It is a fascinating time to be part of an industry that is changing day by day. Over the last few years, it was about the explosion onto the scene of Airbnb, Hoteltonight and meta search ads by Tripadvisor and Google, to today where Expedia buys HomeAway and booking.com integrates with TripAdvisor’s new platform – Instant booking. To add further confusion, over the last 12 months, some countries in Europe started to state illegal, the rate parity clause that has helped the likes of booking.com and Expedia to enjoy the strength they have today.
Exciting times ahead but when all the dust has settled, where does it leave the independent hotelier? What is the right strategy to take over the next 12-18 months with the major brands?
According to this recent article by tnooz.com, they are the number one visited travel site by far in the US & UK. Their recent evolution from just being a review site to OTA has been taking place over the last few years. Tripadvisor clearly has power in our industry and the take-up of their instant booking in the US has been brisk by hotels. Connecting to booking.com made sense, as they will getting the inventory of hotels from the rest of the world overnight, which so far have not had access to the instant booking product. We will also see over the next few months the other major hotel chains joining, following in the footsteps of Marriott. At a recent conference in Asia, Tripadvisor was already signalling that they will be pushing forward quickly to implement this agreement with English speaking countries the first to be connected. So what should you be doing to take advantage of this? We will have to see how booking.com processes reservations from Tripadvisor. One would expect that there will be an increase in commission to compensate for the % they are paying Tripadvisor. If that is the case and you start to see bookings come from this particular channel, then it would make sense to connect directly with Tripadvisor, as most likely, the cost of sale will be less. Also, remove the Tripadvisor widgets from your website, do not give them free traffic, which could lead to a potential loss of direct reservations. There are other ways to promote your reviews whilst keeping your users on your brand website.
They have been recently working on their new offering that will likely be called “Book on Google.” At the moment, this is only available in the US and again, hotels have been signing on steadily as well as the recent deal to connect with Sabre which provides them access to 20,000 properties. Hotels in Europe can still connect manually or through solutions such as Siteminder for their Meta Ads “Google HPA” however, this has not proved very popular with hotels, like Tripconnect wasn´t for Tripadvisor, hence the change. We should not underestimate Google. Should they wish to turn on the taps, they can. They are totally dominant on Mobile, 70% of Europeans use Android, most smartphone users use Google Maps and Google search is still frequently used in hotel searches. You should be attentive to the industry news, Will Expedia integrate with Google, now that Priceline is with Tripadvisor? Which chain will be the first to connect? Once book on Google gains traction, as with instant booking by Tripadvisor, your hotel should get connected.
They have been testing their express booking product currently testing in the German market. Trivago´s owners – Expedia, have been very insistent on not going down the same path as Tripadvisor & Google and will maintain the cost per click meta ad model. The cost of sale usually using this method is less for a hotel, although as their main rivals found out, not exactly the most popular with independent hotels who have to compete with OTA´s and who have limited marketing budgets. The upside for Hotels though is that the transaction is done on your brand website and with the European market entering the post rate parity era, should present some interesting pricing opportunities for hotels who have the budget to invest in Meta ads.
With the majority of hotels according to numerous surveys enjoying over 70% dependency for all your online reservations from these two giants, this is not going to change overnight. With Expedia´s recent acquisitions, they now own 75% share of the online travel market in the US. What we are most likely to see over the next couple of years is the new players in the OTA space gaining traction which could force Expedia & Priceline to review the % of commission they offer your property. Hotel revenue managers will also start to take the cost of sale into consideration when setting prices, especially in Europe where rate parity is no longer obligatory in some countries.
The last minute booking market is becoming enormous and the competition is getting fiercer with Priceline recently launching the Booking Now app. Proving to be very popular is Geolocation offers with some city hotels seeing big increases in last minute bookings and the commission rates are roughly in line with other OTA´s These are great apps for travellers who need to organise at the last minute, so if you are based in a city centre, you should make sure that your hotel is visible. These guests are also great targets in converting to direct bookers so if they have a great experience, the next time they travel to your city they’ll more likely book directly with you.
Still not quite on the hotel scene but a big hit with Millennials. Airbnb is also starting to actively target business users. Some hotels in the US are already offering their rooms on this portal and with a 3% commission level, offers an interesting cost effective option for hoteliers. The three big questions still to be answered though will be 1)Will Airbnb start to actively recruit hotels? 2)Will any major hotel chain sign on? 2)Will any OTA follow their strategy of charging both the client and the hotel commission? Early days but watch this space……
We are in an evolving market and it is important as an hotelier to understand these changes going on within our industry, but never lose site of the following:- All the above companies provide your property with added visibility to drive guests to your hotel. Your job is then to convert these guests that come through your door to book next time with you directly. Incentivize them, take advantage of technology to capture data, make sure your web is intuitive and shows off your property with great photos and videos, and finally do not over complicate the booking process with an engine that is great for your revenue manager but your clients find long winded and slow. Read this recent article on how to improve your guest experience online.