Can Big Hotel Chains Really Manage To Cut Out The OTA ‘Middleman’ By Offering Incentives To Direct Hotel Bookers?

PCLN: Priceline Group logo
Priceline Group

The tussle between hotel owners and online travel agencies seems to be heating up. OTAs charge a substantial commission to hotel owners for hotels booked through their websites, however, given their popularity, hotel owners cannot avoid them entirely. Though the big hotel chains are spending a significant amount in their marketing campaigns to encourage direct bookings, one might wonder how successful the efforts will be. Let us take  a look at some such campaigns and where the OTAs stand in all this.

How Are The Hotel Chains Attracting Direct Bookers?

According to a report from the Wall Street Journal, global hotel chain leaders such as Marriott International, Hilton, and InterContinental are luring direct booking customers by providing them exclusive perks and benefits that is not available to the customers who book through OTAs.

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Hilton’s ‘Stop Clicking Around’ campaign, one of the biggest campaigns that the company has ever undertaken, stressed the benefits of direct booking by offering exclusive discounts on room prices to direct bookers. The ads also demonstrated the benefits of Hilton’s loyalty program, such as free room nights, free Wi-Fi, checking into rooms of one’s choice from a digital floor plan, and using a digital key. Marriott also started following the same trend around the same time. According to Skift, some hotels might also be planning to reduce the allotment of their rooms to OTAs. Vanessa Sinders, SVP of government affairs for the American Hotel & Lodging Association, wrote in an email to GeekWire that hotels can establish a long term relationship and look after specific guests’ needs and amenities in a way that OTAs cannot.

Where Do Priceline And Expedia Stand Today?

According to PhocusWright, the OTA accommodations bookings in the U.S. overtook the gross booking through hotels for the first time in 2016. After Expedia’s consolidation of the U.S. OTA market with the acquisition of Travelocity and Orbitz, the two OTA leaders, Priceline and Expedia currently enjoy over a 90% share of the U.S. OTA market. And that’s not the end. In the more fragmented markets like Europe and Asia, OTAs are growing even further, thus demonstrating the sheer bargaining power that both these leading OTAs command. This brings us to our next question:

Why Are Customers Making A Beeline For The OTAs?

While the hotels would be advertising solely for their own properties, OTAs are ‘impartial’ in that sense. They do not care about the properties a customer books, they want to show the customer the best hotels available at their chosen budget. This means that a customer would definitely trust an OTA more than an advertising from a single hotel chain. The hotel industry spokespersons are countering that by saying that hotels genuinely care about building a relationship with their guests and providing them with the best possible experience, while OTAs merely end their responsibilities after the hotel booking transaction is completed.

However, upon reflection, does that look like a huge differentiating factor to the price sensitive new age travelers of today? Also, the OTAs allow a plethora of choices including alternative accommodation options such as boutique hotels, vacation rentals, hostels, etc. Young people traveling on a strict budget would rather go for a pocket-friendly choice than the luxury treatment that one of the hotel chains have to offer upon direct booking.



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1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Priceline

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