To keep up with the shifting distribution landscape, hoteliers better start their engines, because the race is on.
“It’s a race of who can provide the best consumer experience through technology,” says Sloan Dean, VP of revenue optimization for the Ashford Group of Companies.
But instead of a straightforward race to the finish, this course comes with a few obstacles. In an ever-changing landscape, it is difficult for hoteliers to distinguish friend from foe as they strive for the perfect distribution mix between brand.com, online travel agencies (OTAs), global distribution systems (GDS), and other channels.
New players entering the game, like Google and Facebook, offer unexpected competition that Dean says even OTAs fear. And then there is the question of what happens when hoteliers reach the finish line: They might have acquired the guest, but at what cost? And now that the guest is at the hotel, what can be done to guarantee a return visit?
Battle for the Consumer
The OTA argument makes sense. Online booking companies like Expedia and Priceline focus solely on developing the latest and greatest in digital offerings, which means they are able to devote all of their time and money into attracting guests. They can be on the edge of new technology in ways some hotels cannot keep up with, simply because hotels are additionally tasked with day-to-day operations, food and beverage, and the like.
“I understand that argument,” Dean says. “None of the stay brands are going to abide by that, though, because it diminishes their value. All of a sudden, they’re relying on some other entity to provide all of their consumers. Whose traveler is it? Is it Marriott’s, is it Expedia’s, or is it Ashford’s? There is definitely a battle over who owns the customer; that’s playing out before our eyes as we speak.”
The battle to which Dean refers is how major hotel brands have recently upped the ante in the fight for direct bookers. Hilton Worldwide, Marriott International, Hyatt Hotels Corp., InterContinental Hotels Group, and Choice Hotels International are among the chains that have incentivized direct booking by lowering rates for loyalty members who book direct.
Dean expects to continue to see offerings tied to company loyalty programs that differentiate the stay experience for guests, countering the OTAs’ offerings. But if one were to ask the OTAs how they feel about this “battle,” they’re not exactly readying their weapons. At least, Expedia isn’t.
“This strategy is an interesting one to us, because it appears to us that the battle between the big chains is for a finite, existing pool of loyalty bookers,” says Adam Anderson, managing director of industry relations at Expedia. “This actually puts us outside the battle, as we have a very different customer.”
Anderson explains that OTAs like Expedia attract the brand-agnostic traveler. Basically, brands are fighting for customers who will never commit to a monogamous relationship with only one brand.
“Some of the positioning is that [the chains] are battling OTAs, but our perspective is that we’re not at war. We feel like we’re sitting back and watching this—they’re basically fighting each other,” Anderson says. “And you have to wonder, if they’re fighting for an existing pool of this type of traveler, and they’re doing it by reducing rates and making it available to everyone—basically, the barrier of entry is very low to get a reduced rate with loyalty membership—are they just giving away rates?”