Industry Update
Opinion Article10 November 2015

Why The Online Bookings Power Shift Is More Manageable Than Hotels Think

By David Chestler, EVP Global Enterprise Sales & Business Development, SiteMinder

By David B. Chestler, Senior Executive in Hospitality and Travel

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Online distribution is growing at a faster pace than the entire travel market. The American Hotel and Lodging Association (AHLA) estimates 480 online bookings are made every minute, across the US, alone. It's a fascinating statistic that emphatically demonstrates how much the hotel industry has changed over recent years.

We know more people are travelling than ever before. Figures from the UN World Tourism Organization show that in 2014 the number of people travelling internationally reached 1.14 billion – and it forecasts growth of around 4% during 2015.

This heightened desire to travel and see parts of the world that 25 years ago would have been considered out of reach, and of course too costly, has been spurred on by the Internet economy, the desire for experiences once reserved for the elite, and the sheer volume of information that's available to travellers making it more accessible.

But if we dig deeper into this observation, the broad accessibility of information isn't just changing a handful of travel industry trends, it's completely shifting the balance of power – from a consumer economy with intermediaries, to a user economy with "self-service".

The consumer economy is now a user economy

Travel knowledge and information used to lie in bricks and mortar, dominated by brands and agencies, renowned for delivering an expertise that could be rarely challenged.

But the Internet has caused a tipping point to occur, enabling hotels to sell themselves to potential guests who appear to know precisely what they want, and the research they need to carry out in order to make their travel aspirations a reality.

Everything from photos through to guest reviews are creating information overload, as user generated content becomes a critical variable in the consumer's battle for power. In the early days, travel agents and experts influenced consumers with experience and brochures illustrating what was available. Later OTAs, and especially Booking.com, revolutionised this idea of putting the traveller in control by providing more content and information available at their fingertips. Now we see the user economy taking control with the growth and development of Airbnb, Uber, Flip.to, and many others enabling self-selection.

Travellers can have an authentic experience of living like a local, in the neighbourhood, visiting their host's local favourites – and quite often at a fraction of the price. Travellers are willing to transact beyond hotel rooms, and as a result guests are becoming more efficient at making their final booking decisions.

The new doesn't always replace the old

After 26 years in the hotel and travel industry, I'd like to think that the old (or perhaps mature) can continue to be relevant. And it is.

Many travellers still rely on the services of travel agents – in fact, research shows that in 2014 18% of American travellers used traditional travel agents, compared with 12% in 2013.

Global distribution systems (GDSs), which have been around for decades, continue to service a huge volume of travel and accommodation bookings – an estimated 62 million in 2015 – demonstrating the staying power of expert advice from travel agents and wholesalers with enhanced networks and online tools.

That said, there are always going to be new brands or industry challenges that force hoteliers to stay fresh and on top of their game. That's nothing new and it will always evolve. For hoteliers, it's a question of managing and adapting to those changes. It's evolution, not revolution.

The bookings gauntlet has been thrown down

Hoteliers must think global and act local in order to capitalise on the guest's winding path to purchase. We live in a multi-screen world, with many points of conversion, and it's important to remember that rate is not the prime decision tool. Yes, price is a big differentiator when assessing the challenge presented by the likes of Airbnb, but there are many more factors to consider. Hoteliers can take on the challenge in many ways. One example is to become more service-orientated, focusing on the elements of a hotel that home-sharing can't offer – such as tour guides, chauffeured drivers, dry cleaning, restaurants, gyms and a bounty of amenities and loyalty points.

By offering an extraordinary guest experience hoteliers can really capitalise on the impact of user generated content – reviews, social media check-ins, comments, ratings – and in turn use these positive affirmations to drive bookings.

A hotel's biggest weapon in the fight for bookings is knowing the business mix inside out. Ask where your bookings are coming from. Ask what your local competition is doing to fill their rooms. Ask how you are driving your online and offline business.

It is truly all about the details.

Hoteliers need to find balance and control of how your rooms are being distributed. Take charge of your bookings mix and ultimately your business.

Cloud technology – such as SiteMinder's Channel Manager, TheBookingButton and Canvas – is levelling the playing field for independent hotels, helping them to compete in a fast-changing market. It gives hotels of any size the power to be exactly where prospective travellers are – without the need to invest heavily in IT and systems, providing more time for creativity and caring for your guests.

The multi-channel, multi-screen world is now completely accessible, giving hoteliers greater opportunity to reach, attract, and convert global guests. Chain hotels have been doing this for years, reaping the benefits of having a visible online presence to ensure they turn lookers into bookers. It's time for independents to take charge, challenge the status quo, and compete in the same way.

It was an honour to present at WTM London once again this year. If you missed my presentation on "The power shift in travel: How hotels can get back on top with their online distribution strategy", you can now view it here.

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David B. Chestler

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    About SiteMinder

    In an age of rising choice and accessibility for curious travellers, SiteMinder exists to liberate hoteliers with technology that makes a world of difference. SiteMinder is the global hotel industry's leading guest acquisition platform, ranked among technology pioneers for its smart and simple solutions that put hotels everywhere their guests are, at every stage of their journey. It's this central role that has earned SiteMinder the trust of more than 35,000 hotels, across 160 countries, to generate in excess of 100 million reservations worth over US$35 billion in revenue for hotels each year. For more information, visit www.siteminder.com.

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