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OTA-supplier debate a generation gap?

November 30, 2011 | Hotel Marketing

According to a new report, hoteliers taking a hard stance against the involvement of third-party intermediaries tend to be long-time hoteliers who had built their business a generation ago while the developers and proponents of third-party distribution systems tend to be younger, tech-savvy marketers.

As STR analyzed the OTA-hotelier debate for its upcoming special report (due now in January 2012), one common theme stood out: The hoteliers taking a hard stance against the involvement of third-party intermediaries tended to be long-time hoteliers who had built their business a generation ago while the developers and proponents of third-party distribution systems tended to be younger, tech-savvy marketers. Dara Khosrowshahi, for example, was 35 when he became the CEO of Expedia in 2005.

The debate bears a striking resemblance to a quarrel that played out in the music industry nearly a decade ago. Entrenched record executives wanted control of the music supply and wanted to sell the music via their channels. Along came Napster, invented by Northeastern University programming student Shawn Fanning, and verified Napster use peaked with 26.4 million registered users worldwide in February 2001. Strong Napster opponents included longtime artists Metallica and Madonna, as well as the age-old record companies. Proponents included younger independent bands such as Radiohead and Dispatch and college students, who admitted to obtaining the music for free but argued the music distribution service led them to purchase albums and attend concerts (billboard effect!).

Here’s the difference: It took the music industry less than a decade to get it figured out. Today, Napster is owned by Rhapsody and is a pay service where the artist, the record company and the third-party distributor get a fair share of the profits. Since then, a slew of competitors have emerged, including the gigantic Apple iTunes.

To solve the hotel-room distribution dilemma, it’s going to take similar concessions from both sides. Brands need to realize that travelers today are shopping for hotel rooms in different places, and having those rooms available via third parties actually makes business sense. Third-party intermediaries are going to have to realize the profits they made in 2002 are no longer justifiable and the commissions need to be fair for all parties.

Get the full story at HotelNewsNow.com

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