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The OTA Battle Heats Up: Expedia Fights Back Against Marriott and Hilton

With two major hotel brands making efforts to enhance direct guest bookings, one Online Travel Agency (OTA) has decided to fight back.

Expedia’s CEO Dara Khosrowshahi recently spoke at a recent investor day in New York City, and proclaimed that Marriott and Hilton will likely lose share in the Expedia marketplace if they don’t provide their best prices and availability.

Khosrowshahi also stated that hotels fall to lower positions in Expedia’s sort order and their conversions decline when properties or brands don’t aggressively engage on Expedia sites. He even went on to say that there are plenty of rival brands ready to gain share.

According to this recent Skift Magazine article, Marriott is taking the high-road based on this comment from a spokesperson for the international brand, “we have great relationships with our OTA partners and will continue to work with intermediaries in mutually beneficial relationships that enable us to achieve our strategic objectives. We realize that customers today have a choice of booking channel at their fingertips so our goal is to offer a portfolio of direct and indirect booking channels for our guests.”

With investor pressure always being high, it’s natural for Expedia to respond to this new “direct booking” trend. The challenge is that guests are already overwhelmed with multiple channels for booking. While many search for hotels based on price, if they are loyal to a brand they may be more apt to cut through the clutter and book directly.

Conversely, when there is no direct channel for getting the best rate, the guest needs to do all of the legwork. This is very similar to the rise of movie streaming services. Most consumers have to figure out whether or not Netflix, Hulu or Amazon Prime actually have the movies they want to watch. As a result, the consumer experiences undo friction.

Ultimately, the guest could lose in the scenario. Perhaps the OTAs and the major hotel brands should put the guest first in this “booking battle” and let the loyalty happen naturally?

This will most likely not happen. Though one thing is for sure … this battle is far from being over and the ultimate outcomes will be very interesting.


Stop Clicking Around: Hilton’s New Ad Campaign Pushes for Direct Bookings

Hilton Worldwide recently made a significant marketing investment to combat the rise of guest bookings from third-party distribution channels. The hospitality leader has launched an advertising campaign based on the concept of “Stop Clicking Around.”

With this campaign, Hilton is aiming to recapture booking commissions that go towards online travel agencies (OTAs), which can range from 10 to 30 percent. According to a recent Skift article, the campaign promotes how guests can get the lowest rates possible by booking direct, as well as incentivizes guests to become Hilton HHonors members.

Watch the advertisement here:

The campaign takes a smart and fresh approach by telling a great story – with an iconic song – in 30 seconds. When compared to other major hospitality providers that are more risk-averse with their brands, this is a highly creative way to convey a message that could ultimately generate more revenue.

A Cautionary Tale for Hoteliers: Pay Attention to the Terms and Conditions of an Acquired Service Provider

Leading booking site Trivago is making waves in the hospitality industry with the news of its majority ownership stake in Base7booking, a cloud-based property management system.

As highlighted in this recent Skift article, this move means Trivago can get deep into the business-to-business side of the hotel business – allowing hotel brands to manage daily operations, run reports, send invoices and enhance their digital and email marketing.

On the surface, this seems like a very viable strategy for Trivago. However, for hoteliers who are already using Base7booking as their Property Management System (PMS), what happens when Trivago gets access to guest booking data?   Since Trivago is an Online Travel Agency (OTA), will they use this data to divert direct bookings from hotel brands?

This certainly remains to be seen, but it should be a cautionary tale for all major hospitality providers. The lesson being that everyone should fully know the contractual terms and conditions of a technology provider in the event that a potential competitor acquires them.

Of course, it is not clear if this will actually happen with this particular acquisition. But when looking at other industries, this is a common phenomenon. For example, in the healthcare arena, you often see device manufacturers acquiring billing platforms, which will go directly to the consumers (cutting out the distribution channel).

Investors and the public markets need to see year-over-year growth and a return-on-their-investment, drivers for companies like Trivago expanding its footprint.

While this type of business expansion is understandable, it can put a hotelier in a risky position, which is why knowing all of the contractual terms and conditions with your partners is vital.


Simplified Web Presences for Hotels: A Shorter Path to Booking?

In today’s information-crowded Internet, a smart strategy for increasing guest bookings is for hotels to offer more simplified websites.

The Ritz-Carlton hotel group recently captured the attention of Skift Magazine with the re-launch of its website, which was noted as “style over substance.” The publication felt the new website forgoes experiential travel content and does not offer an exciting brand experience.

However, there may be a good reason for this. The more simplified approach could be aimed at enhancing direct booking. The reality is that most guests research 6-8 hotels before the finally book, and the path of least resistance may ultimately be the winner.

Of course, there is always the challenge of who owns and manages the booking engine on the backend, and keeping these processes more simplified and streamlined. But the guest-facing booking experience is the vital last mile in gaining more conversions.

