My thoughts are with you, your loved ones, friends, clients, partners – around the world. This is a strange time, travel has stopped and thus bookings. My sites DNA Hotels and charmhotelsweb however will continue to showcase exceptional hotels – to inspire and offer some kind of escape.
These times also call for reflection and how to make a better tomorrow. Tomorrow the virus will not be gone, but it will eventually and we will come out of it for the better. Until then, stay safe and sane – and keep distance!
Bookings Holdings reported a 4% increase in revenue to US$15.1 billion for 2019, but the travel giant is expecting a “significant and negative impact” for the first quarter of 2020 due to the COVID-19 coronavirus. The Connecticut-based online travel agency warns about a potential year-over-year decline in non-GAAP revenue for the first quarter between 9% and 5%. Room nights booked are also expected to decrease by as much as 10%, and total gross travel bookings are expected to decline by as much as 15%.
Oyo is learning that lightspeed growth is fraught with peril. The Indian budget hotel startup might be tapping the brakes on meteoric expansion plans to focus on profitability, better serving its main funding source, SoftBank and its suffering Vision Fund, and better prepare for an anticipated IPO. Another SoftBank-funded unicorn, shared-workspaces provider WeWork, recently aborted its planned IPO amid losses and criticism of management.
Oyo, with what it says is about 43,000 “hotels” worldwide and a valuation reported at US$10 billion, recently report a US$335 million loss for fiscal 2019, yet a 450% increase in revenue reaching US$951 million. As a result, it has announced staff reductions of approximately 1,200 in India (about 10%) and 500 in China to sustain the business.
Founder Ritesh Agarwal has stated its dynamic pricing model is not living up to expectations and that the group is working hard to add more data points to improve pricing decisions. It also has a lot of fence-mending to do with owners to improve public perception.
Today’s tech-focused, quick-to-market model does have its challenges.
Some 40 companies and trade bodies in nine EU countries, Switzerland and the United States, including eDreams Odigeo, Expedia and Tripadvisor, have accused Google of favoring its own vacation rental service on its search engine. The New York Times reported the organizations sent a letter to EU Competition Commissioner Margrethe Vestager urging enforcers to take action. “We see strong indications of a competitive strategy for Google to reduce us and our industry to mere content providers for the ‘one-stop-shop’ of Google’s new product,” the letter said. Google said its search results aim to provide users with the most relevant information.
According to marketwatch.com, the global online travel market is expected to grow from US$ 570.25 billion in 2017 to US$ 1.134.55 billion by 2023, at a compound annual growth rate of 13.16% during the forecast period. That is quite some $$$ we are looking at.
OTA stands for: Online Travel Agent. Their websites allow consumers to book various related services directly via the internet. They are third party agents reselling trips, hotels, cars, flights, holiday packages etc. provide/organized by others.
OTA’s deliver. The sheer volume of business they generate come after a decade of developing and investing in their technology (which is highly fenced off). It also comes at a price: with (individual) hotels they take a commission which usually starts at 15% and goes up as high as 30%, usually depending on the competition within a certain area.
Who are we talking about? The biggest online OTA’s in 2018 according to statista.com – revenue in billion US$:
Note that above Trivago is also a part of the Expedia Group. Booking is leader in revenue probably because it mostly is in the selling of hotel rooms, which has the highest commissions/profits. Booking and Expedia have 90% of the market, with their only competitor being Chinese Ctrip.
Booking Holdings (the parent company of Booking) and Expedia, the two biggest OTAs, boast a combined market cap of more than US$100 billion, comparable to the four largest US airlines combined.
Are these companies big enough to fail? Probably not: we did see a fair share of collapses last year: 127-year old Thomas Cook, several airlines, not-so-old WeWork. And now things are getting messy at star newcomer OYO Hotels.
