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Hotel Distribution

Contents Section Section title Pages

1 Introduction 4 2 Forecasted Spending on Travel & Tourism 5-11 3 Hotel Supply Worldwide 12 4 The Top-Ten Hotel Chains 13 5 Oyo the Disruptor 14-16 6 Hotel Capacity & Chain Penetration 16-27 7 Reflections About Hotel Distribution 28-30 8 Distribution Channels in Europe 31-33 9 Distribution Channels in the US 34 10 ‘Rogue’ OTAs Are Disrupting Rate Parity 35-42 11 Brands 43-58 12 How Much is an 'Influencer' Worth? 59-60 13 Fake Reviews Still a Problem 61-64 14 The Importance of Metasearch 65-68 15 Advertise Your Hotel on Facebook? 69-70 16 How is loyalty evolving? 71-73 17 Airbnb as a hotel distribution channel 74-81 18 Hotels by the Hour-Why Not? 82 19 Wedding planning goes digital 83-84 20 References 85-86

This report looks at the following areas:

1. Which are the main chains by region/major country?

2. What is driving brand proliferation and which are the new brands?

3. How is Oyo disrupting the hotel industry?

4. How serious is the problem of ‘rogue’ OTAs that sell wholesale rooms in retail channels?

5. How does Facebook advertising work?

6. How big a problem are fake guest reviews?

7. How is loyalty evolving?

8. Will Airbnb become a major hotel distribution channel?

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Executive Summary Hotel chains are expanding at a faster rate than the overall industry and independent operators are increasingly under pressure to affiliate their properties to major brands. The burgeoning Indian chain Oyo is causing major disruption in the lower end of the hospitality market. Brand.com appears to be outpacing OTAs in terms of growth in bookings. Meanwhile, ‘rogue’ OTAs, that have no contractual relationship with hotels, are undercutting direct rates as they unload wholesale inventory into the retail marketplace. The value of so-called social media ‘influencers’ is questionable for hotels. Facebook can offer a hotel well-targeted advertising coverage. Loyalty programmes are evolving towards offering more immediate rewards. Airbnb has upped the ante as a valid distribution platform for hotels – which may put pressure on the big OTAs down the road.

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1.Introduction

Objective The objective of this updated report is to identify key trends in the distribution of hotel services and to project how they will evolve. In order to accomplish this goal, the various hotel distribution channels are analysed, regional differences are investigated and key issues regarding hotel distribution are evaluated. In conclusion, it is intended that the report will serve as a valid basis for more detailed analysis and decision-making regarding an individual hotel or chain's distribution strategy.

Structure The report begins with an overview of the outlook for spending on travel and tourism and of the structure of the international hotel industry in terms of major hotel operators, chain penetration and brand value. In further sections, a breakdown of distribution channels by major region/country is presented. Then the issues of ‘rogue’ non-contracted OTAs, the role of social media 'influencers' and the problem of fake guest reviews are investigated. The importance of metasearch, advertising on Facebook, loyalty programme trends and Airbnb as a hotel distribution channel are also discussed in subsequent sections, as well as niches areas of hotel distribution, such as weddings and day use.

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2. Forecasted spending on travel & tourism Spending on travel & tourism worldwide currently amounts to almost six trillion dollars and is expected to increase by over 40% over the coming five years to reach almost 8 trillion dollars by 2023. Leisure travel expenditure accounts for 78% of the total currently and is expected to grow faster than spending on business travel over the next five years. Growth in business travel spending will likely lag that of leisure travel, which argues for hotel chains increasing their leisure-based offerings, such as all-inclusive and rentals, as, for example, Marriott is now doing. FIGURE 1: FORECASTED SPENDING ON TRAVEL AND TOURISM BY CATEGORY FOR THE WORLD*, 2018-2023 (IN NOMINAL US$BN)

Type of spending 2018

2019 (fore)

2020 (fore)

2021 (fore)

2022 (fore)

2023 (fore)

% change 2018-2023

Business travel 1,228.02 1,283.48 1,374.18 1,465.23 1,555.03 1,649.24 34.3% Leisure travel 4,475.33 4,715.16 5,129.56 5,541.09 5,931.96 6,340.24 41.7% Domestic tourism 4,060.14 4,260.13 4,615.88 4,976.39 5,323.81 5,687.31 40.1% Incoming receipts 1,643.21 1,738.50 1,887.86 2,029.92 2,163.18 2,302.17 40.1% Total spending 5,703.35 5,998.63 6,503.74 7,006.31 7,486.99 7,989.48 40.1% Outbound spending 1,495.09 1,582.56 1,715.23 1,845.96 1,967.47 2,094.04 40.1% Capital spending 940.95 997.41 1,088.11 1,177.36 1,266.81 1,362.80 44.8%

