I keep hearing today’s consumers want choices. That’s why they’re shopping 13 or 22 sites or however many the latest research says they shop before booking a hotel room.
I believe those numbers, but I think that’s the wrong conclusion. They don’t want more choices; they want better choices. They want a good experience and the best price without visiting 21 other sites to get there.
NB: This is an analysis by Patrick Bosworth, co-founder and CEO of Duetto. It appears here as part of Tnooz's sponsored content initiative.
According to a study from the Hotel Asset Managers Association, third-party commissions rose at twice the rate of revenue from 2009-2012.
Customer acquisition costs in the hotel industry are on average 15% to 25% of total revenue, more than four times the 3% to 6% seen in airlines and the 4% to 6% in car rentals.
Those numbers are staggering. All of them point to one conclusion:
Hotels are not providing the best prices and booking experiences for consumers. The online travel agencies, metasearch sites and intermediaries such as Google are doing a better job and have created the belief that the best prices are with them and not the hotel itself.
Of those 22 sites being shopped, one of them is certainly the website of the hotel eventually booked. The fact that many consumers are leaving and booking elsewhere demonstrates what a huge opportunity this is for hotels.
Consumers would be happy to book directly if given a reason. Brand.com websites and hotel booking engines have become a very homogenized experience. Consumers believe, and have been trained to believe, that the best prices can be found at third-party sites.
Expediaspent nearly $3 billion on marketing last year to help make that case.
It’s no wonder recent data from TravelClick showed in the fourth quarter last year OTA channels saw the largest growth in bookings, up 12.7% year over year, while brand.com bookings went up by only 6.8%.
Hotel direct bookings via calls and walk-ins will continue to decrease as consumers become even more tethered to their digital devices, meaning the fight for online bookings is more important than ever.
Hotels can’t match the money Expedia and Priceline spend on marketing and they don’t have the technology expertise in-house to match those multi-billion-dollar companies, either.
But they do have what travelers crave - they control the hotel rooms, the guest experience and the hospitality. They need to do a better job of using all three to their advantage from the point of booking.
It was a step in the right direction when several of the major brands began offering free wifi to customers as part of their loyalty programs. But hotel companies could be doing even more through their rewards programs to win new customers and turn them into loyal guests.
Instead of offering points and rewards, why not offer more personalization and better rates than anyone else can? These special prices could be discreet if customers logged in to view them, meaning parity agreements wouldn’t be broken.
By offering discounts and inducements every day of the year and without the need to respond to special offers and redeem points, hotels could alleviate consumers’ anxiety and confusion.
If customers always knew where to find the best deal - at the hotel website - they wouldn’t shop around.
OTAs are a valuable and important channel for hotels, but owning the customer from the point of booking must become a priority for hotels.
Building a base of loyal customers who know they’ll get the best deal at the hotel’s website is the first step.
NB: This is an analysis by Patrick Bosworth, co-founder and CEO of Duetto. It appears here as part of Tnooz's sponsored content initiative.
NB2: This is part one of a two-part series. Read the next installment to see how hotels can merge marketing and revenue management to drive loyalty and profitability.
NB3:Multi-screen image by Shutterstock