The rapid advancement in digital technology is transforming the cozy world of travel retail into an all-out war for customers. And that’s a good thing for you and me as travelers. Ultimately, it means more selection, better customization and, potentially, lower prices.
The Travel Industry Today Is More Tech-Savvy Than Ever …
I’m not talking here about travel planning. That “great unbundling” took place years ago thanks to the proliferation of online travel agencies (OTAs), meta search sites and, more recently, mobile travel apps like HotelTonight.
The war I’m talking about is taking place behind the scenes. As technology rapidly transforms the field of digital marketing. RTB, SDK, DMP, DSP, IDFA, API, Hadoop and Hive are the weapons used to wage this war. They are changing how travel brands communicate with travelers.
Today, brands can send bespoke offers milliseconds after seeing a customer online. How? They can cross-check his or her loyalty status with their travel history, recent travel searches and historical price sensitivities. Just five years ago this was a pipe dream. Neither the computing power nor the targeting technology existed to support it.
… And That’s Why This War Is Imminent
This may be news to some travelers, but most major hotel chains don’t actually own the properties they market. A few decades back, they figured out that it was a lot more profitable to be a marketing company than a real estate company, so they shifted their focus from financing new buildings to filling hotel rooms. They built central reservations systems and spent a lot of time advertising the brands represented by their “Flags” (so named for the flags that wave above the properties they market).
Ironically, that has led us to a period where Flags and OTAs serve a very similar function: Selling hotel rooms for property owners. Today, about the only thing that sets a Flag apart from an OTA is that the former can offer you Flag-specific loyalty benefits (i.e., award points), while the latter has more rooms to show you for a specific destination (from other Flags and independent hotels). bandovetinh And now even this delineation is starting to melt away.
In late 2013, Orbitz launched a robust loyalty program, offering discounts on future bookings. Sound familiar? Earlier this year Booking.com followed with an even more aggressive move: they stopped sharing customer emails with their hotel partners, withholding a primary marketing channel from the Flags.
On the flip side, Accor Hotels acquired FASTBOOKING in April, and in June this year, announced they would represent any independent property on their website. And recently, Marriott fired a missile of their own by launching a cheeky national video campaign titled #itpaystobookdirect aimed at getting customers to book directly on Marriott.com. Fire in the hole!
World War H And The “Nuclear Option”
So how is this all going to play out? There are three possible scenarios:
a) Other Flags may follow Accor’s lead and start to compete head to head with the most obvious OTA advantage: Inventory.
b) OTAs may get deeper into the hotel management business. Oh wait, that’s already happening.
c) All of the above.
Imagine traveling to New York and staying in an Expedia-branded hotel … that you booked via Marriott.com. The way things are headed, that’s a distinct possibility.
But there are two additional players who are relevant in this skirmish: TripAdvisor and Google. TripAdvisor recently enabled direct bookings on its 375MM monthly user review site (can anyone say “OTA”?). And Google, not one to miss out on trillion-dollar industries, quietly released a direct booking feature of its own. We’re talking about the same company that has built more B2B marketing relationships than anyone else in history.
In our war analogy, Google’s entry into the market may be the equivalent of a nuclear arsenal. Armed with more web traffic, more data on their users from which to determine the perfect offer and an infrastructure to manage millions of hotel clients profitably, Google is uniquely positioned to wage — and win — a two-front war against OTAs and Flags.
So what’s a hotel marketer to do in a multi-player war of constantly shifting sands? Understand as much as you can about your customers to keep them coming back, embrace the powerful targeting tools available to you courtesy of all that data you just collected and, most importantly, remember that your customer is a unique person who deserves a unique conversation.
Want to hear more about our solutions for hoteliers? Get in touch with none of our travel specialists now.