The OTAs don’t have to be a hotelier’s worst enemy, providing the big boys play fair

Judging by the sometimes tetchy relationship between online travel agents and hotels, and if you believe that statistics aren’t lies damn lies, then you would be pleased to know that on the whole online travel agents actually do bring new customers to hotels.

That’s according to Isabelle Pinson, Expedia’s senior director market management, northern Europe who was at the recent Travel Distribution Summit, Europe.

What’s more, she says those customers who start their journey on the OTAs website, probably wouldn’t have gone to a hotel first anyway because they fit into a different demographic.

What Expedia’s data shows – and this is a highly data driven company – is that customers booking through OTAs are often looking for the lowest price, or for a package deal. They are also more likely to use mobile features, are younger and more prone to international travel. On the other hand, those booking direct tend to prefer loyalty schemes and are more familiar with the hotel; they often want high-end amenities and care about the brand.

While some might argue that points to a lack of customer understanding about how the industry works, Expedia’s data shows that of the customers that booked a hotel direct 100% of time:

• 12% started on hotel site
   
• 15% started on OTA site
   
• 32% had used an OTA

And when it comes to customers booking a hotel direct most of the time

• 11% started on hotel website
   
• 32% started on an OTA site
   
• 63% had used an OTA

In essence, a core thrust of Pinson’s presentation was that there was space in the market for all to play, and that like or not savvy customers do use OTAs to research hotels.

Mobile opportunities

Admittedly not all hoteliers have a great relationship with the OTAs, but what’s become abundantly clear is that all travel brands have an opportunity to deliver on the mobile experience. And with much bigger technology and marketing budgets and economies of scale, the OTAs could, on this front at least, be of some assistance. Providing, of course, the big boys play fair in an increasingly competitive landscape.

As Carl Oldsberg, VP Revenue & Distribution, Nordic Hotels argues hotels need to negotiate hard and also clearly understand what any OTA partner can deliver.

As an example, a bona fide ‘boutique’ hotel might find it better to work with a smaller niche agency like Mr & Mrs Smith. Although Andrew Leung  who heads up online marketing at the upscale agency admits that the big OTAs have started to bid on terms like boutique, Smith Hotels' have the advantage of having a focused approach to content and a particular tone of voice. Press partnerships with British Airways, Condé Nast and Times Travel also help them to reach the right audience for hotels.

One thing the big OTAs can deliver on, however, is insights into marketing and technology. Last year, Expedia carried out 800 A/B tests on their online brand – and invested in £1.2bn in marketing with the central objective of improving conversions.

Of course a major focus is mobile and for Pinson, the question hotels should be asking is: how do we prepare to win in a mobile enabled world?  After all, consumers want enhanced technology and the share of travel booked via online mobile platforms is growing apace. According to EyeforTravel’s latest Mobile in Hospitality Industry Report, 64% of hotel executives believe that mobile has generated direct bookings.  

So, it comes as little surprise that behind the scenes Expedia is collecting huge amounts of data and testing everything from how to size a picture on a mobile device to the colour of a button and understanding the customer’s requirements during a trip.

Expedia is looking to better understand the local needs of customers in order to respond to growing markets of Brazil, Russia, China, South Korea and Malaysia. The firm’s research identified variations across different nationalities.

• In Brazil customers prefer to pay in instalments, something Expedia has invested in to ‘unlock growth’
   
• In Japan drop down menus on a mobile device are preferable due to the large number of characters in the Japanese language which make typing more difficult

With its multiple brands, multiple products and big marketing budget, online travel agents like Expedia and booking.com can help hotels to:

• Play the booking curve
   
• Analyse, test and learn
   
• Target promotions based on need
   
• Present the hotel to the consumer in the best way possible: for example verified reviews do actually work

In other words, play your cards right and OTAs, big or small, can serve a useful purpose if you keep one thing top of mind: hotels still own the customer experience and this is where you really can stand out.

Research for this article was prepared by Mariam Sharp, a business consultant focusing on projects that promote international exchange; she can be found on LinkedIn and Twitter. Additional reporting by EyeforTravel