This is a follow up on the previous News Release on the HotelTonight Airbnb deal . In this followup Max Starkov of HEBS Digital Marketing examines why Airbnb wants to be an OTA, why they may not be a great idea and what they have to do to get there. He suggest that the reasons are a matter of growth opportunity and declining expectation for rental growth and user fees.
Currently Airbnb charges 4 to 8 % for the host and 6 to 10% for guests. But the trend is moving away from guest fees as the OTAs get into Airbnb Vacation rental with no guest fees.
The writing is on the wall so Airbnb want to hedge its bets and get into the mainstream business head to head with OTAs.
That the reason they want HotelTonight. Its not that they need the technology as HT is way behind on instant bookings and many of its properties are still connected via a manual extranet. Airbnb has ample capability in mobile also so that not a reason to want HT.
It’s not going to be a happy marriage for many hotels who think that Airbnb is steeling their business.
The trip to becoming an OTA is a long and windy road with many pitfalls along the way. It is a fiercely competitive market, not like being a first mover as in the past.
In its summary the UK Completion Watchdog Reigns-in Misleading Booking Sites that it says are: “Using sales tactics like pressure selling.” Also evaluated were misleading discount claims and hidden charges. The Consumer Watchdog demanded full disclosure and transparency in how money influences which properties are featured on their sites.
Specifically they oppose tactics such as: Misleading statements that effect search ranking, leading to search results that do not truly reflect the offer. References pricing with strikethrough, savings claims and any form of pressure selling are forbidden. All these misleading tactics put hotel marketers, agents and distributors at risk of breaking consumer protection law.
BBC news reported that no names were mentioned but it is widely believed that the sites that were investigated include leading OTA sites include Expedia and Booking.com. Of particular note to Digital Media Marketers was the warning that sites that manipulate search ranking are a major concern; “How search result rankings are influenced by factors irrelevant to consumers, such as how much commission a hotel pays the site.” Source BBC News
Trust Betrayed
‘Trust’ is the key to commerce on the Internet and all marketers loose if they fail to convey trustworthiness. About 70% of travel shoppers use hotel booking sites, according to the CMA. Andrea Coscelli, CEO of the CMA adds: “Booking sites can make it so much easier to choose your holiday, but only if people are able to trust them.”
This Blog, by Linda Fox of Tnooz, covers the Startup Hotel Bonanza, a new OTA working with hotels at only 8% commission. That’s good news for hotels for sure. It is also good news for travellers as they offers a membership that gives 5% off every booking.
As they say “Our mission is to deliver a better deal for both properties and consumers by offering a fair rate of commission and a customer loyalty scheme, all run from a single, easy to use digital platform.”
Linda wondered if its too good to be true and why would they offer so much right at the start as that it like a red flag to the existing OTAs. I suggest that’s lots more like this will happen. I know they will because i am involved with one startup right now that looking at fair and reasonable commissions and will make distribution a vital partner of tourism suppliers. Check this blog for updates coming soon!
I did add a comment to this blog saying:
“Yes I agree ‘Good news sometimes does seem to be to good to be true’. But I think it is realistic. For some time now their has been speculation that OTAs will have to reduce fees.
For smaller hotels the startup rate is now 15% and Google hotel Ads start at 10% TripConnect for some hotels is 8%. Booking.com charges just 5% on direct booking to hotels that have their booking widget installed. So 8% is in line with where things are going.”
Unfortunately many travel shoppers do not know that they are not linking to the the hotel’s own website to book from these mirror listing on Google.
Not only do OTAs List higher that Brand sites they mirror in many cases the brands who do not advertise will likely be way down on the page or not listed on the first page at all.
Even Google is crowding the space with its own information and booking options and that is not about to change.
In this article, Adrienne Hanna, founder and CEO of Right Revenue, warns that with all the big players mirroring marketing and filling the page with their representation of hotel brands, the brand is often pushed out of search results and maybe ‘Under the fold’, if you are lucky”. She adds “unless you are paying for the privilege, even on your own wonderful name, you seriously risk not appearing on the first page at all.”
This means are loosing direct business and loosing the opportunity to build brand integrity. As she says “Make no mistake, this is something that we can all challenge with the OTAs.”
Adrienne advice is “Read the small print and challenge those clauses in the contract. Maybe it is time we all stepped up and were brave enough to be counted.”
Hotel Finder was launched in 2011 and we have seen many upgrades since- The last video we did showed Google becoming more hotel friendly. Now it is looking like just another OTA.
Here is a picture of the new interface:
is hotel finder just another ota
Here is our previous 2015 video on Hotel Finder
In our previous MarkHat.com Update on Hotel Finder, we looked at the inevitable changes in advertising that underlie this move by Google. But adding bookings to hotels finder brings Google into direct competition with its largest customers, the OTAs. Get the details here >>>. The question we ask is that knowing current CPC ads are not the future for advertising is changing into an OTA the right strategy for search?
A recent study published by global hotel consultancy HVS revels that the major OTAs; Priceline, Expedia, and such have catapulted their dominance in the market throught acquisitions of regional agents and specialized distribution. Today Priceline controls 62% of the European market and Expedia has approx. 70% of US market. The HVS report cautions that the trends makes Hotels More Vulnerable to Distribution as Hotels reliant on bookings from OTAs may soon have just a couple of these distributors to work with and terms and commissions are likely to get more onerous.
HVS says that “while OTAs offer a number of advantages to hoteliers including a wide, multi-national reach and big marketing budgets, the commission rates of anything from 15% up to 30% are a heavy burden on hotel profit margins.”
HVS also warns that OTAs are also launching their own loyalty programs which will further negatively impact the growing trend to favour hotel website and book direct. This says HVS is “taking them into a head-to-head battle with hotel group loyalty schemes and threatening one of the unique selling points some hotel brands offer their customers.”
Get More Direct Bookings
The report concludes that “hotels should aim for a healthy balance between OTA bookings and bookings from their own website, making sure they maximize their website bookings by making their site as up-to-date, attractive and easy-to-use as possible.”
For more on how to enhance hotel direct bookings and build brand loyalty with straetigmessaging and effective sales systems see our previous blog THe move to direct bookings >>>>
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