OTAs hit reset

Online travel agent platforms are limbering up for a fresh battle for the consumer, as they look for opportunities as international travel opens up once more.  

Airbnb has been quietly testing new APIs that will allow listings to show multiple rates, and is ramping up recruitment at HotelTonight. Expedia has revealed plans to further align its multiple brands, by uniting its loyalty programmes.  

Meanwhile Tripadvisor, which recently announced its new subscription scheme, Tripadvisor Plus, has experienced pushback from the big brands, as it sought to push the model out to international markets. 

Airbnb, it has been revealed, is beta testing a new format of listing that will allow accommodation to be offered with a variety of rates – with or without breakfast, with or without cancellation options, etc. Industry reports name Italian channel and booking manager RoomCloud, and US based Cloudbeds among two companies testing out the new format. The new API-powered display will make uploading information simple. Silvia Gualano, marketing manager at RoomCloud, told Phocuswire: “It can work for hotels and apartments, but it’s even more interesting for hotels because they are more used to working with rate plans on other OTAs.” 

And Sebastien Leitner, vice president of partnerships for Cloudbeds, said he sees the move making Airbnb more competitive: “I think Airbnb is really pursuing powering everything in lodging. That’s the biggest story for me.” 

The company is also advertising for new staff, at HotelTonight and accommodation management business Luckey, as well as for the main Airbnb business.  

At Expedia, the group has announced it will draw its various brand loyalty programmes together into a unified offering across more than 145 m members. The new scheme will draw together existing Expedia, Vrbo, Hotels.com, Travelocity, and Orbitz programmes, with the ability to earn and spend across flights, hotels, vacation rentals, car rentals, cruises, and activities. 

 “We want our customers to get the most of their travel experiences, plain and simple,” said Jon Gieselman, president of Expedia Brands. “No one needs to do anything right now, but soon their current rewards will be even more valuable, as they will gain access to the world of Expedia Group through one consolidated, easy to use programme.” Expedia has promised continuing free membership of its scheme, with a seamless switch to the new platform in the coming months. 

Expedia has spent recent years looking to shift from an internally competitive environment, to having teams work together – a process that will have been speeded up during the pandemic. In May, the company reorganised under four lines: Services, Brands, Marketplace, and Expedia for Business.  

Expedia recently revealed the results of a survey of 2,200 US travellers, undertaken with Morning Consult, to see how minded consumers are to travel. They found 58% of repondents have autumn travel plans, with millennials the leading age group at 67% planning to travel. The company says monthly trip searches were up 70% over the summer, compared to earlier in the year, with positive momentum continuing.  

Expedia CEO Peter Kern, speaking recently to CNBC, said anecdotally companies are seeing the benefits of returning to business travel. The company is currently spending around ten times the amount Airbnb spends, on advertising: “We are following the market, and as things rebound we will lean into the opportunities we see.” Questioned about competition from Airbnb, he added: “We like our odds in that fight.”  

Kern said he had seen demand respond to the easing of transatlantic flights: “We’ve seen searches go up considerably across Europe, I had a stat that in the UK they were twice what they were a week ago. Obviously, the airlines need to get more planes back in the air.”  

Meanwhile, Tripadvisor has suffered teething troubles with its new subscription service, Tripadvisor Plus. The company recently announced it would roll out the package internationally, after a promising trial in the US. Consumers subscribing to the annual USD99 membership get discounted hotel room offers, with the promise that the savings from their first trip will probably more than cover the membership cost.  

Big hotel chains cried foul, after their discounted rates were advertised to subscribers, once they were behind the membership paywall. As a result of that pushback, Tripadvisor has been forced to modify Plus, shifting it instead to a points-based credit that effectively delivers a member a cashback on future bookings, as opposed to a saving in the moment. “Consumers are likely to be getting the same savings, just at a slight different time,” explained CEO Steve Kaufer at an industry event. “It’s literally the same to hoteliers.” 

