Hotels win small victory: So why are we still arguing about OTAs?
Hotel chains are making some inroads because hotel loyalty rates – whereby loyalty members get unique discounts for booking direct – are paying off after all.
Hotels have long lamented their dependence on online travel agencies (OTAs) and their ascribed high cost of distribution (commission or mark-up). Over the years, Hilton, IHG and Hyatt are among the brands that have tried to cut the cord (generating dramatic headlines), only to rejoin the OTAs with fresh, new agreements.
While it's easy to say that hotels are fighting a losing battle – since OTAs now make up more than one fifth of U.S. hotels' overall revenue – the fact is that chains are making some inroads. Perhaps hotel loyalty rates – whereby loyalty members get unique discounts for booking direct – are paying off after all.
The truth is that OTA hotel sales keep growing because U.S. hotel sales are rising modestly while the shift from offline to online is accelerating at nearly three times the pace. U.S. hotel sales gained 4% in 2017 to reach US$158 billion, but the online hotel segment (including both OTAs and hotel websites/apps) jumped 13% to $69.3 billion.
This doesn't mean hotel loyalty rates are a failure. If anything, hotels would still be losing share considering that most travelers – especially millennials – prefer the choice offered by OTAs.
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