July 2017 Archives

Jul 31

despite the best efforts of hotel brands, travelers still love to click around

In their ongoing tug of war with online travel agencies, hotel companies have launched some clever campaigns in recent years to steer more consumers to their branded sites for commission-free direct bookings, promising that travelers always will find the lowest rates there.

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But a new study indicates it still pays to click around.

A survey by the research firm Piper Jaffray found OTAs and travel search sites offered the lowest rates more often than hotel brand websites.

The survey of 1,000 U.S. customers who reserved rooms at 86 chain hotels in the world's largest 25 cities found that OTAs and travel search sites had the lowest price 21 percent of the time compared with 13 percent for hotels. Pricing was the same about two-thirds of the time.

The researchers told Skift they had expected to find more price parity, and that the results show consumers are not shifting despite hotel company marketing efforts.

The American Hotel & Lodging Association questioned the validity of the results, and Hilton and Marriott told Travel Weekly that direct bookings are the only way for customers to get the guaranteed lowest rate with all the perks afforded members of their loyalty programs.

It’s certainly easy to understand why hotels are trying to drive more direct bookings. It’s not just about saving on what they say are sometimes unfairly large commissions. More importantly, it’s about preserving a direct link to the customer and collecting that all-so-important information needed to deliver personalized service and conduct future marketing efforts.

Unfortunately, the internet and OTA floodgates opened long ago, and to borrow the catch phrase from Hilton’s clever campaign, travel shoppers love to “click around” to find the best deals and properties that best fit their needs.

We call it the look-to-book factor, or how many clicks (“looks”) there are for every booking. And it’s a whopping 11,000-to-1, according to the data from the nearly 13 billion hotel booking transactions we process every month. That’s a whole lot of clicking.

Add in the movement to overturn rate parity laws in Europe and the seemingly endless number of new players entering the online travel landscape, I expect the clicking will only increase.

For instance, one of our newest partners, Zumata, is using artificial intelligence to quickly gather information across a host of new wholesalers and other suppliers around the globe. And the meta sites give consumers easy access to an increasingly wide variety of deals.

So while many seasoned and loyal travelers no doubt will take advantage of the special rates and bonuses that brands offer for direct bookings, the Piper Jaffray report serves as a reminder of the value of industry players working together rather than against each other to embrace new technologies that ultimately will drive more bookings and more revenue for everyone.

– CEO Toni Portmann

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Jul 17

blockchain and its potential to upend the travel industry

We’ve been hearing a lot lately about artificial intelligence, “big data” and their potential for transforming the travel industry. But there’s another new technology on the horizon called blockchain, and it promises to upend much of the business world as we know it.

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So what exactly is a blockchain? It’s the technology underlying virtual currencies like Bitcoin. It’s basically a living digital business record or ledger that can be updated in near real-time by multiple parties, creating permanent and inalterable records on everything from bank transactions to house and land sales, real-time shipping records and, of course, travel bookings and payments.

While most of the talk about blockchain currently is focused in the payments world, a recent report from IBM says blockchain already is disrupting the disrupters and could eventually eliminate whole sectors of intermediaries.

It’s both scary and exciting stuff, with unknown but potentially game-changing disruptions to the travel distribution world as we know it.

According to a new analysis from the IBM Institute for Business Value, blockchain has the potential to become “the foundation of a robust system of trust, a decentralized platform for massive collaboration.

“With that, intermediaries will be shuttered. Assets that were once dormant can be exploited. Profit pools can shift and be redistributed. News services delivered on blockchain networks can accelerate access and liberate those that were once locked out of efficient value creation to fully participate in an all-in economy.”

So how might this all impact travel and hospitality distribution? According to the IBM report, two new blockchain pilots are already attacking one of the industry’s newest disrupters, the sharing economy.

La’Zooz, being developed in Israel, cuts out the middlemen in ride-sharing services like Uber by establishing a trusted system that allows car owners to share rides with each other. An Austin-based company, Arcade City, is developing a blockchain-based system that allows riders to directly negotiate rates with drivers.

In the travel distribution space, a startup called Winding Tree is circulating a draft white paper about its vision for using blockchain to upend traditional travel agency sales and commission models.

And experts say blockchain also has huge potential to open new avenues for not only new payment and reservations management solutions but also helping travel companies achieve the Holy Grail of truly personalized services and one-to-one, persona-based marketing.

As the IBM report states, blockchain’s “leveling effects across frictions at various levels of the economy are startling. They suggest that transaction costs and enterprise friction could be so greatly reduced that organizations will be transformed in ways not yet imagined.”

In other words, this is a space we should all be watching very closely.

– CEO Toni Portmann




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