The relationship between the OTAs and the operators remains one of ‘frenemies’, the delegates at IHIF were told.
While the tone was familiar, hotel companies called on their fellow operators to be more proactive in reclaiming control, rather than complaining on the sidelines.
John Brennan, CEO, Amaris Hospitality, described hotels’ relationships with the OTAs as a ‘frenemy’ situation, adding: “”We need to optimise the performance of our brands and our assets in the context of that”.
Camil Yazbeck, partner, investment director, hospitality, Patron Capital Advisers, went one step further and described the relationship with the OTAs as “all the hotels fault”, pointing to lazy reliance on the platforms to fill beds, after years of failure to keep pace technologically.
Jean-Philippe Chomette, founder & CEO, Algonquin, warned that: “If a hotel is hostage to the OTAs it is probably a property that you shouldn’t have bought …OTAs are part of life now and we have learned how to live with them.” Chomette reminded the audience that, prior to the OTAs there were tour operators who were taking 15% to 20% commission.
Dara Khosrowshahi, president & CEO, Expedia, Inc, defended the group’a position, saying: We’ve gone from a web company to a platform company and that comes with cost. We have bought the cost of our commission down and as we scale our cost we pass on those economics to our partners.”
Khosrowshahi was not concerned about a possible shift in direction for Google, into a direct selling role, commenting that the search engine was “a marketing platform and a very important strategic partner for us” while declining to comment any further. He said instead that the market was “consolidating, the amount of technology you need to invest is this business is getting higher and higher”.
Earlier in the day, Sébastien Bazin, AccorHotels’ chairman & CEO, had laid out his own vision for the company, commenting on the role that the OTAs and sharing platforms fulfilled. Bazin said: “They are very good and what they are doing is legitimate. Every time they grow, they take something away from me. They also bring me something, they bring me traffic.”
Bazin said that the goal for AccorHotels was to have the same level of interaction with their guests as the digital brands do. He said: “Every passing year Uber, Facebook grow four or five times faster than we do and we should just watch?
“Whatever we do, we need to be customer-centric; stop looking at yourselves and look at your clients. Stop imposing your brand, your promise, your intent. Listen to what they want and react. None of those digital players want to be asset-heavy and labour intensive. We do and you might as well turn this weakness into a strength.”
Bazin was planning to build brand loyalty by creating a relationship with the wider community, something he said had been lost, with the local community viewing hotels as outsiders who serve outsiders”.
Loyalty as a defence against the OTAs was a popular theme, with David Kong, president & CEO, Best Western Hotels & Resorts, commenting that, “in 20 years, hotel loyalty programmes will be as relevant as they are today”.
For Simon Naudi, CEO, Corinthia Hotels, there was safety in numbers, with Corinthia joining the Global Hotel Alliance and allowing the group to “share technology and cross reference but maintain our own identity”.
The ultimate example of faith placed in a loyalty programme in recent years has been Marriott International’s takeover of Starwood Hotels & Resorts. Arne Sorenson, chairman & CEO, said: “People have said: ’30 brands, really? Can you keep them all, can you distinguish them all? But we go to market not with individual brands but with the loyalty brands. You don’t have to know the difference between the brands in the abstract”.
The theme continued into ITB, which took place following IHIF, also in Berlin, where Kong told Reuters that the company was looking to “how we can dramatically increase our scale”. Kong said that the group was was considering mergers and acquisitions, as well as partnerships, with homestays as well as traditional hotels under consideration.
HA Perspective [by Katherine Doggrell]: After many, many, many years of grumbling about the influence of the OTAs, but doing nothing about it, the past couple of years have seen the hotel sector pick itself up and strategise.
That this needs investment has been acknowledged – and hearing the Expedia, Inc CEO complain about cost raised some rueful smiles – but at the moment there is division on the part of who should be making this investment. The sound of owners’ complaints about paying for direct booking discounts is getting louder, as the strategy is showing up in profits.
Bazin’s attempts to make AccorHotels into an integral part of everyday life and make hotels part of a community are ambitious, but the sector has learned to take the company’s actions seriously. After all, Amazon started out as a bookshop but is now a general retailer which can bring you goods within hours. AccorHotels’ borrowed Amazon’s marketplace model – with moderate success – can it also expand its remit?
Image: Sébastien Bazin, AccorHotels’ chairman & CEO