How hotels and OTAs can prepare for the post-pandemic future — Photo by HotelRunner

At the time, the negative impact on global travel of the Great Recession in 2008, the Icelandic ash cloud in 2010 and, of course, 9/11, were considered 'unprecedented'. The ash cloud resulted in 95,000 flights being cancelled over five days, and 9/11 saw a ban on all civil air traffic from entering US air space for three days. However, that was BC (before COVID). It's been well over a year since the first case of COVID-19 was declared by China and it's only now that we are beginning to understand what 'unprecedented' really looks like.

Leisure travel outlook

In the US, the American Hotel and Lodging Association's 2021 State of the Industry report predicts that half of US properties will be booked out during 2021 and states that hotel employment will likely return to pre-pandemic levels within two years. Once the vaccination programme has been fully rolled out, hotel bookings are expected to rise in line with increasing consumer confidence.

In the UK, there's no doubt that, after months of being in lockdown, people are desperate to travel and, like the US, their propensity to do so is very much linked to the vaccine rollout and perhaps, as was the case last summer, we should expect the sector to return domestically first, with short-term rentals and self-catering accommodation proving especially popular.

The good news is people are booking holidays and there has been a noticeable increase in bookings for October (ie post vaccination programme), with agents also reporting an increase in holiday bookings for winter 2021, summer 2022 and even as far ahead as 2023.

Corporate travel outlook

If the outlook for leisure travel sounds unsettling, things are not better for the corporate travel sector. The GBTA's recent annual BTI Outlook revealed that business travel spend dropped by 77 percent in Western Europe as a result of COVID and the financial losses for 2020 are expected to be 'ten times larger than the impact of either 9/11 or the Great Recession of 2008'. The decline in spend between 1 April and the end of 2020 is expected to be 68 percent in Western Europe and 63 percent in Eastern Europe. Some industry experts are forecasting that it's unlikely business travel will return to prepandemic levels before 2025.

There is a chink of light at the end of the tunnel, however, as the report predicts a 21 percent increase in business travel spending for 2021, although most of this is expected to come in Q4 as vaccinations increase globally.

The continued rollout of the vaccine really will be central to recovery for the global travel industry. As at 12 Feb 2021, the UK had administered over 14 million first doses; approximately 20 per cent of the population. Over 50s are on track to be protected by May and everyone else by September.

So, the message for the hotel sector is 'don't stand still, it's more important than ever to look forward and plan for a future post-COVID'. To do this, hotels must be able to continue to manage cancellations effectively, encourage and facilitate rebookings, cut costs and increase their discoverability, availability and 'book-ability' in real time.

Why hotel supply and demand are out of sync?

One huge issue to address now is the mismatch between hotel supply and demand as this will affect the future success and profitability of hotels post-COVID. Of the 15 million accommodations worldwide, 14 million (93%) are not available to book online in real time, which means hoteliers, online travel agents (OTA) and guests are all missing out.

Why should hotels care?

Without an online presence, those 14 million accommodations have limited visibility and discoverability, particularly beyond their local market. For millions, their rates and availability are managed manually and not in real time and they are not benefiting from instant, last minute and long-term bookings.

Before the pandemic, Euromonitor International predicted that 44 per cent of travel bookings would be digital in 2020. 80 per cent of 2019 hotel bookings by travellers under 30 were made online. This really highlights why hotels must start leveraging technology if they are to both survive and grow. The challenge they face is a very fragmented tech market - solutions are complex, expensive, not scalable and not connected - which is why transitioning to managing and accepting real time online payments worldwide remains a huge problem.

Why should OTAs care?

The hotel supply/demand mismatch causes equally frustrating challenges for OTAs. A lack of inventory, compared to global availability, reduces choice for travellers and means OTAs are competing for customers with the same, relatively small, product offering.

Plus, 70% of the inventory on the world's biggest OTAs - Booking.com, Expedia, etc - is still not connected in real time, despite statistics proving that connected properties drive the best revenues. On average, 70% of an OTA's revenue comes from its connected properties, which account for just 30% of its inventory, and revenue from those connected properties can be 500% more than from unconnected ones.

So why don't OTAs simply add more inventory to their offering? The economics of visiting long-tail properties for acquisition, especially in emerging markets, just doesn't stack up. And, even when they do contract small properties, it can be difficult to engage and manage them without the right automation and tech stack.

Why hotel guests should care?

Customers are losing out through lack of choice, convenience and information - aka online booking anxiety. Travellers don't always want to stay with big chains or corporate hotels, they may prefer places that reflect the local area, and these properties are difficult to find and book online.

There are often price and information discrepancies between the OTAs and the hotels that are online, which can lead to confusion and mistrust among guests. Plus, paying online isn't always possible as many hotels are unable to accept real time online payments through their own websites.

So, what's the answer? Simply, OTAs need to be able to find hotels and hotels need to be able to find OTAs because sustainable and scalable supply acquisition, distribution and engagement drives incremental revenue growth for both. Of course, it's not that simple, because the booking chain is very crowded and there are many intermediaries slashing away at profit margins from both sides.

Why isn't there a simple dating app for OTAs and hotels?

Well, there is. It's called HotelRunner. Listed by WIRED magazine as one of Europe's 100 Hottest Startups two years in a row, travel tech startup HotelRunner is a VC-backed, global sales management and distribution platform for OTAs, hotels and payment providers to 'find, contract, connect, and transact with each other'. Operating a freemium business model, it's the first peer to peer networked marketplace for the sector with over 41,000 accommodation providers registered on the platform in 193 countries: exactly like a dating app for hotels and OTAs.

Alongside connectivity services, HotelRunner provides all types of accommodations with a hotel website, built-in themes, integrated booking engine, property management, call centre, rate intelligence, mobile app, guest relationship and online payment management tools, as well as property management systems integrations.

