Waking up this morning I realized again that the Online Distribution market for the Hospitality Industry is young but so incredibly dynamic that it has made it marks already. 25 Years ago, the ‘Hotel Reservations Network’ started selling hotels through a call center and built power house that became Hotels.com; American Airlines and its Sabre unit created Travelocity. Later, Mr. Walker came up with a ‘Name Your Own Price’ idea for selling discounted flights, hotels, mortgages and new cars and launched Priceline.com. In 1996, a Microsoft executive founded Expedia.com and directly after that four major American airlines found it very discriminating that not all sites would get access to their room availability & pricing and Orbitz.com was born. Then the lucky Mr. Fogel spotted the Dutch OTA Bookings B.V. (Booking.com) which everyone else seemed to be blind to and acquired it.
Today’s Industry is that complex that it will take me at least an hour to explain to an outsider how Online Distribution for the Hospitality Industry works before the discussion about how it could work much more hospitable and cheaper by making use of today’s knowledge. For the insiders, I have written out some key trends to focus on in the upcoming decade:
Peer-to-Peer vs. Monopoly of OTA’s
The landscape is changing at high-velocity and the oligopoly OTAs are squeezing margins across the industry. The start-up, leisure and niche boutique travel agencies need an alternative – they cannot compete with the big players themselves. Travellers are overwhelmed by the number of booking agencies online available at their fingertips. The resolution can be found in word of mouth and peers in guest platforms and social media. At this point, we are not very consistent and reliable on the quality of social media influence. However, we do see the trend of meta search engines making use of guest reviews and classify hotels by guest experience. A valid feedback standard set by and for the travel industry will influence a change moving away from pricing and focus more on authentic experiences.
Talking about the experience of guests from a marketing perspective, I am sure that the days of outbound marketing have been numbered. Especially in the Hospitality Industry personalized, targeted marketing campaigns spread on social media, intelligent cookies and emails will be fully utilized. It will end up in a win-win for hoteliers by the fact that relevant prospects need relevant campaigns to convert to relevant customers that pay for extra’s at the hotel.
Customer profiles will become key if we state that the inbound marketing is the key to success. I think that we will move to individual profiling and instead of randomly relying on the different databases you will be able to merge these databases to create completely accurate profiles of targeted customers from the booking channels to the hotels.Technology trends
Technology in the Travel Industry it is not being used to its maximum yet. I expect that due to innovation and increase of integrations the complexity of the Online Distribution flow will decrease. Global Distribution Systems, Central Reservation Systems and Property Management Systems enable hoteliers to provide more personal touch to their guests by having intelligent guest information available upon request. Channel Managers will integrate with both the above-mentioned systems and the booking channels on a much more dynamic way to distribute all this future big data to the hotels. It will lead to reduced failures (in processing the data) and an increase of commercial importance.
Payments (virtual) trends
The first OTA’s started experimenting with virtual payments already. The opportunity can be found in an increase of efficiency, flexibility and safer payments. A hot topic is the PCI compliancy for providers in the Hospitality Industry. This standard is obligated as soon as a distributor save credit card information in their databases. The upcoming trend to pay with Bitcoins (blockchain) or another digital decentralized currency is a good development. It has some advantages as it isn’t controlled by any financial institution, and can be used by customers in any country. Compared to credit card payments, payments with Bitcoin have lower transaction fees and don’t carry the risk of chargebacks. Expedia.com is one of the first OTA’s accepting bitcoins, however, the feedback of guests who paid with bitcoins is not that good yet.
Channel Manager as umbrella for OTA’s
By optimizations in the workflow of distribution, the Channel Manager will become more and more the umbrella over the silos of the existing distribution channels. It is not only the technology in this that makes the Channel Manager so important for hotels. It is also the fact that the consultants (who are working all day in the world of Online Distribution) know and recognize the behaviour of travellers and hotel guests before their intent to book a hotel. Therefore, it will stay very important to focus on the quality of service and specialization when deciding on preferred Channel Management supplier. In the end, SmartHOTEL is able to develop hotel sentiment and a better understanding of the demand by having this knowledge.
How to get the most out of your channel manager.
In an increasingly complex online hospitality world it will only get more difficult to get noticed.
How to get the most out of your Channel Manager and select the right online distribution partner.
Read it in our free whitepaper: “The S² model of successful hotel distribution”.