Digital wars in the travel industry

Digital wars in the travel industry

In 2015, the battle continues between hotels and online travel agents (OTAs).

Hotels and hotel brands are investing in technology to develop more sophisticated digital platforms to compete with the OTAs. Some in the industry are turning to outside solutions and others are acquiring the companies which have the right expertise.

Some players are monetising their capabilities by offering digital services alongside their main business.

As the chess pieces move at speed, the OTA giants are responding by doing everything possible to take more and more of the board for themselves. Understanding this fast moving dynamic – and responding to it – is one of the most important management priorities your hospitality business faces today.

Accor steps into the distribution game

In recent years OTAs have been consolidating on a huge scale. Expedia, Priceline and TripAdvisor have been acquiring smaller companies to boost their digital capabilities and fend off competition. This year alone Expedia acquired Travelocity and Orbitz Worldwide. But now it is not just the OTAs playing the game.

In June, Accor blurred the border between hotel brand and OTA by bringing independent hotels onto its booking platform. This is advantageous for Accor which could effectively increases its hotel stock from 3,800 to a whopping 10,000.

It’s also an amazing opportunity for independents, which get to share the carefully developed platform. This is a clever and strategic development in hotel distribution and turns the heat up significantly on the OTAs.

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Accor’s decision to open up its booking platform is part of a careful plan. In April, Accor took over FastBooking, which focuses on hotel website development and distribution channel management solutions.

FastBooking continues to operate independently but the partnership will undoubtedly enable both companies to develop in the face of OTA pressure. As part of its ‘digital transformation’ Accor also acquired mobile developer Wipolo in October 2014.

Clever web sites for independents

With OTAs taking the lion’s share of the market, hotels are also turning to third party technology companies who can help give them a competitive edge.

In February, Sabre, a technology provider for the travel and tourism industry, launched website services for hotels. Sabre is headquartered in the US and has revenues of US$2.5 billion. Sabre claims that the ‘industry-first turnkey website solution [will] help hoteliers in-crease online conversion and build brand loyalty.’

This would allow the hoteliers to quickly set up a website using a wizard and bypass the process of designing and building a website themselves. It also helps them to be less reliant on OTAs.

At the same time, TripAdvisor has turned up the heat with ‘Instant Booking’: a display of room prices and a ‘view deal’ button that leads to a booking page an OTA or a hotel website that is distributing the room.

Which hotel appears in this section will depend on whether a hotel is signed up to Instant Booking and pays the right level of commission.

This tool is targeted at independents, and would allow them in theory to compete with OTAs and get customers to book directly on their booking platform. However much of the time the OTAs appear to be more likely to show up on the site. Best Western International and Choice Hotels have both signed up to Instant Booking.

OTA giants expand digital arsenal

 Mergers and acquisitions are allowing businesses to recombine services and consolidate brands to their best advantage. Last year Priceline bought web services company Buuteeq, which has now been renamed BookingSuite and is being operated as a unit of Booking.com (a previous Priceline acquisition from 2005).

BookingSuite is now offering web services to help independent hotels build their websites. Whilst there is no charge for this service Booking.com would take a 10% commission from the hotels subsequent bookings. So whilst independents could improve their sites and drive more bookings to their direct platform they would still be strengthening this OTA.

Expedia, OTA superpower and an undisputed technology leader in hospitality continues to add to its armoury. Expedia’s acquisition of Orbitz Worldwide brings with it Orbitz Partner Network, which delivers travel technology solutions to some of the world’s largest airlines, bank loyalty programs and travel agencies.

These acquisitions are clever “plays” – both increasing OTA revenues whilst also ensuring that interesting technology companies are out of the reach of hotel companies.

 How can your business ensure its strength?

 The war rages on. More acquisitions will certainly take place. Digital technology will continue to evolve and open up new possibilities for the hospitality industry. It’s all moving faster and faster.

To remain competitive, hotel operators need to keep tabs on this fast moving landscape. For most in the industry, OTAs are a necessary and important partner. But increasingly, new technologies, strategic alliances and platforms are within reach. And for those hospitality businesses with reasonable scale and serious capital, technology acquisitions just might make sense.

Don’t just “watch this space”.  Get actively involved.

Republished with permission from the Which50 blogEwa Maliczowska is a consultant at Madison Mayfair – ewa@madisonmayfair.com.

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