Seven trending hotel news stories that will have an impact on your hotel Revenue Strategy.
1. DIRECT BOOKING, LIFETIME VALUE ARE ISSUES FOR 2018
Like 2017, the coming year promises to be one of change in the hotel revenue and distribution landscape. The author lists four trends RMs need to pay attention to in 2018:
- OTAs will continue to improve their tools and programs for hoteliers to help enhance placement and boost revenue.
- The distribution emphasis will move from cost to ownership and lifetime value of guests.
- Brand and management companies need to work closely with properties to constrain promotions on OTAs, managing distribution more actively to ensure the direct price is always the best available.
Here’s the money quote in the story: “The revenues a hotel leaves on the table by not understanding the contours and mechanics of a diffused, decentralized distribution environment are significant — and they need to be calculated into a coherent distribution strategy.”
2. 2017 ENDS ON A HIGH NOTE FOR NORTH AMERICAN HOTELS
According to TravelClick, the North American hotel industry is ending the year on a high note, with all travel segments of the business showing fourth-quarter growth in both average daily rate (up 1.2%) and bookings (up 4.3%). Group travel was a particularly bright spot during the quarter, with bookings up 5.1% and ADR rising 1.7%.
TravelClick says for the next 12 months the transient leisure segment of the hotel business will be the star, with an 8% rise in bookings but just a 0.4% increase in ADR. How is that possible?
3. WSJ CALLS FOR HEIGHTENED SCRUTINY OF GOOGLE TRAVEL
The typically business-friendly Wall Street Journal last week called for closer federal scrutiny of Google Travel for some of its business practices the paper says is unfair to smaller competitors. Specifically, the Journal implored Google to "compete fairly by giving free rein to smaller online travel agencies to use hotel trademarks in their Google ads and URLs, and to stop biasing search results in favor of Google’s own flight and hotel metasearch businesses to the detriment of competitors’ businesses."
Not surprisingly, Google denied the charges, and the relevant federal agencies refused to say whether Google is under investigation. And as the article says, the feds rarely telegraph investigations in advance, and additional business regulations are unlikely under the current White House administration.
4. OTAS BENEFIT FROM TRIPADVISOR PULL-BACK
As TripAdvisor has backed away from its ill-fated Instant Booking platform, the major OTA sites have gained traffic. Since TripAdvisor reverted mostly to its metasearch model, referral traffic to the top 10 OTA sites has increased from 46% to 70%, with two sites — Booking.com and Hotels.com specifically — reaping most of the benefit.
The data further shows a marked reduction in traffic going to Booking.com from Trivago, coinciding with the increase in traffic to the Priceline Group-owned hotel giant from TripAdvisor. The chess game in hotel distribution continues unabated.
5. CONSOLIDATION CONTINUES IN CHINESE OTA MARKET
The Chinese travel distribution market is becoming more consolidated. Two mid-sized online booking sites — Tongcheng Network and eLong — have agreed to merge, with the backing of two giant travel and social media companies: Ctrip, China’s largest online travel agency; and Tencent, owner of social-networking site WeChat. The new company will be called Tongcheng-Elong.
The new company will benefit from Ctrip's size and reach and from its new connection to WeChat, which is a huge source of traffic and also allows online payment through its wallet technology.
6. AIRBNB, BOUTIQUES LEAPFROG OVER CHAIN HOTELS
The data is a little hard to follow in this story, but new research appears to show Airbnb and boutique hotels making significant inroads against more traditional chain hotels. According to research from 1010data, in the 12 months ended October 2017, bookings rose 49% at Airbnb properties, 43% at boutique hotels and 28% at traditional hotels (although it’s unclear how they calculated that growth figure).
The report was also bad news for the direct-booking campaigns launched last year by the large brand companies: During the period studied, 44% of all hotel bookings online were done through online travel agencies, up from 38% in the prior year.
Again, some of the data is confusing, but the point is that a growing number of travelers are eschewing traditional cookie-cutter hotels and instead booking accommodations with more character and experiential offerings, i.e., Airbnb properties and boutique hotels.
7. LOYALTY RATES HELP BELEAGURED ROOM KEY EXPERIMENT
For the past few years, many in the hotel industry have dismissed Room Key as either a toothless afterthought or a downright failure. Now, the metasearch site founded in 2012 by six major hotel brand companies might finally be showing some progress, thanks in part to those chains’ aggressive marketing campaigns to encourage loyalty-club members to book rooms directly.
A spokesman said the site, which offers consumers access to more than 74,000 hotels, is profitable and produced a 50% increase in transactions in 2017. The site still faces significant challenges before anyone could say without laughing that it is a success. One major hurdle is its relative paltry inventory compared to most online travel agency sites.
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