Note: *Includes data from 185 countries. SOURCE: 2019. WTTC. TRAVEL & TOURISM ECONOMIC IMPACT RESEARCH, DATA GATEWAY, JUNE 2019

By major region APEC The APEC region countries, which are located on the Pacific Rim collectively account for well over half of worldwide spending on travel & tourism and should see slightly stronger growth over the coming half decade than the worldwide average. FIGURE 2: FORECASTED SPENDING ON TRAVEL AND TOURISM BY CATEGORY IN APEC*, 2018-2023 (IN NOMINAL US$BN)

Type of spending 2018

2019 (fore)

2020 (fore)

2021 (fore)

2022 (fore)

2023 (fore)

% change 2018-2023

Business travel 725.270 758.246 802.301 850.309 903.454 962.644 32.7% Leisure travel 2,367.430 2,497.170 2,719.800 2,951.840 3,185.350 3,433.830 45.0% Domestic tourism 2,393.020 2,521.480 2,732.800 2,956.290 3,188.090 3,435.940 43.6% Incoming receipts 699.683 733.936 789.298 845.852 900.717 960.531 37.3% Total spending 3,092.703 3,255.416 3,522.098 3,802.142 4,088.807 4,396.471 42.2% Outbound spending 743.165 793.513 864.179 939.813 1,017.950 1,100.230 48.0% Capital spending 540.297 570.807 618.248 666.153 717.959 775.211 43.5%

Note: The *APEC (Asia-Pacific Economic Cooperation) region includes the US; Australia; Brunei Darussalam; Canada; Chile; China; Hong Kong, China; Indonesia; Japan; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; The Philippines; Russia; Singapore; South Korea; Taiwan; Thailand; and Viet Nam. SOURCE: 2019. WTTC. TRAVEL & TOURISM ECONOMIC IMPACT RESEARCH, DATA GATEWAY, JUNE 2019 Caribbean

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3. Hotel Supply Worldwide Room supply is a significant metric because it reflects the attractiveness of destination and is a gauge of strength of a hotel brand. The number of rooms worldwide grew by 8.5% between 2014 and 2018, according to STR.The global hotel industry generates revenue of US$525billion and has a total capacity of some 18 million rooms, according to STR, who estimate that the number of rooms worldwide grew by 8.5% between 2014 and 2018, which works out to a CAGR (compounded annual growth rate) of 2.1% over the four-year period. FIGURE 15: TREND IN WORLDWIDE HOTEL CAPACITY, 2014-2017

Year Worldwide hotel rooms (millions) 2014 16.4 2015 16.7 2016 17.0 2017 17.4 2018 17.8

SOURCE: STR The US is the largest hotel market in terms of revenue and China continues to grow apace. FIGURE 16: ROOM REVENUE BY COUNTRY/REGION, 2018 (%)

Region/country % of room revenue Rest of the world 51% Americas 40% Greater China 9%

SOURCE: STR According to STR, as of 31 December 2018, the global hotel market consisted of approximately 191,000 hotels with 17.6 million rooms, of which 54% are affiliated with a chain. The combined annual revenues of the industry are estimated at over half a trillion Dollars (US$540 billion). The industry is geographically concentrated with the top-20 countries accounting for over 80% of total rooms. The US has the largest presence in the global hotel industry with 5.2 million rooms, representing approximately 30% of the worldwide market; meanwhile, China has the next largest concentration with 2.5 million rooms, representing approximately 14% of the global market. FIGURE 17: GEOGRAPHICAL DISTRIBUTION OF WORLDWIDE HOTEL CAPACITY BY REGION, 31DECEMBER 31, 2018

Region Hotels Room Supply(millions)

Revenues (US$billions)

Brand Affiliated %

US/Canada 61,602 5.7 177 70% Europe 69,870 4.8 168 40% Asia Pacific 40,090 5.0 130 54% Latin America/Middle East 19,470 2.1 65 43% Total 191,032 17.6 540 54.1%

SOURCE: STR

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5. Oyo, the disruptor Launched in 2013, Oyo has taken the world of hospitality by storm. As a major disruptor of the industry with a unique business model, Oyo has been consolidating tens of thousands of unbranded, often rundown hotels and converting them into franchises or leases with a new, standardised product that achieves high occupancies at revenue-managed bargain rates.

