Where does the power lie when it comes to hotel distribution in 2022? Has the Covid-19 pandemic broken or enhanced the role of online travel agents when it comes to shifting hotel rooms?
During a panel discussion at IHIF 2022 entitled “More guests, fewer guesses: supercharging hotel distribution,” a series of trends and strategies were highlighted to help hoteliers understand their markets better and reach more guests.
Cori Inti Galindo, vice president commercial development & growth, NH Hotel Group, S.A, noted that the difference between business and leisure travel has narrowed and this is creating opportunities for hoteliers.
Now that many people can work remotely, this is contributing to ‘bleisure’ and longer stay duration, he said, as well as lead times starting to lengthen.
This new type of business travel is compensating for the slower-to-return corporate and MICE segments, he added
Many hotels will want to continue offering flexible terms and conditions as a key way of attracting guests, the panelists agreed.
The latest Expedia Traveller Value Index survey of 5,500 travellers revealed a major shift in interest away from price towards flexibility when making a booking, said Tara Colpitts, senior director market management, Expedia Group.
“What we have seen is it becomes a differentiation factor, meaning properties that continuously offer flexibility tend to convert higher than properties that have started to introduce non-refundable and tougher cancellation policies. We’re seeing flexibility become an asset and a revenue generation tool,” added Sébastien Leitner, vice president strategic partnerships, Cloudbeds.
In terms of using data to forecast market dynamics, the panel acknowledged how Covid-19 has seriously interrupted the conventional use of historical data to predict future demand.
“I’m sure many of us are still making comparisons to 2019 numbers and I look forward to the day when we are not, and we are fully in the here and now,” said Colpitts.
Galindo said that his focus is now on pre-booking and upper-funnel data – the discovery of the destination, flight, transport and alternative accommodation searches.
“The aim of incorporating all of these ingredients is that we can categorise future demand levels and we will react in advance with an approach in terms of pricing and making sure we are capitalising on those revenue opportunities,” he said
Leitner added: “Ultimately success is when we put an API (application programming interface) around Google Analytics and access this data in real time. When we start looking at reports in a pdf format or an Excel spreadsheet, we are not making decisions in real time. If this pandemic has taught us anything, it is that the speed of change has significantly increased.”
In March 2021, Google started to roll out free hotel booking links into its Hotel Ads results. This gives hoteliers a direct link to their official brand websites. Leitner said this was “a significant increase in visibility for hotels.”
At the same time he reckoned that travel distribution is not a level playing field and that the OTAs still have “a significant competitive advantage when it comes to processing payments and the hotel industry has some catching up to do.”
He said: “There is no-one as good as someone like Expedia at collecting payment from a Brazilian customer to help him travel to Berlin.”
Galindo underlined that rather than relying too much on OTAs or even direct bookings, it was important for hotels to create a balanced channel mix that brings in different segments, demographics and archetypes.
When a member of the audience complained about OTA commissions being too high, Galindo pointed out that hoteliers only pay for the bookings they receive. Unsold rooms mean no commission for the OTAs too, so both parties have a vested interest.
In conclusion Remy Merckx, senior advisor, global travel & hospitality, eClerx Digital, argued that OTAs plough their commission back into marketing and building technology whereas hotel companies tend to invest in building new hotels, or creating brand standards that no one is interested in.
He added that hotel companies spend 1-1.5% of their turnover on marketing, compared to the 10-15% invested in marketing by retail companies.
“We are in a different world where you need to listen to the consumers and tell them and serve them the way they want. That's really a strong belief. And on that side, we’re still not on the same level playing field,” he said.