Loyalty pricing only beginning of hotels’ long campaign against OTAs

Judging by the comments and feedback I’ve received from a recent interview I gave to Tnooz, people are focusing intensely on the race between major hotel brands and online travel agencies to corner the market in hotel loyalty. Lots of players, on both sides of the hotel-OTA clash, seem to share Duetto’s view that personalized pricing is the future of loyalty programs.

For instance, Hilton and Marriott want to own their guests’ repeat business and have deployed massive marketing campaigns to convince consumers to book direct. OTA leaders have responded publicly that hotels’ direct-booking ads would backfire with guests or, at the very least, annoy the same OTAs upon which brands still depend for a lot of new business. The big hospitality brands clearly got under the skin of both Expedia and Priceline with their new moves toward exclusive discounts for loyalty club members. I applaud them for it — better late than never.

But I would caution any hotel brand against thinking that Hilton and Marriott have found the answer to OTAs grabbing a bigger share of room bookings. This only opens up a new front in the contest for hotel e-commerce that’s been going on for decades. For one thing, pulling off true one-to-one pricing isn’t easy, even for major hotel companies, and especially for the ones relying on legacy technology stacks.

Why loyalty is essential to hotel Revenue Strategy

If brands let up on further developing their loyalty pricing capabilities, they’ll leave themselves vulnerable to disruption all over again. Twenty years ago, OTAs emerged with new threats to hotel profit margins. Then came metasearch sites. Today, peer-to-peer lodging services like Airbnb are disrupting the model once again. That’s why I hope hotel brands of all sizes continue to innovate around their relationships with customers, and personalized pricing is an important part of that.

What Marriott’s and Hilton’s moves signal to me — or, for that matter, Starwood’s aggressive incentives it’s offering to retain members of the Starwood Preferred Guest program — is that hotels are fully aware that the challenges built over two decades have finally matured. Brands have struck back at these competitors by credibly promising the most competitive rates to guests who book direct on their sites.

But the work does not end there. Hotels need to make the direct-booking process as easy as possible for guests, and they must also reassure customers that they’ve been taken care of after the room has been booked. Before that guest’s arrival date, your hotel can send her a personalized welcome email with recommended hotel services or local attractions suggested, based on the information you have saved about that guest in the loyalty program. The property should also stay in touch after the guest’s visit and send out reminders to book direct the next time she’s back in town.

New technologies enable better hotel loyalty

Those personalized touch points occur before, during and after the guest’s stay, and they will require a hotel’s sales, marketing and revenue management departments to work together. If the staff succeeds in collaborating this way, it deepens the connection your guest will have with your hotel.

As I mentioned to Tnooz, the big hotel chains could have been doing fenced, exclusive offers for loyalty club members who book direct a long time ago. But I should concede that, before the development of cloud computing that enables a software-as-a-service firm like Duetto to fold loyalty pricing into an RMS, this was very difficult to do. It still is, actually, given how complicated it is to integrate a cloud-based RMS with any hotel’s legacy systems for customer relationship management.

But the effort is well worth it for hotels. While personalized pricing isn’t a silver bullet, it’s a big part of a contemporary Revenue Strategy built upon guest loyalty. Hotels can count on their hospitality and their trusting relationships with guests as their best defense against OTAs, Airbnb or any other new competitor trying to battle with them on convenience or price points.


Patrick Bosworth, Co-Founder and Chief Executive Officer

As CEO, Patrick spearheads the firm’s strategy and vision, while also championing a new approach to revenue management. Under his leadership, Duetto has grown to more than 100 employees supporting nearly 3,000 hotel and casino properties around the world. Before founding Duetto, Patrick was Director of Yielding and Business Strategy for Wynn Las Vegas.

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