Some pretty major hotel chains are heading into battle with the very people that helped them boost their business Ð Online Travel Agents. According to Wall Street Journal’s Chris Kirkham, Marriott International, Hilton Worldwide, and InterContinental Hotels Group are trying some new marketing tactics, namely ones that steer travellers away from OTAs like Expedia, Priceline and more.
These booking sites were once applauded for getting more hotel rooms booked, but can also take commissions of up to 30 per cent for each reservation. Per WSJ, hotel groups are seeing OTAs less as friends, and more as foes, acting as virtual tolls on a customer’s path to purchase.
Mr Kirkham reported many of these large hotel brands are now inviting travellers to book direct, with incentives like cheaper nightly rates and a bunch of other perks as rewards for skipping the OTAs. But it’s no walk in the park, WSJ claims, with travel research group Phocuswright showing OTAs were responsible for over one billion Aussie dollars’ worth of global hotel bookings last year.
And that’s not all the hotels are coming up against, with 52 per cent of US travellers aged 18-34 preferring to book hotels through OTAs then direct, compared to 37 per cent aged 35+, according to travel data firm Adara.
Younger travellers are also less likely to sign up to those plush hotel reward programs, which as WSJ pointed out raises some big issues with how much brand loyalty actually matters to travellers who are more price-focused.
In fact, OTAs are winning more customers due to the fact that customers can book a whole range of things, like car rental, at the same time as securing their hotel stay.
ÒIt’s always been a thorn in our side,Ó said Mari Ricketts, President and Chief Operating Officer of McNeill Hotels, which owns over 12 Hilton and Marriott-affiliated hotels, told WSJ.
ÒThere had been this perception that to get the best price, you book through a different channel than going direct,Ó said Chris Silcock, Hilton’s Executive VP and Chief Commercial Officer. ÒThat’s never actually been the case.Ó
It’s been a tumultuous relationship between hotels and OTAs, with industry greats like Gil McLachlan Ð who saw the rise of some of the first travel search websites Ð still not sold on their business model.
Per WSJ, the 10 to 30 per cent commissions that OTAs charge per night mark a hefty chunk of revenue for hotel owners who already pay fees to major brands such as Hilton and Marriott. According to research out of hotel industry consultant, Kalibri Labs, commissions snatched up by OTAs cost around US$4.5 billion for the year to June 2016.
As a result, it’ll prove a real stretch to break free of the grasps of OTAs, given hotel bookings represent the biggest growth sector for them. According to _Phocuswright, last year the value of hotel bookings through OTAs overtook direct hotel online bookings for the first time since 1998.
And even though one travel industry bigwig claimed agents should encourage clients to Òclick aroundÓ, many hotel groups are striking back with campaigns that urge travellers to ÒStop Clicking AroundÓ, which is Hilton’s latest tactic.
They’re also extending loyalty rewards to casual travellers as well as frequent visitors, and Hilton even started letting customers use loyalty points for Amazon purchases, while Choice Hotels did the same but with Starbucks and petrol.
According to WSJ, Marriott’s Global Sales Officer, Brian King, said the goal is to convert casual customers into repeat guests. But OTA bosses say their platforms are still bettering hotel revenue as they give exposure to lesser known hotel brands.
ÒFree is best,” said Glenn Fogel, Chief Executive of Priceline Group told WSJ.Ê”Everyone would like people to come direct to their business. That’s not the way the world works, though.Ó