Apart from the high commissions of OTA’s there are other disadvantages to hoteliers. As the biggest OTA’s only seem to get even bigger – often buying competitors out of the market/integrating into their technology – the dependency on them rises. And dominating the market only means one thing: the ability to raise their commission rates even higher. Smaller businesses are therefore prone to OTA’s “running” their business.
Are there alternatives?
The mantra the last few years has been selling direct. Luring consumers to the hotelier’s own website and persuading them to book direct saves paying these high commissions. Many, what I call, “booking boosters” (for example Triptease or Hotelchamp) jumped into the gap. They persuade the customer into direct booking with specialized and individualized technology. Which too, comes at a price – this technology is not cheap. And how do consumers find you on the net? According to these same booking boosters 70% visit an OTA first. Some stiff competition to take into consideration.
Other alternatives include becoming a franchise of a major chain (especially “soft” brands are on the rise), but these too are costly. It often means complying to guest loyalty programs and mostly your inventory is still sold through third-party OTA’s, alas at slightly lower commission rates. Most loyalty programs don’t work. They seldom change customer behavior and many actually irritate loyal customers. Almost all of them are stuck – either with dormant points, inactive members or as a liability on the balance sheet.
Then there are the review sites like Tripadvisor and Holidaycheck. Their income stems from advertising, though Tripadvisor has a commission based program with still has high commissions and which is rather confusing depending on the reach. The usual system is PCP (pay per click) which requires expertise or hiring a revenue manager.
Metasearch engines usually use similar PCP technology. Google of course is the most famous and used one, but there are also the likes as Trivago (owned by Expedia) and HotelsCombined, Kayak and Momondo (all by Booking Holdings). A metasearch engine is an online information retrieval tool that uses the data of a web search engine to produce its own results. Metasearch engines take input from a user on one end (like rates and availability) and gathers, ranks, and presents to the users on the other end, the consumers. Here too, hoteliers compete with OTA’s as the search results always includes availability through the OTA’s.
Did you know that Booking is the biggest advertiser on Google? 3% of Google’s advertising revenue comes from Booking.
Although forbidden in some countries due to competition laws (like in the UK, and currently being investigated in Russia), OTA’s used to commit hoteliers not offering a lower rate on their own website then on the OTA’s. That’s why usually you don’t see any or little difference in rate comparity displayed on metasearch engines sites amongst various channels.
So then, a true alternative?
Yes, bookhotels.direct! At bookhotels.direct we combine the strength of an OTA with the connectivity of metasearch to deliver direct bookings.
Reduce cost per booking
bookhotels.direct charges an industry disruptive commission on sales of 5% (10% if you give a preferred direct booker another 5% off on your best rate). How do we do that? Firstly, the commissions charged by OTA’s simply seem to be unfair. Of all the travel related businesses, hotels pay most commissions. But why? The technology used is similar or even less complicated (Booking even uses an outdated programming language, Perl) than say, the airline industry. Hight costs are certainly involved with customer service. At bookhotels.direct we do not offer a customer service, as we are strictly an intermediary. Clients book directly with you, and in the case of complaints, cancellations, or rebooking turn directly to you too.
Direct customer relationship
The OTA’s control of oceans of data (which they keep firmly to themselves) – and the relationship with your customers. By making customers book direct you own the booking channel and its data. And as customers are directed to your own website, they can see all your offerings (not limited to the OTA pages) and get a “feel” of your property, which makes them far more likely to convert.
Be found on the net
Our general booking site, http://www.bookhotels.direct, works like an OTA. It lists all our members to search criteria by our customers – with a little more. Ofcourse we have real-time price and location search options, but we like to inspire. Boutique hotel? Design hotel? Hip hostel? That family-run guest house hidden on the Amalfi Coast? A lodge on Namibia’s Skelton Coast? Overwater bungalow in Switzerland?
You can also use affiliate marketing, now only used by -again- the OTA’s and major chains. Advertise your property on other (niche) websites and reward these with a commission on generated bookings. Hello influencers!
