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The biggest trends in direct distribution in 2016

So far 2016 has been proving itself to be the “Year of Direct.” After becoming overly dependent on online travel agencies (OTAs) and their hefty commission fees for too long, hotels are now putting more investment into their direct distribution channel, particularly their online channel. By strengthening their own websites and digital marketing campaigns, hotels have been able to shift more business to direct, ultimately resulting in higher revenues due to lower distribution and acquisition costs.

We’ve witnessed the “direct booking wars” of major brands, where big names such as Hilton, Marriott, Hyatt, Choice, and Wyndham have all started pushing member-only direct booking rates for loyalty program members. But it’s not just a pricing game. Independent hotels have also seen the value of investing in direct distribution, but have been taking a different approach—for many independents, it’s about having a smart and balanced distribution strategy that is bolstered by the right tools. Here are some of the biggest trends driving direct distribution for hotels this year:

E-commerce conversion strategies. OTAs have found enormous success with high-pressure sales tactics on their websites, whether it’s informing the customer that “139 people have booked the hotel within the last two days” to the fact that there are only “5 rooms left.” New developments in CRS and booking engine technology now allow hotels to apply the same e-commerce principles on their own website to help drive direct bookings.

Price-checking widgets. To combat the issue of rate parity with OTAs and to also ensure consumers of price transparency, many hotels have begun to implement price-checking widgets on their website as a way to guarantee best price to their guests. Tools such as Travel Tripper Rate Match, Triptease, and Clicktripz allow guests to see prices from major third-party booking sites so that they can instantly compare rates and be reassured that they are getting the lowest price possible. Rate Match also goes a step further and will match any competitor’s price if it’s lower and make that new rate instantly bookable.

Personalized loyalty programs and direct booking incentives. Hotels’ parity clauses with OTAs mean that hotels can’t publicly advertise lower rates on their website, but that doesn’t mean they can’t offer incentives for direct bookings. New companies like Voyat and StayWanderful have developed unique plug-and-play tools that offer guests loyalty offers and direct booking perks right on the hotel website. For example, Voyat takes advantage of social logins to track customers, offering personalized booking offers through targeted campaigns, while StayWanderful takes advantage of local partnerships to secure special perks for guests, such as free Gogo in-flight internet or local shopping and restaurant discounts.

Mobile user experience. Mobile is on the rise, currently making up half of all hotel website traffic, and approximately 20% of all direct bookings. That number is only expected to increase in the coming years. Many hotels have taken this an opportunity to bolster their mobile channel, including building responsive websites to accommodate for varying device sizes, investing in mobile-specific marketing and mobile pricing strategies, and generally improving the overall mobile booking experience to accommodate an increasingly mobile-dependent traveler.

All-in-one website and booking solutions. Until recently, hotels have treated their website and booking engine as two separate entities. You work with one vendor to develop a website and another vendor to set up a CRS and booking engine. It was a clunky solution that often resulted in a lot of disconnect—there was no way to advertise the current price from the booking engine, or sometimes rate plans advertised on a website would be expired. Recent tech solutions such as TT Web have attempted to close that gap, providing a solution that ties the CRS, website, and booking engine together and allows information to pass seamlessly from one to the other. Now information from the CRS (such as daily rates, special offers, number of recent bookings, etc.) can be dynamically fed and advertised on the website and booking engine, without any extra work on hotel management’s part.

What the future holds

Even as hotels strengthen their direct distribution strategies, it’s important that they remain alert to the fast-changing distribution landscape. OTAs certainly don’t want hotels to lessen their dependence on them. In fact, some OTAs are even making significant investments in providing direct distribution technology to hotels, as evidenced by Booking.com’s rollout of BookingSuite, a website and booking platform targeted primarily at independent hotels. Perhaps it’s an easy solution for many hotels, but the commission costs remain relatively high, and some experts warn against the dangers of giving powerful companies like Booking.com intimate access to your inventory and pricing strategies.

And OTAs are not the only ones who are developing new booking solutions. With TripAdvisor’s development of TripConnect Instant Booking, and with Google nipping on its heels to also offer an instant booking solution, the metasearch landscape is also morphing into a competition as to who gets to own the “Book” button. The app economy also wants in on the game—players like HotelTonight have built up a market for last-minute reservations in recent years, and newcomers like Recharge that allow by-the-minute room bookings are completely rethinking the traditional booking model.

To stay competitive, hotels will need to forge strong partnerships with technology and marketing partners that have a vested interest in the hotel’s success. It’s through these close relationships that hotels can stay abreast of trends, weather future challenges, and develop new solutions that will help them stay strong and profitable in the years to come.

Gautam Lulla

Gautam Lulla

Gautam is CEO of Pegasus and an outspoken expert in hotel technology and distribution. When he's not busy disrupting the status quo, you can find him ripping powder on the slopes. Contact him at gautam@pegs.com.

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