TheRiseofOnlineIntermediariesintheEuropean

HotelDistribution:ImplicationsforHotelsinthe
CzechRepublic

Prof.RolandSchegg
Instituteof Tourism,HESSOValais/Wallis
Sierre(Switzerland)

9thAHRCRannualconference
Prague,November21,2014

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 Anearlyconclusion
1. Yes,theOTAswillcontinuetogrowandbecome
stronger

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 Anearlyconclusion
2. Yes,thepaceofinnovationwillcontinuetobehigh
andweareheadingtowardsamorecomplexworld

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 Anearlyconclusion
3. Yes,hotelsstillhaveachanceinthisbattle,but
havetoworkontheir(e)Fitness

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 Agenda
Viewonthecustomer:travelsearchandbooking
trends
HoteldistributioninEurope
7hoteldistributiontrends
Challengesandrecommendationsforthe
hospitalitysector

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Viewonthecustomer
(travelsearchandbookingtrends)
1900

2000

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Viewonthecustomer
(travelsearchandbookingtrends)

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Topinformation sources for travel
bookings inSwitzerland (20092013)

Internet Recommendations (WOM) Catalogue

Source:Buchungs undReiseverhaltenAllianzGlobalAssistance2014
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TravelCycle

Travel
inspiration

Post-travel Information
search

Travel (on site Booking

experience)

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 TheComplexPathfrom
SearchingtoBooking

Source:http://www.tnooz.com/article/travelresearchgoogleonlineacitvity.Thedata(andsubsequentinterpretationby
Google)comesfromtwostudiescarriedoutlastyearwith5,000consumersviaGFKandaNielsenstudyof1,700mobile
users,bothwithUKrespondents

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 TheComplexPathfrom
SearchingtoBooking:thestats

Onlinebuyers:
Numberofsearchsessions 16.7
Overalltimespent 129minutes
Numberofsitesvisited 32.5
Daysofactivityovera73dayperiod 13.8days

Source:http://www.tnooz.com/article/travelresearchgoogleonlineacitvity.Thedata(andsubsequentinterpretationby
Google)comesfromtwostudiescarriedoutlastyearwith5,000consumersviaGFKandaNielsenstudyof1,700mobile
users,bothwithUKrespondents

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DistributionChannelsinthe
EuropeanHotelIndustry

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Numberofsurveyresponses
bycountry(totaln=2298)
0 100 200 300 400 500 600
Germany
Switzerland 279 597
Greece 279
Spain 159
Italy 102
Czech Republic 85
Belgium 79
Hungary 77
Denmark 73
Finland 67
Austria 60
Turkey 56
Norway 55
France 54
Luxembourg 39
Slovakia 36
Latvia 35
Portugal 33
Ireland 33
Croatia 26 In Germany, 5 hotel chains with 596 hotels and 82129 rooms
Estonia 20 have provided additional data for some of the questions
Sweden 18 (distribution channels and /or relative market shares of OTAs) of
Cyprus 18 the survey.
Malta 8
Netherlands 6
Lithuania 4
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Marketsharesofdistribution
channelsinEurope2013:
weighted sample
Market
Weighted overall sample: n=2'169
share
Direct - Phone 19.41
Direct - Mail / fax 2.66
Direct - Walk-In (persons without reservation) 5.79
55.94
Direct - Contact form on own website (without availabilty check) 5.50
Direct - Email 14.91
Direct - real time booking over own website with availabilty check 7.67
Destination Marketing Organization (DMO) / trade associations 0.95
1.35
National Tourism Organization (NTO) 0.39
Tour operator / Travel agency 9.59
Hotel chains and cooperations with CRS 1.63
16.50
Wholesaler (e.g. Hotelbeds, Tourico, Gulliver, Transhotel, etc.) 3.54
Event and Congress organizer 1.74
Online Booking Agency (OTA) 22.50
Globale Distributionssysteme (GDS) 1.89 24.81
Social Media Channels 0.42
other distribution channels 1.40 1.40
Basedonresultsof25countries(datafromhotelchainsinGermanynotincluded).Market
sharesin%ofovernights.
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 Marketsharesofdistribution
channels:CzechRepublic
Market
Unweighted sample: n=82
share
Direct - Phone 17.4
Direct - Mail / fax 0.9
Direct - Walk-In (persons without reservation) 6.1
58.0
Direct - Contact form on own website (without availabilty check) 8.3
Direct - Email 18.8
Direct - real time booking over own website with availabilty check 6.5
Destination Marketing Organization (DMO) / trade associations 0.8
0.9
National Tourism Organization (NTO) 0.1
Tour operator / Travel agency 12.7
Hotel chains and cooperations with CRS 1.7
19.9
Wholesaler (e.g. Hotelbeds, Tourico, Gulliver, Transhotel, etc.) 2.0
Event and Congress organizer 3.6
Online Booking Agency (OTA) 18.1
Globale Distributionssysteme (GDS) 1.1 19.6
Social Media Channels 0.4
other distribution channels 1.7 1.7

