Community rates: How the OTAs are reacting to it

11/10/16

It is a matter of physics: for every action there is a reaction. Some time ago, we mentioned the creation of community rates (or member rates), developed by major hotel chains to boost the direct channel. Marriott, Accor, Hilton and other chains have launched customized rates and exclusive benefits for members of their loyalty programs. This attitude is also a way to keep the customer engaged with the brand and an attempt of opposition to OTAs. But the agencies are reacting.

What the experts say

Chris Anderson, an associate professor to the Cornell University School of Hotel Administration and creator of “the Billboard Effect”, has said in a recent interview that there was a misguided effort from hotels when they focused on price while the OTAs focused on technology and content.

“Brands have put a Band-Aid on the problem by competing in price instead of tech. And when you look at the agents, that tech is even more dated than the hotel chains’.” (Chris Anderson)

Estis Green, author of a study called “Distribution Channel Analysis: A Guide for Hotels”, believes in something similar. To her, there must be a good reason for direct bookings. If the relationship is built around discounts, it is not sustainable. She believes that the purchase should be so simple and convenient that the person will feel compelled to return. In addition, the use of consumer data has never been as necessary.

“If you start mining travel habits, you’ll notice other data on travelers and use it for a recommendation. This builds a relationship where you show that you understand what the person is interested in and communicate exactly that. There must be more than a dialogue between hotels and their customers, and this has to happen before, during and after their stay.” (Estis Green)

Data exchange

A bold bet was made by Red Lion. The company recently delivered its loyalty program to Expedia and Hotels.com, allowing them to show the exclusive rates for Hello Rewards members. In return, the Red Lion gets to keep customer’s e-mail addresses and, most likely, will pay much lower fees.

Data exchange can be beneficial to both parties and seems to be the future of negotiations between hotels and OTAs, but it could also enlarge the hole in their already troubled relationship. 

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Booking.com for B2B

When you place a reservation on Booking.com, the site asks if you’re travelling for leisure or business. After completing the purchase, you receive an email invitation to a free upgrade to Booking.com for Business. After five reservations, the traveller gets access to “exclusive discounts and advantages for future trips,” according to their rewards program.

Learn more:
Why Red Lion-Expedia-Marriott raises some curious questions
Hotel Direct Booking Campaigns Won’t Hurt Priceline and Expedia Says Study
Booking.com in Reversal as it Launches Loyalty Program for Business Travelers

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