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Tim Peter Thinks

Tim Peter

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July 20, 2017

OTA’s vs. Brands: OTA’s Say Hotel Companies Are Just As Bad for Consumers as… OTA’s?

July 20, 2017 | By | No Comments

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OTA's vs. Brands: Booking.com and Expedia So the battle of OTA’s vs. brands just keeps getting weirder. The Travel Trade Association (TTA), which represents Expedia, Priceline, and TripAdvisor (as well as Sabre, Amadeus, Travelport and others[1]) responded to the recent AHLA report claiming OTA’s harm consumers by suggesting—and, honest to God, I’m not making this up—that hotel companies are just as bad as they are.

The AHLA report claims that Expedia and Priceline control about 95% of “the online travel market” and that these travel search giants mislead consumers about pricing, availability and a host of other relevant information. The biggest problem from AHLA’s point of view is that most guests don’t realize how much consolidation has limited the actual number of options available to guests when booking hotels online. The TTA’s Stephen Shur acknowledges the point when he tells Tnooz,

“The Federal Trade Commission in a hearing last year testified to Congress that they have no records of consumer complaints on these issues. We checked with the major consumer groups here in the United States, such as Consumers Union, National Consumers League and others, and these issues don’t even fall on their radar. The only place you’re hearing about hotel booking scams is from the hotel lobby.”

Tough to complain about something you don’t know exists, though, amirite? (Also, Is it just me or do you love the “hotel lobby” double entendre there? Just me? OK. Moving on…)

Odder still was Shur’s choice to highlight the number of brands held by six major hotel chains in the US (Choice, Hilton, Hyatt, IHG, Marriott, and Wyndham) noting that they own 10 or more brands each, with Marriott carrying a whopping 31 brands in its portfolio. Except, here’s the thing. They’re comparing apples to orangutans. Brands does not equal market share.

So, yes, those 6 chains do each own a whole bunch of brands. But their collective share of global room inventory is less than 30%. Even with consolidation, Marriott’s marriage to Starwood granted the combined hotel powerhouse only 8.3% of global room supply. Big, sure. But not outrageously so. And if you add in major players like Accor, Best Western, and Carlson Rezidor to the Big 6 named by Shur, total combined share of rooms climbs all the way up to… 34.8%. Again, that’s hardly an anticompetitive distribution when spread across nine separate companies. This data shows the full story:

ChainRoom CountRoom ShareProperty CountProperty ShareOwned Properties% of Properties Owned
Marriott1,200,0008.3%6,1613.9%220.36%
Hilton812,0005.6%5,4003.5%1412.61%
IHG767,0005.3%5,0283.2%80.16%
Wyndham697,6074.8%7,9235.1%20.03%
Choice516,1223.6%6,5144.2%00.00%
Hyatt171,0001.2%6570.4%436.54%
STR Hotel Industry Totals14,500,000100.0%156,000100%N/AN/A
Source: All data retrieved from their respective company’s 2016 annual report or, when not available, from publicly-stated information. STR data retrieved from STR Hotel Census Database. All data as of July 19, 2017.

Now let’s not forget that the two major OTAs also sell pretty much all of these companies’ inventory, as well as a hefty chunk of the remaining 65% too. So I don’t think they’re making the argument they claim to be when criticizing the hotel companies.

The OTA’s make a much stronger argument by the way when they cite Phocuswright data showing they outsell hotel brands by only a few billion dollars, controlling 54% of the market compared to suppliers’ 46%. Except if two companies really do control 95% of that 54% (or, more simply, 51% of the total), as AHLA claims, that’s a big frickin’ deal. Here’s why.

The vast majority of the hotels within each of these chains are franchised. They don’t have to stick with the chain if they don’t want to.[2] If you’re a hotel owner carrying a flag from one of those 6 large hotel chains and aren’t happy with the value you receive from said chain, you have a ton of options available to you. You could dump your current flag and instead:

  1. Switch to your original chains’ soft brand(s)
  2. Go to one of the other 5 chains the TTA calls out, either carrying one of their flags or using one of their soft brands
  3. Go to another chain outside that original set of six (Accor, BW, Carlson Rezidor, Magnuson, etc.)
  4. Go to one of their soft brands, or, finally,
  5. Skip the whole thing and fly independent (potentially affiliating with still other soft brands like The Leading Hotels of the World, Preferred, Small Luxury, etc.—or not—as you see fit)

I don’t know about you, but that feels like a pretty good set of options for today’s hotelier.