Oyo has overtaken IHG as the world’s fourth largest chain In early July 2019, Oyo became the fourth largest hotel chain in the world in terms of room count, leaping two positions from the sixth largest chain with 636,000 rooms in April, to the fourth largest with 850,000 rooms in June. In a matter of two months, according to Oyo, it overtook IHG and Wyndham, to rise to a fourth-ranked position. Oyo’s young founder 25-year-old, Ritesh Agarwal, has raised more than US$1.5 billion in equity financing from banks, venture capitalists and even Airbnb to reach a notional valuation of over US$5 billion. Attempting to estimate Oyo’s lodging capacity at any point in time is like trying to hit a moving target. As of mid-year 2019, the company reported it had grown to more than 23,000 hotels, 850,000 rooms and 46,000 vacation rental homes across 80-plus countries, with most of its capacity still located in India and China.

Rapid expansion Oyo has grown to become India’s largest hospitality company, with a presence in 260 Indian cities, including all major metros, regional commercial hubs, leisure destinations, and key pilgrimage towns. In only 18 months after making its debut in China, Oyo has become the country's second largest hotel chain, with more than 500,000 rooms in 10,000 hotels across China’s 320 cities. FIGURE 19: OYO’S PORTFOLIO AND BUSINESS ACTIVITIES, JULY 2019

Leased and franchised hotels, globally 23,000+ Rooms 850,000+ Holiday homes 46,000+ The number of rooms Oyo adds every month, globally 80,000 The number of people sleeping in an Oyo every night Almost 500,000 Oyo's global footprint 800 cities across 80 countries Global employees: 8,000+ of which are in India and South Asia 17,000 The number of guests Oyo has hosted to date 11 Million + India Leased and franchised hotels in India 9,000+ Rooms in India 176,000+ Cities / destinations in India 260 China Oyo-branded hotels Nearly 10,000 Rooms in China 500,000 Full time employees in China 10,000+

SOURCE : OYO

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On average, business travelers consider three hotels before booking and 82% say loyalty programs matter when making that decision, according to research from the Global Business Travel Association (GBTA) in partnership with Omni Hotels & Resorts. Additionally, the study has shown that 90% of business travelers view rewards points and perks as a motivating factor in selecting a hotel and 81% believe being a loyalty member results in better service6. Furthermore, 49% of business travelers use loyalty rewards for business travel and 43% use them for future leisure stays. For road warriors, the top five rewards of a loyalty programme are free nights, room upgrades, reward redemption flexibility, express check-in and service perks.The great majority (84%) of business travellers feel having a personalised guest experience is important – and most believe that experience should differ from that of a leisure trip with 64% purchasing different amenities on a business trip than they would otherwise7. FIGURE 42: WHAT TRAVELLERS WANT IN TERMS OF PERSONALISED GUEST EXPERIENCE, 2018

SOURCE: “BUSINESS TRAVELERS SAY LOYALTY MATTERS IN HOTEL BOOKING”, GBTA, 25 OCTOBER 2018 Business travelers are largely OK with both their employers and hotels using shared information to provide a personalised hotel booking and guest experience. Information they are most willing to share include: preferred hotel amenities (55%), travel itinerary details (42%) and favourite types of restaurants or entertainment (39%). “From booking to check-out, our research confirms personalisation is highly valuable to business travellers, with many seeking customised hotel experiences that are tailored to fit their business travel needs,” notes Jessica Collison, GBTA director of research, who adds that, “Both travel buyers and suppliers should evaluate how personalisation factors into hotel booking and the guest experience when it comes to building their travel and loyalty programs.”