Easy to use
bookhotels.direct is easy to use. There is no software to be installed by you, no extranet to upkeep, no allocations to be given, no extra work on yet another sales channel to do and no expertise needed on PCP and bidding. We integrate with your website’s booking engine or channel manager. Nothing needs to be done on your part, you just keep working the way you do with your booking engine. All traffic is tracked and generated and consumed bookings and are charged with commissions once a month. We like to keep it simple.
End domination/competition of OTA’s
As we only display the (lowest guaranteed) rates of your website, not of competing OTA’s, we encourage customers to book direct with you. We make it easy for them without endless surfing or clicking around. Together we can beat the OTA’s. So stop paying high commissions and grow your revenue with bookhotels.direct.
Independent Hotels Are Disappearing as Chains Grow
This should be the heyday of independent hotels, which by their very nature offer the distinctive experiences sought by many travelers.
Instead, they are up against huge hotel companies with deep pockets as well as competitors on Airbnb. The result? More independent hotels are either joining the big chains or shutting their doors.
Thirty years ago, about two-thirds of all hotels were independent, according to the hotel data company STR. Today, less than 40 percent are independently owned and run.
One of the biggest reasons independent hotels are disappearing is that they’re getting acquired by the large hotel companies or joining them as affiliates to tap into their marketing power.
Accor had 3,600 hotels and 14 brands in 2013. Now, through acquisitions and investments in other lodging companies, it now has nearly 5,000 hotels under 39 different brands. The chain IHG was also one of the first to the trend, buying the boutique hotel company Kimpton in 2015.
Marriott International’s purchase of Starwood Hotels & Resorts in 2016 included the acquisition of the Luxury Collection and Tribute Portfolio. These groupings of affiliated hotels, known as “soft brands,” get access to the big companies’ reservation and marketing resources but keep their individual identities.
Marriott has had its own soft brand since 2010, the Autograph Collection, which now includes more than 175 independent upscale and luxury hotels worldwide, among them the Emery Hotel in Minneapolis and the Publica Isrotel in Tel Aviv. Nearly 90 more hotels are in the process of joining the Autograph group.
From a customer standpoint, the clear demarcation between a chain and an independent hotel has totally eroded, said Jan Freitag the senior vice president of lodging insights at STR. When a guest walks into a hotel, he said, it’s not apparent that “it may be powered in the back by an affiliation.”
The big chains have been expanding their soft brands to meet the needs of travelers looking for “unique, boutique or historic” places to stay or to add a smaller or different-priced offering to a market where the company sees an opportunity, said Ting Phonsanam, co-founder of Momentum Hospitality Management. His company works with independent hotels to strengthen their brands, help develop renovation plans or prepare their properties to join a soft brand.
Independent hotels that join a soft brand keep much of their own personality, Mr. Phonsanam said. “They can make their own decisions on uniforms, dining offerings, furniture and other aspects of the hotel,” he said.
The fee can be significant, commonly 5 to 10 percent on all revenue, Mr. Phonsanam said. In return, soft brand members get help with marketing and can take advantage of the larger company’s purchasing power or property management software.
Joining a soft brand can get even more expensive, though, if the hotel requires significant renovations or operational changes as a precursor to joining the group.
There’s also significant competition from Airbnb, said Jeffrey Low, founder of Stash Rewards, which offers a loyalty rewards program for independent hotels. Airbnb is adding inventory to the alternative lodging market, attracting customers “who might otherwise choose an independent hotel,” he said. That drives down the prices independent hotels can charge, Mr. Low said.
Independent hotels with strong established positions in their markets are the most likely to reject offers to join a larger group.
Barbara Malone, co-owner of the 110-year-old Hotel Sorrento in Seattle, says the key to success for the independent hotel she owns with her husband has been to “stay true to the hotel’s DNA as a community builder,” offering music and literary events and serving their core customers including families coming to the area for medical treatment. At the same time, she said, it’s important to stay nimble and take advantage of new opportunities, like the current expansion of Seattle’s convention center just a few blocks away.
