“Fool me once, shame on you. Fool me twice, shame on me.”
Hang it on a sign in the revenue department’s office. Put it on T-shirts. Heck, get it tattooed. Because it’s a saying that hoteliers need to remember fondly and frequently as we move through 2018.
What I’m referring to—and using as a history lesson for anyone who entered the hotel industry within the past 15 years—is the first time online travel agencies came knocking at hoteliers’ doors asking for stronger partnerships. It was 2002, and the terrorist attacks of September 11 had travelers on high alert. Hotel demand was plummeting, and hoteliers were struggling to get their product in front of consumers.
OTAs like Expedia, Orbitz and Travelocity were already selling airline tickets, and they saw hotel bookings as the next logical step. They were much quicker to move transactions online, and early partnerships were considered successful, because hotels were just happy people were coming through the doors again.
It took a few years for hoteliers to realize the mistakes they had made by bargaining with the OTAs. Once hoteliers moved their inventory online, OTAs had already established themselves as the cheapest and easiest place to book hotel rooms. A natural power struggle developed, and hoteliers have been fighting to gain back control of their bookings ever since.
A dozen years later, while some of the OTA names have come and gone, Expedia, Booking.com, Kayak, Trivago and more are still really good at driving demand to hotels. In fact, they’re still better than hotels themselves. Far too many travelers today book through a third-party distribution partner over directly through a hotel supplier.
The first year OTAs surpassed hotels in total U.S. hotel online gross bookings was 2016, according to Phocuswright. Hitwise data midway through 2017 showed hotels’ market share of all online bookings in the U.S. fell to about three in every 10 bookings. OTAs saw their market share rise to about seven in 10 bookings.
While commission costs are coming down thanks to some hard bargaining by the biggest hotel brands, the share of consumers booking through an OTA continues to grow.
