Hospitality: “To promote direct sales, hotel sites must become merchants”

@Hal Gatewood

The last two years of the pandemic have seen the emergence of new uses in the hotel industry. In search of the best price or driven by an outpouring of solidarity, consumers have booked their hotel rooms more directly than through online travel agencies. Is this phenomenon temporary? How can hoteliers make it last? We interviewed Thomas Schmider, Executive Chairman of Hotel Intelligence, serial entrepreneur and former boss of Atari.

How do you explain the increase in direct sales since the start of the health crisis?

Hospitality To promote direct sales hotel sites must become merchants

Thomas Schmider, Executive Chairman of Hotel Intelligence

During this period, hoteliers tried to get by as much as possible. They realized that OTAs were amazing tools, but they were killing them. They already knew this, but the awareness was heightened by being confronted with the cancellation policy. Booking’s policy, for example, has been to offer vouchers to customers, but not for the same establishment, for any establishment on the platform. This is why some have wanted to develop direct selling and have been attracted by its promise of disintermediation. On the other side, consumers have been thinking about ways to help independent hotels by doing without OTAs. They also wanted to pay less. And in some cases, the prices were better.

Will these new uses last over time?

Yes, I think they will stay. 3-4 years ago we didn’t ask ourselves any questions, we went to Booking to book a hotel room. Today, nearly 75% of consumers start their search on Booking, then go to the hotel’s website to compare prices and find more information. But 95% of these consumers finally go back to Booking where they will make their reservation because the price is more attractive on the platform. The bounce rate of hotel sites is staggering.

What can hoteliers do to avoid this?

It must be assumed that hoteliers will not win the marketing battle against Booking, which spends billions of dollars on advertising on Google. They won’t win the pricing battle either because they don’t have algorithms as sophisticated as OTAs. And yet, they must equip themselves with technological knowledge. Most hotel websites today are showcase websites. However, to promote direct sales, they must become merchants with information available on as few pages as possible. Reservation systems aren’t up to snuff either. They are not clear and do not inspire consumer confidence. But I think the real improvement is in the data. Today there is resistance from independent hoteliers who want to keep control of prices. They would however have every interest in adopting yield management solutions (practice which aims to vary prices according to demand in order to increase its turnover, editor’s note) and to be more flexible. It is necessary to give the possibility to the person who receives calls from potential customers to be able to vary the prices. This is part of the job and improves the customer relationship.

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Hospitality: “To promote direct sales, hotel sites must become merchants”