Millennials Strike Another Blow to OTAs

I have covered the trend in direct vs distribution or travel agent assisted booking for some time now, its been gradual and slow but the latest stats and thinking see a dramatic change in booking patterns. Namely that travelers are moving away from OTAs and booking more direct with the hotel.

A large part of this shift is because of the fastest growing segment of the demographics. that is the millennials, or people born between 1982 and 2002. This group has overtaken Generation X and their impact will grow considerable as they mature. Conor Fitzgerald of Goldmana Sachs forecasts that “By 2038 Millennials will be the most important financial generation in America and industry will have to adapt to fill their needs.”

Millennial have a distinct approach to consumption that is shaped by the financial crises, social media and the Internet. Typically they buck the trends and have a very much more do it yourself mentality. They don’t care for frills and luxury or possession as much as their predecessor and I believe this attitude is prevailing more and more and will effect travel, banking and all sectors of the economy (see more on this at the Globe and Mail, June 25th 2015).

Having read the article in Canada’s Globe and Mail I am eager to apply that thinking to what is happening in Travel. MMGY Global’s 2015 Portrait of American Travelers (POAT) documents this convincingly and its findings are analyzed by TravelPulse in a recent article. It too concludes that Millennials Strike Another Blow to OTAs – Here is a snap summary:

Travelers are increasingly migrating from OTAs

Travel shoppers are increasingly going directly to travel supplier websites to both research and book travel. “Only 58 percent of travelers surveyed said they obtained travel information from an OTA during the past year, down significantly from the 84 percent who did so in 2014. On the booking front, the survey found that among travelers who regularly seek information from an OTA when planning a vacation, only 13 percent typically book their reservations on OTA sites, down from 36 percent just one year ago.”

It seems that the main reasons for booking direct are to get the best price (64 percent) and find it more convenient than booking with an OTA (67 percent).

Now to be accurate the study does not track all of this back to Millennials, but the point is this is precisely the sort of behavior we see with this group and it is only going to become more pronounced as they mature and influence more. The report does show that Millennials are reshaping the travel industry in surprising ways:

How Millennials are Reshaping Travel

Many believe millennials are apt to seek travel experiences in far off and more exotic locales, yet more and more are opting to enjoy adventures in their own backyard. More than any other age cohort, millennials are increasingly interested in “staycationing,” with over half (55 percent) taking a vacation close to home as an alternative to traveling a greater distance during the past year. This figure is up 14 percent from 2014 and up 23 percent since 2013. They also appear to find cruising an affordable and convenient vacation option to explore.

Millennials are also using more non-traditional options for accommodation and booking with Airbnb and HomeAway. They are first to use ride-sharing services like Uber. This trends is also hot with GenXers and boomers:

While 80 percent of millennials use these services they are popular with boomers (74 percent) and GenXers (72 percent)

Hotel Direct Marketing Needs a New Strategy

Many hotel have taken the easy road and built their distribution network at the expense of their own website. Too often Hoteliers feel the OTAs understand marketing better than they do and can afford to dominate search results with strategic SEO and marketing. They spend millions on media advertising and attracted millions of travellers. That is still true but, as we see, it is changing. For hotel managers who want to market direct, there are several things that have to be put in place. First is the Messaging. Often the hotel marketing message is fragmented and full of platitudes. This is a mistake that many business owners make- Check out the Power Consultants suggestion for fixing this and other issues – see 2 common messaging mistakes that may be killing your marketing – AllCast PowerConsultants

The MMGY Data was collected in February 2015. See details on TravelPulse>>>

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Mistakes that most hotel marketers make – by All Cast PowerConsultants

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