The way hotels sell their rooms has come a long way. From basic reservation systems to sophisticated guest preference tracking, to the rise of OTAs, and the subsequent shift towards a ‘direct-first’ mindset amongst independent hoteliers, the industry has continuously evolved to keep up with technology and ever-changing consumer trends.
NB: This is an article from Guestcentric
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Now, the question is: what’s next? As the digital landscape continues to evolve, how can hotels build on this progress, continue growing their direct business, and create even more meaningful guest experiences? Keep reading this article to find out.
The Rise of OTAs: Global Reach, But at a Cost
OTAs like Booking and Expedia revolutionized how travelers book hotels. They became the go-to platforms for guests because they provided an easy way to compare prices and find the best deals. This convenience turned them into the “search engines” of hotel bookings, filling a gap that traditional search engines couldn’t handle efficiently.
For hotels, OTAs provided exposure and bookings, but at a steep price. Commissions ranged from 15% to 30%, and hotels lost control over guest relationships. By 2016, OTAs accounted for nearly half of all online hotel bookings in the U.S. Their dominance was solidified through aggressive marketing, mobile apps, and loyalty programs. According to STR & Kalibri Labs as of 2017, OTAs were responsible for 49% of online hotel bookings.
The Push for Direct Bookings
Hotels soon realized they needed to reclaim control. Large chains launched “Book Direct” campaigns, offering perks like lower rates, free Wi-Fi, and exclusive experiences. Meanwhile, improvements in technology – such as user-friendly booking engines, personalized recommendations, and mobile-optimized websites – gave hotels new tools to compete.
By the 2010s, independent hotels followed this shift, investing in technology to facilitate and grow direct bookings. They too began leveraging tools and strategies to make their direct channels more attractive, efficient, and profitable. This approach not only improved financial performance but also allowed independent hotels and hotel collections to compete with larger players, often at higher ADRs due to the added value of booking direct. In fact, many independent hotels within GuestCentric’s portfolio now achieve a strong direct revenue share, with some exceeding 50% of overall revenue.
Meta-search platforms like Google Hotel Ads and Trivago also provided opportunities for hotels to fight back, allowing them to display direct prices alongside OTAs. According to Kalibri Labs, direct bookings can deliver 9–20% higher profit margins than OTA bookings, making them a crucial revenue stream. Hotels have since increased direct bookings by 15–20% after launching targeted “Book Direct” campaigns (Source: Kalibri Labs, 2019).
