Over the past few months, we have started to see a shift in sentiment and resources from the major hotel chains to encourage their clients to book directly. Loyalty programs that were once afterthoughts, and in some cases did not have any meaningful benefits to its members, are starting to be restructured to encourage and help guests who chose to book from the brand website. Over the past year, we have begun seeing compelling new ads from the chains actively seeking this, when once they were slightly cautious of going up against the all powerful Priceline and Expedia OTAs. Now the former CEO of Priceline recently came out with warnings for the major chains who are focusing on getting their guests to book directly, and clearly a nerve has been touched.
Changing times ahead
Hotel chains are focusing on direct bookings is due to a variety of reasons.
- Lower dependency on OTAs
- Competition by OTAs on loyalty programs
- Millennials – with up to 64 percent stating that they sometimes book directly on supplier sites (Source: Phocuswright)
- More and more business travelers are booking direct: 39% in the UK 33% in France and 35% in Germany
- Potential threat from Airbnb.
We also see chains like AccorHotels openly targeting independent hotels to join their franchise programs. With the technological purchases of companies such as Fastbooking they have made over the last 12-18 months, can now offer a credible offering to independent hotels looking to compete in the online travel space.
As consolidation within the hotel industry continues apace, the Marriott and Starwood merger can now offer the biggest selection of hotels that can benefit from a revamped loyalty program that drives direct bookings. We are starting to see that not only are loyalty program members getting free nights and other perks, such as free high-speed Wi-Fi, but loyalty programs are also allowing hotel chains to personalize pricing and marketing too.
Expedia must have seen the writing on the wall. Hilton and Marriott’s recent agreements with Expedia not only included a reductions in margins, but also the removal of guarantees for Last Room Availability. This has allowed the chains also to be bolder in actively targeting direct bookings.
Age of dependency for independent hotels
So I believe that independent hoteliers, as I covered in a previous article, are still sleepwalking into an age of increased dependency. This can be reversed if they take heed and start to learn from the chains, who are starting to take the OTA’s head on, as well as introduce common sense practices to increase their direct bookings.
In reality, it could well be that for some hotels in particular locations, joining a franchise hotel to a chain could become the straightforward choice as loyalty programs become stronger, as the immense driving power of Marriott and its investment in content marketing strategies grows, along with the rise in personalized marketing.
But what about if you want to remain independent and provide a unique personal experience that is differentiated from the rest?
Then your choice is simple. You have to urgently map out a clear marketing strategy that includes the answers to the following questions:
- Can users find me online?
- Does my website make it easy for a guest to directly book?
- Am I capturing guest data in the right way?
- What am I doing to promote my brand online?
- How to I communicate with my guests?
- What incentives do I offer them to book direct?
- What am I doing to convert OTA reservations into direct ones?
Where I believe hotels in general have failed is in creating value for their customers by the way they can find hotels online and complete the booking process for hotel rooms. Many solutions are still aimed at appeasing the revenue manager rather than the client.
If hoteliers are going to start to turn the dial away from increased OTA dependency, they first have to connect with guests and connect with the non-residents in the area who already have an existing relationship with the hotel. Technologies like social Wi-Fi and concierge apps are excellent tools in this area.
Talking with a host of general managers, it is clear they pride themselves on the quality of service they provide to their guests. There is something in their DNA which keeps them at the hotel to ensure that the wedding or events goes off without a hitch, and to view the smiling, happy faces of the participants. Where independent hoteliers have failed though, is showing the same pride for the first impression they give online to any prospective client.
The major chains are starting the fight back. Keep paying attention and learn how your hotel too can start moving the dial back in your favour, or risk becoming even more dependent on intermediaries.
John Kearney is Director of Hotelient as well as Hotel Sales & Consultancy Specialist with over 15 years of experience in managing hotels. Hotelient provides guest marketing solutions to hotels across Europe. Need help in planning the right online marketing strategy for 2016? Talk to us, email email@example.com for further information.