Still, she said, it’s getting more challenging to operate as an independent hotel. “The major brands can approach corporate clients with a large portfolio and a range of prices,” she said. “That’s stiff competition.” The Sorrento also competes with a growing number of Airbnb offerings and other short-term rentals.
Patty Baird, who owns the independent Cedar House Sports Hotel in Lake Tahoe, Calif., with her husband, focuses on creating a sense of place at the hotel, including photography retreats, cooking classes using local ingredients and a dog-friendly itinerary on the hotel website. A recent outing to a local food hub and brewery gave visitors. “a sense of our town and its spirit,” she said.
Independent hotels can face higher costs than large chains when working with online travel agencies like Expedia and the Priceline Group. Hotels generally pay a 15 to 30 percent commission when a traveler uses the online booking agency to reserve a room. But larger companies like Marriott use their market power to negotiate lower booking rates. Independent hotels also rely more on online travel agents to book their hotel guests than the big brands.
Independent hotels also face competition from online booking agencies’ sites. The agencies will sometimes buy key words, including the name of independent hotels, to advertise on Google and steer travelers to their sites rather than to the independent hotel’s site. Ranked first in a recent search for Cedarbrook Lodge, outside of Seattle, were advertisements from two Expedia brands, meaning that those brands had essentially outbid Cedarbrook Lodge for its own name on Google. This practice can translate to reservations that are less lucrative for the independent hotels.
For its part, Expedia says buying those key words can help independent hotels because its research shows that search experiences that associate hotels with an Expedia family brand name give those hotels more credibility and customers are more likely to book them.
Jolene DiSalvo, senior vice president of Columbia Hospitality, which manages the Cedarbrook Lodge, said that while the hotel appreciated the wider audience exposure provided by online travel agencies, the goal is always to “drive direct bookings to our websites,” both for the extra revenue and more important, she said, to own the customer experience from the start.
Extreme weather has been especially hard on independent hotels because they don’t have the resources of a major chain to rebuild. According to the research company STR, 1,000 independently owned and operated hotels closed in areas along the Gulf of Mexico and the Atlantic from 2003 to 2007. Those were the years that nearly 40 hurricanes, including Katrina, came through the areas.
The big chains have also been building new hotels at a faster clip than independents, according to STR. One reason for this may be that lenders prefer hotel projects that are affiliated with a large hotel chain because they see it as a less risky investment, Mr. Phonsanam said.
A set of businesses is serving independent hotels to help them “compete and thrive,” said Mr. Low of Stash Rewards. Accruing points for travel can be an important factor when choosing a hotel, especially for business travelers, Mr. Low said, so his product helps independent hotels stay on a guest’s radar.
Review sites like Trip Advisor can also help independent hotels. Accessing reviews and photos helps guests feel more comfortable booking a place they’re not familiar with, said Stephen Chan, a hotel real estate investor who helps organize the annual Independent Lodging Congress, a gathering of people who work in independent lodging.
Attendees at the latest conference, held last week in downtown Los Angeles, expressed their concern that many guests see soft brand hotels as “boutique enough,” Mr. Chan said. That, Mr. Chan said, was making it hard for truly independent and distinctive hotels to remain that way.
By Julie Weed. From: The New York Times, October 21, 2019.
Accor and Chinese retail commerce gaint Alibaba Group have announced a strategic collaboration to develop a series of digital applications and loyalty programs to improve the consumer and traveler experience over the next five years.
Accor will leverage Alibaba’s nearly 700 million consumers across its China retail marketplaces to create hotel bookings within Alibaba’s comprehensive ecosystem. Alibaba’s travel arm Fliggy will allow consumers to book hotels, access catering services, book entertainment and take advantage of other lifestyle services. Payments can be made using Alipay, a digital payment service operated by Alibaba affiliate Ant Financial.
