NB: This is a viewpoint by Mike Ford, managing director of SiteMinder.
Oh yes, a horse is on its way to Troy as you read this. Or, has it arrived?
As most hotel industry folk know, there are a number of major OTAs moving aggressively to provide hotels with technology to manage their inventory and bookings – internet booking engines, rate comparison tools and websites.
Until this point, this has been an area occupied by technology companies that have specialised in supplying the same, albeit partnering with these very OTAs to extend a hotel’s online reach.
This continues to be a point of discussion within media and the broader industry, and I suspect it won’t be going away any time soon.
We know the Priceline Group has been building up its B2B portfolio BookingSuite. HomeAway and Airbnb also provide technology to the private rentals segment, as does Hostelworld in the backpacker segment. Then there is Trivago, majority owned by Expedia Inc, which has recently acquired hotel technology provider Base7Booking.
All of which begs the question: what would inspire such giants in travel to make an entry into the highly-competitive and fragmented hotel technology sector and what are the possible implications for hoteliers?
Looking at the travel and hospitality sector more broadly, it would seem there are juicier targets for these companies to focus on, as evidenced by Priceline Group’s acquisition of OpenTable to dominate the restaurant booking industry. There is also the vacation rental business to conquer, which is very closely aligned to Priceline Group’s core strength of dominating accommodation search through effective and efficient deployment of online media tactics. No one is better at this.
So, what would make these booking giants want to get into the area of hotel technology development – which, for some of them, isn’t a core strength or capability?
The strategy of acquiring technology, rather than building it, suggests that either they are not adept at building product or they are attempting to enter the hotel technology space with urgency.
One story pitched to me by an OTA getting into this space is that they are doing it to “help” hoteliers get online. This same OTA also pointed out it is just a new revenue stream for them.
What’s the point?
At the risk of sounding cynical, the fact is there are already many better technologies on the market for hotels to choose from. Additionally, if you’re an OTA earning many millions or even billions in revenue, the challenging (and very costly) business of building and selling hotel technology is not something you do to delight your shareholders from a revenue perspective.