On the other hand, if you’re unhappy with Expedia, you could sell your inventory on Travelocity instead. Oh… wait. Expedia owns them. OK, how about Orbitz? Nope, Expedia owns them too. Hotels.com? Also Expedia. And so on. The landscape on the Priceline side isn’t any better, with Booking.com, Agoda, Kayak, Momondo, and the company’s flagship Priceline brand among its guest-facing presence. And these two represent probably 51% of all reservations made online if AHLA’s numbers are right.

Hmm… remind me again who’s better positioned to harm consumers and hotel operators?

Does any of this automatically prove that the OTA’s are evil? Of course not. As I’ve argued repeatedly, OTA’s can represent a reasonable option for reaching guests you’re not able to reach on your own.

What it does prove is that the OTA’s aren’t so great at making an argument about who’s the big bad wolf here. Just like your mom probably told you as a kid, the OTA’s may find that when they’re pointing a finger at the evils of industry consolidation, the rest of their fingers end up pointing right back at themselves.


  1. I’d be curious to know how Sabre and Amadeus feel about this approach, given the amount of effort they’re putting into wooing major hotel chains as clients for their CRS products. ^Back to article
  2. To be fair, this ignores the challenge of getting out of any existing franchise agreement, which can be onerous. ^Back to article

If you’re looking for even more hospitality marketing goodness, you might also want to take a moment to review the slides from Tim’s recent seminar, “Digital Marketing Directions: The Key Trends Driving Your Hotel Marketing Next Year” here:

Finally, you will definitely want to check out some of our past coverage of the mobile, local, social web and how to make it work for your hotel, including:

Tim Peter

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March 28, 2017

7 Sensational Posts for Hospitality Marketers: Hospitality Marketing Link Digest

March 28, 2017 | By | No Comments

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7 Sensational Posts for Hospitality Marketers: Hospitality Marketing Link Digest

Howdy, Big Thinkers! We’re skipping any big setup today and just getting you right to these 7 sensational posts for hospitality marketers. Enjoy:

  1. TechCrunch reports that “Airbnb Pledges Not to Replace Human Community With AI.” Given the importance of people to the overall guest experience, that direction makes a ton of sense.
  2. For more on Airbnb, you’ll probably want to check out these pieces that ask “What Business Is Airbnb In? Hotels? Or Hospitality?” and “How Safe Are Independent Hotels from Airbnb?”
  3. Sojern reports on its blog that they’ve “Teamed Up with Google to Reveal Hotel Guests’ Path to Booking.” Solid information there.
  4. While we looked at this a few weeks ago, it’s worth revising this Hotel News Now report from this year’s HSMAI Digital Marketing Strategy Conference that said, “Digital Marketing Goes Mobile.”
  5. For further evidence of what that means, see Travel Week’s article about “Dressing for Access: Wearable Technology and Travel.”
  6. Keeping up with trends isn’t always easy. And that’s why we produce the Hospitality Marketing Link Digest series for you. Recent entries looked at “8 Outstanding Hospitality Marketing Posts Focused on Guest Experience” and “5 Hospitality Marketing Trend Posts You Won’t Want to Miss.” So, y’know, don’t miss ’em.
  7. Finally, let’s round out the list of these 7 sensational posts for hospitality marketers with a recent post here on the blog that asked “Hospitality Digital Marketing and Distribution: Is it Time to Give Up?” You can probably guess the answer. But why not read the whole thing to find out for sure?

If you’re looking for even more hospitality marketing goodness, you might also want to take a moment to review the slides from Tim’s recent seminar, “Digital Marketing Directions 2016: The Key Trends Driving Your Hotel Marketing Next Year” here:

Finally, you will definitely want to check out some of our past coverage of the mobile, local, social web and how to make it work for your hotel, including:

Tim Peter

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March 21, 2017

Hospitality Digital Marketing and Distribution: Is it Time to Give Up?

March 21, 2017 | By | No Comments

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Hospitality Digital Marketing and Distribution: Is it Time to Give Up?