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“The importance of personalisation is one of the recurring themes we hear directly from our Select Guest loyalty programme members,” notes Chad Gaither, vice president of customer relationship management (CRM) and loyalty for Omni Hotels & Resorts, who adds that, “We aim to keep it at the forefront of our messaging as we evaluate and design the overall customer experience. There are many ways to do this, but email messaging, for example, should recognize guests’ past activity and show appreciation for their loyalty.” 8

Location, location, location Location, location, location - the old saw still rings true. Has it been forgotten in all the discussion about brand loyalty and one - on - one marketing efforts that people choose or are obliged to travel to destinations, not to specific hotels. The choice of hotel, whether selected by the travellers themselves or someone else, is almost always part of a second-level decision process. Therefore hotel chain loyalty programmes have been obliged to enter into a vicious cycle of one-upmanship, continually raising the ante in the hopes that the rewards offered will entice more travellers to choose their brand. In fact, Marriott, which now has the industry's largest programme (Marriott Bonvoy) with over 120 million members, following its merger with Starwood Hotels and Resorts, allows points to be 'burned' in scores of ways, including restaurants, retailers and theme parks, in addition to the regular travel-related options like car rental, hotel nights, air flights and cruises. Would hotel chain managements like to get rid of these programmes? Of course, they would, as they cost money (e.g. for the purchase of air miles), but they can't because that would leave a hotel group in a weak competitive position if they could no longer 'bribe' their guests with the prospect of rewards.

Customer data is a sensitive issue What about using all that wonderful data from frequent guest schemes to deliver 'tailored', 'personalised' service to members – the Eldorado of 'big data' analytics buffs? Rising concerns about the use of customers’ personal data, as well as the coming into force of the EU’s GDPR (Global Data Protection Regulation) has made the accumulation and storage of personal data more problematic. People are increasingly reluctant to allow their intimate personl habits to be tracked and recorded in a hotel chain's database. Indeed, here we could be entering into the realm of 'big brother', as depicted in George Orwell's novel, Nineteen-eighty-four. And besides a cusomter might change his/her mind from one day or one trip to the next. For instance, last Monday in London she had cappuccino for breakfast, but now in Paris maybe she would prefer black tea. Is it desirable that travel becomes a mechanical process with every minute detail planned out in advance? What ever happened to serendipity?

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8. Distribution channels in Europe An empirical study of over 2,000 European hotels, of which over three-quarters are independent, showed that all channels lost share or were flat over the period 2013-2017, except for OTAs and ‘direct on own website’, which gained 7.6 and 1.3 percentage points, respectively. Still bookings via direct channels accounted for over half of the total. Interestingly, much-hyped social media channels showed no growth in the share of overall bookings and continue to represent an infinitesimal half a percent of the total. FIGURE 43: TREND IN MARKET SHARES OF DISTRIBUTION CHANNELS IN EUROPEAN HOTELS* 2013, 2015 & 2017 (IN %)

Distribution channel 2017 (n=2,593)

2015 (n=2'188)

2013 (n=2'221)

PP* change 2013-2017**

Direct – Phone 18.5 18.7 21.1 -2.6 Direct - Mail / fax 2.0 2.3 3.1 -1.2 Direct - Walk-In (persons without reservation) 4.4 4.8 6.0 -1.6 Direct - Contact form on own website (without availabilty check) 6.0 6.1 6.1 -0.2 Direct – Email 16.0 16.7 16.1 -0.1 Direct - real time booking on own website with availabilty check 8.2 6.8 6.9 1.3 Total direct** 55.1 55.2 59.4 -4.3% Destination Marketing Organization (DMO) / trade associations 0.9 0.9 1.0 -0.2 National Tourism Organization (NTO) 0.5 0.6 0.6 -0.2 Total DMO/NTO** 1.3 1.4 1.7 -0.3 Tour operator / Travel agency 7.8 8.0 9.6 -1.8 Hotel chains and cooperations with CRS 1.0 2.6 1.4 -0.3 Wholesaler (e.g. Hotelbeds, Tourico, Gulliver, Transhotel, etc.) 1.9 2.6 2.8 -0.9 Event and Congress organizer 1.9 3.1 1.9 0.0 Total TO/CRS/wholesaler/MICE organiser 12.3 16.7 15.3 -3.0 Online Travel Agency (OTA) 26.9 22.3 19.3 7.7 Globale Distribution Systems (GDS) 1.9 2.7 2.0 -0.2 Social Media Channels 0.5 0.5 0.5 0.0 Total OTA/GDS/Social Media** 29.3 25.5 21.8 7.7 Other distribution channels 1.6 1.5 1.5 0.2