Confidenceintervalsarestatedatthe95%confidencelevel.Marketsharesin%.
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 OTAmarketsharesinEurope
Italy (101) 31.2
Belgium (78) 27.9
Netherlands (5) 26.0
France (49) 24.8
Estonia (19) 23.7
Denmark (73) 22.8
Europe (weighted) 22.5
Spain (153) 21.7
Portugal (30) 21.3
Germany (966) 20.9
Luxembourg (39) 20.1
Switzerland (272) 19.4
Hungary (76) 19.1
Czech Republic (82) 18.1
Greece (266) 16.3
Austria (58) 15.4
Ireland (33) 15.3
Latvia (33) 15.2
Cyprus (17) 12.4
Turkey (52) 12.1
Malta (7) 12.0
Sweden (17) 11.8
Croatia (26) 11.8
Finland (66) 11.1
Lithuania (4) 10.0
Norway (55) 9.1
Slovakia (35) 7.1
0 5 10 15 20 25 30 35
in %
Lessthan30observations>weakvalidityofmeanvalue,lessthan10values>novalidity.For
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Germanytheweightedmeanbetweenindividualandbrandedhotelsisused.
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 Marketsharesofdirectbooking
channelsinEurope
Sweden (17) 74.7
Slovakia (35) 70.1
Finland (66) 69.8
Norway (55) 68.3
Austria (58) 67.6
Germany (966) 63.7
Netherlands (5) 66.2
Switzerland (272) 63.7
Belgium (78) 61.2
Ireland (33) 59.4
Denmark (73) 58.7
France (49) 58.7
Czech Republic (82) 58.0
Hungary (76) 56.7
Lithuania (4) 55.8
Europe (weighted) 55.3
Greece (266) 54.9
Luxembourg (39) 53.9
Croatia (26) 52.4
- Phone
Latvia (33) 50.3 - Mail / fax
Portugal (30) 49.9 - Walk-In
Italy (101) 49.1
Spain (153) 43.6
- Contact form on own
Turkey (52) 41.7 website
Estonia (19) 32.8 - Email
Cyprus (17) 28.3
Malta (7) 27.0
- Real time booking over
0 10 20 30 40 50
own
60
website 70 80

Arithmeticmeansbasedonsampledata. in %
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Lessthan30observations>weakvalidityofresults,lessthan10observations>novalidity
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EvolutionofHotelDistribution
Channelsbetween2002and2013:
exampleSwitzerland

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DistributionTrendsintheSwiss
HotelSector20022013
2013 (n=279)
Tourism partners (tour operators, DMO 2012 (n=200)
national-local, event & conference 2011 (n=196)
organizers, others) 2010 (n=211)
2009 (n=198)
2008 (n=184)
Online booking (GDS, IDS/OTA, direct
booking on hotel website, hotel chains 2006 (n=100)
with CRS, social media) 2005 (n=94)
2002 (n=202)

DirectBookings
Electronic request (e-mail, booking form)

Traditional distribution (telephone, fax,

letters, walk-ins, others)

0% 10% 20% 30% 40% 50%

Attention:Marketsharesin%ofbookings for20022012andin%of
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OTAsinEurope

