Monday 15 July 2019

Hotels no longer own their guests

Reaching the consumer is absolutely critical but hotels are failing to capture enough of the market and are paying the price says new report.

According to an EyeforTravel industry survey, which captured nearly 800 responses from travel suppliers, OTA ownership of the customer is the single biggest external challenge they face. The results featured EyeforTravel and Fornova’s new The State of Hospitality Distribution: Direct report, which is free to download now, show that hotel brands are struggling to reach the consumer and get them to make a direct booking, with the fierce competition hurting revenues.

This can be seen in the soaring cost of acquisition. When EyeforTravel asked travel suppliers what issues were standing in the way of getting their products in front of customers, cost of acquisition came top at 43.4% of respondents, followed by another highly relevant issue to the direct question: Intermediaries.

The position of intermediaries as the supreme sellers of hotel rooms has put hotels at a disadvantage, in large part due to the accumulation of data expertise, along with the resources to interrogate and fully utilize the findings in marketing campaigns.

OTAs have an advantage that hotels continue to struggle to match, from proper data analytics to being overmatched in PPC campaign spending.

The net result of this is that the major OTAs have created a sense of brand loyalty among travel consumers and created a powerful market position. In a consumer survey of more than 5,000 travelers from Australia, Canada, the UK and the US also featured in the report, OTAs came out strongly ahead of hotel and traditional travel agencies for driving consumer bookings. Expedia, and were the brands attracting the most repeat bookings, far ahead of the big hotel brands, with Best Western, Hilton and Marriott the best performing of these but still far behind the OTAs.

This means hotels needs to look more carefully at how they attract and retain business from consumers, considering profit per guest and customer lifetime value, as well as the value of owning the data from each guest.

“The question is, do you look at it from the perspective of operational results, which means profitability for the transaction, or from the point of view of lifetime customer value or customer retention?” Posited Sanchit Rege, manager, distribution strategy at Hyatt Hotels Corporation. “Even if I have to spend five extra dollars [on metasearch costs] for someone to book direct, I have an advantage over the other transaction because now I know who this person is before he arrives and I have the ability to drive profitability on my food and beverage or some other form of ancillary revenue and I have the ability to actually make him loyal over a period of time.”

Kyle Mais, general manager of the Jamaica Inn in Ocho Rios, Jamaica, called guests who book directly “more sticky”. “Once the booking is made, we follow up with them directly to get them ready for the trip and create a relationship from an early stage,” he attested. The hotel will advise guests of packing needs, ground transportation and seasonal activities taking place on property during the guest’s travel dates. At check-in, these guests will ask to meet the reservationists with whom they’ve been communicating because of the relationship and want to thank them before their vacation has even begun. For guests who book through an OTA, their initial interaction with the hotel is upon arrival and the hotel is starting from square one without data on the customer to help them.

For more tactics from both major and independent hotel brands and data, download the report and receive:
  • Industry and consumer survey data from hundreds of travel suppliers and thousands of consumers
  • Viewpoints from major hotel chains and independents on key tactics
  • Analysis of the state of direct booking rates to benchmark your performance against
  • Tactics to improve direct channel booking rates and increase loyalty
  • Strategies to increase channel visibility and get more guests into your funnel.

This report is part of the State of Hospitality Distribution Report Series. In this we cover metasearch, direct and OTA channels, assessing the health and landscape of each before giving you the information to maximise their effectiveness. Keep an eye out for our upcoming OTA report and click here for the metasearch report.