2019: The Year Hotels Get a Grip on Acquisition Costs
Examining the challenges and opportunities facing hoteliers in 2019, it might be easy to say, “New year, same old story.”
The days of fearing that Expedia and Booking.com will dominate distribution and bankrupt your business are over. After gobbling up most of the other third-party distribution sites and building what appeared to be a duopoly, Expedia and Booking suddenly find themselves facing new competition in Google, Airbnb and eventually Amazon. For hoteliers, this new competition is good and drives down costs.
Kalibri has been examining hotels’ efforts to drive direct business through their loyalty programs, which often offer a 10% discount or similar to entice travelers to join their loyalty programs and book directly with the brand or the hotel. “Bookings growth for online travel agencies during this period either held steady or decelerated, signaling a shift for the hotel industry,” Kalibri said.
In 2018, Google made significant strides toward improving its hotel booking offerings. Not only is Google’s hotel search and map functionality better, but a Book on Google feature was introduced allowing travelers to reserve a room without leaving the search engine. Allowing guests to book hotels in Google’s environment helps hoteliers reach guests on the channels they prefer.
Along with many independents, Choice Hotels was one of the early Book on Google adopters, and leadership recently told Hotels Magazine that early results are extremely positive.
One growing point of contention between hotels and OTAs is rate parity, or the idea that publicly available room rates should be the same across all channels. Many consumers have become aware of rate parity and understand that they’re not going to find a substantial deal by searching dozens of different websites. This hurts OTAs because if deals are less likely to be found, travelers may as well book direct and reap the benefits that come with doing so.
Hoteliers in 2019 should continue to shift their concentration away from battling the OTAs to instead using the troves of data they have about their guests to make more profitable pricing and distribution decisions.
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