I had a discouraging discussion with an outstanding general manager recently who complained that her property’s struggles with rapidly shifting guest preferences, an evolving distribution landscape, and ever-rising distribution costs – particularly in the form of OTA margins and increased search spend – had made it almost impossible to compete. While running her hands through her hair – or possibly pulling it out by the roots – she pleaded, “Why do we even bother? How can we possibly be expected to keep up?”

While its hardly a welcoming thought, maybe it’s worth asking his question: Is it time to give up? Should we just outsource all our marketing activities to OTAs? After all, they are fantastic at marketing and merchandising hotels online, arguably better than many hotels will ever be. Should we simply hand over responsibility for filling our rooms and place our focus elsewhere?

Um… no. In fact, hell no.

Now, let’s be fair. OTA’s are undoubtedly very good at what they do. That’s a fact. But that doesn’t mean for a moment that you can’t drive profitable business on your own. What we need to do is stop behaving like OTAs are our only option. Direct channels and email and search and ratings and reviews and a host of other time-tested tactics and strategies play important roles in delivering strong business results. The key is focusing on those channels that do that most effectively.

First, though, hotels need to be clear about their distribution strategy. To paraphrase NYU professor Clay Shirky, distribution once was a career. Now it’s a button. Online, the distinction between marketing and distribution is essentially non-existent. Once you add a buy button to any marketing message – email, search, display, metasearch, etc. – you’re really just one click away from the sale. And at that point it’s not a marketing channel; it’s a distribution channel. There are certainly some in the industry who will try to confuse you with fancy marketing terms, but the simple fact remains that marketing and distribution are inextricably linked online. You can – and must – measure exactly which channels work best for your business.

The most effective way to ensure that you’re thinking about distribution correctly – and getting the greatest benefit for your property – is to ask three simple questions about your marketing and distribution channels:

  1. Where do your guests find you ?
  2. Where do guests choose to book you?
  3. How much profit do you make from each of those?

Notice I’m not talking about revenue from these channels. It’s time to look past revenue and instead focus on profit. Recent data shows that distribution costs have outpaced rate increases, putting heavy pressure on your properties’ profitability. If you focus solely on revenue, it’s easy to miss the underlying costs impacting your business – and give too much credit to channels that aren’t actually helping you grow.

You may find that for your property, OTAs play an incredibly valuable role in driving profitability particularly during shoulder or slow seasons. That’s OK. As I’ve said before, there’s no need to make OTAs the bad guys here. However, what we don’t want to do is become so dependent upon them – particularly during periods where we can drive more profitable revenue through other channels – that we neglect direct business completely. Understanding which channels work for your property represents the first step in creating a marketing and distribution strategy that actually increases your hotel’s overall profitability.

After spending time digging into the data with my GM friend, we discovered several underutilized tactics driving fantastic returns that simply required greater attention. We also found a few areas that consumed lots of her marketing team’s time for very little benefit. It’s much easier to keep up when you’re only focusing on the areas of greatest return.

Outsourcing your sales and marketing to an OTA is certainly one approach to fill your rooms. And they still will play a role. But realistically many other options exist that can help you grow. The key is focusing on profitable revenue. After looking at the data, I asked the GM, “Is it time to give up?” Her response: “Absolutely not. It’s time to get to work.”

If you’re looking for even more hospitality marketing goodness, you might also want to take a moment to review the slides from Tim’s recent seminar, “Digital Marketing Directions 2016: The Key Trends Driving Your Hotel Marketing Next Year” here:

Finally, you will definitely want to check out some of our past coverage of the mobile, local, social web and how to make it work for your hotel, including:

Tim Peter

By

December 4, 2016

6 Travel Marketing Posts Highlighting 2017 Trends: Hospitality Marketing Link Digest

December 4, 2016 | By | No Comments

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6 travel marketing posts highlighting 2017 trends

Hey, Big Thinkers! Welcome to December and to another amazing week ahead as we work our way to the end of the year. To get your week going in a great direction, don’t miss these 6 travel marketing posts highlighting 2017 trends for you. Enjoy:

