erc

Hotel Chains step up their battle with Online Travel Agencies

Discussion created by erc on May 31, 2017
Latest reply on Jun 1, 2017 by erc

A good article yesterday in the Wall St. Journal about the major chains continuing in their strategy to reduce their relatively expensive OTA bookings (10-30% commissions, which shows the margins the chains have to play with when negotiating prices).  What began as a support system for building revenue is now being viewed as a competitor eating into margins.
Unfortunately, the article appears to only be available to subscribers - so here are some highlights;

https://www.wsj.com/articles/for-hotels-theres-no-room-left-for-online-travel-agencies-1495974698

Online travel agencies booked $99 Billion in hotels last year and hotel bookings are the biggest source of growth for the OTAs and as we all know from the Trivago folks, Captain Obvious and others, spend aggressively on marketing (over $8.5 Billion). Last year was the first year that OTA bookings exceeded direct hotel online bookings for United States properties ($31.4 Billion).

"
A survey conducted by travel-data firm Adara Inc. showed that 52% of U.S. travelers between the ages of 18 and 34 prefer booking hotels through online search engines as opposed to brand websites, compared with 37% age 35 and older. Younger travelers are also less likely to participate in hotel-rewards programs, the survey found, raising questions about how much brand loyalty matters to price-sensitive customers. Many prefer third-party sites because they show an array of options and allow customers to package airfare or car rentals".

"
Brands have been tweaking their loyalty programs to extend immediate benefits to casual travelers, not just frequent business travelers".

and the quote from the article that caught my attention;
"
Brian King, global sales officer at Marriott International, said the goal is to convert casual customers into loyal guests who “stay the most, and they pay the most.”

Certainly an understandable, worthwhile goal, (not necessarily so publicly stated) as well as a signal to all travelers to be just as vigilant in seeking deals and watch for incremental costs (amenity fees, coffee charges, and other aggressively creative non-rate increases).

I view this as one more sign of the value of the SPG purchase to Marriott and would not be surprised if over time, we started to see the sharing of SPG pricing w/o the sharing of SPG elite benefit culture. We'll see. As always, be alert, the world needs more lerts.

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