Why aren't chains successful at taking back shares from OTAs?
We're in 2014 and in all my interactions with hotel chains, the needle has still not moved much from OTA towards direct booking. Yet investors and owners keep wanting more of it, our main trade news talk about it and the most-read articles are often about it.
Why after so many years of talk, are chains still only moderately successful (if at all) at taking back shares from OTAs?
I don't pretend to know everything or be a whole lot smarter than the amazing marketing people that work at these chains, but having worked with some chains and hundreds of independent hotels I've seen some of differences that could help explain.
First, to understand this, we must understand the paradigm shift that is happening (or happened) to hotels. What is holding back chain success today is the very essence that makes chains, chains: pushing the brand more than the hotel.
Why is this a problem? Because the internet has changed the way we look for hotels. TripAdvisor, Google Maps, Expedia, Booking, Kayak and the many other search sites are all brand agnostic. Today consumers don't rely on the brand to guarantee the quality, they rely on user reviews. They don't rely on brands to find hotels, they have OTAs, meta-search platforms, Google maps and a plethora of other tools. And if consumers want to ask a question on social media, the last thing they want is an answer from a brand level community manager.
In other words, the internet has made every hotel "independent."
But while that is a DNA problem for chains, it doesn't explain the problem. After all, the marketing power, budgets and competence of said chains should be able to figure it out. So why so few results?
There are many reasons for the problem, a large problem could be the fact that distribution, e-commerce and marketing are often three separate departments and each tries to hold on to their budgets and political views, some of the problems are that pulling out a budget to generate direct revenue is a lot harder than signing a contract for a commission based OTA. But these problems exist to some degree at every hotel.
Now, let's take a look at the other side, the independent hotels, just to set a contrast. Having worked with hundreds of hotels and successfully moved that needle, I can say it's not that hard. I've spoken to many other hotel marketing agencies who similarly had great success (not to say it doesn't take hard work, but it's solving the problem isn't that hard).
Essentially, while there are basic rules to follow, there is one underlying rule which is, be inventive or be agile as many like to say.
Let me give you some examples:
When analysing a hotel's online presence one regularly finds they are just showing too many rate/room types. For an independent hotel, it's not too hard to change, a conversation and we're testing a smaller list. Not quite so for a hotel chain.
When noticing how incredibly negative the average hotel's cancellation policies are for most hotels, independent hotels can rewrite them rather easily. Chains well, you know what it takes to change those.
When seeing that there is not customer advantage to book direct independent hotels work out a solution, in a chain if E-commerce figures that out they need to ask Distribution, and Distribution sees it as a threat to their revenue and so we're down the same rabbit hole.
Let me assure you they aren't the only offenders, the list goes on.
The good news is that independent hotels have been successful at shifting shares from OTAs for a few years now. I can't speak for all the hotel marketing agencies on the market today, but at the better hotel marketing agencies it's down to a science. There are exact steps to take in precise sequences.
So back to the problem, why aren't chains as successful?
Fundamentally it's about agility, it's about understanding how consumers shop and changing to accommodate for all that, and that agility needs to happen on the top with someone who can get change to happen without needing many further levels of approval.
To conclude, I believe it's time for chains to take a page of two out of the independent hotel marketing handbook. To learn from the independent world whose "guerrilla" marketing of the last five years has developed into processes and solutions.
In Malcolm Gladwell's book Underdogs he explains the biblical David and Goliath story. According to the book, David not only CAN defeat Goliath, he IS SUPPOSED to defeat him, as "giants are not what we think they are. The same qualities that appear to give them strength are often the sources of great weakness".
David being small, quick and agile was in fact the one advantage over Goliath, who was too "big, slow and blurry-eyed to comprehend the way the tables had been turned".
I don't mean to be harsh on chains, I think they're doing incredible work in hotel marketing space, but it's time to take the "direct booking" issue serious or stop trying.