How will online hotel booking change in the near future?NewsBy Viewpoints | May 23, 2013Share This article was originally published on NB: This is a guest article from Gary Leff, a frequent flier mileage expert who blogs at View from the Wing.It's finally happening. TripAdvisor is going to go big in hotel metasearch as a way to drive bookings.The announcement made me wonder about the bigger picture: How is the industry evolving?It's not news that hotel chains want to push guests toward booking through the chains' own channels. Chains have been trying to do that for years.For instance, they've long denied elite stay credit to bookings made through online travel agents. In some cases, chains have even denied elite benefits to OTA referrals.Chains like Starwood Hotels & Resorts, InterContinental Hotels Group, and Wyndham Hotel Group also offer "best price guarantees" meant to suggest that customers will get the best deals on the chains' own websites.(Nevermind that these guarantees are not always true. What's actually happening is that, on some rare occasions, the chains will reward customers who discover the chains haven't offered the best rate. Even so, the guarantees still demonstrate an effort by chains to drive business to their own channels.)The shift to supplier direct accelerated in 2012In recent years, supplier sites have gained at the expense of OTAs. PhoCusWright's latest Consumer Travel Report shows some interesting stats: Supplier websites were a hit across the board, but last year ... younger guests (age 18-34) especially switched to supplier sites to book lodging (up 12 percentage points in usage from 2011) and away from using OTAs (down to 39% from 45% in 2011). In the age 35-to 55 category, online direct gained nine percentage points in just one year. Age played a huge role in booking dynamics for lodging -- even more significant than for air.Share this quote Cutting out the middlemanHotels want to drive bookings to their own channels because the payouts to online agents for hotel bookings are huge.To be sure, commissions seem to be declining lately. I used to see major chains paying out commissions in high 20% ranges, while more recently such high payouts seem to apply mostly to independent hotels. The savvier big chains like Marriott, depending on the online channel, may have negotiated down the payouts to the high teens.But those payouts are still high enough to represent a real cost to any chains' bottom line, so there's still an incentive to push consumers to book directly.Where's Google?Interestingly, the leading threat to OTAs ought to be coming from Google. Most searches still start at Google, after all. But this threat hasn't materialized.Google is certainly trying to provide customized answers and advice in the travel space, yet the conventional wisdom is that Google hasn't made much of an impact.Anti-trust concerns voiced by Google’s rivals have failed to persuade the US government to shut down Google as a competitor (mostly, to date, in flight search – and fortunately, to date, unsuccessfully).Kayak may accelerate hotel metasearch as a trendThe competition here is far from over. Priceline's purchase of Kayak highlights the fact that metasearch is a growing category, and metasearch tends to work in favor of direct hotel channel bookings.But Kayak certainly will face pressure because while it can find you lots of different hotels (compared to chain sites which generally offer their brand only), it doesn’t do a good job at guiding you to book the room that’s most right for you. There's an opening for sites like Room 77 here, though these sites also have flaws.TripAdvisor is well positionedWhereas flight sales aren't especially lucrative, hotels bookings are, and TripAdvisor is naturally positioned to get a strong piece of that action.TripAdvisor (in theory, though not always in practice) guides you toward the hotel that’s right for you. It ought to be better at monetizing the consumer's decision, especially if it wants to compete with companies like Kayak.The trouble with TripAdvisorI’ve often found TripAdvisor useful (1) for real guest photos, and (2) to scan common themes in reviews. But never for the rankings, and never for the content of any single review.But there are several problems with TripAdvisor.One is fake reviews: hotels with fake personas trashing their competitors, hotels giving themselves high marks. Another is the inherent unreliability of complainers who also may represent outliers among guests. And still another is that the rankings aren’t valid interpersonal comparisons.The guest doing a ranking may simply not think about hotels the same way that you do. And rankings are often simply not reasonable reflections of what a hotel is trying to accomplish. (Imagine knocking down the Ritz-Carlton Central Park because its room service breakfast is expensive... Well, of course it is expensive.)Hotels have tried to compete as well (remember, they really want you to book direct) with their own reviews. And they can even verify that a guest writing a review has really stayed at a hotel!A need for personalization/customizationThe big thing that was lost when mass travel became substantially an online booking phenomena was the loss of human agents who could understand your preferences, combine your preferences with their own personal experience, and make recommendations that were in theory tied to the individual customer.That’s also the future once again, even in the online booking space as sites race to get better at doing more than just returning results in a city and letting you sort by price or distance or ‘number of stars.’No one is very good at it yet. Orbitz fumbled when they started returning higher priced hotels to Mac users, a story broken by the WSJ.Orbitz wasn't trying to "charge those customers more", I bet. They just didn’t want the customers not to find what they were after and go somewhere else to book instead.I suspect that all that Orbitz was trying to do was respond to its data that suggested that Mac users tended to book higher priced hotels than PC users, and so wanted to give those customers tailored results that were more likely to lead to a sale.There’s still a lot of room for work to be done, and I suspect the conventional wisdom about hotel booking competition may yet be proven wrong.I'll especially be watching developments for mobile devices, where last minute bookings are increasingly common, and customized advice won’t just be based on other guests’ experiences (social) but also on real-time geolocation data.NB: This is a guest article from Gary Leff, a frequent flier mileage expert who blogs at View from the Wing.