in     05-10-2015
OTAs are not necessarily the enemy of hoteliers, but the struggle to regain ground against their onslaught of marketing dollars continues.
LONDON—Most hoteliers in Europe appear keen to say that and Expedia are important partners in their overall distribution strategy, but the two colossi of the online  world possess marketing clout and tech savvy to make property revenue managers consider every way possible of fighting back.
During a session at the Hotel Distribution Event 2015 held on 30 September, speakers agreed that hoteliers continue to misunderstand the difference between the online and offline world, which, they said, has become increasingly blurred.
The battle, said Matt Luscombe, chief commercial officer and senior VP of franchise operations at InterContinental Hotels Group, is “not one of online travel agency versus online travel agency, but a duopoly versus millions of hotels.”
The analyst on the panel, Tim Ramskill, head of European travel and leisure equity research at Credit Suisse, said the very nature of the duopoly might not be attacked by regulators if recent United States’ form is anything to go by.
“In the United Kingdom, if a supermarket had more than 15% share of the market, it will be investigated. and Expedia has 40%, but when Expedia bought Orbitz last month, that meant it had 75%, and the (U.S.) Department of Justice just waved that through,” he said.
European regulators have been active in the battle over rate parity. France has outlawed the practice.
Ramskill brought up the old chestnut of chain collaboration.
“The hotel industry remains fragmented. Lots of people doing the same things is ultimately not of benefit to hotels. Why should hotels not just all get together? Yes, it would be very complicated … but what spend could be spent collectively?” Ramskill asked.
“The core will be pulled,” said Alastair Campbell, chief strategy officer of GLH Hotels, “but the proprietary stuff will be guest facing. And there remains the perception among the public that OTAs provide a better price.”
Vivek Badrinath, deputy CEO of AccorHotels, which recently rolled out an expanded distribution platform that eventually will include 7,800 independent hotels, said there is no doubt the duopoly needs more competition.
“The most-favored nation clause has been eliminated. But let us not forget that rate parity has played a huge role in our sector’s development of the sector, so we should not be going out and burning statues. … The industry has to continue its intelligent use of channels,” Badrinath said, who added that along with France, he believes rate parity will be abolished in Germany, too.
Campbell said GLH Hotels stopped using Expedia for a while but later came to realize the value such an OTA brought in bookings and thus returned.
“We returned in a specific way, as we saw the value they brought to us. They are a partner, but we see our best line of attack (against their dominance) is continually striving to get the best experiences for our customers,” he said.
Share and share alike
Moderator Andrew Sangster, editor at Hotel Analyst, asked if hoteliers’ relationships with the sharing economy are now just where they were 10 years ago with OTAs.
The hoteliers on the stage agreed that it constitutes another battle, but also another opportunity from which to learn.
“Hoteliers have to create differentiated and meaningful guest experiences over multiple brands, so we face a challenge with Airbnb, which has a simple premise and great choice,” Luscombe said.
“Airbnb is not making a difference yet, especially in regards to corporate clients where guest safety is of ultimate importance to travel managers. But who can be complacent?” Luscombe added.
GLH Hotels has dabbled here, too.
“We did have a go at listing, and maybe we’ll do some more. Since June, we have had a ‘choose your own room’ app. I can’t think of anything else I will spend £250 ($379.72) on that I have not seen beforehand,” Campbell said.
Ultimately, Badrinath said, hoteliers simply need to strengthen their distribution capabilities.
“Everyone will benefit. Increasing footfall is better for everyone. What Airbnb tells us is that we need to be stronger in personalization, de-standardization and being in touch with customers,” he said.
Campbell agreed.
“Airbnb is the most personal stay you can have, which forces it back on us,” he said, adding that the sector probably most affected from the sharing economy is extended-stay product in the U.S.
“And the weakest defense is to hope regulators come in and save (hoteliers). Regulators are there not to protect corporates. No, they are there to protect consumers,” Ramskill said.
Campbell also gave a few examples of how GLH Hotels moved its TripAdvisor ratings in terms of Wi-Fi satisfaction to positions one, two and three in the world for three of its London properties.
“We digitized the building, managing Wi-Fi on a rooms level, not of the hotel, and viewed guests’ booking journeys backwards, not forwards, as this allows us to service the guest regardless of how they reach you. It is radical hosting,” he said.
The goal remains the same, though, all the panelists agreed: giving the guest as much choice and information as possible and regarding it as an opportunity squandered if the guest does not book direct on the second stay.
All also agreed the battle is far from over against that massive pile of OTA marketing spend.