Turf war erupts between hotels and OTAs

Photo of two female boxers fighting in a boxing ring.

Some pretty major hotel chains are heading into battle with the very people that helped them boost their business – Online Travel Agents.

According to Wall Street Journal’s Chris Kirkham, Marriott International, Hilton Worldwide, and InterContinental Hotels Group are trying some new marketing tactics, namely ones that steer travellers away from OTAs like Expedia, Priceline and more.

These booking sites were once applauded for getting more hotel rooms booked, but can also take commissions of up to 30 per cent for each reservation.

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

Kirkhma reported many of these large hotel brands are now inviting travellers to book direct, with incentives like cheaper nightly rates and a bunch of other perks as rewards for skipping the OTAs.

But it’s no walk in the park, WSJ claims, with travel research group Phocuswright showing OTAS were responsible for over one billion Aussie dollars’ worth of global hotel bookings last year.

And that’s not all the hotels are coming up against, with 52 per cent of US travellers aged 18-34 preferring to book hotels through OTAs then direct, compared to 37 per cent aged 35+, according to travel data firm Adara.

Younger travellers are also less likely to sign up to those plush hotel reward programs, which as WSJ pointed out raises some big issues with how much brand loyalty actually matters to travellers who are more price-focused.

In fact, OTAs are winning more customers due to the fact that customers can book a whole range of things, like car rental, at the same time as securing their hotel stay.

“It’s always been a thorn in our side,” President and Chief Operating Officer of McNeill Hotels Mari Ricketts, which owns over 12 Hilton and Marriott-affiliated hotels, told WSJ.

“There had been this perception that to get the best price, you book through a different channel than going direct,” Hilton’s Executive VP and Chief Commercial Officer, Chris Silcock, added.

“That’s never actually been the case.”

It’s been a tumultuous relationship between hotels and OTAs, with industry greats like Gil McLachlan – who saw the rise of some of the first travel search websites – still not sold on their business model.

Per WSJ, the 10 to 30 per cent commissions that OTAs charge per night mark a hefty chunk of revenue for hotel owners who already pay fees to major brands such as Hilton and Marriott.

According to research out of hotel industry consultant, Kalibri Labs, commissions snatched up by OTAs cost around US$4.5 billion for the year to June 2016.

As a result, it’ll prove a real stretch to break free of the grasps of OTAs, given hotel bookings represent the biggest growth sector for them.

According to Phocuswright, last year the value of hotel bookings through OTAs overtook direct hotel online bookings for the first time since 1998.

And even though one travel industry bigwig claimed agents should encourage clients to “click around”, many hotel groups are striking back with campaigns that urge travellers to “Stop Clicking Around”, which is Hilton’s latest tactic.

They’re also extending loyalty rewards to casual travellers as well as frequent visitors, and Hilton even started letting customers use loyalty points for Amazon purchases, while Choice Hotels did the same but with Starbucks and petrol.

According to WSJ, Marriott’s Global Sales Officer, Brian King, said the goal is to convert casual customers into repeat guests.

But OTA bosses say their platforms are still bettering hotel revenue as they give exposure to lesser known hotel brands.

“Free is best. Everyone would like people to come direct to their business,” said Glenn Fogel, Chief Executive of Priceline Group told WSJ.

“That’s not the way the world works, though.”

Advertise with us

Email the Travel Weekly team at traveldesk@travelweekly.com.au

Latest comments

PAT DONAHAY says:
June 5, 2017 at 8:47 pm
I don’t think online travel sites save enough money to justify the risks if something goes wrong.
My personal example. . .I have used booking.com, Kayak as well as Hotwire in the past for most of my hotel, car and airline bookings because I saved some money and it seemed convenient. However I recently went through a big hassle/expense due to a car rental I made through CarRental.com (owned by Priceline). I reserved a rental ($364) for a Dollar/Hertz rental at Berlin/Tegel and when I got to the counter the Hertz clerk would not provide the car unless I bought CDW insurance for an additional $1000. I declined the rental and went to a competitor, but CanRental.com still charged my Visa the $364. I have found customer service at CarRental.com to impossible to work with, so I went to Visa to get a chargeback issued. I have come to the conclusion that the small of money saved by using a 3rd party like Priceline is not worth the aggravation if/when something goes wrong. I will use Booking.com and other sites to gather info but all my reservations in the future will be made directly with the car rental company or hotel
Log in to Reply

expedia hilton worldwide hotel groups intercontinental hotels group marriott international ota Priceline