Accor will also offer Chinese consumers a hassle-free hotel experience through its “Haoke” program, which ensures hotels offer Chinese amenities and services.
Note: undeniably a great business idea, but where is the individuality and choice in this? 700 million people in their own bubble, booking the same chain hotels with amenities exactly catered to them. A sort of new (Chinese) Club Med; paying with their Alibaba phone in stead of plastic bar beads.
The following article appeared on Tambourine earlier. bookhotels.direct offers the same functionality as the metasearch engines, but without the competition of the OTA’s (why compete when the best rate can be found on your website?) and without the knowledge of SEO Marketing and PPC (bookhotels.direct works on a simple, pay-only-for-results at a commission of 10%).
While OTAs have long been a dominant source of indirect hotel bookings, metasearch sites like Kayak, Trivago, TripAdvisor, and Google have recently become much more relevant in hotel marketing and distribution channel discussions.
As you know, OTAs are indirect booking channels that own the relationships with your guests. Metasearch sites, on the other hand, are primarily not booking channels. They are advertising platforms on which hotels (and OTAs!) can market their inventory. From the price-sensitive consumer perspective, metasearch sites have the distinct perceived advantage of being a one-stop shop—it’s a way to research hotels available during their desired travel dates, read reviews and compare prices between different booking channels (including the OTAs).
However, we’ve recently seen a blurring of the lines between OTAs and metasearch sites. First, a sweeping trend of industry consolidation has led to acquisitions; like Kayak by Priceline and Trivago by Expedia. Also, much like the OTAs, TripAdvisor and Google have integrated inventory into their search results with a Book Now button, leading many to wonder whether a hybrid OTA/metasearch model is on the way.
Given this information many hoteliers are asking, do I really need to invest time and money in metasearch?
The answer is, probably yes. If your guests are using metasearch sites to book hotel accommodations, you need to have a presence on those sites. Fortunately, there are some great benefits to investing in metasearch.
What are the benefits?
1. Reduce cost per booking
OTAs like Priceline and Expedia are now charging booking commissions as large as 30 percent, taking ever larger cuts of the hotel’s bottom line. Metasearch sites, however, operate on a different model, as businesses pay on a cost per acquisition (CPA) or cost per click (CPC) basis. This often results in hotels paying much less overall per booking, allowing them to keep more of their profits. TripAdvisor, for example, offers a CPA model and charges only 12-15 percent of the booking, in exchange for a guaranteed 25-50 percent visibility in search.
Google has also jumped on this model in their own way with the Google Hotel Ads Program. With this program, ads appear deeper in the consumer’s hotel search process, as prospective guests narrow their requirements for your specific type of hotel, resulting in stronger conversion rates and higher returns on investment. Hotels can choose the OTA-like CPA model or the traditional CPC model. But in both cases, the hotel “owns” the customer and receives the contact when the consumer books.
Expedia and Priceline Group together spent $5.8 billion on advertising last year, with 23 percent ($1.3 billion) of that deployed on TripAdvisor and Trivago. In other words, your OTA partners are likely using metasearch sites to sell your hotel. Why not claim your own presence on those metasearch sites, pay a lower price for the booking AND get the contact info of the guest?
4. Own your guest data
With metasearch sites, hotels receive the booking as a direct booking, as these sites either redirect guests to the hotel’s website or integrate directly with the hotel’s CRS/booking engine. This means you receive the guest’s contact information and other data, rather than a generic Booking.com email address. Once you have that data, you now have the opportunity to market directly to that guest with targeted email marketing and win back direct, repeat business.
5. Diversify your marketing
The cost of other direct traffic sources continues to rise, making metasearch a proven, viable option to diversify your marketing investments. Search engine marketing pay-per-click (PPC) costs (especially on Google), burning holes in hotel marketing budgets around the globe.
