Spain 
Italy 
Greece 
Hotels Bet on Online Sales to Escape Booking.com
24 June 2018
Hotel groups want to reduce their use of intermediaries, like Booking.com. To do this, they are guaranteeing lower prices for direct reservations.
Large hotel groups have entered the digital age and no longer seem willing to cede a large share of their revenues to online travel agencies like Booking.com and Expedia. The numbers speak for themselves: these two Online Travel Agencies (OTA) have a nearly 60% share of online bookings. Hotels believe that they need to reduce their dependence on content aggregators.
Hotels are now investing heavily in direct online sales, offering lower prices and better services. The hotels are using their websites to offer seasonal and specific packages, customised services and competitive prices. All of this is designed to avoid the OTAs’ commissions, which can reach 20% of the amount paid by the guest.
SHotels Collection, the name of the hotels owned by the Sonae group, is “prioritising the need to attract end-customers without using intermediaries,” an official source at the group said. InterContinental, an international luxury hotel chain, even launched a direct booking program on its website, with a press release guaranteeing the lowest prices. Pestana, the largest Portuguese hospitality group, has joined the trend, adopting the motto “Seek out your customers and your business will grow.”
After all, 60% of travel purchases will be made online by 2020, more than 30% of which will be conducted using mobile devices.
Increasing market share
The market is dictating the trend, and the Pestana group is quickly adapting. “We do not necessarily want all our sales to be direct, but we also want our fair share,” says Luís Monteiro, the head of Pestana’s digital area. “The hotels who do not have their fair share of direct sales will lose customers.” Last year, this channel accounted for 40% of the group’s revenue growth. “The balance between the B2B and B2C components is critical to making any hotel business sustainable at the level of operating margins.”
The four Sonae Capital hotels in Portugal guarantee “the best price on direct bookings,” while also offering added services, such as the possibility of early check-in or late check-out. The goal is that each guest should immediately recognise “the added value of not using intermediaries.” Last year, reservations made through OTAs accounted for 30% of all Sonae’s hotels’ sales.
The InterContinental group, which operates hotels in Porto, Lisbon and the Algarve, decided to advertise a direct reservations program on its website. The group is seeking to attract customers to its online booking service by guaranteeing lower prices and exempting booking fees, in addition to running an associated marketing campaign. Direct communication with the customer is becoming a trend.
Mercure, owned by the Accor group, also offers a mobile app. Its hotels also guarantee the best price for reservations made through their site, along with the possibility of checking availability in real time and online check-ins and check-outs. Vila Galé also uses its website to engage the customer with discounts, marketing campaigns and loyalty programs.
Share of the pie
Each customer has their requirements, and the digital world allows potential buyers to compare prices and services – all on the same device – Luís Monteiro stressed that the Pestana group would continue to collaborate with OTAs and meta-searchers, such as Trivago, Hotel Ads and Tripadvisor.
These online channels offer global searches, aggregating content, and benefit from the capacity to provide simple price comparisons, and thus “are an important extension” to the hotels’ business model. The group, however, is looking to redistribute the revenues, decreasing their reliance on intermediaries.
Sonae also stressed that, despite a strategy based on direct sales, it continues to rely on online operators, which are “important to our marketing strategy”. Their goal to reduce the weight of intermediaries in their hotel operations.
Original Story: Dinheiro Vivo – Sónia Santos Pereira
Photo: D.R.
Translation: Richard Turner