There is a great imbalance in the relationship between hotels and OTA’s (Online Travel Agencies). Today it is extremely rare for a hotel to have an official website that brings in as many bookings as Booking.com or Expedia. Why? Simply because it does not have the same technological weapons as the OTA’s.
In 2010, when hotels were giving their online travel partner 20-40% of their gross revenue the business model was simply:
There is no denying that this model gave the hotel industry a big boost and allowed many hotels to open up new market segments. For example, it is unlikely that a 5 star hotel in Egypt would have been able to open up a website that can compete with Booking.com or similar OTA’s, simply because they did not have the same budget to spend on marketing. As such, these 5 star hotels simply stayed away from advertising and relied on OTAs for 80%+ of their bookings.
But, over the last five years we have seen a lot of changes in the online travel industry.
On one side, we have seen many 2 / 3 star hotels that are now advertising on Google and other search engines. These hotels are getting a big share of their bookings directly through their own websites which they can achieve by offering good rates and quality service. Many of these hotels have also started to offer discounts and promotions that allow them to undercut OTAs by 20-30%.
Across the world the number of hotel websites has grown from 1 million in 2006 to more than 30 million in 2014 (source: PhoCusWright).
On the other side, OTAs are fighting back. They now have huge teams of engineers that spend most of their time developing new algorithms to fight back.
OTA’s create rate disparity to sell more… at the expense of the hotel
Today we see a completely new dog-eat-dog competition where the winner is a simple equation:
Whoever is able to offer the best price at the right time on the market and the right device wins the majority of bookings.
By using Artificial Intelligence and Machine Learning (AI) to apply massive amounts of data and powerful algorithms to systems that are designed to catch out hotels in their web presence. By doing so, they are able to create pricing disparity and pricing opacity according to customers’ markets and connection devices.
Today, 70% of hotels in the world are more expensive on their official website than on the OTA’s.
Giving the right tools to the hotelier
HOTEL INTELLIGENCE provides a technological solution for hoteliers. This unique technology allows the hotelier to integrate on its official website a price comparator between the main OTA’s and its direct sales price. Nothing new so far, you may say?
What changes everything in this technology and is unique in the world is that this comparator is in real time (and not a capture of metasearch every 6 to 8 hours), that it geolocates the country of connection of the visitor as well as his device of connection (mobile, tablet, computer). This allows it on the one hand to provide the real price of the OTA’s but above all to propose an intelligent parameterisation of the hotelier’s direct selling price.
HOTEL INTELLIGENCE provides a technological solution for hoteliers.
There is no need to set a fixed price, but simply to decide to automatically align with the best price offered by the OTAs. It is also possible to have a more aggressive strategy by proposing a reduction compared to the OTA’s or added values.
The result? The hotelier guarantees that in 100% of the cases the customer will get the best rate.
Finally, you are equipped with the same pricing technologies as the OTAs. This is how Hotel Intelligence allows you to develop your direct booking by rebalancing your relationship with the OTA’s.
Of course, price is not the only criterion for developing your direct sales. Request a demo from the Hotel Intelligence team to discover the full range of its technological solutions.