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Hoteliers Must Focus on Long-Term Value Creation—Starting With the Booking Experience

Hoteliers Must Focus on Long-Term Value Creation—Starting With the Booking Experience

Familiarity isn’t driving purchase intent when it comes to booking travel. Lodging brands should recognize this as a call to innovate. Instead of letting online travel agencies and home-sharing platforms duke it out, hotels must continue to focus on long-term value creation rather than a short-term lift in numbers.

Earlier this summer, hoteliers likely cheered survey results from Allianz Global Assistance and MMGY Global that showed waning interest among travelers in using Airbnb and other sharing economy services, even among millennials. The Allianz study noted that 53 percent of respondents were unlikely to use Airbnb or its rivals when booking travel this year. The MMGY survey found that 33 percent of adults polled were interested in using a home-sharing service, down from 41 percent in 2017 and 37 percent in 2016.

MMGY’s report also found that the most common reasons for the decline in interest for Airbnb or HomeAway directly favor hotels. The top reasons travelers gave for disliking home sharing were not wanting to share accommodations with strangers, as well as believing hotels have superior locations and room products.

The findings don’t negate the core appeal of home sharing, but signal an opening for hotels to offer the authentic, local experience promised by these platforms in a setting that guests already tend to perceive as higher-quality.

However, hotels shouldn’t spike the football just yet, because consumer research reveals they still have work to do on their booking experience. The recently released J.D. Power 2018 North America Hotel Guest Satisfaction Survey showed that direct bookings have stalled among survey respondents. This trend comes despite many of the largest lodging brands pushing major book-direct marketing campaigns the past two years. Though the hotel industry as a whole achieved its highest level of satisfaction overall in the 22-year history of this consumer survey, OTAs still made slight gains in reservations among respondents last year.

What lessons should hotels take from this data? While consumers recognize and appreciate hotels’ advantages over home sharing, it’s still incumbent upon lodging brands to create value in the experience they offer during the customer journey. In the booking stage, that means wielding data to make the prices, packages, and room types the potential guest sees more relevant and personalized. On property, it’s about offering unmatched hospitality in a way that feels authentic and gives the guest a sense of place.

Hotels can create value where home sharing and OTAs have influenced customer expectations about making guests feel “like a local” and providing a seamless booking experience. But it will take thoughtful investment in the property to reflect the look and feel of the community; in staff, to share local knowledge and show guests a good time; and in data, to drive the hotel’s financial results through a cutting-edge e-commerce experience.

Those digital disruptors will have their own challenges trying to co-opt hotels’ inherent advantages. Airbnb can’t add enough high-quality inventory at scale fast enough—which is a big reason why it’s diversifying into boutique-hotel supply and distribution. OTAs continue to excel at marketing and e-commerce, but without hotels’ supply of rooms, they have nothing to sell.

By contrast, hotels have everything they need to engineer more value for guests before, during, and after those people stay on property: the physical asset, the people, and guest data.

 

About the Author
Patrick Bosworth is CEO and a co-founder of Duetto, hospitality’s Revenue Strategy Platform, based in San Francisco.

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