The Battle for Guests, Bookings & Revenue: What’s in Store for the Hotel and Hospitality Sectors in 2019


The Battle for Guests, Bookings & Revenue: What’s in Store for the Hotel and Hospitality Sectors in 2019

Jan 14, 2019 / By Vanessa Horwell

All things considered, the hotel sector remained healthy and resilient in 2018, despite the industry’s longest ever stretch of RevPAR growth being shattered. Recent political uncertainties faded into the background behind strong economic growth in the US and other key markets. Here are a few headlines that reflected the state of the industry in 2018:

What do these headlines mean for hotels, hospitality brands – and the B2B technology companies serving them – in 2019? Here are a few things we think will impact the battle for guests, bookings and revenue. 

Brand Wars

Since Marriott’s acquisition of Starwood in 2016, the world’s largest hotel company has been operating under a much larger umbrella of brands, with analysts and guests alike questioning the differences between categories such as distinctive, premium and luxury. Brands are important to hotels in a way they aren’t to airlines. An airline can repaint, polish and update the livery on an old aircraft, whereas a hotel property might need significant investment before it can be rebranded - new carpeting, decor and “facelifts” are just the start. Hence, the need for multiple hotel brands to suit different properties and traveler demographics. 

In this scenario, what matters most from a business perspective is the strength of the umbrella. If travelers or guests trust the hotel’s umbrella brand (in this case, Marriott), they will likely go to their website or app to book one of the many sub-brands according to their needs and preferences (luxury, convenience, price, proximity, etc.). But unless hotels can be more competitive versus OTAs in the direct channel, their sub-brand inventory will continue being fragmented among intermediaries who control those bookings and, ultimately, the customer relationship. 

Online Travel Agencies

Case in point: Marriott is currently in final negotiations with Expedia and expected to command lower fees on all bookings made through the OTA, also one of the world’s largest travel sites and a major source of distribution and customer acquisition fees for hotels, airlines and other travel suppliers.  

Marriott’s new-found negotiating power is due largely to the strength and scale of its Starwood acquisition – it has more properties to offer and more clout and recognition across more brand categories. Aside from negotiating lower commission rates (from Marriott’s perspective) and eliminating those fees altogether, we’re also seeing renewed investment in the direct channel. 

The real question for Marriott is not so much what it pays to Expedia as OTA fees are a cost of doing business, but whether those will be one-time booking fees or longer-term customer acquisition fees? The next time a traveler books a property, will they go indirectly through Expedia or directly through Marriott? Hotels may never eliminate intermediary bookings, but they can use their direct channel to engage repeat customers and lead them from a booking into a customer relationship. Expedia is a competitor for Marriott, but not the enemy. It will come down to how well hotel brands can digitally manage the opportunities they get through intermediaries like Expedia.  

We know that travel distribution strategy is not only about increased bookings but understanding the entire customer profile and not limiting revenue to the booking itself. Fees paid to Expedia or Priceline, for example, can be made up through loyalty or event revenue in the direct channel. 

Hotel and Travel Technology

How will hotels expand their revenue beyond the room? For the most part, they are relying on hotel and travel technology companies – some of whom are our agency’s clients – to provide new solutions that solve multiple problems and create multiple opportunities. One Silicon Valley-backed startup, Life House, raised $40 million in capital funding this year for a technology platform that can drive direct bookings, optimize operations, and foster a social community for travelers much like today’s modern direct-to-consumer brands. (Yes, it does all that…) 

But while Life House is marketing its platform as “a first of its kind for the hotel industry,” the fact is that many companies have travel technology platforms that can do many things. The real challenge is applying the technology to hotels’ business and revenue concerns and meeting their needs as buyers, which includes educating them about the technology through regular content (blogs, webinars, reports, etc.). Hotels are out to cut costs and generate revenue and are interested in technology that achieves those goals immediately. As a B2B communications firm, we understand the importance of content in being able to communicate the features and benefits of our clients’ platforms in a way that is direct, engaging and tailored to a hotel buyer audience.  

The Hotel and Hospitality Sector in 2019

There are certain storylines that are always top of mind for the hotel sector like which OTAs are growing or which hotel brands are succeeding in the direct channel? There’s also the ‘wildcard’ of Big Tech companies like Amazon and Google and how their technology – Alexa for Hospitality, for example – is changing business dynamics. But on a daily basis, hotels are most concerned with keeping operations going and being profitable and those are the ‘top of mind’ concerns that will drive their technology investments in 2019 and beyond. 

Several of our travel technology clients are building the platforms that hotels are using to manage customer relationships, strengthen loyalty, improve guest experience, and grow revenue. There is no single platform that will suddenly transform hotel technology. Some hotels are investing in their direct channel websites and apps, while others are investing in a superior guest experience through in-room technology like Alexa for Hospitality The best brands are doing both at once – think of what it’s like on a modern cruise with wayfinding guides and mobile billing – and setting the standards high in guests’ minds.

These are the leading brands that will keep pushing the hospitality sector in 2019 to stay on its digital toes – because a hotel or hospitality brand’s guests, bookings and revenue depend on its ability to serve today’s digital travelers.

Vanessa Horwell

Vanessa Horwell
Contact Us