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Weightedrelativemarket
sharesofOTAsinEurope
Booking.com 60.9
Expedia 9.2
HRS 8.9
other OTA 7.1
Hotel.de 3.8
Venere 3.3
Hotels.om 1.6
Agoda 0.9
OrbitzTravel 0.7
lastminute 0.7
eBookers 0.4
Bergfex 0.4
eDreams 0.3
Destinia 0.3 Agoda 0.9
Hotelzon 0.3
Tiscover 0.2 Booking.com 60.9
Rumbo 0.2 Priceline 61.8
Olotels.com 0.2 HRS 8.9
Logictravel 0.2
Hotel.ch 0.1 Hotel.de 3.8
Latebooking 0.1 Tiscover 0.2
Hoteliers.com 0.1 HRS(total) 12.9
Hotels.nl 0.0
BookNorway 0.0 Expedia 9.2
0.0 10.0 20.0 30.0 40.0 50.0
Venere 60.0 70.0
3.3
Hotels.com 1.6
Basedon1736observationsfromthe Expedia(total) 14.0
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survey.Valuesin%
Page 21 Totaloftop3 88.8
Distributiontrendsintourism

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7 Distributiontrendsinhospitality

I. Increasingcomplexityofdistributionlandscape
II. MarketingpowerofOTAs
III. GrowingOTAmarketshares
IV. Mobilebooking
V. Consolidationinonlinemarket&productdiversificationof
OTAs
VI. Metasearch Sites(Kayak,Trivago,TripAdvisor MetaSearch,
GoogleHotelFinder)
VII. Socialmedia/sharingeconomy:Newentrants(P2Ppeer2
peersuchasAirBnB,HouseTrip,HomeAway)

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I.Complexity ofDistribution
Landscape ortheExplosionof
Interconnectivity inTourism

Source:Buhalis D.,andO'Connor,P.,2005,InformationCommunication
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II.MarketingPowerofOTAs

Estimation:Pricelinespentprobably1.8billionUS$in2013for
theonlinemarketingofmorethan420000properties
worldwide(>4000US$perhotel).
555000transactionshandledeachdayonbooking.com
WebsitetrafficOTAsinMay2014(skift.com):
o booking.com:200millionmonthlyvisitorsonwebsite
o TripAdvisor:160million
o Expedia:63million

Source:
http://www.travolution.co.uk/Articles/2014/02/21/7573/big+interview
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III.FutureEvolutionofOTAsin
Europe:Priceline(booking.com)
90
80
70
60
50
40
30
20 Priceline Bookings
(Milliarden US$)
10
0
2010 2011 2012 2013 2014 2015 2016 2017 2018

Source:http://skift.com/2014/04/16/thebiggrowthopportunityleftfortheworldsbiggesttravelcompany/
ExpediaandPricelinecompanyreports,eMarketer,PiperJaffray Research
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III.FutureEvolutionofOTAsin
Europe:Priceline(booking.com)

45%
Priceline as a % of total
40%
online
35% Priceline as a % of total
online & offline
30%
25%
20%
15%
10%
5%
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018

Source:http://skift.com/2014/04/16/thebiggrowthopportunityleftfortheworldsbiggesttravelcompany/
ExpediaandPricelinecompanyreports,eMarketer,PiperJaffray Research
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IV.MobileBooking:Evolutionof
InternetAccessDevices

However, in Europe only 28%

of hotels have a mobile
Source:PhocusWright 2014basedonExpediaandBusinessInsider
version of the website!
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IV.MobileBookingsasShareofOnline
TravelBookings

30%

25%

20%

15%

10%

5%

0%
US Europe APAC
2013 2015

Source:PhocusWright 2014
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V.Consolidation Cooperation:
Expedia&Travelocity&
HomeAway (2013)

Source:http://skift.com/2013/10/22/expediapartnerswithhomeawaytooffervacationrentals/
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V.Cooperation Diversification:
Priceline&OpenTable (2014)

