News Analysis: Will direct booking overtake OTAs?

In this digital age, online booking has arguably replaced traditional booking methods such as walk-ins and physical travel agencies. For one, Mohammed Khoori, general manager of Golden Sands Hotel Apartments in Dubai, told Hotelier Middle East during Arabian Travel Market that the hotel’s focus for 2016 is increasing its online bookings by finding new online travel agency partners to work with. While the property currently receives 40-45% of its bookings online, Khoori predicted that this figure will increase to 80% within the next 10 years.

Yet, as the consumer moves towards online booking, many hoteliers are beginning to capitalise on this by moving their business away from OTAs, and looking for ways to drive direct booking traffic to their own website. This shift is often attributed by hoteliers to OTA fees, which are often considered to be high. Indeed, in Hotelier Middle East’s recent poll on the subject, nearly a quarter of those who voted, 22.2%, agreed that OTA fees are currently too high.

Asked by Hotelier Middle East what benefit hoteliers receive for these fees, Expedia senior vice president Melissa Maher offered insight into the relationship: “We bring a global customer base to our partners in the Middle East from our presence in 75+ countries, with 200 points of sale across 35 languages and around 80% of the demand we bring to these hoteliers is international.”

“We also provide hotels with the resources to optimise their revenue — our technology investment enables owners to use data and analytics to be strategic in appealing to customers to drive revenue,” Maher continued. “This global scale gives us an immense amount of data and insight for our partners. This comes via our market management team who provide consultation to hotel partners, as well as our investments in Expedia Partner Central (EPC).

“EPC is our supplier tool which enables hotels to manage their offers and rates, and provides a tonne of great market data and intelligence. It’s a complimentary offer to help our partners meet their goals. For example, EPC’s Market Watch allows a hotel to monitor its competitive set, notifying them of public rate changes. It also lets a hotel know when an Expedia traveller visited their page, but booked somewhere else instead. Another recently launched tool was developed after hoteliers requested the ability to communicate directly with guests. EPC Conversations provides a platform for booked guests and hoteliers to communicate via a message centre.”

Despite Maher’s comment, hotels in the region are indeed shifting towards direct booking through several methods. One is the increase in hotels launching dual language booking platforms. For example, last month Dusit International launched a dual language booking engine, by adding an Arabic language platform (in addition to English) to www.dusit.com.

However, one of the primary methods used by hoteliers this year has been booking campaigns aimed at loyalty programme members. Examples include Hilton Worldwide’s “Stop Clicking Around” promotion, launched in February this year. It offered discounted room rates at 4,500 hotels worldwide, for Hilton HHonors Members who book their stay directly through the Hilton website or HHonors app.

Marriott International also unleased the power of direct booking when it launched the #MarriottTravels promotion in April 2016. This campaign offered free nights and discounts on dining at 50 properties to new and existing members of Marriott’s loyalty programme, Marriott Rewards, when booking directly through the Marriott website. According to Marriott, last year’s direct booking campaign “It Pays to Book Direct”, received more than six million views on YouTube.

According to Expedia’s Maher, however, there are draw backs to direct booking for hoteliers: “Regarding direct booking campaigns, we know hotel brands are feeling pressure to add value to their proposition to owner’s with respect to how much they are charging owners. However, we strongly believe those chains are on a dangerous path, limiting owner/operator choice by not allowing them to decide for themselves whether to extend these member-only rates to Expedia consumers and limiting their ability to manage their business, potentially resulting in revenue loss. Displaying loyalty rates unfenced and prominent on brand.com as the lead-in price also risks confusing consumers. Plus, there is no differentiation for the 14 brands doing this and if consumers are signed up for 14 different loyalty programmes, and booking at 14 different brands, they are loyal to none.”

Nevertheless, direct booking campaigns of this nature, linked as they mostly are to loyalty programmes, present at least one obvious benefit to hotels. It can potentially help increase the number of members in their loyalty programme.

Clearly a concern for hoteliers, since 13.9% of voters in Hotelier Middle East’s poll also recognised the importance of direct booking in order to increase hotel loyalty programme membership numbers.

