Online travel agencies (OTAs) and hotels have battled for years to get your hotel booking. Technology has advanced, allowing OTAs to take over the online travel market. But, hotels should have the upper hand because booking direct offers a comprehensive service experience that can’t be overlooked.
But rather than debating who’s winning or losing this seemingly never-ending hotels vs. OTAs battle, we’re highlighting the “why” behind this long-term feud.
The OTAs Share of the Hotel Market
One of the biggest hurdles hotels face with OTAs is that most OTAs are owned by two rather big players: Booking.com and Expedia. As of 2017, OTAs controlled over two-thirds of all online hotel bookings, a number that continues to rise. In fact, according to Skift, one in five hotel bookings made online are made through Expedia alone. The result? With OTAs having such a leg-up in the market place, hotels are stuck dealing with their high commission prices, regulations, and poor tactics if they want to keep listing their properties on OTA sites.
Hotels know that something must be done. If they keep paying the OTAs high commission prices (which can sometimes be up to 25% of the price of a hotel room), their margins grow thinner. Then they will have less ability to offer loyalty discounts and benefits and to serve their guests the way they deserve. Hotels are pushing back to win back their customers so they can do what they do best—offer the best rooms, at the best rate, and offer the stellar hospitality hotels are known for.
To increase direct bookings, hotels are shedding light on the OTA industry. You may remember the “Stop Clicking Around” campaign from Hilton in 2016, Their ads encouraging users to stop wasting time searching and spend more time relaxing. Since then, a recent report from Kalibri Labs shows that Hilton has seen its loyalty membership rise from 51 million at the end of 2015 to 85 million today.
On the OTA side, Booking Holdings (the parent company for Booking.com) stated that they plan on spending heavily on brand advertising to get more people to book on their sites. As a result, they saw a record number of room nights booked in the third quarter of 2018, up 13% from the previous year.
When you compare hotels vs. OTAs in terms of marketing dollars, OTAs typically invest 35-40% of their revenue in marketing efforts, while hotels spend around 6%. This is a significant difference in allocation of marketing budgets and can somewhat explain why travelers believe OTAs are the best way to book: because they’ve heard more about them. In 2019, Booking Holdings and Expedia Group combined spent a whopping $11 billion on advertising, and that was up from $10.6 billion the year before. That number is estimated to be at least double what the top five hotel brands spend combined. Combined! It sometimes feels like the hotels don’t even stand a chance.
Hotels Push for Direct Bookings
To push back against OTAs, hotels are putting a lot of thought and effort into boosting their direct bookings. They want to portray the same caliber of customer service online as they offer in person. With user experience top of mind, they’re re-vamping websites and apps, hoping to better serve customers on their own sites and make the booking process as easy and rewarding as possible.
Staying on the digital trend, hotels are also investing more in digital marketing and technology. Take Wyndham for example. After investing $5.2 million in digital marketing and highlighting low prices during a large campaign, a whopping 5 million new loyalty members signed up for the Wyndham Rewards program. That’s a big win for the hotel industry.
With around 85% of travelers saying that price is the most important factor when booking a hotel, hotel chains plan on increasing awareness around their pricing. This will include explaining that OTAs aren’t always budget-friendly, and that booking direct with discount loyalty rates will almost always get you the best price on a room.
Fighting for Guest Loyalty
As loyalty memberships increase for hotels, so does the competition for their business. OTAs are stepping up their game to combat the hotel’s loyalty programs. Currently, OTAs are offering several types of discount programs. The two most well-known programs today are Expedia’s rewards, which offers up to two points per dollar spent, and Hotels.com, which offers one free night for every 10 nights stayed.
However, none of this really compares to the perks you get as an actual rewards member with a hotel. You can expect a lot more than just free nights from hotel loyalty member programs. With upgraded rooms, VIP treatment, and cheaper prices, what could be better? Plus, a hotel won’t lose your reservation like an OTA might. Nor would a hotel boot you out if for some reason the property was overbooked on the night you arrive.
Hotels also have the advantage of being able to offer travel credit cards that coincide with their loyalty programs. Major hotel chains like Marriot, Hilton, Hyatt, and Wyndham all have credit cards that earn you points on everyday purchases that can be redeemed for hotel rooms and flights.
Where Roomkey Fits In
Roomkey is unique and a beacon for the future of the OTA vs. hotel battle. We were created by six major hotel brands to allow travelers to search for hotels free from all the clutter and questionable tactics of OTAs. On Roomkey.com, we don’t bias our search results or give preference to one hotel brand over another. We simply exist to help travelers search hotel rates among their favorite hotel brands in one place. As an added bonus, we’ll show you cheaper rates that are available to members of hotel loyalty programs (which are always free to join).
We also have a built-in map function, making it easier than ever to search for hotels available in the areas you want to stay in. You also have the ability to set price alerts so you can hit “book now” when rates are lower. But what really sets us apart is that booking with Roomkey gives you all the benefits of booking direct. When you find a hotel room you want to book, we take you directly to your hotel of choice. There, you’ll complete your booking and start earning your loyalty member points while you’re at it.
The travel industry is ever-changing, and so is the battle between OTAs and hotels. Nonetheless, hotels will still actively pursue the goal of providing the best experience possible for their guests. This includes making sure booking direct is more attractive than ever, providing top customer service, and continuing to build loyalty with cherished guests.
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