In the past, if you wanted to travel, you called a travel agent. Today, many consumers book their own trips by visiting online-travel agencies (OTAs) such as Expedia or Booking.com. OTAs provide convenience and choice and help travellers discover, book and experience travel in a different way.
The first mainstream OTAs, such as Expedia, Booking.com, Lonely Planet, Travelocity, Priceline and Travel Zoo, were founded in the 1990s. The early 2000s saw the debut of Hotwire, TripAdvisor and Travelport. Expedia.ca was established in Canada in 2000 and in 2003, the company merged with Hotwire. In 2004, Expedia acquired TripAdvisor and since then, numerous other OTAs have entered the market.
Today, the Expedia family is the largest online-travel company in the world and Expedia.ca is Canada’s largest online-travel provider. Booking.com stands as the world leader for booking accommodations online.
According to a study published in the International Journal of Trade, Economics and Finance, equal proportions of men and women use the Internet to book online and they do it more frequently as they get older. Interestingly, the higher their income or education level, the less likely people are to book online.
AN EVOLVING RELATIONSHIP
At first, hoteliers viewed OTAs with some skepticism, but now, “They are part of the travel landscape. There are mutual benefits in working together,” says Sarah Major-Bourgeois, director of Distribution at Groupe Germain Hotels.
According to Don Cleary, president of Marriott Hotels of Canada, “[Marriott takes] a strategic and holistic approach to our distribution channels, which include both direct channels such as Mariott.com and indirect channels such as OTAs and travel agencies.” OTAs, on the other hand, have always had a positive outlook on their impact in the travel and accommodations industry. “In my seven years working at Booking.com, I’ve always described these relationships as immeasurably valuable,” says Sherlee Taylor, regional manager for Canada at Booking.com. “From small independent hotels to global chains, the feedback we receive from our partners [shows] we are trusted, valued and collaborative partners with the mutual goal to optimize their business strategies.”
Likewise, Expedia Group Area manager – Canada, David Debeule says “We are constantly evolving our business and transforming the way we work with our partners. We are about helping our partners reach incremental customers through our technology advancements and marketing reach. We offer diversity, breadth of travellers and the resources to optimize revenue.”
IMPACT OF OTAS IN CANADA
In terms of the Canadian hotel landscape, specifically, Debeule say OTAs have offered the opportunity for consumers to find a wide variety of lodging accommodations and expand their holiday’s horizon. “OTAs provide incremental marketing and are a key piece in driving exposure to destinations,” he says.
“From the exclusive Ice Hotel in Quebec City to grande lodges in the Canadian Rockies, all the way to five-star boutique hotels in core cities, there is something for every occasion, every budget and every consumer to discover. By partnering with local destination-marketing organizations, we are able to help customers find new and exciting destinations they may never have thought of before,” he explains.
The proliferation of OTAs has also resulted in stronger visibility for Canadian hotels in hard-to-reach markets such as Asia, adds Major-Bourgeois.
OTAs see challenges as opportunities and the focus, as might be expected, is often on the technology. “One of the most relevant [challenges/opportunities] in the industry at the moment is the fast move towards mobile and the fact consumers are preferring and insisting on making more of their purchases using their devices. Staying up-to-date and ahead of all the changes can be challenging and costly for our accommodation partners,” says Taylor. “Mobile technology continues to grow,” adds DeBeule. “It is a fast-paced environment and we need to be where the consumer is — online. While being more transparent, the online-distribution landscape is still complex to navigate. With so many options now available to the consumer, for a hotel, standing out in the crowd has never been more important and challenging at the same time.
“Additionally, with advancements in technology, there is an increased need for hoteliers to stay ahead of the trends and tools. With the amount of data and tools available to hoteliers, there is increasing revenue-management complexity. It is increasingly challenging and important to stay competitive,” says DeBeule.
To help meet those challenges, Expedia offers its extranet platform, Expedia Partner Central (EPC), which gives hotels access to immediate, relevant, actionable data, 24/7. “EPC enables hoteliers to have real-time insights into the marketplace [and helps them to] evolve and make the right decisions to drive incremental revenue — this is information that helps hotels make informed business decisions.”
Taylor cites a few examples of how Booking.com is meeting the technology challenges: “Our Booking.com app allows searches for accommodations ‘around me,’ enabling guests to find accommodations close to them and book instantly,” says Taylor. “We launched a new analytics report for our partners, giving them additional info on mobile booking trends. We also offer a great new product in our Booking-Suite family called Rate Intelligence, a rate-shopping tool that gives partners powerful, live, on-demand data — enabling them to stay ahead of what’s happening within their competitive set.”
“The relationships we have in the industry, especially with hotels, [are] hugely important,” adds DeBeule. “Our market managers work directly with hotels to help them maximize occupancies and revenues. We use a combination of local knowledge, real-time data and analytics to help hotels with local strategies to reach target customers at the right time, with the right rate. Our most successful partners are the ones meeting regularly with their market manager [at Expedia].”
OWNING THE RELATIONSHIP
Although hoteliers acknowledge the challenges associated with mobile technology and the continued growth of online tools and platforms, they are also concerned with maintaining customer relationships. It’s fair to say this evolving relationship is the main challenge hoteliers face with regard to OTAs.
According to Major-Bourgeois, “It is important [for hoteliers] to be conscious of our distribution channels. OTAs can be leveraged and are innovative with technology, but hotels need to keep ownership of the relationship with the customer.”
A few years ago, she says, customers would begin their relationship with the hotel when they were in the shopping phase. “Now the relationship often begins when they set foot on the property. The relationship between hotel and customer is ‘shorter’, so hotels need to be attentive to the small details. A hotel needs to stay transparent, relevant and share its value with the customer. OTAs are a great one-stop shop, however, when the customer books with a hotel, there is more service, more attention to detail.”
Likewise, while he appreciates the benefits OTAs bring to the hotel industry, Cleary believes there is great value in booking directly with the hotel. “We are always looking to increase customer knowledge of the fact that when you book directly with us, through channels such as Marriott.com, you not only get the best rates guaranteed, but additional perks such as earning Marriott Reward loyalty points and free Wi-Fi, among others.” Nevertheless, Cleary adds: “We have strong partnerships with OTAs, and they play an important role in the industry as they have a large reach into a customer base of infrequent travellers that may not have a lot of experience with our brands.”
As they collaborate and innovate to find solutions to the challenges faced by OTAs and hoteliers, the one thing both groups have in common is the desire to please the customer. The relationship between OTAs and hoteliers needs to continue to thrive and grow in order to foster the ultimate customer experience. DeBeule sums it up by saying, “We are constantly looking for ways to innovatively work with and assist our partners. As we roll out new initiatives, our partner relationships are continuously evolving so that we can provide them with more value.”
Volume 29, Number 1
Written By Sherene Chen-see