Commenting on the recent direct booking campaign, Marriott International’s chief sales & marketing officer for the MEA region Neal Jones told Hotelier Middle East: “The simple fact is that you will find the lowest rates across our portfolio when you join Marriott Rewards and book direct. We launched our campaign in order to profile the numerous channels available to our customers when booking a stay at Marriott.

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“When consumers book on Marriott.com for example, they receive benefits like the company’s best rate guarantee. If consumers find a better rate elsewhere, the company’s best rate guarantee will match it and give them an additional 25% discount. In addition to earning points for their stays, Marriott Rewards members enjoy extra benefits, such as free Wi-Fi and mobile check-in, and special deals only available when booking direct on a Marriott channel.”

“Same day bookings on mobile devices are the new ‘walk in’ business for hotels,” Jones added.

Direct booking he argued, facilitates other benefits for the hotel and the guest: “Hotels can also forge a closer relationship with customers who book direct, allowing for tailored communication and delivery of enhanced, customised guest experience during their stay.” Although here, Maher’s point regarding EPC Conversations has relevance.

The new wave for direct booking in the Middle East, however, is a recent increase in third party companies that help hotels to drive traffic to their websites, on an ongoing, rather than campaign basis. Among these companies, FastBooking began operations in Dubai earlier this year, and now has 1,300 independent hotels on a worldwide level signed up.

Talking to Hotelier Middle East during ATM, FastBooking CEO Jean-Luc Chrétien explained how FastBooking works with hotels: “FastBooking helps independent hoteliers sell themselves better on the web. We provide hoteliers with booking engine solutions, channel management solutions, we help them design their websites or do their marketing online.”

The French company was originally founded in 2000, and then acquired by French hotel group Accor in 2015. It now features access to some 4,000 Accor properties, as well as independently operated hotels. According to Chrétien, this strengthens Accor’s own online presence. “Selling online is like stores. The more products your store has, the more chances that you will attract people. Guests will go to Expedia or Booking because there are so many hotels to choose from. Accor has 4,000 hotels. There are places where it doesn’t have any hotels, or many hotels, or the right category,” he explained.

“Between Accor and my marketplace hotels, I have a very good selection of properties. We will increase the number of visitors to our site. If we increase the number of visitors to our site, we will increase the number of reservations, and if we increase the number of reservations, we will bring business to our own properties.”

Chrétien explains that Fastbooking only signs up independent and local hotels to its service. Its only requirement, he adds, is that hotels must have “a rate competitive with OTAs”. While Fastbooking currently has 4,400 properties in its portfolio, the target, Chrétien told Hotelier, is to have a total of 10,000 hotels in two years. “We don’t want to compete with Booking and Expedia, but we want our platform to be the strongest managed by a hotelier,” he concluded.

Other examples include BookLogic, which began collaborating last month with UAE based Première Hotels Group, in order to increase direct booking traffic. Commenting on the new partnership, Première Group, group director of sales and marketing Ismat Huque explained: “As a new player in the market, BookLogic has shown us that it can make significant gains in direct bookings, while helping us optimise the performance of our existing third party channels.”

Triptease, which entered the Middle East market in 2015 also works with hotels to facilitate direct booking. Triptease’s current clients in the region include Atlantis, The Palm in Dubai and HMH Hotel Group, which operates across the GCC. Asked whether these hotels had seen an increase in bookings as a result, Triptease CEO Charlie Osmond described the results as “through the roof”.

“They can establish a direct relationship with the guest, including building anticipation before they arrive and encouraging loyalty after they leave,” Osmond told Hotelier Middle East.

“Direct bookers are more likely to have made an informed, active choice to stay at your property and are usually therefore from your ideal target market, often enjoying and rating their hotel stay higher on average than OTA bookers. Plus of course there’s the high commission rates, which is money many hotels would rather be spending on providing a better experience for their guests,” Osmond added.

Crucially for hoteliers, many of these new companies also provide hotels with guest data, which is often lost to hotels in the OTA relationship. Triptease confirmed that since the booking is driven to the hotel’s own channels, all data passes on straight to the hotel. Similarly, Chrétien from FastBooking told Hotelier: “We communicate all the information about customers. We do not hide email addresses of customers. For an extra fee, hotels can even access our loyalty programme.”