Direct Bookings Up, but Downward Trend for the Inudstry on the Horizon
The trend of pushing for direct bookings continues. A recent study from Kalibri Labs indicating that direct bookings are indeed significantly more profitable than those that come through OTAs, despite the much-lauded ‘billboard effect.’
However, the forecast for the hospitality industry as a whole is looking grey. After years of surging business and rising demand, supply is finally on the road to outpacing demand with the latest inventory boom and a slowing economy. This won’t be a crash, but it will be a definite slow down – hoteliers will have to adjust to avoid a ‘race to the bottom’ over the next few years.
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Based on analysis provided by Kalibri Labs, direct brand.com bookings continue to be significantly more profitable than OTA bookings. And there is only a slight likelihood (7 percent) that a consumer will visit an OTA and then return to brand.com to book.
The balance of power has shifted in favor of U.S. hospitality companies in their tenuous relationship with online travel agencies (OTAs), according to Fitch Ratings. Solid industry fundamentals have allowed many lodging brand owners to negotiate more favorable commission rates and contract terms, and hotel brand consolidation will perpetuate this trend.
A Google search for hotels brings up hotel results in Google Maps. When you click on a hotel listing, it will show you a ton of information, including the reviews. Previously, the reviews have all come from Google. Now, though, there is also an additional section that shows you reviews from third-party web sites including Booking.com, Priceline, Agoda and more.
It’s the question of the hour at every industry conference and every hotel conference room. No one knows the answer, but we have the data to make an educated prediction.
If you haven’t read the recent article in Hotel News Now by STR’s Jan Freitag, you need to check it out. In a clear and simple way, it presents the historical trends across the most recent, relevant hospitality industry cycles.
The U.S. hotel industry is projected to experience record-breaking room demand but low room rate growth during June through August 2016, according to summer forecast figures from STR.