In the middle of the last decade, hotels flexed some muscle to take back some semblance of distribution control from the likes of Expedia and Hotels.com, but with Google, Apple and Facebook waiting in the wings, a new study suggests hotels ain't seen nothing yet.
The 214-page study, Distribution Channel Analysis: A Guide for Hotels, warns that third-party "gatekeepers" such as Google, Facebook and Apple, will expand their influence as "preferred points of entry" when consumers search for hotels and make reservations.
"... It is plausible that upwards of half of the hotel business could ultimately pass through third parties before being delivered to a hotel or brand ..." according to the study, which is billed as a special report from the American Hotel & Lodging Association and STR (formerly known as Smith Travel Research).
The study, published by the HSMAI Foundation, was written by Cindy Estis Green and Mark Lomanno. It is geared toward the US market, although many of the interview subjects have global operations.
The study estimates that US hoteliers paid $2.7 billion in online travel agency commissions in 2010, with another $1.3 billion going to traditional travel agencies through global distribution system bookings.
"... The prospect of paying double these costs to a widening array of third-party intermediaries within 3 to 5 years may be shocking, but it is not unrealistic," the study says.
And, referring to "this emerging new network" of gatekeepers, the authors argue that US hoteliers may end up paying them 10% to 20% of revenue in distribution costs.
The big intermediary brands are coming, and as the study states:

New players, such as Facebook, already in a relationship with Microsoft (active in travel search with Bing), and Apple, possibly in partnership with Kayak (or other meta-search sites, like Room Key, with access to a robust travel inventory), are dabbling in travel and can gain traction quickly due to deep pockets and a high level of consumer adoption. Likewise, large consumer sites like Amazon, eBay or other consumer-savvy retailers as well as media companies who need to expand their traditional reader base like USA Today or The New York Times may well get in the game. It is not clear which business models they will offer and what kind of control a hotel may have to gain visibility and participate cost effectively.
The study further contends that channel vendors "are unlikely to bring meaningful incremental demand into any US marketplace in the near term."
And the primary source of new hotel demand in the US come from an influx in visitors from India, China and other international markets, the study says.
And, while major hotel brands are expanding in markets such as China and India, "third parties with marketing savvy and substantial budgets" are focusing on tapping into their inbound potential, the study says.
And this, the study suggests, will further entrench intermediaries as "crucial players in the consumer hotel selection process."
And, speaking of demand generation, the study raises questions about the billboard effect, which is the theory that a brand's presence on OTA sites such as Expedia creates incremental demand for the hotel's own website.
The billboard effect theory was most prominently espoused in 2009 and 2011 studies by the Cornell Center for Hospitality Research.
But, the AH&LA and STR study faults the Cornell research for failing to prove cause and effect between a brand's presence on Expedia.com and increased bookings on brand.com. The AH&LA and STR study notes:

The more comprehensive April 2011 study of 1,720 hotel bookings does not give any credit to the other seven to eight travel websites visited by consumers in the run-up to each booking, nor does it evaluate email, offline advertising, banner ads or any other commonly used promotional vehicles, each of which may create the effect of an added 'billboard' on a travel shopper's path.
No one doubts, however, the current clout of the OTAs, especially during recessionary periods. The AH&LA and STR study estimates that OTAs accounted for 11% of room nights and 7.7% of US hotel revenue in 2010.
So, with hotels' frenemies at the OTAs still forces to be reckoned with, and with the likes of Facebook, Apple, Google and other gatekeepers fast-emerging on the scene, what is a hotel to do?
The study offers several strategies for hotel managers or owners -- none of which on the surface sound promising as a means of stemming the tide.
Among the recommendations:
- Manage the hotel's most beneficial channel mix;
- Manage your channel mix against the competition, and compare channels in terms of shifting share, their fees and how they encourage consumer engagement;
- Invest in sustainable channels which enhance customer retention;
- Conduct systematic channel audits to ensure they are reaching the customers that they are supposed to be targeting.
- And, safeguard your pricing, brand and inventory, and "price smart."
If only hotel distribution strategy was so easy.