Evolution of the travel industry
In 2015, 1 in 4 overnight hotel stays were generated by Online Travel Agents (OTAs). While aware of this growing dominance of OTAs within the space for some time now, it seems hotel brands are finally starting to take action to avoid aggregators pushing up costs and decreasing brand loyalty.
The evolution of the travel industry, the hotel space in particular, reminds me a lot of the finance sector. Aggregators in the land of finance are huge players, with massive marketing budgets available to spend both on and offline. They are brands in their own right. Financial service providers have found aggregator partners pushing up their costs across the board. They dominate the paid search space and organic results, as well as utilising clever display ads and affiliates to push traffic to their sites.
Sound familiar? All of the above is pretty similar to Online Travel Agents (OTA’s) giants like Booking.com and Hotels.com dominance in the hotel space. Individual hotel brands are being pushed out by OTA’s across the board, and Google’s introduction of Hotel Price Ad’s has only added to this with very few hotel brands themselves spending in this area.
Some finance brands took a heavy stance on the competition from aggregators in their markets in 2008/2009. Direct Line and Aviva withdrew their listings from the sites entirely, instead transferring the commission based spend into their own marketing budgets. Whilst Direct Line continue this strategy for some of their key brands, Aviva reversed their decision just 3 years later.
Within the hotel space, Hilton have had a less drastic, but perhaps more impactful approach. Rather than removing themselves from OTA’s, they launched their biggest ever ad campaign which reached out to consumers encouraging them to “Stop Clicking Around” and book direct. But critically, there was an incentive to do so. A guaranteed discount would be available to all Hilton HHonors members when booking direct. And the campaign seems to be working.
At Equator, we have several clients operating in the hotel space. All have in some way been impacted by shifts in the marketplace, and consumer interaction with OTA’s is something we’ve kept a close eye on. Hotel operators have two options; watch their spend with OTA’s increase and let customers go via their platforms, or shift their own strategy to give customers a reason to book direct. We have some of the best marketing minds within our team here, and over the next few months we are going to give unprecedented access to some fascinating insights across the sector. Here’s a taster for some of the key things we’ll be detailing:
- Paid Search space and how non-brand keywords are a critical part of a strategy if hotels are to be considered by users.
- The evolution across all marketing channels has impacted hugely on strategies brands across display, affiliates and search – we’ll look at the trends across each to show how things have shifted.
- How customer incentives, loyalty schemes and personalisation from the retail sector could provide learnings for travel brands.
- A deeper dive into the changes within the SERPS, sharing our thoughts on these changes off the back of data we’ve collected that shows the impact of having an organic & paid search strategy combined rather than competing against one another.
Plus a few more snippets as well as our predictions for the future in the travel space. We’re really excited to have you join us for this great series!
By Fiona Robertson, Marketing Director.
The latest pieces in the series can be accessed through the following links
- How display advertising can help to drive direct bookings.
- How the latest affiliate strategies drive performance for hotels.
- The evolution of PPC trends and their impact on hotel brands.
- How organic search changes have affected the hotel sector.