The hotel industry has been losing booking share to the OTAs for several years, and the trend does not appear to be reversing any time soon. Phocuswright shows that U.S. hotel online gross booking revenues from the OTAs exceeded hotel websites for the first time in 2016, and the projected gap widened in 2017. This channel shift continues to erode profit margins, and has frustrated chains, independents, and hotel management companies alike.
Let us consider some of the factors driving the shift from hotel websites to online travel agencies:
1. Marketing Spend: Expedia alone spent $5.3B in marketing in 2017. OTAs spend significantly more than hotel brands and independent hotels.
2. Research & Development: OTAs spend hundreds of millions of dollars annually on R&D. This includes development of new platforms, technology, and optimizing their existing products.
3. Rise of Metasearch: The ability to see the price for the same product sold by various online retailers on a single website has also contributed to the increase in OTA production. Many independent hotels do not have their own direct website featured on metasearch sites.
4. Shift to Mobile: Expedia’s app had 250M cumulative downloads in 2016, and approximately 33% of their transactions booked via mobile. Business Insider recently reported that Americans have on average 27 apps on their phones. Because OTAs such as Expedia and Booking.com dominate travel app share, they are more likely to gain from an increased growth in mobile bookings.
In order for brands to take share back from the OTAs, they need to provide a compelling reason to book direct and simplify the booking experience. Here are a few tactics to consider for your brand:
Implement a Direct Booking Strategy
Hilton was the first major brand to offer preferred rates to their loyalty members when booking on line when they deployed their “Stop Clicking Around” campaign in 2016.
