Is it impossible for hotel direct bookings to overthrow the reign of OTAs?
NB: This is an article from guestcentric
Can independent hotels challenge the supremacy of the two major channels in the world, Booking and Expedia? Has the pandemic changed the channel mix for hotels? Most importantly, will this be a permanent change?
Similar questions have been asked frequently across the hotel industry and likely crossed your mind too. Keep reading to find the answer.
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So, What has been happening in the World of Hotel Bookings?
Up until 2020, Booking.com had been experiencing phenomenal growth and kicking butt for years, as was the case with Expedia. However, the world took a big turn with the Covid-19 crisis and all channels lost an incredible amount of revenue as a result.
According to Phocuswire, global hotel gross bookings amounted to $523.7 billion in 2019. Online sales represented 42% of the total revenue, and the OTAs captured two-thirds of this.
But this all changed in 2020.
According to Statista, gross bookings of Booking Holdings worldwide decreased from 70.7 billion U.S. dollars In 2019 to about 24.5 billion U.S. dollars in 2020. As for Expedia, the global gross bookings of Expedia dropped from 108 billion U.S. dollars recorded in 2019 to 36.8 billion U.S. dollars during 2020.
Is this surprising taking into account the situation we are living in? Not really. What’s new here, is that the Direct channel, meaning the share of website direct revenue, has accelerated in 2020. According to our ongoing Hotelier PULSE research, the Direct channel has proven to be the most resilient in 2020, generating 58.6% of the bookings made in 2019, outperforming Booking (41.5%) and Expedia (22.8%).
You are Probably Wondering, why are Hotel Direct Bookings dominating OTAs Bookings right Now?
In the early stages of the pandemic, when the world shut down and people saw their travel plans canceled, everyone desperately tried to get their refund on the vacations that they were unable to enjoy.
During these early stages, Phocuswire interviewed Giancarlo Carniani, who manages ToFlorence Hotels, which operates three properties in Florence. His words mirrored how many Hoteliers felt about OTAs at the time: