Are hotels falling for the OTA trap?
Within today’s online business mix, OTA’s are the main revenue driver for many hotels, creating a high dependency as well as increased acquisition costs.
With business slowly coming back there is the danger that OTA's are becoming even more powerful, since many hotels are desperate for business, opting in for various discount programs that undercut their own rates. They rely on the power of a few distribution powerhouses like booking.com or Expedia to get back on track...disguising the lack of a solid distribution and revenue management strategy.
New travel technology provides new opportunities.
On the other hand, the hospitality industry is yet at another tipping point, where radical change can happen due to the dynamic of technology changes and open APIs making the connection of two different systems easier (2020, Skift). New cloud-based solutions in many different areas are gaining traction and momentum in the market. For example new PMS, CRM, or Channel Manager startups or a number of different “add on” technologies like upselling solutions, digital guest directories, online concierge services, review tools (the list goes on...) can become a strong support solution to improve the customer journey and strengthen the proprietary distribution channels of individual hotels.
A new generation of hoteliers want more.
There is a generation change within the hospitality industry that will not accept legacy and not-user-friendly systems that require a high amount of training. Whilst legacy systems are trying to re-invent themselves by reproducing their solutions to cloud-based technology offerings, they have not been able to adapt to current consumer trends and adjust their systems accordingly. We believe now is the right time for every hotel and hotel chain to rethink their entire retail, distribution, and inventory management strategy and finally be one step ahead of OTA's (2020-How hotel technology can drive recovery, apaleo).
Legacy systems are slow to adapt, but so are hotels.
Whilst legacy systems try to re-invent themselves by reproducing their solutions to cloud-based technology offerings, so are hotels. Many lack solutions for selling experiences online and there is typically a disconnect between the hotel website and booking experience. While on the website it's all about experiences, when it comes to actually booking an experience, the user experience reverts back to a good old standard or deluxe room booking room experience. “Legacy PMS vendors have for too long reaped the rewards without truly pushing the boundaries of what they could offer hoteliers. Now technology has passed them by, and they are playing catch-up” (2020 PMS Landscape, Skift Research).
Hotel guests want more personalization!
Hotel guests are also calling for new solutions! They want to be able to book connecting rooms online, select their room features like garden view or high floor, and do not want to be confused about inconsistent room types nobody understands. In particular, younger generations do not understand the complexity inherited from the hospitality distribution landscape and enjoy challenging the status quo. Digital engagement and personalization are crucial and important when it comes to improving perceived hotel stay quality overall. According to a study from Brandwatch with 8000 travelers, quality is the most important attribute for guests, for which they are willing to pay for and without understanding customers, expectations are rather difficult to meet. (2019, Brandwatch)
Feature-based booking engines are on the rise.
Big hotel groups such as IHG and Marriott understand the situation and announced that they are working on a feature-based booking solution trying to resolve this industry problem. Other big hospitality technology companies like Sabre Hospitality Solutions or RMS Company IDeaS also announced that they are looking into this way of selling and attribute-based pricing or personal online selling becomes a more prominent topic in the sector.
Let’s be one step ahead of OTA’s after this crisis.
Large distribution players have been adding their own content to improve the retail experience during their rise after 9/11, they commoditized rooms making price the most important feature and hotels are still today one step behind differentiating their retail experience from those powerful aggregators. Besides consolidation and mergers of hotel chains and countries like France building their own OTA to increase negotiation power, reducing distribution costs, and level the playing field, we believe it requires a lot more differentiation for hotels to gain more control of their own distribution.
Now is the time to change this and get finally ahead of OTA’s. The World Hospitality Alliance provides not only sales & marketing services, yet also offers new technology solutions to break away from existing inventory and revenue management practices, allowing hotels to sell their inventory in an authentic, proprietary way, which is not comparable to any other third-party channel!
Let us help you to find the right solution for you.