Perhaps the Ritz-Carlton hotel group understands how the average guest is bombarded all the time with information, offers and other content. As a result, many people experience “cognitive overload” from today’s digital world.

The best way to reduce information overload is to make it easier for the guest. The Ritz-Carlton is paving a new road for enhancing the guest experience? As they say, less is more.


Pulling Back the Curtain on the “Unique” Hotel Experience

Delivering a “unique and personalized guest experience” has become a ubiquitous public relations message for virtually every hotel brand. However, the big question is: can hoteliers actually deliver on this promise?

The Managing Editor of HotelNewsNow.com put the concept to the test by engaging with a hotel brand with a special request via Twitter for her upcoming stay there. In addition, she also asked a different hotel to “treat her husband well” during his upcoming stay prior to their wedding.

What were the outcomes of both of these efforts? Unfortunately, neither of her requests were fulfilled. Why? The tools and innovations for delivering a unique guest experience are simply not yet in place.

For example, today’s cloud-based property management systems (PMS) would have to somehow deliver a guest request from a remote call-center directly to the front desk in time to meet the request. While this is certainly possible, technologically speaking, it often does not happen this way.

Hoteliers also face a work culture challenge. For example, many front-line employees are not incentivized to go the extra mile to please guests. Much of this comes from hotel brands considering themselves to be “concrete boxes in the sky,” as opposed to providers of specialized travel experiences.

Much like the Managing Editor of HotelNewsNow.com, other travelers will eventually figure out that hotels cannot deliver on this brand promise. When this happens, the best approach is admit to the inability to execute, and even poke fun of yourself and the industry at large – much like Southwest Airlines is known for doing.

Of course, the best solution would be to implement a cultural and technological transformation that will allow hoteliers to provide a truly personalized and unique experience. This can include developing comprehensive guest profiles, directly engaging with them at the start of their day, surprising them with unsolicited offers, and following up with them post-stay.

When this happens, hotel brands will win the hearts and minds, and long-term loyalty, from a very wide variety of guests.


Rise of Yotel: A Big Return on Small Rooms

In the past, Japan was one of the only nations to fully embrace capsule hotels. However, this trend seems to be catching on stateside, and it may be time for larger hotel brands to take note.

A capsule hotel offers extremely small rooms – capsules – that are intended to provide cheap, basic overnight accommodation for guests who do not require the services offered by more conventional hotels.

According to a recent HotelNewsNow article, Yotel, a London-based hotel chain that uses smaller-than-average guestrooms called cabins, is in the midst of an expansion campaign with its sights set on having an additional 50 properties globally open or under construction by 2020.

Markets with Yotel properties in various stages of development include Boston, San Francisco, Brooklyn, Miami, Paris, London, Dubai and Singapore.

Capsule hotels allow technology workers to minimize travel costs while being able to fully focus on their work-at-hand. These types of employees often work on a contract basis on client sites for extended periods of time, which is often common for government IT contractors who service agency clients for weeks at a time.

In addition, the majority of the public space at a Yotel property is dedicated to club lounges that are equipped with WiFi and are available to anyone. This ultimately allows traveling knowledge workers to remain productive in the evenings or mornings before being at client sites.

While offerings like this are beginning to appeal to value-oriented, technology-savvy guests, the true driver of Yotel’s growth are management contracts with developers looking to cash in on the trend of maximizing real estate value by building hotels with more guestrooms per square foot than the industry average.

With many businesses continually aiming to reduce overhead and maximize productivity, capsule hotels have the potential to really catch on in the U.S. We would imagine that larger brands are keeping an eye on this trend, and will eventually expand into this new (and much smaller) frontier.


The Delicate Balance of Next-Generation CRM for Hoteliers

Loews Hotels & Resorts recently announced that it is implementing a CRM solution that will provide a single view of guest history, value, behavior, desire, intent and engagement at 23 of its locations.

The new solution will tap into first and third party data sources to deliver “one-to-one marketing across all digital channels.” These channels include email, Web, display ads, mobile, social, video and search.

While this effort is laudable – and reinforces the value of being able to provide sophisticated guest intelligence, reporting, and analytics – it can create a “too much of a good thing” phenomenon where the brand could potential bombard guests with too much information.

Of course, the main driver for this effort is to enhance marketing and up-sell opportunities for Loews. However, if you saturate a guest with offers through every possible digital channel, it could potentially turn them off.

The key is being able to leverage this system beyond just for marketing. The goal behind a new CRM system should be to simply help the guest. This can include developing targeted offers based on the guest’s true preferences, and pleasing the guest through the entire stay cycle.

In addition, consumers are becoming savvier about how targeted digital marketing actually works. If they are watching a music video on YouTube, and then see an ad for that particular band or musician on Facebook immediately after, they often feel like they are being tracked – or worse, spied upon by brands.

