Is there future for a hotel-owned OTA?
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Travel suppliers - hotels and airlines - have experimented for years with a supplier-owned online travel agency (OTA) to combat their over-dependency on the mega OTAs like Booking Holdings and Expedia Group. Orbitz started in 2001 as a joint venture of five major U.S. air carriers. The hospitality industry answer to the OTAs was RoomKey — a joint venture among Choice Hotels, Hilton, Hyatt, IHG, Marriott, and Wyndham — launched in January 2012 as "an innovative new online hotel search engine that will provide the simplicity, transparency and breadth of choice consumers expect from a search engine." Both of these attempts to establish a fairer marketplace, a conduit between suppliers/owners of inventory on one side and travel consumers on the other end - failed to gain traction: Orbitz was acquired by Expedia Group in 2015 and RoomKey folded operations in June 2020. Recently, some hotel owners and operators forums - including a prominent one with thousands of hoteliers - have again started discussions about creating a hotel-owned OTA to battle the dominance of Booking and Expedia.
The question here is: In the distribution landscape, is there a place for a hotel-owned OTA, and how viable would be such an initiative?
Adjunct Professor NYU Tisch Center for Hospitality and Hospitality & Online Travel Tech Consultant
Building a hotelier-owned OTA is such a hotelier's pipe dream! Expedia spent billions of dollars building its current CRS platform now being used across its portfolio(Expedia, Orbitz, Travelocity and Wotif). In addition, Expedia spends $6 billion on marketing EVERY YEAR. All of hotels combined spend less on marketing globally.
In place of a hotel-owned OTA, smart hoteliers should consider a joint venture to build an “Open API marketplace” to provide seamless and low cost connectivity between PMS, CRS, RMS, CRM, Channel Managers, CMS, DMS, and myriad guest-facing and back-office AI, automation, robotic and IoT applications, devices and solutions. Within five years, a 4- or 5-star hotel would need 200 plus APIs to its PMS in order to accommodate all of the next gen (AI, IoT, robotics, automation, blockchain, etc.) technology devices and applications it would need to survive.
The OTAs are constantly evolving and will continue to do so. Their role as a marketplace i.e. a conduit between suppliers/owners of inventory on one side and travel consumers on the other end - will continue as such. A marketplace provides choice and efficiency. Amazon is a marketplace. Booking is a marketplace. Consumers have been in need of marketplaces for millennia. What form and shape of a marketplace the OTAs will evolve to let's say 10-15-20 years from now? It's anybody's guess. But a hotel-owned OTA? Dream on...