HotelRunner is also a Booking.com Premier Connectivity Partner, Booking.com Top Connectivity Performer for 2018, Airbnb Software Partner, Agoda Innovative Supplier, Oracle Gold, Hotelbeds Strategic Partner and Google Hotel Ads Partner.

How do hotels benefit from working with HotelRunner?

With the ability to plug hotels into OTAs and create their online presence - including website and booking engine - within seven minutes using its self-service platform, HotelRunner has been helping 41,000+ independent hotels and chains to survive COVID and combat the supply and demand mismatch by increasing their visibility.

Hotels of any size are invited to join the platform for free, paying just 1% commission on bookings and this affordability has proven critical says Co-founder and Managing Partner Arden Agopyan, as hotels continue to look for ways they can cut costs but still reach customers in the face of the pandemic.

"We've never been busier as we've been desperately trying to help the global hotel economy fight back over the last 12 months," he said. "Hotels urgently need to manage overheads and, as most of our software is free - website, booking engine for hotels, and part of the channel manager - we've become a go-to provider for them. We've been onboarding hundreds of new hotels from all over the world, from Mexico to Indonesia, and even more infected areas like Italy and Spain."

With hotels and travel agencies having to deal with an influx of cancellations over the last 12 months, HotelRunner has been helping to simplify this process by allowing hotels to manage cancellations and take advantage of the uptick for the rise in long-term bookings and the interest in domestic holidays that was mentioned earlier.

A huge plus for hoteliers is the ability to use HotelRunner to connect to multiple channels/booking extranets through one central solution, allowing them to manage their inventory, availability, reservations and payments in real time, often leading to improved customer experience, trust, reviews and sales. Hoteliers also have access to a mobile app to manage the business on-the-go as managers of small properties are frequently multi-taskers.

How do OTAs benefit from working with HotelRunner?

For OTAs, HotelRunner offers an affordable, scalable solution to adding real time, global inventory to their online offering, HotelRunner Connect, which has proven popular among leading global OTAs including Booking.com, Agoda, Hotelbeds and Ostrovok for several years.

"We've been a trusted advisor to OTAs for many years, including sitting on the Booking.com Connectivity Advisory Board for Hotels since 2018," said Agopyan. "In that time, we've shared our insights, innovations and tactics to overcome industry challenges and this has shaped many innovations to better support our own customers."

Viewing itself as a platform and network rather than a software provider, HotelRunner provides OTAs with a direct connection to reach out to an eco-system of hotels that would not be economical for them to find themselves. In the past, the team has even connected OTAs to hotels in their home cities and countries. It has also recently acquired a company in Turkey (RateFor), which is part of its strategy to offer a complete tech stack for hotels, including property management and rate intelligence and comparison.

Keen to stress that HotelRunner is not just for leisure travel, Arden points out that the 50+-strong team is also working with corporate travel agencies and B2C players and can manage both B2C and B2C rates for suppliers. The startup is also in discussion with offline travel agencies.

"The number of offline travel agents has dropped rapidly over the years as online bookings have soared, and COVID has accelerated that decline," said Agopyan. "I predict that many of them will die - and soon - unless they act now and digitise. We are already piloting technology that will help and intend to launch our offline travel agency support this year."

How does HotelRunner benefit hotel guests?

Further down the eco chain, HotelRunner offers choice, convenience and reassurance to travellers.

"When guests see "Powered by HotelRunner" on a hotel's booking engine or website, it's reassuring and instils trust: it means the hotel is managing its rates and availability and that it processes payments securely," explained Co-founder and Managing Partner Ali Beklen.

"There is also the added convenience of access to long term availability, reassurance there are no rate or information discrepancies with the OTAs, and minimised double-booking and over-booking risks. HotelRunner hotel websites and booking engines have also been designed to display the COVID-19 related precautions and measures hotels are taking, which is so critical right now."

What's the future for hotels?

As highlighted in the introduction, exactly when travel will return to pre-pandemic levels is difficult to call but we do know that legislation and consumer confidence are both inextricably linked to the success of the global vaccine rollout.

"We are optimistic that recovery will happen quicky once the virus is under control, and when it does, we will see a new travel industry emerge. We are forecasting a continued rise in digital bookings with hotels introduce more flexible booking policies."

Those hotels that improve their guest communication and experience with Guest Relationship Management (GRM) and Extras Management will be the ones that stay one step ahead, claims Beklen.

"Just like many other hotel management software providers, our main opportunities this year include increasing accommodation sales performance with autonomous features, and onboarding and engagement with seamless integration experience, auto-payment processing, PMS, contactless and mobile applications. The next step is to increase our total transaction value by connecting with more unconnected properties. And finally, hotel management software providers must increase their content quality through their certified partner ecosystem because, no matter how good you are at what you are doing, you need to be able to present it well."

"We provide scalable zero-touch direct contracting and connectivity for the long-tail which helps the industry to unlock new revenue streams that are desperately needed especially after COVID, and in five years from now, we will be working with at least 1 million accommodations, will be known throughout the travel industry as the go-to supply network, and (assuming it's open) will have processed the first booking for the first hotel on Mars."

About HotelRunner

HotelRunner is a data-driven SaaS-enabled unified sales, operations, and distribution management platform and B2B network for accommodations, travel agencies, and payment providers. HotelRunner has thousands of accommodation and travel agency partners globally. HotelRunner is a Booking.com Premier Connectivity Partner and Best Overall Performing Partner, Expedia Elite Connectivity Partner, Airbnb Software Partner, Agoda Innovative Supplier, Oracle, Hotelbeds, trivago, and Google Hotel Ads strategic partner.

For more about HotelRunner, visit the website.

Media relations contact: [email protected]

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