Hotels Employ New Strategies to Thwart Online Travel Agencies
Mintel Finds Hotels Vying for Control in the Online Booking Arena
SEPTEMBER 5, 2006. Hotels are waging new campaigns to get online travel agencies to check out of the travel arena, according to a new Mintel report. With online travel agencies growing revenues to $18.4 billion in 2005, hotel Web sites found themselves posting only $14.4 billion over the same period. By comparison, in 2003 hotels were the forerunners in the online booking game, posting $4.2 billion in revenues to the $3.7 billion from online travel agencies. Over the years, consumers have gravitated toward the online agencies resulting in stronger growth. To regain its ground, the hotel industry is employing new strategies.
After 9/11, hotel companies allowed excess inventory to be sold by third-party Internet sites at discounted rates. This helped to spur increased traffic, but resulted in lower direct online bookings for hotels. With the hotel industry showing signs of robust growth, the direct hotel companies are trying to expand their sales in the online market. With reservation rates rising, hotels are resorting to limiting third-party inventory and promising the lowest prices through their own hotel brand sites.
"Hotels are facing strong opposition from each other, and they need to increase existing revenue streams in order to maintain their competitive footing," said Chris Haack, analyst for Mintel. "Online travel agencies were seen as a great industry assistant during periods of low travel, but now they are seen as major revenue threats."
According to Mintel, more than 36 percent of respondents used an Internet travel site such as Travelocity or Orbitz to book their hotel stays, compared to 32 percent who said they used the hotel's Web site. With hotel consumers looking for increased amenities across lodging categories, these properties are looking for additional ways to maintain the ability to provide distinctive and competitive service upgrades at a more continual rate. This includes spending more dollars against "engagement marketing," promotions and special events designed to entice more travelers to go directly to the hotels for their travel booking.
"Hotels have some competitive advantages that ordinary online travel sites lack," said Haack. "First, a hotel can better understand the needs of its guests, giving consumers the option to make more specific requests for amenities and guest services. A hotel can also offer deals and holiday specials tailored to its guest profile. It can use this information to boost continual online usage of their sites, offering a direct-source solution that online travel agencies cannot provide."
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