The independent hotel market in Europe is a big business, in terms of employment, tourism and contribution to local economies. Most importantly for the players in the industry, independent hotels are big in terms of room inventory – the collective number of rooms these hotels represent. Independent hotels have 10 advantages in controlling their inventory that chains can’t match.
Inventory is what makes independent hotels attractive partners for online travel agencies (OTAs), and it’s at the heart of the current struggle for independents and chains alike to strengthen their direct bookings. Along with all that inventory to sell, promote, control and protect, independents have 10 powerful, often overlooked advantages when it comes to competing for market share.
We’ll get into detail about these 10 reasons, but first, how did we get to where we are today?
Independent Hotels are an Attractive Market for Online Travel Agencies
European independent hotels make up almost two thirds of the room supply in Europe. This makes them an attractive, lucrative market for OTAs like Booking.com and Expedia.
The independent hotel business is so attractive and so profitable to OTAs because they rely on availability – it is the backbone of their business model. They sell your room stock on their sites, for a fee. Through the strength of their brand, marketing and technology, OTAs have cornered a very nice business for themselves. Independent hotels are appealing because they a) have availability to offer, and b) lack the bargaining power of a large multinational chain when it comes to commissions and more.
However, this availability is an independent hotel’s most powerful tool. Rate parity is a secondary issue. Parity without availability is a moot point, so we’ll leave it alone for now.
Let’s step back for a minute. How did OTAs corner this market?
PhocusWright and H2C commissioned a study in 2015 which reported that independent hotels believe that their direct website is their most important channel. In other words, direct bookings are a priority for them. Part of the reason for this is that direct bookings come at a lower CPA than OTA bookings, and they give you the chance to improve the lifetime value of the guest.
