Steve Jones’ Say
IT seemed to fly under the radar, but Expedia recently appeared to deliver welcome news for the accommodation sector.
Soon after Labor’s pre-election pledge to outlaw online travel agents’ price-parity rules, Expedia declared it was eliminating the clause from contracts.
For hoteliers prevented from offering lower rates through their own websites, it was long overdue. But few were celebrating, not with such a nasty sting in the tail.
Those hotels which do undercut Expedia will likely find themselves relegated to pages where most consumers rarely venture. Banished, in other words. Indeed, when one major hotel chain defied the price-parity clause in Australia it was delisted for three days, globally. The threat is real.
Hotels have long viewed OTAs as a necessary evil, a distribution channel they bemoan for sucking them dry, but one that must be reluctantly tolerated. The days when Wotif was a welcome sales and marketing tool for its ability to fill distressed inventory is a faded memory.
It’s easy to have sympathy for hotels. The power wielded by the dominant OTAs has often left hoteliers paying upwards of 25% commission when promotions and overrides kick in. That is hard to swallow.
Additionally, the price-parity clause has, they insist, stymied fair online competition.
Yet hotels have hardly played a clever game. Naive at best, strategically inept at worst, they ceded power to OTAs by effectively outsourcing sales and marketing functions to web-based players in the relatively early days of the online era. As one hospitality consultant told me, hotels have been on the back foot ever since.
Coupled with that is criticism that hotels were dismal at creating customer friendly booking channels, persevering with inflexible and clunky sites and clinging on to industry jargon which meant nothing to the public.
So what to do?
Clearly the best way to reduce the hefty commissions paid to OTAs is to attract direct bookings. That, in an age where comparison shopping is the norm and the online landscape is cluttered and competitive, is easier said than done. But try they must.
One focus must surely be loyalty, an area where the hotel industry has hardly excelled. And it doesn’t need to be a cumbersome and complex points-based scheme. One new Sydney hotel has simply begun welcoming guests who booked through an OTA with attractive incentives to book direct next time.
According to industry observers, such straightforward tactics are remarkably uncommon.
Improving booking platforms would also help. And would it not be more cost effective to start re-investing in their own sales and marketing strategies?
It’s a long road, but hotels must do more to wrestle back control of their distribution.