Note: 1. 75,5% of properties in the sample are classified. 3-star (43,5%) and 4-star (33,8%) hotels make up the

great majority of the classified hotels in the sample. 2. Size –The average size of the hotels in the sample is 38 rooms (median value), yet one hotel out of four

has less than 20 rooms. 3. Customer segment –The leisure segment is the dominant target group for 57,6% of hotels, followed by

business clients for 34,9% of properties 4. Management –Nearly 70% of hotels are independent, whereas 19,8% belong to a hotel chain and 10,4%

to a hotel consortium. *PP = percentage point; *** may not add up due to rounding. SOURCE: EUROPEAN HOTEL DISTRIBUTION STUDY, RESULTS FOR THE REFERENCE YEAR 2017, MAY 18, 2018,PROF. ROLAND SCHEGG, INSTITUTE OF TOURISM, HES-SO VALAIS, SWITZERLAND.

Booking predominates It comes as no surprise that Booking Holdings sites heavily dominates the OTA channel in Europe, accounting for almost two-thirds of total overnights booked in 2017. FIGURE 44: MARKET SHARES OF THE THREE MAIN OTA GROUPS IN EUROPE, 2017

OTA/OTA family (% of overnights)

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identity, noting that, "The sense of entitlement is just too strong in the blogging community and the nastiness, hissy fits and general hate displayed after one of your members was not granted her request for a freebie is giving your whole industry a bad name. I never thought that we would be inundated with negative reviews for the simple reason that somebody was required to pay for good received or services rendered. The girl in question was never identified in my original post, but she herself went on to create a video explaining how she was 'exposed' with 'malicious intent' for asking for a freebie. This kind of victimisation is very prevalent in the blogging industry and is in keeping with their general modus operandi of wanting everything for nothing."

Stenson sent a bill for services rendered But the story didn't end there. In a final episode, Stenson has sent Darby a bill for €5,289,000 'for all the publicity it’s given her' after she accused him of bullying for refusing to let her stay in his hotel for free. While online bullying is never a desirable occurrence, it must be said that Ms. Darby took a certain risk when she requested her free stay and was obliged to accept the consequences. Furthermore, given her comments about "people over 30", she can be accused of ageism. Finally, it is questionable what value such influencers actually add to a hotel's promotional strategy. Having 100,000 or 200,000 social media followers spread around the world of unknown profile (maybe some are 14-year olds) does not necessarily add up to an interesting target audience for a hotel, as compared to say an OTA, which directly captures a much higher level of demand specifically targeting the destination.24

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13. Fake reviews still a problem Guests reviews are a crucial decision making criterion for those booking hotels. However, since over a decade, the industry has been plagued by fake reviews –notably on TripAdvisor, who apparently have not been very diligent in weeding out fabricated online testimonies about hotels on their website, according to a September 2019 report by London-based Which Travel? The consumer advocacy group analysed some 250,000 reviews for the top-10 ranked hotels in 10 popular tourist destinations worldwide and determined that there were blatant indications of fake reviews at one in seven of these 100 hotels, while others raised some serious concerns. Which? Travel analysed 247,277 TripAdvisor reviews of the top 10 highest ranked hotels (by travellers) in London, Paris, Barcelona, Rome, Cape Town, Punta Cana, Jordan Las Vegas and Cairo, plus 10 Premier Inns and 10 Travelodges in London. The analysis compared the proportion of first-time three-star reviews, which it can reasonably be assumed are rarely faked, against the proportion of first-time reviewers who left five-star reviews. Which? Travel reported 15 of the worst cases to TripAdvisor and it admitted that 14 of these had already been caught with fake positive reviews in the past year. Furthermore, the travel website revealed that six of these hotels had been penalised for breaking guidelines and two had previously received a “red badge” warning for suspicious activity; yet this had not been made clear to travellers and a highly suspicious pattern of reviews had continued to appear – suggesting a lack of serious ongoing oversight and action to address repeated abuse of the system.25

Following the Which? Travel investigation, TripAdvisor took down hundreds of reviews, while the UK chain, Travelodge, admitted to having previously been tagged with the website’s most severe red badge warning for suspicious reviews after two of its London hotels were flagged by the Which Travel? report. TripAdvisor’s rating scheme reflects a summary of a hotel’s ratings from guest reviews, which is displayed on a 1-5 scale, where 3 means ‘average’ and 5 ‘excellent’.

