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Tag Archives: peer to peer travel

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How the hotel industry will never be the same again

Trevor No Comments

Online Travel Agencies (OTA) are changing significantly how hotels do business. You, more than likely, have booked a hotel using online travel agents such as Expedia, booking.com or Hipmunk; considered to stay in other people’s home through Airbnb, Housetrip or Homeaway; and probably checked out the hotel reviews in Trip Advisor or Yelp.

What is a pressing concern for hotels is that OTAs are exercising more and more power over them. Any booking conducted over an OTA means a commission received; these commissions are negotiated behind closed doors and can range up to 25%. Furthermore, Intercontinental Hotels group, the biggest operator worldwide has about 4,500 hotels; in contrast, Booking.com has a listing of half a million hotels worldwide.

Online Travel Agencies: Benefit or Not?

Considering the large chunk of commissions that these online travel agencies charge, should they be considered detrimental to the industry?

According to Tony Pollard, President of the Hotel Association of Canada states that it really depends on how you use OTAs.

“This is inventory that a hotel offers up on the internet through a third party that derives a commission. So if you have a few rooms left at the end of the day, and you know that you’re not going to sell them and want to put them in an OTA, then it’s a great move to make. But if you’re selling all your rooms through an online travel agency, then you’re only leaving money on the table”.

Cho Wong, managing director of Supranational Hotels, say that 30% of the bookings in his chain of 800 hotels come from Booking.com; and that he focuses on the repeat customer.

“We need to learn from other retailers. If you have a voucher so that next time you get 20% off or free drinks at the bar, you will come back”.

OTAs won’t let a hotel lower prices to customers who book directly; but if you start creating a loyal customer base through promotional offers, and also giving sweeteners for people who book direct at full price, it may seem like the perks compensate for the standard price.

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Peer-to-peer travel: A threat to the Hotel Industry?

According to a survey carried out by World Trade Market 2014 Industry Report, 9% have booked a holiday through a site like airbnb, Housetrip or HomeAway. What’s interesting is that out of that percentage, 86% say that they would do it again.

Dorian Harris, founder of Skoosh, sees Airbnb (and similar) as “the biggest threat or challenge to the hotel industry of all”.

Tony Pollard, offers his thoughts on these type of service:

“[peer-to-peer is an ] uncontrolled and unregulated industry that goes out and functions providing rooms, but without having to have all the regulatory conditions, including everything from: health, safety, comfort, bookings, third party liabilities. All of these things are completely unregulated…”

Dual-Service through Reviews

With sites like Trip Advisor, no bad customer service goes unnoticed pressuring hotels to improve and maintain their customer service standards. If someone feels like they got terrible service in a hotel or restaurant, they will undoubtedly write a review worthy of their experience.

On the flip side, Airbnb offers a dual review service where both the renter and rentee can review each other. This seems like the new trend, where customer reviews are leveraged by venue reviews of the customer.



Sources: BBC News & Business News Network