospitality – and hopefully convince her that for her next stay, she should book direct.
Modus Hotels CEO Aaron Katz told me, “If we pay 20 percent [in an OTA commission fee] to get a customer, that’s not an expensive way to get a loyal member into your organisation. You get that opportunity to turn that person into a loyal member of your organisation.”
And as vigilant as hotels are today about curbing disruption from OTAs, both hotels and OTAs have another disruptor they need to account for: tech platforms like Google and Amazon or even Facebook. We have already seen how Expedia has been compelled to use higher-cost Google Hotels rather than lower-cost organic channels such as Google Search – and caused their market share to fall.
Some independent hotels are advertising their rooms on Airbnb, because Airbnb’s commission structure can be more favourable than traditional OTAs in most instances. The increased competition is, in some ways, benefiting smaller, independent hoteliers. And it’s also impacting how the larger hotel companies strategize, too.
However, it should be noted, said Robert Cole, CEO of hospitality and travel technology consulting firm RockCheetah to GUEST magazine, “Google is not an OTA. It is simply the platform that connects travellers to the travel sellers.” Google, he said, benefits because it’s just the platform.
“Google is compensated for fulfilling the role of advertising platform, not as a travel seller or operator. This is a very high margin business, which appeals to Google shareholders – much more than owning/managing hotels or running a travel agency, online or otherwise.”
In other words, Google may not be as much of a direct threat to hotels as the online travel agencies such as Booking and Expedia are; it may, in fact, be hurting the OTAs much more than the hotels. But the work that these tech platforms like Google are doing are having an impact on how larger hotel companies strategize for the future.
At the NYU International Hospitality Industry Investment Conference in 2018, Marriott CEO Sorenson said, “I think we are in an absolute war for who owns the customer. It’s a long-term war, and ‘long term’ in digital space might be a few years. I think less about Airbnb than I do about Google and Facebook and all these other digital empires who own all of us.
What Amazon is doing with these digital assistants is reinventing voice search. They are all getting into having a profile for each and every one of our customers, so how do we use that to make sure we are monetising that relationship as much as we can? This is a battle we are going to be fighting for some time,” and he added, “Each of us is making our bets in this space.”