“PEOPLE CHARACTERIZING IT AS A BOOKING WAR, I WOULDN'T AGREE WITH THAT. WE'RE ALL PART OF THE TRAVEL ECOSYSTEM, AND WE'LL CONTINUE TO COEXIST AND WORK TOGETHER.” — CHRIS SILCOCK, EXECUTIVE VICE PRESIDENT & CHIEF COMMERCIAL OFFICER, HILTON
Report Overview
In the following report, we analyze distribution trends for the hotel industry by combining our own primary research and survey data from 375 hotel respondents with insights from leading hotels, online travel companies, and industry experts. These engaging interviews amount to a roundtable discussion from thought leaders in the hospitality industry. We discuss the ad campaigns launched by the mega brands and provide our estimates for implicit and explicit costs of customer acquisition across direct and indirect booking channels. We offer key findings from this data including current distribution mix and expected change in the next 24 months, profitability ranks of indirect and direct channels, ideal distribution mix, and predicted spending trends on Expedia, Booking.com, Ctrip, trivago, TripAdvisor, Kayak, Google AdWords, and Google Hotel Ads. At close to 60,000 words including survey data along with new interviews from executives at Marriott, Hilton, Wyndham, IHG, Choice Hotels, Best Western, Red Lion, citizenM, and NH Hotel Group on the hotel side and Expedia, TripAdvisor, Kayak, trivago, Google, and Facebook on the digital side, what follows is one of our most comprehensive reports to date.What You'll Learn From This Report
- What should count as a direct booking
- The difference between paid and unpaid digital direct
- How hotels can and cannot compete effectively on metasearch
- How hotels are engaging OTA customers to build their loyalty base
- How CPC on metasearch can be riskier than CPA, but more cost-effective when done well
- How traditional travel agents can compete on domain expertise rather than inventory
- How much traditional travel agents charge per booking and how that number is under pressure from the large hotel groups
- Corporate travel trends and economics to the hotel
- Estimates for the share of bookings across non-digital direct (phone, email, walk-ins, group), unpaid digital direct, paid digital direct, OTAs, GDS, traditional travel agents, and managed corporate travel for both large brands and independent hotels
- Effective commission rates for the OTA, metasearch, metasearch Instant Booking model, GDS, traditional travel agent, and corporate travel manager
- Why OTAs have dominated metasearch bookings
- How the fee structure works for GDS bookings
- Implicit costs of digital and non-digital direct bookings
- The economic value of moving a booking from an OTA to direct including the impact of advertising and opportunity costs
- What issues impact the optimal distribution mix
- What Hilton, Marriott, IHG, Best Western, Wyndham, Choice Hotels, AccorHotels, and Hyatt are doing to drive direct bookings and what their booking distribution mix likely looks like
- How hotels can improve their chances of “winning” the OTA-booked guest to book direct the next time
- What leading independent hotels are doing to win booking share
- What share of Expedia’s and Priceline’s OTA bookings likely comes from the mega-chains and the potential financial impact from channel shifts
Executives Interviewed
- Chris Silcock, Executive Vice President & Chief Commercial Officer, Hilton
- Drew Pinto, Senior Vice President Distribution, Marriott
- Barry Goldstein, Chief Marketing Officer, Wyndham
- Andrew Rubinacci, Senior Vice President Distribution & Revenue Management Strategy, IHG
- Jeannie Lin, Vice President, Marketing and Distribution, Choice Hotels
- Dorothy Dowling, Senior Vice President and Chief Marketing Officer, Best Western
- Lennert de Jong, Chief Commercial Officer, citizenM
- Bill Linehan, Executive Vice President and Chief Marketing Officer, Red Lion Hotels
- Otón Gomez Fernandez, Senior Vice President – Marketing Services, NH Hotel Group
- Sebastien Bazin, CEO, AccorHotels (excerpted from a previous Skift interview)
- Bill Walshe, CEO, Viceroy Hotel Group (excerpted from a previous Skift interview)
- Jimmy Suh, Chief Revenue Officer, Standard Hotels (excerpted from a previous Skift interview)
- Melissa Maher, Senior Vice President, Global Partner Group, Expedia
- Johannes Thomas, Managing Director & Chief Revenue Officer, trivago
- Brian Schmidt, Vice President of Global Sales, TripAdvisor
- Keith Melnick, President, Kayak
- Christine Warner, Travel Head of Industry, Facebook
- Oliver Heckmann, Vice President of Engineering, Travel, Google
- Erik Blachford, Former Expedia CEO, Current Venture Partner at TCV Partners
- Jean-Louis Boss, Co-Founder, Chief Marketing & Digital Services Officer, FastBooking (owned by AccorHotels)
- Kurt Weinsheimer, SVP Property Solutions, Sojern
- Mike Ford, Co-Founder and Managing Director, SiteMinder
- Martin Soler, Managing Partner, Martin Soler Consulting
- Tony Loeb, Co-Founder, Experience Hotel
List of Figures
- Current Booking Breakdown by Channel
- Direct Bookings from Paid Channels
- FastBooking Metasearch Market Share
- Effective Commission Rates
- Implied Costs for Direct Bookings
- Booking Valuation NPV Analysis
- Hotel's Current Distribution Mix
- Percentage of Guests who are Loyalty Members
- Hotel's perception of a fair OTA commission
- Hotel's satisfaction with OTA data sharing policies
- Projected changes in Distribution Mix
- Projected spending changes by Distribution Channels