“Since 2012, we’ve seen more volatile fluctuations to Google CPC (cost per click) costs for both branded and non-branded keywords in certain markets,” said Shannon DeFries, director of digital strategy & optimization at Tambourine. “Most hotel’s branded keywords have become much more expensive.”
Metasearch: Keys to success
1. Pick the right sites
Some metasearch sites may yield better results than others, depending on factors like your hotel’s location, the type of experience you offer, and the types of guests you attract. If you’re a small hotel with fewer resources, it’s a good idea to closely monitor your return on CPA/CPC spend for each site. This way you can prioritize the channels that perform best for you.
2. Use technology to your advantage
The thought of managing yet another distribution channel may be daunting to revenue or channel managers who are strapped for time or have little to no experience with CPC ads. Fortunately, there are ways to easily manage all of your distribution channels in one place, including automated best rate guarantee on your direct booking engine and dashboards that instantly show you your return on investment.
3. Get help if you need it
On the other hand, while revenue and channel managers at branded hotels may leverage technology to help them scale, their counterparts at independent properties may struggle with the additional load and should consider outsourcing metasearch to a trusted and experienced agency partner who will help them achieve their revenue goals.
4. Close the loop
Now that you have a relationship with this guest, it’s important to convert that guest to a direct booker. Make sure your marketing team communicates with these guests regularly after the stay with offers and incentives to book directly with you the next time they take a trip to your area.
Very interesting article in Forbes on OTA’s – how they work, their future and competition.
Online travel agencies (OTAs) are the original digital disruptors — first-generation internet businesses that identified an unmet customer need and created digital destinations that became the first stop for prospective travelers. Yet the very thing that gave rise to OTAs — the ability to aggregate digitized data to create economical, do-it-yourself travel planning — now threatens to be their undoing. As with most erstwhile digital upstarts and once-transformative business models, OTAs must disrupt again or risk being disrupted.
Where 20 years ago planning travel was a complicated, anxiety-fraught exercise, travelers today feel more in control, thanks in large part to OTAs. The digitalized travel model brought comparison shopping and price transparency to desktops and mobile devices, and travelers embraced this self-sufficient approach to planning business and pleasure trips because of its enhanced flexibility and customization.
That awakening helped produce explosive growth for both travel and OTAs but spawned myriad challengers competing for the same customer. Eventually, the explosion of rivals led to bigger and savvier OTAs as small ones were gobbled up.
The consolidation created heavyweights in the travel value chain. Booking Holdings and Expedia, the two biggest OTAs, boast a combined market cap of more than $100 billion, comparable to the four largest US airlines combined.
But competition doesn’t end there. The biggest threat in travel planning could eventually come from the tech powerhouse that helped OTAs become successful in the first place. After years of quietly building a brand in travel, Google today has become a leading option for travel search, second only to Expedia.
While Google still sends most customers to its advertisers to book, the tech giant has introduced close to one-stop shopping over desktop and mobile app; it also can complete the booking for some hotels and flights. In time, it will extend the tool to Google Assistant. But what gives Google its edge in travel are the petabytes of data at its disposal from its purchases of ITA Software for flights and Zagat for restaurants, building up its hotel metasearch comparisons, and the trillions of travel searches going on daily via Google.
Costs and commissions
But Google isn’t the only thorn in the OTAs’ side. Besides rising competition, OTAs are also seeing their operating costs climb and the once prescient business model undermined. The culprit: The cost of search engine marketing (SEM) — the most important tool in the OTA toolkit — has been increasing. Booking.com alone spent over $4.4 billion in 2018 on performance marketing, which is essentially SEM. Booking’s expense represents about three percent of Google’s advertising revenue. So not only is Google pocketing Booking’s money, it is also grabbing new travel data with each click.
