March 22, 2017

Why hotel chains’ loyalty programs don’t pose a threat to OTAs


Data from Phocuswright shows that airlines receive almost 64% of their direct bookings from people who are not enrolled in their loyalty programs, while the percentage is just 21% for hotel suppliers.

Bookings through OTAs will likely continue to rise as the online channels’ share of total travel bookings keeps rising in the future. A recent Phocuswright report states that in the U.S., the online channels accounted for around 45% of total gross bookings in 2016. This figure might be lower for developing markets, but with increasing internet penetration globally this proportion is bound to grow in those markets as well.

Around 80% of direct booking customers for hotels are enrolled in their loyalty programs, and half of those bookings are done by Elite members. This implies that – other than elite members – most travelers do not prefer to book through hotel websites, especially if they do not fall under a loyalty program.

Many travelers do not seem to care much about the hotel brands, as long as they can get good value by booking through OTAs. The OTAs, on the other hand, offer a wide range of hotels to choose from within their preferred price range. With the inclusion of more and more properties on their platforms, the OTAs’ power to compete with hotel chains will likely keep getting stronger over time.

Get the full story at Forbes

Read also "Priceline thinks it has the ‘muscle’ to offer private rates"