  1. Leading off, Eddie McGraw at Brand Quarterly takes a look at “How Hospitality And Travel Brands Can Top Review Charts.” Given that we think managing your hotel’s reputation online represents “The Single Most Effective Way to Improve Your Brand’s Digital Marketing,” you’d be right in guessing we think that’s a critically important post for the past week.
  2. Smart Insights lays out its list of “2017 Travel Marketing Trends” that you’ll definitely want to review. You should also take a look at our “2016 Key Travel Marketing Trends Presentation” and our “Digital Marketing Directions 2016: Key Trends Driving Your Hotel Marketing Next Year” for added insight.
  3. One other key trend you’re going to want to watch? Well, “For Travel Marketers, Content is Still King.”
  4. TodayOnline says that “Airbnb Is out to Be the Wechat of Travel Where You Can Do Everything With One App.” That’s really worth paying attention to. You’ll also want to check out our past coverage of Airbnb, including these posts that ask, “What Business Is Airbnb In? Hotels? Or Hospitality?”; “How Safe Are Independent Hotels from Airbnb?” and “Are Hotel Brands Doomed?” Good stuff all around.
  5. For one last trend in this week’s post, Tnooz reports on “Priceline Group’s Prediction of the Rise of Travel Besties: Smart Tech That Understands Traveller Needs.” That’s probably right.
  6. And, finally, we’ll round out this list of 6 travel marketing posts highlighting 2017 trends with these “6 Significant Travel Marketing Posts You Might Have Missed” and this set of “10 Great Hotel Direct and OTA Distribution Posts” to help you through the coming week.

Hope you have a great week ahead, Big Thinkers!

If you’re looking for even more hospitality marketing goodness, you might also want to take a moment to review the slides from Tim’s recent seminar, “Digital Marketing Directions 2016: The Key Trends Driving Your Hotel Marketing Next Year” here:

Finally, you will definitely want to check out some of our past coverage of the mobile, local, social web and how to make it work for your hotel, including:

Tim Peter

By

November 27, 2016

8 Must-See Travel Marketing Posts from the Past Week: Hospitality Marketing Link Digest

November 27, 2016 | By | No Comments

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8 Must-See Travel Marketing Posts from the Past Week: Hospitality Marketing Link Digest

Howdy, Big Thinkers! Hope you’ve had a terrific Thanksgiving holiday here in the States (and a great week no matter where you are). To help you get back in the groove and start your week off right, here are 8 must-see travel marketing posts from the past week for you. Enjoy:

  1. Tnooz talks to “Dara Khosrowshahi, Expedia’s CEO, About the Company’s Long-Term Strategy”. Definitely worth your time to check out.
  2. Speaking of Expedia, don’t forget that we’ve entered a new era of “OTA’s vs. Chain Brands: Expedia Comes Out Swinging.”
  3. It’s not all good news for Expedia, by the way. In an interview with Google Travel managing director Rob Torres, Ashley Stewart of the Puget Sound Business Journal highlights “What Google Travel Has That Expedia Doesn’t.”
  4. Skift builds on that concept, noting that “Google Making Gains in Hotel Advertising, Updates Website for Hoteliers.”
  5. Shifting gears to the content marketing side of the house, Hotel Marketing reports that “Booking.com Launches a New Content API” to make it easier for hotels to push their content to the travel booking giant — and maybe hold Google at bay a little longer.
  6. Skift recently rounded-up a great set of research for “Cracking the Travel Booking Code” — meaning improving your bookings — that you won’t want to miss.
  7. And, we’ve done something similar, with this set of “6 Key Mobile Posts for Hotel Marketers,” these “6 Significant Travel Marketing Posts You Might Have Missed,” and this collection of “5 Amazing Travel Marketing Insights from the Past Week” all from the Hospitality Marketing Link Digest series.
  8. Finally, let’s close out this list of 8 must-see travel marketing posts from the past week with this amazing video from Skift, “What We Can All Learn From The Modern Supertraveler,” that you can watch right here:

Hope you have a great week ahead, Big Thinkers!

If you’re looking for even more hospitality marketing goodness, you might also want to take a moment to review the slides from Tim’s recent seminar, “Digital Marketing Directions 2016: The Key Trends Driving Your Hotel Marketing Next Year” here:

Finally, you will definitely want to check out some of our past coverage of the mobile, local, social web and how to make it work for your hotel, including: