GA MAY The direct booking battlefield MAIN
2 years ago
 

The fight for hotel bookings – direct vs online travel agencies

If I were to look at the world through the lens of Expedia and Booking.com, I would probably argue that my biggest competitors are not other OTAs or suppliers, but the hotels themselves.

NB: This is a guest comment by Mike Ford, co-founder and managing director at SiteMinder.

I love this industry. The hotel technology sector must be one of the most rewarding, fluid and interesting spaces to be a part of. At SiteMinder, we have a mantra in the office that that there is never a boring day in hospitality IT – and this certainly holds true!

Like many of you, I’ve been watching with interest the commentary on the tug-o-war between hotels and OTAs for a bigger share of online bookings, particularly following recent acquisitions by Expedia and Priceline Group on behalf of  booking.com.

We are all witnesses to the continual talk of the powerful duopoly that dominates the online hotel booking space, and the concerns that hotels have about its power.

These concerns have even been covered in mainstream press, especially within Europe where issues such as rate parity remain a point of contention and are still playing out.

I have also followed the debate between hotels on social media about how they can maintain a balanced distribution and online sales environment – ie one where they are not powerless in their dealings with the OTAs and can find a position where they can pick up a healthy share of direct bookings in addition to OTA-generated bookings.

And in the past few weeks, I was made aware of a further, albeit-seemingly-small development in the tussle between OTAs and hotels for the guest relationship – one I think is particularly notable and highlights how easily the hotel-guest relationship can be impacted.

The big OTAs’ biggest competition

What caught my attention was an announcement by Booking.com to its hotel customers that it would stop providing the hotel with the guest’s email address as part of the booking confirmation process. Booking.com cited security as the key reason for the change.

However, last week’s change means guest email addresses are  invisible to hotel customers, which hampers  the hotel’s ability to market directly to the guest via email.

Expedia, and other booking channels SiteMinder works with, continue to send the hotel the guest email address as part of the reservations process, but could they follow suit?

While it may seem a small and innocuous change in information flow, changes like this effect the power balance between OTAs and hotels and show how easily that balance can be upset.

Of course, hotels could implement strict front desk processes to try and manually capture the guest email address upon arrival, but many hotels may not think to do this or be motivated to take on the extra overhead.

There are many exciting new marketing and sales cloud platforms available to hoteliers to engage returning guests online and offer personalised experiences. But many depend on the quality of guest data within the hotel system to be effective.

More choice, more winners

Looking more generally at direct versus OTA, , a number of factors are impacting a hotel’s ability to compete directly with OTAs.  Moves by “meta” sites to allow hoteliers to take direct bookings, alongside the OTAs, are notable in this context.

We are seeing options in Google and TripAdvisor, among others, which are potential avenues for independent hoteliers to compete for business with OTAs.

These options are not yet fully developed and rolled out, but there is sufficient motivation to establish a direct relationship with hoteliers.

This would act as  a hedge against Expedia and Booking.com’s ability to cut other intermediaries out of the supply chain through their investment in the mobile app channel.

Booking.com’s move to becoming a hotel technology provider could be seen as a result of the potential impact of direct hotel bookings.

Given the revenue that Booking.com generates from its core business, it’s arguable whether being a hotel tech provider will move the needle a huge amount, but it does provide a hedge as the options available to hotels to sell direct are starting to open up through new cloud technologies, as well as the aforementioned direct sales opportunities such as TripAdvisor.

But it also gives Booking.com direct access to the source system data of the hotel and potentially more influence over rates than its competitors.

Recent coverage on EU rate parity settlements also sheds light on another signal that Booking.com may view the capability of hotels to attract direct bookings as a key threat.

Reports indicate that rate parity requirements will be relaxed in terms of allowing hotels to list lower rates on other OTAs but still require that Booking.com has access to the same rates as on the hotel’s own website.

Assuming these reports are accurate, then they would indicate that Booking.com is not concerned predominantly with other OTAs but, rather, the hotel’s ability to market better rates themselves in order to attract direct bookings.

On the other side of the equation, in hotel land, Accor’s recent acquisition of Fast Booking could be construed as a move to develop their own online sales and marketing technology capability in the quest to diversify its reliance on OTAs, now and into the future.

Hotels are increasingly looking at their cost of distribution and looking for ways to leverage available and developing technologies to maximise direct sales.

OTA commission costs of between 15% and 30% are a good reason for savvy hotels to invest in technologies that drive guests to book direct.

The good news is that commission-free booking engines and other website technologies are today available to hoteliers to allow them to drive down the cost of acquisition and, consequently, these preserved funds can be used to spend more on sales and marketing to attract guests directly.

OTAs work hard and invest big in order to get hotels bookings they may not otherwise pick up. OTAs are a vital part of giving consumers better choice and a more convenient booking experiences.

As the landscape continues to evolve a well-balanced distribution and sales strategy which includes both directly-generated as well as OTA-generated bookings is key.

As a provider of a cloud platform that offer hotels not only the ability to manage their offerings effectively on OTAs but also to sell and market direct SiteMinder continues to be fascinated by the twists and turns the space is taking and we remain committed to help hotels navigate this complex environment

Never a boring day!

NB: This is a guest comment by Mike Ford, co-founder and managing director at SiteMinder.

NB2: Fight image by Shutterstock

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Special Nodes

About the Writer :: Special Nodes

Special Nodes is the byline under which Tnooz publishes articles by guest authors from around the industry.

