Hospitality strategies for facing Online Travel Agencies predominance and power

After a continuous evolution during the past fifty years, the tourism field keeps changing through internet and the web 2.0. According to an analyse from PhosCusWright,

Source: http://www.freedigitalphotos.net

the market of the e-tourism increased around 8% each year in the world since 2013. Customers are more connected and they use more and more smartphones and tablets to shop. E-commerce is still exploding and has created opportunities for Online Travel Agencies (OTAs) such as Booking.com, Expedia, Hotels.com and many others that have become “gigantic cornerstones” in Tourism.

For example, in Europe, Booking.com was in 2013 the leader of the market online with 49% of the market share, followed by Expedia (23%) and Odigeo (17%). Thus, hospitality groups and independent hotels from all over the world try to establish tools and strategies to face this tendency and decrease the growing power of their competitors.

First of all, we can take the example of the French hotel Accor group, which is implementing one of its strongest IT strategies since 2014. In fact, Accor group launched in 2014 its “leading digital hospitality” plan, a €225 million investment plan over the five next years to reinforce and develop its informatics structure and services.

The Online Travel Agencies threaten hotels since they prevent from establishing last minute promotions, and they decrease on the long run the profitability of Hotel groups. This is why Accor group decided to invest in order to have more control over its distribution canals. The French group created a fidelity card through customers’ email addresses so as to have a direct link with them, and developed effective application and website. The main goal of this strategy is to influence customers to book through their own website and application, and then avoid as much as possible the impact of OTAs on their revenue.

On another hand, we can clearly notice that all the hotels cannot implement this strategy which needs such a huge investment. Independent hotels also suffer from this constant growing influence of OTAs. Commissions can reach 30% of the price, which weaken tourism institutions on the long run. Some of them also decided to cope with the increasing power of OTAs by collaborating to offer an alternative to traditional booking engines: “Fair Booking”. This originally 18 French hotel group rapidly grew up to get thousands of members which joined the association in order to limit intermediaries such as Online Travel Agencies.

Sources:

S.J. (2013, December 17), Voyages en ligne : le mobile pèse 8% des ventes en France, http://www.tourhebdo.com/, Retrieved from : http://www.tourhebdo.com/actualites/detail/72045/voyages-en-ligne-le-mobile-pese-8-des-ventes-en-france.html

 

Jérôme Marin, (2014, Decembre 7th), Booking vs Expedia, la bataille du voyage 2.0, http://www.lemonde.fr/, Retrieved from : http://www.lemonde.fr/economie/article/2014/12/07/booking-vs-expedia-la-bataille-du-voyage-2-0_4536168_3234.html?xtmc=accor_numerique&xtcr=5

 

(2014, October 30^th) Accor fait sa révolution numérique pour mieux affronter les centrales de réservation, www.latribune.fr, Retrieved from: http://www.latribune.fr/entreprises-finance/services/tourisme-loisirs/20141030tribfcb5393a0/accor-se-renforce-dans-le-numerique-pour-mieux-affronter-la-concurrence.html

Laurent Guena, (2013, July 2^nd), Comment les hoteliers sortiront du piège des agencies en ligne, www.latribune.fr Retrieved from: http://www.latribune.fr/opinions/tribunes/20130702trib000773582/comment-les-hoteliers-sortiront-du-piege-des-agences-en-ligne.html

Emma Eversham (2013, October 22^nd) Hotels start fighting back against OTAs, www.bighospitality.co.uk Retrieved from : http://www.bighospitality.co.uk/Business/Hotels-start-fighting-back-against-OTAs