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Hotels and OTAs

When Will OTAs Offer Bundled Packages to Counter Hotel Efforts?

Without a doubt, the travel sector is highly competitive and many of today’s players – whether it be OTAs or hotels themselves – are quick to shift their strategies to drive more revenue.

This concept was recently brought to life by new efforts by hotels and resorts to divert revenue from OTAs by offering bundled vacation packages. With packages that include airfare, it’s much easier for hotels and resorts to enhance direct bookings, and ultimately increase conversions with a “one-click” effort.

Since OTA’s are very nimble and competitive, it is only a matter of time before they start to offer similar packages, securing guaranteed rates from airlines, hotels, car rental agencies and much more. In addition, if these packages are presented as a “single-click” package, we may see travelers quickly swinging back towards using OTAs.

The primary driver for this? Most travelers want and demand convenience and simplicity. Everyone is overwhelmed with data and information overload to the point that we will often take the easiest route to get what we want. The same happens when booking travel, whether it is for pleasure or for business.

So, with the pendulum between hotels and OTAs rapidly swinging back and forth, what should a hotelier do to counter this? The key is to continually make guest loyalty about loyalty, and not just about targeted discounts.

As we have highlighted before, the core focus in the hospitality arena should be about fostering relationships with guests that truly matter. Hotel guests want to have an emotional connection with their preferred hotel brands. This concept is critical for developing high-level strategies that build loyalty.

Hoteliers also need to understand what is important to the customers of their hotel, and its market segment, in order to develop and offer specific products and services that matter most to guests and ensure that their staff members know how to deliver on those guests’ preferences.

Of course, hotel brands often have complicated relationships with OTAs, where they often compete, yet try to play well together in the sandbox by developing the right channel pricing and approaches. For this latest battle over bundled offers, hoteliers can certainly emerge on top if they continually focus more on fostering true guest loyalty.

 

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.