SaaS Travel Booking Industry – Hotels, Air BnB, and OTAs

SaaS Travel Booking Industry

The past few years has seen a fervent battle between Hotels, Air BnB, and Online Travel Agencies (OTAs) to become the dominant market force in accommodation bookings. Whilst Air BnB and OTAs have made a significant dent in hotel’s profit shares, they are starting to fight back in an attempt to encourage customers to book directly with them.

Their reliance on 3rd party booking systems, combined with the rise of Air BnB has created an increasingly ruthless market – hotel chains can no longer afford to pay sites like Priceline or Expedia a cut of their profits. OTA’s take a portion of the sale, usually around 10-20% depending on the site. The main issue the hotels face is that most travellers under the age of 35 prefer to use online search engines rather than booking directly, despite numerous campaigns that have been run by the hotels.

The Hilton, for example, ran a ‘Stop Clicking Around’ campaign that highlighted the ease of booking through the Hilton compared to shopping through comparison sites – it was widely considered to be the largest ad campaign in the 100 year history of the chain! Other firms are using loyalty programs to try to incentivize customers to book directly, offering 25% discounts to book directly, allowing customers to redeem points for amazon vouchers and offering free Wi-Fi or room upgrades.

Hotels have also decided to fight back by legally challenging the OTAs market monopoly. Bloomberg reported that the U.S. hotel industry have proposed to lobby the federal Government and Federal Trade Commission officials, on top of launching a marketing campaign highlighting “the Expedia and Priceline duopoly.” Yet despite their best efforts, hotels are losing this battle. In fact, OTAs like Flighthub (a Momentum Ventures company), have now surpassed direct bookings for the first time and their growth has shown few signs of stopping any time soon.

But the hotel industry is not just fighting against the rise of OTAs, the meteoric rise of Air BnB has had massive consequences for the hotel industry in general. There has been a swathe of lawsuits aimed at Air BnB over their unfair advantage in to being held to the same regulations that hotels have to adhere to, but nothing has really halted the onward march of the sharing economy. The American Hotel and Lodging Association (AHLA), a hotel industry trade group, has been increasing its lobbying efforts to try to get more regulation in place, but lawsuits and legislative processes like this can take years to come to fruition so hotels will need to find new ways to fight back.

With Air BnB adding Trips and Places, which allow you to book guided tours and meet other users, their market share and user appeal will likely continue to grow. Hotels are looking down the barrel of industry disruption that is sweeping every industry, unless they can adapt, they may never see their profits return.

By Josh Hamilton

Living on the Edge: The New Real-Time Communications Security Risks

Real-time communications Security Risks As more and more people have been forced to work remotely due to the global public health crisis, collaboration platforms have unexpectedly saved the day for millions of businesses and allowed ...

Speeding up Digital Transformation During the Pandemic – 7 Steps to Unlocking the Benefits of Cloud

7 Steps to Unlocking the Benefits of Cloud The pressure for IT leaders to support more workloads and remote staff with limited resources is as contagious as the pandemic. The most powerful tool in their ...

The 5 Biggest Hybrid Cloud Management Challenges—And How to Overcome Them

Hybrid Cloud Management Challenges The benefits of the cloud—reduced costs, greater IT flexibility, and more—are well-established. But now many organizations are moving to hybrid cloud management platforms. While hybrid clouds do offer a greater level ...

Episode 6: Cloud Migration: Why It’s More Important Than Ever

The Importance of Cloud Migration Moving fully to the cloud is still a concern for many companies, but with millions of employees working from home, there’s an even greater need to migrate. Mark Kirstein, VP ...

The Growth of Third Party Risk Management (TPRM) Firms

Cybersecurity and the Continued Risks Back in the day, we played cops and robbers with sticks and plastic squirt guns.  Sometimes you were pursued, at other times you were the pursuer.  There wasn’t much more ...

What You Need to Know – IoT and Real-Time Operating Systems

Real-Time Operating Systems A real-time operating system, or real-time OS, appears to execute tasks while using a single processing core simultaneously.  However, what's really happening is that the tasks' response time is so fast that ...