The brands struck back at accusations they were being outdated by the rise of the online travel agents at last week’s Hogan Lovells/CBRE conference.
The global operators are fighting against the commoditisation of hotel rooms by leveraging their loyalty schemes as well as taking advantage of the many chances they have to digitally engage with their guests.
Graham Dodd, development director, UK & Ireland, Hilton Worldwide, acknowledged: “We have to sell where customers want to buy – OTAs are part of that story. There’s no hiding place any more – we have to give customers what they want, which is flexibility and value. But if we can engage with clients early on we can do well and we have lots of opportunities to engage digitally with people – more than the OTAs.”
Todd Shallan, director of asset management at KSL Capital Partners, added: “The OTAs look at everything as a commodity. We have to fight that, but how do we differentiate? It’s not just price – there has to be the ability to get the customer to look at your hotel and what it does. Your own website carries much more information than an OTA does.”
Dodd drew attention to the role that the operators could play in terms of their relationships with the OTAs, where they had more negotiating power than an individual hotel would, commenting: “Our relationship with the OTAs is very strong. It’s also important that owners must challenge the brands as to what they’re doing with the OTAs”.
Brian McCarthy, managing director at Valor Hospitality Europe, was happy to let the brands act on behalf of his properties adding that they saw “13% of our business through OTAs, but we think we can do better embracing the brands”. He added: “When you sign up to a brand you don’t just sign up to the brand name, but the whole package – technology, loyalty and so on.”
There was a voice of dissent from Terri Scriven, industry head of travel at Google, who warned that hotels were doing a poor job with mobile, while OTAs were doing better: “You can’t shy away from it.” She also pointed to the OTAs “doing more brand-building with TV ads. They want to be less dependent on Google”, suggesting that the hotel brands would continue to be under pressure for recognition against the OTAs in the eye of the consumer.
While there was acceptance amongst the panellists of the role of the OTAs in hotel distribution, Hotel Analyst editorial director Andrew Sangster, chairing the panel, raised the issue of peer-to-peer networking platforms such as Airbnb, which were bringing not only new distribution, but new supply into the market.
Dodd described Airbnb as most likely “just incremental demand – it’s not affecting us”, with Shallan agreeing, adding: “There is still growth in hotels despite Airbnb – where are those guests coming from?” He cautioned that it would be “interesting to see what will happen in a downturn with Airbnb”.
There was a consensus that more should be done to legislate the sharing economy, with Shallan commenting: “I would like to see level playing field. There’s room for everyone to play, but I want to see more regulation and taxation for Airbnb.”
Earlier in the day Brian Reeves, founder & CEO of Goppar Digital, had attempted to debunk the idea that hotel operators could not compete with the marketing spend of the OTAs, estimating that, for every room sold on booking.com, the OTA had spent USD11.50, well within the operators’ means.
He instead pointed to simple changes that hotels could make to their own websites to shift them from “telling a story” to selling more effectively, such as using the “persuasion” techniques seen on booking.com, where consumers are told that a limited number of rooms are available at a certain price. Reeves said that some hotels were unwilling to use such mercenary tactics.
If hotels want to take some of the power back from the OTAs before their brands become entrenched in the consumers’ minds, now would be the time to position themselves as salesmen as well as hosts.
HA Perspective [by Chris Bown]: The revelation that OTAs spend USD11.50 on promotion, for every room they sell, puts into perspective the effort hotel groups ought to be making to promote their product imaginatively. Sure, loyalty programmes are one effective way to take the consumer away from the OTA and its price-driven sales process, but they are not the only one, and perhaps creative marketing spend needs to be pointed in new directions. While the battle for the internet customer seems to have been won by the OTAs, there are always new fronts, from metasearch to social media. Apps may or may not be the answer, but are being tried out, as more consumers move to mobile as the platform for picking up information.
One thing is clear, if hotel groups are shy about trying to sell their products themselves online, there are plenty of others who will do it more effectively for them, for a fee.
Meanwhile, little has been heard about the success – or otherwise – of Roomkey.com, the hotel industry’s collaborative effort to create a brilliant booking website that would give the OTAs a run for their money.