Online Travel Agencies: the empire strikes back?
A broader, more portfolio based, approach to distribution is needed to minimize risk and ensure hotel success in the long run.
What can the hotel industry expect to see in the rapidly evolving OTA arena in 2013? We asked Prof. Peter o’Connor, the academic director of the MBA in Hospitality Management at France's prestigious ESSEC Business School and a sharp observer of this market, for his thoughts on the coming year's possible developments.
The hotel online distribution landscape has changed significantly over the past few years. Online channels have become vitally important, with the vast majority of today’s customers making their travel plans online, and a corresponding positive effect on online booking levels. In the US hotel sector, online sales can now account for over 50 % of a typical hotel’s room revenue. Although other parts of the world lag considerably in terms of online penetration, figures of 35 % of bookings flowing through online channels are not unusual for European hotels, with significant further growth certain in the short run.
However, a bone of contention for many hotels is the source of their online bookings. Within the highly consolidated US market, hotel chains have managed to leverage their brand power, technical expertise and deep pockets to ensure that the majority of electronic bookings flow through their direct “brand.com” websites. In Europe, where the market is more fragmented and global chains have much less presence, the proliferation of small and independent properties means that the majority of online hotel bookings flow not directly but through one or another of the various Online Travel Agents (OTAs).