What Independent Hotels Gain from Flags’ Investments in Direct Channel

In 2016, several major hotel brands launched aggressive campaigns to drive direct bookings. Hilton’s is among the best known, with its catchy “Stop Clicking Around” campaign. The company claimed this was “its largest campaign ever.” Hyatt, Marriott, and Intercontinental joined the fray, and what was once just a campaign became a long-lasting news story about the big brands waging war on OTA commissions.

How did it work out for them? According to a recent Skift report, Hilton CEO Christopher Nassetta said that HHonors enrollments increased 80% year over year. At this point, Hilton reports direct business channels (only including .com and app) account for 25% of business versus OTAs at 10%. Nassetta says that direct business is growing at a much faster pace than third-party bookings. According to Hyatt CEO Mark Hoplamazian, their loyalty campaigns have resulted in much more than increased numbers of rewards members (and their bookings). Instead, Hoplamazian says they have driven “higher market share, higher channel share for Hyatt.com overall. It just so happens that the actual booking pattern isn’t primarily of member discount rates.” By all accounts, efforts are paying off.

What does this have to do with independent hotels? Independents are seeing the trickle-down effects of the flags’ investments in the direct channel. This is primarily because the leading brands are spending millions to promote the idea that direct booking is better for travelers, offering additional value gained implicitly by booking directly rather than via third-party channels. This awareness, which influences booking habits on a large scale, is good for everyone.

The hotel industry forecast for this year shows slow but stable growth. However, according to STR, this year the independent segment is projected to have the largest increase in ADR (+3.0%) and in RevPAR (+2.7%). Independents have an opportunity to seize more profitable business than anyone else this year, and this greater awareness of the direct channel is crucial.

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