Hotels

Booking direct no cheaper than OTAs: study

Booking a hotel directly doesn’t seem to equate to cheaper price-tags, according to new research that suggests customers don’t save any more by using an OTA. 

Research conducted by Piper Jaffray has found that booking hotels directly may not always be the most effective way to save on accomodation, per Skift.  

The top four hotel chains – The InterContinental Hotels Group, Hilton, Marriott and Wyndham Hotel Group were analysed across 25 international cities, and it was found that only 14 per cent of the hotels were able to be booked at a cheaper price directly.

It was cheaper to book via an online travel agency (OTA) for 21 per cent of the hotels in the sample. 66 per cent of the hotels on OTAs had the same price listed as the hotel websites and metasearch sites.   

When hotel prices were cheaper on OTA and metasearch websites, they were 4.2 per cent less expensive than hotel direct websites.

Hotel direct websites were on average, 3.8 per cent less expensive.

“I would have expected the percentage of hotels with same price to be higher across all channels,” Michael J. Olson, senior research analyst for Piper Jaffray and co-author of the report told Skift.

“I would have expected in most cases where it was a lower price, it would have been directly from the hotel.

“We believe these results provide further evidence as to why consumers will not begin to shift towards hotel direct as a primary booking option, despite increased marketing resources, loyalty efforts, and product enhancements that the hotel chains have attempted to put in place,” Olson and research analyst Yung Kim told Skift

Off the back of the research, Marriott International told Skift, “While we can’t speak to the validity of this report, direct booking continues to be the best way that Marriott loyalty members are guaranteed the lowest rate, with benefits and services at one of our hotels.”

This research comes in amidst a hotel versus OTA battle, as hotel chains fight to encourage customers to book directly with market campaigns and incentives.

Per Wall Street Journal, hotel groups are seeing OTAs less as friends, and more as foes, acting as virtual tolls on a customer’s path to purchase.

Latest research from Phocuswright found that millennials are more likely to use an OTA compared to older travellers who accumulate loyalty points.

MarketWatch said there are certain times when travellers should book via a third-party OTA and times when they should book directly via the hotel website, and both have advantages. The report suggested it does not always just come down to the costs.

Earlier this year, Skift spoke to Choice Hotels’ CEO Stephen Joyce, who was firm in his belief that direct is always better.

“I think we’re finally in a position where we’re going to start eliminating the misperception, on the consumers’ part, that the lowest rates available are anywhere else other than ChoiceHotels.com, and we’re making really strong headway because we can see it in the numbers,” Joyce told Skift.

“For the first time in a long time, our proprietary growth rate is higher than the OTA growth rate, and we think we’re in a position to actually shrink the OTA contributions. Not that we don’t want the OTAs.”

The report strongly suggested that if hotels want more direct bookings, they’re going to need to do a lot more than just wait on the other end of the website.

In fact, they’ll need to work hard on educating customers on potential benefits of booking direct and becoming a member of their loyalty programs to have access to loyalty rates. In particular, the fact that loyalty rates are cheaper than the rates being advertised on OTAs and search sites.

“As long as there are inconsistencies in pricing across channels and OTAs are periodically offering a lower price, that’s going to keep consumers wanting to check multiple sites before they book,” said Olson, the Piper Jaffray analyst.

“Which means OTAs remain a critical component of the consumer travel booking process.”

SEE WHAT PEOPLE ARE SAYING

  • Maxwell Smart

    just had a case where someone booked a week in a U.S. ski resort with us, but found $5 cheaper online, BUT the online price didn’t include daily 3 course breakfasts & didn’t include heavily discounted lift tickets (you can ski without lift tickets). At the end of the day, the online $5 cheaper price, ended up being about $1500 more, allowing for lift tickets & breakfast.

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