Hyatt’s Latest Move to Balance OTA Relationships
In a somewhat surprising move in a year that has seen more reconciliatory overtures between OTA’s and hotels than 2016, Hyatt has given notice that they intend to terminate their contract with Expedia. While this is widely seen as a negotiating tactic, if a resolution is not reached, Hyatt will no longer be on Expedia effective July 31, 2017.
This news comes as a strong indicator that the movement to promote direct bookings, especially among major chains, is only gaining in strength. While many hotels are conscious of the value of remaining on and working with OTA’s, they are pushing harder than ever for that relationship to be fair and balanced. A viewpoint from Econsultancy believes that this relationship will result from hoteliers bringing all their experience to bear.
In other news, Ian Schrager, the founder of the modern boutique hotel, is proving to be one of the strongest voices defining the next generation as well. Take a look at his new hotel, the latest Public property, and what makes it unique.
While more marketing dollars will no doubt help hotel brands compete with OTAs, which themselves spend heavily to market themselves, realistically, increased marketing alone is not likely to help hotels win over consumers.
Instead, hotels will need to offer guests a reason to book directly and that will require that they tap their ability to segment guests and deliver better experiences to guests that direct book. Hotels should focus on revising loyalty program, managing price expectations (“Book direct for the best rate”), and ways to innovate the experience beyond the basic.
The decision to cut ties with the OTA giant falls on the heels of several months of negotiation and ultimate failure to come to an agreement on what Hyatt considers to be “reasonable, competitive terms,” namely lower commissions and improved flexibility.
In the communication to owners, Hyatt describes this decision as “a powerful step to reduce distribution costs by shifting bookings to lower cost and more flexible channels.” Hyatt acknowledged that Expedia and related bookings represent a notable share of Hyatt’s business, but remain confident that eliminating the channel will drive more bookings to Hyatt direct, enable more meaningful guest connections and reduce costs (enhance profitability).
The next generation of boutique hotels, according to Ian Schrager, is about adding technology and business smarts to the tried-and-true formula that he and other boutique pioneers perfected nearly 40 years ago.
Just the night before, on June 6, the man often credited with being the pioneer of the boutique hotels movement in the U.S. opened his latest hotel: the 370-room Public in New York City’s Lower East Side neighborhood.
The secret to scaling the Public brand, and keeping its rates so low, lies in its disruptive, tech-reliant business model. The majority of rooms range in size from 205 to 220 square feet. “It allows us to make booking of the rooms over the Internet and through technology, rather than to a reservationist, very easy,” he said.
Instead of charging fees for things such as room service and Wi-Fi, Schrager said he’s using technology to streamline the process and cut down on labor costs in the process. He estimated that the number of staff is only 50 for the 370-room hotel.
Travel marketing, while certainly one of the more exciting product areas to market, comes with its own set of challenges. It’s a fast-evolving industry with increasing competition, fluctuating trends and a particular vulnerability for disruption in many shapes and sizes, from political instability to start-ups using brand new technologies. And that means there is plenty of room for growth and rewards for innovation.
Here are three key challenges affecting the travel industry as we know it.
In the dark about dynamic travel ads on Facebook? This is the guide you need.
This year, eMarketer expects one in three display ad dollars will be on Facebook. That is serious investment from brands looking to engage with the nearly 2 billion monthly active users on the social media giant. Facebook’s Dynamic Ads for Travel (DAT) are uniquely positioned to help travel brands reach customers in an effective way. But how does DAT stand apart from Facebook’s other ad types? Here, we highlight what makes DAT different from the rest.