NB: This is a guest article by Markus Luthe, CEO of the German Hotel Association.
There is a certain helplessness creeping in around online hotel distribution which is worrying hotels in Europe and worldwide.
In recent weeks, Germany’s market leader HRS increased commission fees by more than 15 %, just two months after acquiring Hotel.de, the number three in the German market.
Simultaneously the screws were tightened in a frightening manner as rate- and availability-parity clauses applicable throughout all (!) online and offline distributions channels were inserted into the terms and conditions.
Now we are not talking only about last room availability, but we are confronted with anytime-access to the entire hotel inventory, a veritable product-parity.
Since then there has been increased murmurings in the discussion forums and chat rooms of the hotel industry.
For the sake of fairness, it should be mentioned that HRS also announced an automatic GDS-connection via Amadeus for HRS hotels, including a flat fee.
This particular booking portal’s power and the eventual dependency of hotel businesses on it raise fundamental questions.
Why couldn't the hotel industry oppose these mechanisms of online distribution in time, and why did it leave the increasingly one-sided booking conditions in place?
At least in Europe the cause lies in the conditions of the market, where a constantly narrowing oligopoly on the side of the supplier faces a fragmented hotel sector.
As a consequence, unfair market practices are established which the hotel industry can barely defend itself. In economics this effect is known as The Prisoner’s Dilemma.
What is the way out?
Sure, every hotel has a whole lot of homework to do to strengthen its direct bookings via its own website.
Hotel associations inform their members and give a wide variety of help with direct-booking strategies, hotel reviews, content, customer loyalty, context and search engine optimization.
The development of a booking system belonging to the hotel industry is hardly the tool of choice due to the market and painful experiences of the past, no matter how promising new approaches, such as RoomKey, may sound.
And also Google will not incorporate the heroic epic of the so-called White Knight into its repertoire.
But how can the markets be held open in the medium and long term?
The hotel industry must have a vital interest in preventing monopolies in the growing markets of online travel agents, hotel review sites and search engines.
For this the barriers to entry for third parties such as agencies, app-developers, booking service providers, channel managers, online-merchants, search engines, think tanks outside the industry, garage startups and any other market participant, must be kept as low as possible.
This enables real and latent competitive pressure to be generated though alternatives, which sustainably prevents monopoly rents from being siphoned.
This allocation of industry know-how must be perceived and organised as a public good, the use of which is accessible to the general public at a low cost, or for free.
Why don’t we, as an industry, combining our knowledge and expertise, build a comprehensive hotel database – a worldwide Hotelwiki?
It would include unique global identifiers, address data, GPS-coordinates, photos, videos and in particular deep links to the favourite booking page of each hotel would have to be added and inserted there.
This project could be cast in the shape of a foundation. Or it could be built up from already existing industry initiatives such as Dothotel, HEDNA, HFTP, HTNG, OpenTravel Alliance, RoomKey or TTI, you name it.
Who takes the lead is secondary in the end. We need this industry’s joint show of strength – worldwide, undistorted, neutral.
It’s time for a Hotelwiki!
NB: This is a guest article by Markus Luthe, CEO of the German Hotel Association.
NB2:Imagesvia Shutterstock.