Source:http://skift.com/2014/06/13/pricelinegrouptoacquireopentablefor26billion/

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VI.OTAsplaytheMetaGame:
Expedia Trivago &Priceline
Kayak

Source:http://skift.com/2013/09/19/afterbigmergerswhenwillpricelineandexpediatakethenextbigsteps/
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VII.SharingEconomyasDisruptor
oftheHospitalityIndustry

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VII.SocialMedia/sharing
economy:Newentrantssuchas
AirBnB

Source:airbnb.com

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Challengesandrecommendations

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Direct bookings
The foreseen very high market share of OTAs is a serious
threat for the lodging sector, already identified in 2003
o OTAs have become increasingly powerful in recent years and this
development puts hotels in a difficult position of having to sell steadily
growing portions of their inventory at (often) discounted rates and with
high commission rates through third party intermediaries (Carroll &
Siguaw, 2003).
o but it has become an even hotter topic today (Green 2013):
o The hospitality industry has reached an inflection point. On one hand,
the many intermediaries involved in travel have driven the cost of
business acquisition to record levels; on the other hand, the
opportunities to tap this base of third-party partners for competitive
advantage is growing in leaps and bounds. Changes in consumer
behavior have altered the business dynamic more than most hoteliers
yet realize.
Source:Carroll,B.,andJ.Siguaw.2003.Theevolutionofelectronicdistribution:effectsonhotelsandintermediaries.
CornellHotelandRestaurantAdministration
http://www.hospitalityupgrade.com/_magazine/magazine_Detail.asp?ID=825
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Direct bookings:Accors
strategy 2013

http://www.eyefortravel.com/distributionstrategies/leafoutaccor%E2%80%99sbookhowdrivedirectbookings
%E2%82%AC2billion

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Direct bookings:Accors
strategy 2013
Website Traffic:
paid search (SEM), SEO
Website Usability
Conversion rate
Best rates and very last room for customers
Merchandising
Club Accor: Loyalty program
Improving digital Tools
Mobile Site

http://www.eyefortravel.com/distributionstrategies/leafoutaccor%E2%80%99sbookhowdrivedirectbookings
%E2%82%AC2billion
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AccorsGlobalDigitalStrategy
2014

Accor has allocated 225 million Euros over the next five
years to fund a company-wide digital transformation which
covers guests, staff and hotels.
http://www.tnooz.com/article/digitalrevampAccormobilefirstwipolohacks
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Globaldigitalstrategy:Accors
strategy 2014

http://www.accor.com/fileadmin/user_upload/Contenus_Accor/Finance/PDF/2014/UK/20141030_accor_leading_di
gital_hospitality_presentation.pdf
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Lastbutnotleast:UniqueSelling
Proposition(USP)
Ask yourself:
Why should customers book directly?
What is my value proposition for them?

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Lastbutnotleast:UniqueSelling
Proposition(USP)
OTAs (still) sell commodities (rooms) -> therefore create
unique and local products which cannot be replicated
Generate higher revenue onsite through appropriate extra
services and qualified personnel. Learn from airlines
Leverage ICT

Source:IBMInstituteforBusinessValue&AccorsDigitalDay2014
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Differentiationstrategyand
customerfocus:caseHotel
Lugano Dante(Switzerland)

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Differentiationstrategyand
customerfocus:HotelLugano
Dante

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Differentiationstrategyand
customerfocus:HotelLugano
Dante Personalized reception

Personalized services before arrival:

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free and paid extras
Thanks for your attention!

Prof. RolandSchegg
UniversityofAppliedSciencesofWesternSwitzerlandValais(HESSOValais)
SchoolofManagement&Tourism
InstituteofTourism(ITO)
TechnoPle 3
CH3960Sierre/Siders,Switzerland
Tel:+41(0)276069083
Mail:roland.schegg@hevs.ch
Twitter:@RolandSchegg
LinkedIn:ch.linkedin.com/in/rolandschegg/
Web:www.hevs.ch/www.etourismmonitor.ch

BachelorofScienceHESSOinTourisminGerman,FrenchandEnglish
http://tourism.hevs.ch

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