Over the past few months, we have started to see a shift in sentiment and resources from the major hotel chains to encourage their clients to book directly.
Loyalty programs that were once afterthoughts, and in some cases did not have any meaningful benefits to its members, are starting to be restructured to encourage and help guests who chose to book from the brand website.
Over the past year, we have begun seeing compelling new ads from the chains actively seeking this, when once they were slightly cautious of going up against the all powerful Priceline and Expedia OTAs. Now the former CEO of Priceline recently came out with warnings for the major chains who are focusing on getting their guests to book directly, and clearly a nerve has been touched.
Hotel chains are focusing on direct bookings is due to a variety of reasons.
- Lower dependency on OTAs
- Competition by OTAs on loyalty programs
- Millennials – with up to 64 percent stating that they sometimes book directly on supplier sites (Source: Phocuswright)
- More and more business travelers are booking direct: 39% in the UK 33% in France and 35% in Germany
- Potential threat from Airbnb.
We also see chains like AccorHotels openly targeting independent hotels to join their franchise programs. With the technological purchases of companies such as Fastbooking they have made over the last 12-18 months, can now offer a credible offering to independent hotels looking to compete in the online travel space.
As consolidation within the hotel industry continues apace, the Marriott and Starwood merger can now offer the biggest selection of hotels that can benefit from a revamped loyalty program that drives direct bookings. We are starting to see that not only are loyalty program members getting free nights and other perks, such as free high-speed Wi-Fi, but loyalty programs are also allowing hotel chains to personalize pricing and marketing too.
Expedia must have seen the writing on the wall. Hilton and Marriott’s recent agreements with Expedia not only included a reductions in margins, but also the removal of guarantees for Last Room Availability. This has allowed the chains also to be bolder in actively targeting direct bookings.