Striking results in the Middle East Otherwise, there were particularly worrying results in the Middle East, with a very suspicious pattern of reviews of the ‘best hotel’ in Jordan, for example. The hotel denies any wrongdoing; meanwhile shortly afterwards, TripAdvisor removed 730 of its five-star reviews. Neverthless, despite these actions, the property continues to be listed as one of the 10 best-ranked hotels in the increasingly popular Middle Eastern destination. A tell-tale indicator of fake reviews is significant number of 5-star reviews, a high proportion of which come from first-time reviewers who have never previously posted a comment on TripAdvisor. In other example, at the best hotel in Cairo, according to TripAdvisor’s traveller rankings, an alarming 79% of five-star reviews were posted by profiles that had no other contributions on the site, compared to the results for three-star reviews – a rating less likely to be faked – at just 14%. Shortly after Which? had communicated its findings toTripAdvisor, the reviews were removed from the website and the property lost its status as the official ‘best hotel in Cairo’.

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Fakes in Vegas too… Some of the most concerning findings were in Las Vegas, where two of the 10 highest ranked hotels had received almost half (48% and 41%, respectively ) of their hundreds of five-star ratings from first-time reviewers who had never posted any other TripAdvisor reviews before or since – engendering suspicions that the reviews could have been faked. Two more of the city’s top 10 hotels had results that were less dramatic, but raised questions. In contrast, another hotel near the top of the Las Vegas rankings had just 3% of its almost 2,000 five-star reviews from once-only reviewers. This was consistent with the proportion of once-only reviewers giving three stars, which supports the conclusion that most of the reviews were authentic. Some of the best-rated hotels in London, Paris, Barcelona and Cape Town gave some reason for suspicion, but exhibited none of the similar extreme patterns.

London hotels investigated Which? Travel also compared 10 London hotels at the two biggest UK chains, Premier Inn and Travelodge. While Premier Inn did not arouse suspicion, at two of the Travelodges, almost half of the hundreds of five-star reviews – 48% and 40% respectively – came from first-time reviewers who had never reviewed anywhere else. In contrast, the proportion for once-only three-star reviews was much lower. Travelodge operates more than 560 hotels and 40,000 guest bedrooms across the UK as well as in Ireland and Spain and finished towards the bottom of Which?’s most recent hotel chains survey. TripAdvisor admitted that earlier in 2019 the Travelodge Wembley Central had already received its red warning badge. This is the site’s most severe warning, alerting travellers to the risk that reviews may have been manipulated by the business and is reserved for cases where a hotel ‘repeatedly fails to remedy its behaviour and refuses to cooperate with TripAdvisor’s investigators.’ Which? is of the opinion that this research raises a number of serious issues with reviews on TripAdvisor. Reviews are apparently not verified and therefore it is not clear whether reviewers have even stayed at a hotel when they rate it. Thus, travellers have no way of knowing whether hotels have been trying to game the system. Despite the fact that 14 of the hotels flagged had had at least one suspicious review removed in the past year, none of them posted any sort of warning at the time Which? conducted their investigation. And TripAdvisor’s most serious warning – the red badge – remains on hotel sites for only a few weeks.

CMA on the case…. These findings came as the UK Competition and Markets Authority (CMA) was in the process of investigating the growing problem of fake and misleading reviews. Online reviews influence an estimated £23 billion of transactions a year in the UK alone, according to the CMA. The regulator should ensure that online sites that host reviews are scrutinised and that platforms like TripAdvisor take more more responsibility for the information presented to consumers, according to Which?

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Otherwise, business travellers are far more likely to use always metasearch for hotel searches than holidaymakers, 47.4% vs. 37.4% of those who had not made a business trip in the preceding 12 months. Some 30% of business travelers also reported using meta ‘most times’ they book lodging, compared with 27.2% of leisure travel consumers. 30 FIGURE 58: HOW OFTEN DO CONSUMERS USE PRICE COMPARISON WEBSITES WHEN BOOKING ACCOMMODATION? (BY AGE)

Age segment Every time I am making a

booking

Most times I am making a

booking

Occasionally Very rarely Never

18-35 46.4% 29.2% 15.1% 6.2% 3.1% 36-55 45.0% 29.6% 14.2% 6.7% 4.5% Over 55 36.8% 27.3% 15.8% 8.8% 11.4% Total 43.6% 28.9% 15.0% 7.0% 5.6%

