TECHNOLOGY : NEXT-GENERATION OTAS
“ THE NEWER PLAYERS ARE DEVELOPING MODELS THAT ARE FRIENDLIER ON A HOTEL ’ S BOTTOM LINE . WE ARE HOPEFULLY GETTING AWAY FROM THE LARGE MARGINS .”
– KATHLEEN CULLEN , COMMUNE HOTELS & RESORTS , SAN FRANCISCO
variety of business models including both the new metasearch and traditional merchant . “ We need to find partners that can drive incremental , leisure business — especially weekends . Our core goal is to drive that incremental business at the least cost possible ,” says Larraine Voll Morris , vice president , e-distribution , Marriott International .
SilverNeedle Hospitality , Singapore , also recently added Ctrip and MakeMyTrip to its global distribution network . “ They are key partners of our expansion strategy to target the fastgrowing Chinese and Indian outbound travel segments to Australia , Thailand and Laos ,” says Mark Simmons , SilverNeedle ’ s vice president of sales and marketing .
In addition to mobile specialists like CheckInTonight . asia , SilverNeedle says it is partnering with flash sale OTAs based on targeted and seasonal promotions as booking windows for intra-regional Asia Pacific travelers is shortening . “ These OTAs allow us to be more targeted based on our shortterm tactical needs and seasonality ,” Simmons says . “ Their customers may not be our existing customers and may not know of our hotels , so it gives us exposure to such customers . They do drive demand to us , and we believe that they add to our value instead of cannibalizing . It is a cost-effective medium for us to reach a global audience based on a per-for-performance commission model .”
Highgate Hotels , Dallas , is trying to limit the OTAs it works with , but it recently began distributing guestrooms with Hotel Tonight for discounted , last-minute sales . “ It is important to
analyze the opportunity that may be missed ,” says Kurien Jacob , senior vice president , revenue and distribution , Highgate Hotels New York . “ Guests will always use an OTA to shop for hotels if they are not absolutely certain on where they want to stay .”
Other hotel companies say there are too many negatives associated with working with new flash sale-based OTAs . “ New players linked to mobile / last-minute booking are not offering us anything that we cannot do , and it risks cannibalization ,” says Jean-Luc Chrétien , executive vice president of sales , distribution and loyalty at Accor .
Instead , Accor is working on consolidating and developing direct connectivity with its existing OTA partners , which include global sites like Expedia and Booking . com as well as regional players like Agoda , Wotif , HRS and segment-specific niche sites .
Marriott International believes it has a responsibility to its hotels and owners to avoid flash sales and last-minute bargains that damage their brands ’ images . “ These methods of booking and the expectation of deep discounts that these sites engender are irreconcilable with our brands ’ perception in the marketplace , as well as a profitable hotel business ,” Morris says .
Innovations converging While encouraging direct booking and rate parity , partnering with metasearch sites has its own fiscal challenges for hotels . The rise of metasearch is forcing hotel companies to invest in upgrading their connectivity , as the new activity pushes server capacity to the limit — similar to when OTAs first emerged a decade ago . To alleviate this some hotel companies are partnering with vendors that offer hub-and-spoke distribution .
“ In general , the metasearch engines are pretty raw and shoot over a shopping message to the hotel system in a way that is just one message per system — we ’ re talking more than 20 million shopping requests a day just to keep the databases in sync ,” says Keith Cotton , vice president of connectivity at DerbySoft , Shanghai , whose partners include IHG , Hyatt , Hilton , Wyndham and Carlson , among others .
Both new and older OTAs are investing in metasearch , mobile and social functionalities simultaneously . OTAs are also beginning to leverage their data for increased personalization . “ I expect greater efforts to offer experiential search options , where travelers can identify the type of experience they are seeking and the OTA will suggest experience-specific options ,” says John Burns , president of Hospitality Technology Consulting , Scottsdale , Arizona . “ The large OTAs will begin to successfully leverage ‘ big data .’”
The OTA market could witness structural shifts , too . New regional OTAs are springing up in Asia Pacific . At the same time , the largest tech companies like Apple and Facebook are in the early stages of products that could disrupt the travel marketplace .
Lower commission , higher cost Given the changes in the market , it is difficult to predict which online booking model consumers will prefer and which will offer the best deals for hotel companies .
Hotel companies are hoping the
48 HOTELS March 2013 www . hotelsmag . com