Because Airbnb, the online travel agencies and other billion-dollar third parties are waging an arms race to be the world’s biggest travel brand, hoteliers obviously want to optimize their booking platforms.
Yet one home-sharing executive still leveled a bizarre criticism of hotels for being “obsessed” with direct business, revealing a fundamental point that booking brands miss about hospitality.
Hostmaker’s chief operating officer, during a “Back to the Future” event hosted by Mews Systems in September, said that “to spend precious resources entering that battle” among the OTAs, Airbnb and TripAdvisor would be “absolutely crazy.”
“Why should I build a website that does all of those things when there’s 50 channels out there?” he reportedly asked. “As a small hotel chain or small home-sharing company, you’re never going to win that battle.”
Forgive me for being blunt: That’s completely wrong. A hotel selling rooms solely via third parties would significantly inflate guest acquisition costs. It will always make sense to capture as much revenue as possible on the least expensive channels.
More importantly, the hotel would lose critical relationships it had built with its guests.
The guest experience includes the booking journey
The best possible booking engine and e-commerce strategy is worth obsessing over, not only because it puts the most money in the bank but also because it’s intrinsic to the entire guest experience, now more than ever.
Without direct bookings, hotels would never gain any knowledge about their guests pre-arrival, and guest personalization would be a pipe dream.
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The Hostmaker executive argued that a hospitality company was better served focusing its resources on channel integration, pricing and the guest experience.
What’s missing is the recognition that the “guest experience” also encompasses the shopping and booking journey.
Yes, hotels can and should fixate on — to the point of “obsession” — every touch point of the on-property experience.
They must not forget that, when more and more shopping takes place online, their hospitality has to extend to the first place a potential guest is likely to interact with the hotel brand.
A frustrating or ineffective booking experience could sink the entire operation and prevent a potential guest from getting to a property in the first place. Why would a hotel overlook it or outsource it?
The limitations on OTAs or Airbnb
For one thing, let me say briefly that “leave booking up to the booking brands” is a flawed idea, because the OTAs, Airbnb and TripAdvisor run a very real risk of over-reach.
TripAdvisor’s relaunch, heavy on personalization and social-media-like experience, is ambitious to say the least.
Airbnb has to grow like crazy to justify its $31 billion valuation, hence the diversification into corporate travel and distribution of traditional hotels.
Expedia and Booking Holdings already became massive companies by acquisition, but they’re still under pressure to keep growing.
For every successful launch of a tour and experiences platform, there could also be a misstep by an OTA, like Booking.com’s recent decision to shutter the Rate Manager product from BookingSuite.
In addition, those sites are built to optimize transactions for them, not your property. OTAs are efficient at maximizing their conversion rates, which likely means surfacing the lowest rates for guests. That’s bad news if you maintain a premium to your comp set.
Hotels can’t unilaterally disarm
By contrast, if your hotel spends the time and money necessary to boost conversion rates on its own channels, that maximizes your bottom line, not your distributor partners’.
The data that only your property can access — customer data in your CRM, folio spending in your PMS, and regrets and denials from your booking engine — is the ultimate weapon to yield in this competition.
The biggest hoteliers in the world are spending millions to diversify as well toward “one-stop shop” status. In some cases, they’re partnering with OTAs or home-sharing platforms.
They must not forget that, when more and more shopping takes place online, their hospitality has to extend to the first place a potential guest is likely to interact with the hotel brand.
Patrick Bosworth
Their success depends on many things, yet I think the greatest return on investment will probably come from moves that add depth to the booking experience they can offer, rather than breadth to the kinds of properties they can sell.
AccorHotels has been prolific when it comes to diversifying its business through acquisitions and investments.
It’s too early to tell how successful some of those moves will be, particularly its experimentation with home sharing.
Accor’s $288 million write-down of its OneFineStay acquisition shows how hard it could be to pick a winner. So does Hyatt’s $22 million impairment charge it took on Oasis this past summer.
Accor’s €5 million investment in Travelsify, on the other hand, is a no-brainer.
It’s smart for a hotel company to work with a firm that uses artificial intelligence to aggregate and analyze massive amounts of guest preference and product data, then use that information to personalize offerings and content guests see on Accors’ owned channels.
Also, consider the case of Walt Disney World. The big news for the resort last month was that it would finally introduce more dynamic pricing that yields ticket prices for its Florida theme parks by stay date, accounting for seasonal demand.
A major part of that strategy launch is the rollout of a new DisneyWorld.com booking experience.
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One could argue that Disney would more than get by with a standard booking engine and e-commerce offering.
It still derives a significant amount of its traffic through travel agents, and demand for the Disney World experience is always high — especially with the 50th anniversary approaching and the Star Wars: Galaxy’s Edge park opening next year.
Plus, what counts as “precious resources” for a global conglomerate that paid $4 billion just for the rights to the intellectual property for “Star Wars”?
I would say it’s because there are few companies better at building a holistic customer experience than Disney, and it recognizes something crucial.
Online bookings on brands’ direct channels should matter as much as the magic hotels try to make on property.