The revised format will see the hotel’s advertised rate including a commission, payable to Tripadvisor after the reservation. Trip will then pass most of that commission to the member, as a credit in a virtual wallet. Tripadvisor Plus general manager Sean Graber explained the concept of the revised Plus: “The vision of this in the longer term is to create a wallet technology on Tripadvisor, where when you book on Trip, you can earn funds in that wallet … and you can spend on the trip you are currently taking or bank those funds for future travel.” 

Market watchers disagreed that it was the same, wiping 8% off the company’s value, the day after the announcement.  Bernstein analyst Richard Clarke said the shift was “a major and unexpected U-turn at Trip Plus”, and downgraded his target price for the company’s shares.  

HA Perspective [by Chris Bown]: We’ve noted that analysts have been easy on Airbnb at its quarterly results presentations – and there’s been little indication of how the company will grow towards its lofty valuation, apart from more hosts and more listings. Now, we’re starting to see a bit more of the plan. Having a multiple rate listing option means Airbnb looks and feels a lot more like other OTAs, particularly for hotel channel managers.  

And then there’s HotelTonight. I was a fan – having a sensibly curated collection of discounted hotels to choose from worked for me, and the booking experience via my mobile phone was just the simplest ever. But once Airbnb bought HotelTonight out, it languished. Now it seems Airbnb has decided it will resurrect the brand in some way – just don’t try to fill it with home rental listings, please!  

Marriott’s Bonvoy has 120 million members, so if Expedia can truly draw together its 145 million members into a single, effective loyalty programme, it might be onto something. It’s another step in the journey Expedia is taking, as it moves from a gathering of competitive startups, to a more collegiate corporate whole. With lots of heads lost to the pandemic downturn, now is the moment to effectively change the culture.  

The battle of the brands here is interestingly poised. Airbnb is currently peppering my Youtube viewings, and terrestrial TV in the UK, with ads all about hosting. Yet it will, before long, want us to pivot and think of Airbnb when we want to make a hotel booking. Over at Expedia, the marketing challenge is somewhat different. The group currently spends handsomely promoting its many different travel brands, but is clearly now contemplating how much better off it will be, if they are far better united.  

And Tripadvisor’s excitement over their new subscription offering seems to have got the better of them. By shouting about the cheap rates members could enjoy, they have spooked some of the providers of those cheap rates, the big brands – and they are the ones who get into trouble over rate parity clauses, with regulators and OTAs alike. The rejigging instead moves Plus into another competitive domain, that of the cashback offer – and as Bernstein’s Clarke notes, those rivals don’t usually charge to join.  

Additional comment [by Andrew Sangster]: It is a finely balanced call whether OTAs or direct booking are going to win the recovery race. OTAs have the technology edge, the deeper pockets and the focus to emerge triumphant.  

But direct players have a number of advantages that they normally do not have. They don’t need to beat OTAs at tech but they do need to be good enough to be an acceptable alternative. If there is sufficient investment it is possible for direct to maintain status quo here but they need to acknowledge that they are still lagging (including the global brand majors). 

Where they can win is the increasing need and acceptance by consumers to engage digitally when on-property. With the right apps and web interfaces, hoteliers will be able to wrest control of guests from the OTAs. 

During the discovery phase it is hard to see direct players matching OTAs (but they must still selectively engage here). But on booking, and particularly on a repeat booking, hotels ought to now be in a position to win the customer. 

The need for digital keys, for menus and other information about facilities gives hotels the reason to adopt customers once they arrive at the hotel, even if an OTA has brought them there for the first time. 

OTAs will make a fine living focusing on the first-time guests and hoteliers ought to be happy to embrace this. But, as we have noted previously, OTAs are not set to enjoy the growth they have previously. The share prices of Booking and Airbnb look especially vulnerable. 

This recovery could see the better-balanced relationship hoteliers have been demanding. But they will miss the opportunity if they don’t invest now to seize the chance. 

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