 

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  1. leonardo

    I guess that the latest restrictions that european authorities are imposing to OTA’s are shaking this immense market’s rules. Priceline has already felt under the feet the upcoming earthquake so they needed a new strategy. Hiding guest’s contact info has shown how fragile they are. Hotels , on their way, have understood that technically they can cancel each reservation proposing better deals . The impact for OTA’s will be big, airbnb model seems to be lighter and stronger than booking.com model. Hoteliers have their chance, win or rest…”in commission rates ” !

     
  2. Craig Dennington

    With Booking.com being restricted by the EU (especially) on Rate Parity, I think it was only time before they started to adopt similar stratetgies to Paypal and eBay for example on not passing on contact information directly between buyer and seller. Several OTA’s have the feeling that since the buyer has used their booking portal, that they “own” the guest data…and not the hotel where the guest stays.

    Further onto the limiting of email info that the hotel is sent, some OTA’s also will hold onto availability if a guest makes a booking and then cancels the booking later. In other words, the hotel PMS sends the availability up to the channel (perhaps via SiteMinder) and the guest books a room. This reduces the inventory at the hotel by 1 room. The guest then cancels the booking via the same OTA channel, and the hotel gets the room back to sell. The hotel sells the room directly in the meantime. HOWEVER, in some cases the OTA will keep the cancelled inventory – regardless of the availability send from the PMS. Its a case of “you let us sell that room once, we are going to sell it again if it cancels”. Has caught out several of our clients. So much so, that many of our hotel clients artificially limit the availability send to the channel, to prevent the hotel overbooking. And this might be the next battle ground – some OTA’s demand last room availability.

     
  3. A Lloyd

    The latest move by booking.com has 2 important issues attached to it:

    1. Hotels rely on creating an experience and the experience starts from the moment the guest arrives on a website and continues on until they check out. A big part of this experience is building relationship with guests even before they arrive. Key elements such as places to visit, activities, etc. are offered as part of the confirmation process. More importantly, “Directions” to the hotel is imperative since one of the biggest gripes about hotels is “how difficult is was to find them”. Additionally, information such as allergies, dietary requirements, etc. are key in providing the best experience for guests, which Booking.com move has created a serious barrier to.
    2. The second issue is the legal fig-leaf OTA’s have been hiding under, specifically Booking.com. In the event of any claims or complaints they immediately pull out the “Get out of Jail” card claiming that “We are just an intermediary so are not responsible for XYZ”. Well, I don’t think this will wash any longer as courts will see through this nonsense now. If you are simply an intermediary, then why are you blocking direct communications between the user and the supplier? This means, Booking.com is no longer an intermediary but an Agent providing communication channel as well as enabling tool for bookings. Ergo, you are now part of the supply contract and no longer an intermediary.

    Booking.com (or booking.con as it is known within the industry) has many questionable practices including their failure to validate operating licences, safety compliance, and hygiene levels in the outlets they offer. Their claim until now has been “We are an Intermediary, so are not responsible”. This now needs to be tested in courts. If I were Booking.com, I would back off this practice and do it quickly.

     
    • Valentin Dombrovsky

      That’s great that you mentioned the fact that hotel tries to build relations with the customer before he or she arrives into the hotel offering some ancillaries etc. As far as I understand, Booking.com is on the way of building its own ancillary platform with some priviliges for its loyal customers. And it means that it competes with the hotels in this ancillary space. So that might be the reason for that move from Booking.com.

       
  4. Thereasa Roy

    Great article Mike. The consolidation in the market place makes more and more sense especially when you talk about a hotels own booking engine, the true competitor to any OTA:

    “The good news is that commission-free booking engines and other website technologies are today available to hoteliers to allow them to drive down the cost of acquisition and, consequently, these preserved funds can be used to spend more on sales and marketing to attract guests directly.”

    I wonder who will start a marketing campaign direct to consumers talking about the benefits of booking directly on a hotel’s website: better communication with your hotel directly, offers, special requests, etc.

     
  5. Rachel Beck

    OTAs not providing email addresses further restricts hotels’ ability to derive value from those reservations. It’s hard to imagine that other OTAs won’t follow suit if they can find a justification for it. Hospitality tech is an interesting space indeed!

     
  6. John Kearney

    Very interesting article. Hotels will gradually compete more and more with OTAs in the eternal fight for direct business. However, with booking.com now not sending the clients email addresses, Hotels can get smarter by automatically receiving all clients emails whether staying at the hotel or not via their wifi systems…great for the marketing database!

     
  7. Madigan Pratt

    Good article Mike. Beyond the technology though hotels that capture detailed guest contact information in their PMS are sitting on the proverbial gold mine. To ensure it produces the highest grade ore hoteliers need to follow direct marketing and customer relationship marketing’s best practices.

    “Blasting” generic sales message emails is out. Using the database to build strong, personal relationships that move individual guests along the customer lifecycle from awareness to Brand Advocate is in.

    Luckily there are several, affordable, hotel-specific CRM software providers like NAVIS that can help hoteliers make the most of their gold mine. It is critical for hotels that want to maximize their own direct bookings

     
  8. Austin

    Nobody (TripAdvisor, HomeAway, Booking.com) wants to let hotels/vacation rental owners have guest’s contact info… But Booking is the worst here–the others only make you jump through hoops! We’re already moving to capture emails by an alternative route, but it’s a pain.

     
 
 

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