Let’s talk online travel industry: 3. Direct Booking

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Now it is the 3rd article on “Let’s talk online travel industry Series”. Last time, Techrux team wrote on the business model of OTAs and on the meta search engine.

 

In fact, it has been less than 25 years since OTA came out and said hello to the world. The main reason why OTA was welcomed by the users were the “Transparency”. Prior to OTA, the guest could not realize whether this price was affordable or not. Transparency made to attract more guests via OTA reservation.

 

In particular, small/medium-sized hotels that were unable to acquire guest via direct strong sales channel or limited wholesale channels were able to leverage the power of the platform. Moreover, this was a revolutionary platform that can help to avoid vacancy inside the hotel. Then, were they happy forever with OTAs? Absolutely not. Let me tell you why.

 

Data is becoming more and more important for every business these days. Providing customized service to targeted customer can be the main key factor to win the game. But, OTAs are not giving data anymore. Last year Booking.com announced that the company will no longer provide customers’ e-mail information to the hotel. Loss of control over customer data is fatal to hotels.

 

Therefore big hotel chains like IHG, SPG, or Hilton have begun direct booking via its website and application. Even marketing campaigns as well.

 

Hilton Hotel made sure the message was passed to the public by putting their video advertisement in front of 25 million viewers during the 2016 Grammy Awards. The company said the “Stop Clicking Around” campaign is its biggest yet in the company near-100-year history.

 

 

The company said 1.6 million free nights went unearned in 2015 because of bookings made through third party sites. They aim to offer benefits such as lower price, free wifi, digital key, and points for those who book directly with them.

 

So as SPG Group. Starwood (parent company of St. Regis, Westin and Sheraton) stated in their own direct booking hotel website that the hotel will match any rates that are lower than their own website, as well as free internet and other benefits that are not offered if guest book through OTA or third-party website to maintain or increase their hotel profit margin.

 

Then what about small and medium size hotels? They have limited marketing budgets and sales channel compared with big ones. They have been looking for alternatives as below such as;

 

1) Building websites using open platform such as Softinn Online

2) Using online/mobile advertising platform such as Google, Facebook, or etc.

3) Giving incentives via offline travel agencies, or wholesale channels.

 

Of course, this cannot be the total solution. Therefore working with OTAs are essential. OTAs are now providing partner programs to keep them as their boundaries.

 

And other reason is the strong guy came in this market. It is about AirBnB. We will write additional story on them.

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