This all requires a very delicate balance because too much of a good thing can be bad. Other hotel brands should certainly try to emulate what Loews is doing with this new system. The strategy should always be to please the guest, and not bombard them with marketing offers.


Tackling the Branding Challenge Hoteliers Face

With a wide-range of mergers and acquisitions occurring in the hospitality arena, many of the largest hoteliers have to grapple with the challenge of maintaining and promoting their brands.

In addition, as the brand landscape becomes more crowded, chain flags are now required to work harder and be more focused – but there is room for all, according to a recent panel discussion at the December 2015 Sleep Conference.

One of the key takeaways from the discussion was that a brand remains an “idea that is still magical” in the hospitality arena. However, legacy brands are currently under the most pressure especially in today’s post-acquisition environment where many hoteliers seek to cut costs.

The reality is that hoteliers need additional resources to shepherd their brand propositions, post-acquisition. This comes at a time when many sub-brands (i.e., Aloft Hotels) are intentionally distanced from their parent companies because they want to appeal to travelers seeking a more boutique-like travel experience. This is very common for the highly sought after millennial travelers.

One of the biggest challenges is being able to continually deliver on the brand promise in a rapidly changing marketplace.

“The success of the larger chains’ brands have come about because they have inherently been able to deliver on their promises,” said Mark Jory, founder and owner of creative branding firm Latitude Agency, during the panel. “And the promise of the brand is delivered at every price point.”

This perspective reinforces the value of nurturing a brand for true competitive differentiation. The key is to make sure that every hotel – post-acquisition – has the right resources to keep the “myth and magic” of their brands fully alive.


Hyatt Embraces the Sharing Economy?

While many major hotel brands are trying to combat the rise of sharing economy leaders like AirBNB, one hotelier is actually embracing it.

Hyatt Hotels Corporation has made an investment in Onefinestay – a provider of high-end home rentals in New York City, London, Los Angeles and Paris — as part of a nearly $40-million fundraising round completed at the end of 2014.

The global hotel brand has not fully disclosed how the investment will help it get a leg up in the new sharing economy arena. However, during a recent earnings call President and CEO Mark Hoplamazian said that the investment will offer a “learning opportunity.”

“We’ve always been drawn towards it, not sort of away from it, because we feel like we need to learn from what we’re seeing evolve in the market and how consumers think and how they behave,” said Hoplamazian, in this Hotel News Now article.

This learning opportunity – by investing outside of the core business – will allow the brand to gain insights into the stay-cycle of sharing economy guests. In addition, the brand will be able to learn more about affluent guests, and perhaps leverage data that will help them in developing high-end concierge apps and services.

In July 2014, Hyatt announced that it entered into a pilot program with Onefinestay, where it lets house renters freshen up at the Hyatt Regency London – The Churchill if they arrive early for their rental.

This is an interesting strategy that lets these types of guests to experience both the hotel’s amenities while also creating loyalty – in a situation where guests would not think twice about the hotel brand.

By taking this approach, Hyatt is going to achieve a leg up on the competition. Rather than fighting an emerging threat – or denying that it exists – the hotel brand has some “skin in the game,” and could potentially prosper in the long run.

Gaining market knowledge and insights on “sharing economy” guest preferences could be translated into the development of new programs that could greatly benefit guests – whether staying at Hyatt or at a Onefinestay property.


What Expedia Investing in Guest Experience App Means for Hoteliers

Expedia recently made headlines with the news that it is investing in Alice, a back-end platform for hotel operations and guest app for communicating with hotel staff.

Many believe that this partnership will allow Expedia to market the Alice platform to hotel partners, according to this SKift article.   Alice allows the OTA to get a leg up when it comes to guest-facing technologies with this software-as-a-service platform that enables multiple departments within a hotel to respond to guest requests and provide reporting and analytics. But what does this mean for hoteliers?

In one sense, this investment reinforces how OTAs like Expedia truly see the value of leveraging big data to enhance the guest experience. Ultimately, Expedia wants to serve as the “guest service back end” for hoteliers, who have traditionally been slow in embracing these types of solutions.

However, one question remains: will hoteliers be willing to allow OTAs to have a deep reach into guest data?

This remains to be seen. And, hoteliers should also consider whether or not the vision of this effort is to enhance the guest experience, or steer the guest away from their respective properties. This should go much deeper than the traditional OTA model of helping guests find the best hotel rates.

As always, any guest-facing innovation should focus only on pleasing travelers, which ultimately translates into long-term loyalty and enhanced revenue. It seems that OTAs are aiming to get a piece of the pie in an area where hotel brands have been slow to catch up.

Either way, leveraging big data for enhancing the guest experience is a new shift that is here to stay – and it seems that OTAs are taking the lead.