Here’s how SEM works: Through Google AdWords or Bing Ads, companies bid on high-value keywords and phrases such as “flights to Spain” or “New York hotel” that indicate an intent to travel. The bidder — in this case, the OTA — only pays the search provider if a customer clicks on its link. OTAs make money by converting those click-throughs into purchases of flights, hotel rooms, rail tickets, or rental cars. OTA profitability depends on keeping the cost-per-click lower than the revenue on a customer transaction, multiplied by the rate at which the OTA is able to convert visitors into purchasers.
If a consumer visits multiple sites or even the same OTA multiple times from different platforms without making a purchase, the OTA loses money — a practice that is becoming common, as would-be travelers increasingly comparison-shop. (See “The Super Informed Traveler”) Even when consumers do complete a purchase, OTAs struggle with how to credit the sale, given the array of click-throughs and impressions associated with it. That raises the risk of overpaying for SEM.
Travel SEM is not limited to OTAs. Among the regulars competing for travel keywords: airlines, hotel chains, rental car agencies, passenger rail companies, and cruise lines. This creates a bidding war for the best keywords.
OTAs and others in the travel industry are not the only ones facing rising SEM costs, overcrowded marketplaces, and disruption by a new wave of innovators and big corporate names. The same scenario has been playing out in sectors including real estate, autos and insurance that have also been digitally disrupted by savvy SEM. Upstarts like Zillow began upending traditional real estate over a decade ago, and the shakeup and SEM frenzy have continued with News Corp.’s purchase of Realtor.com in 2014 and the creation of online sites like Streeteasy, which specializes in big city real estate.
For OTAs, the pressure comes from more than higher costs. OTAs’ primary source of revenue — commissions paid by travel providers — is threatened by industry consolidation and providers’ push to promote direct booking. Airlines, which have been consolidating for more than a decade, are using apps and loyalty programs to encourage customers to book directly with them. Because airlines rely less on OTAs, they pay significantly lower commissions. The new OTA economics can mean that net of the SEM costs, an OTA may lose money on the sale of a flight.
While hospitality and cruises have offered OTAs an opportunity to earn higher margins than on air travel, consolidation and competition here too are starting to cause problems for OTAs. Large hotel chains are determined to get their distribution costs down by negotiating lower OTA commissions and pushing their own direct channels. To accomplish this, most reserve their best deals and properties for their own channels and OTAs willing to play ball on commissions. OTA hotel offerings are also suffering because of competition from alternative lodging platforms like Airbnb that don’t make their offerings available through OTAs.
Fork in the road
OTAs do have options to grow and better compete. One would be to fine-tune their use of paid search. Developing the capabilities to integrate search activity, site activity, and customer relationship management data could help OTAs identify keywords associated with the most attractive customer segments — those that generate higher margin per transaction — and keep ahead of rising SEM costs.
Another option would be to become one-stop shops, like the travel agents of yesteryear but adapted to an online, data-driven environment. OTAs have the reach and capabilities to provide full-service vacation planning, including tours, attractions, classes, and theater tickets, which would offer more margin opportunity and appeal to a new generation of upscale travelers. Surprisingly, travel agents are enjoying a mini-resurgence with millennials, who want curated, personalized travel planning, according to the 2019 Portrait of American Travelers survey, conducted by travel agency MMGY Global. The survey suggests that not doing everything online and providing person-to-person expertise might lead to more customer loyalty. Creating call centers and a local presence, once eschewed by OTAs, could be differentiators.
A third route is to rethink the marketing mix and reduce reliance on SEM. Some OTAs are looking at traditional media, such as television, radio, and outdoor advertising, as a more cost-effective way to reach buyers. The goal would be to get customers to bypass search engines and go directly to an OTA-branded website or app.
Finally, OTAs could change how they interact with customers. Instead of simply taking orders and delivering the goods, they could become travel advisers, telling travelers about what they haven’t considered, but may very well enjoy. Such inspirational power is well within the capabilities of today’s artificial intelligence and visual rendering technologies. And it just may be the new identity that could help OTAs disrupt the status quo again with a 21st century business model built to satisfy a much savvier traveler.