SOURCE: “EYEFORTRAVEL TRAVELER LOYALTY SURVEY” 2018

Google hotel ads dominate metasearch

Google hotel ads play a dominate role in hotel bookings, generating 65% of all bookings via metasearch engines, according to the roiback.com, who claim that hoteliers using this channel can realise a 900% return on investment (i.e. 9£ for each pound invested). Thus, Google is the most profitable metasearch engine –ahead of Trivago and Tripadvisor- with year-on-year growth for the 12 months ended in September 2018, accelerating to 150% from 26% for the same period in the prior year. Given that about 75% of travellers book their holidays online, it is important for hotels - both independent and chain-affiliated - to maximise their digital presence and to take advantage of the visibility offered by metasearch platforms. "Google Ads continues to be the most important marketing channel, since it means [amounts to] 20% of the total, but Google Hotel Ads (GHA) is gaining ground. Our advice is to combine both channels, since Ads is more useful during the consideration phase of the purchase cycle, and Google Hotel Ads acts more as a tool for the booking phase. With a combined channel strategy, the hotelier has it easier to compete with OTAs and attract customers at a much lower distribution cost”, advises Felipe Bravo, head of digital marketing at Roiback. In the summer of 2018, hotels increased sales made via Google Hotel Ads by 77% compared to the prior year period.31

An ROI of 900% “The return on investment (ROI) of our customers using Google Hotel Ads is around 900% (a return of 9€ per each invested euro). We have also compared the bookings generated through GHA for the same hotels, during last summer and the same period of the previous year, and there is an increase of 77% at practically the same profitability levels or even lower in some cases thanks to the optimisation, notes Bravo, who assures that: "It proves that during this year GHA has been significantly increasing its visibility in Google.com, Google Maps and Google Destinations, as well as enhancing visibility in desktop but especially in mobile devices, and that it is becoming the most relevant metasearch engine for the hotel industry".

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Recognition instead of rewards Luxury hotel brands have basically eschewed conventional loyalty schemes that offer points or rewards. Instead the focus is on delivering a more personalised guest experience. For instance, the hotel staff may study customer profiles, in an attempt to adapt service to individual tastes and requirements. Some of the benefits offered to loyal customers in luxury hotels include: free breakfast which could add up to €80-€100 for two; Wi-Fi charges which can range from €13 to €30 per day; late check-out which could otherwise cost as much as 50% of the room rate; or early check-in (i.e. guests arriving early, before check-in time, may need to pay for the night before if they wish to be assured that their rooms will be ready). Frequent guests can also aspire to VIP status or free airport transfers, for example. Booking direct not always best Some of the programmes also protect customers from 'getting walked' when the hotel is overbooked, and give them waitlisted priority to check-in, even though they may never have stayed in the hotel previously. In fact, many of the hotel groups that offer such onsite benefits don't operate formal frequent guest schemes themselves. Rather these programmes are offered to guests booked by their top-producing travel agents. Thus, in order to enjoy the benefits, guests need to book via an agency that offers the programme. For example, Ovation Vacations, generates over US$250 million in sales to luxury hotels and suppliers and lists over 1,250 hotels which can be booked via the agency. Travellers are advised to ask their agents to which programmes they are affiliated. Alternatively, they can Google the name of the programme and “travel agent” and participating agencies should pop up. Otherwise, the hotel groups don’t publish lists of agents which participate in their programmes. In fact, this reality belies the widely trumpeted message that "booking direct is best".38

Airbnb leads in customer retention Customer retention has been weaker at traditional hotel groups than at Airbnb, for example, where 40% of customers who used the platform in 2017 did so again in 2018, according to the consultancy, Second Measure. In contrast, the percentage of consumers who booked again a year after their first stay at Marriott, Hilton and IHG has fallen by between 24% and 29% in the past six years. Liam Brown, Marriott’s president of Europe, the Middle East and Africa, has stated that loyalty schemes are a “critical part” of the company’s strategy, enabling it “to bind our guests as close to us as we possibly can”. Although such programmes have long been a key feature of the marketing strategy of the big hotel groups, Airbnb’s push into the hotel industry has injected extra urgency into revamping programmes. Richard Clark, an analyst at Bernstein, has warned that hotel brands need to find a way to make their points more relevant to those who travel less often and have not accumulated enough points to earn a hotel night. Keith Barr, CEO of IHG, has observed that, “the average person has two and a half loyalty cards in their wallet,” so “owning” a customer is not possible. Instead “it’s about being really pragmatic and saying: who are the customers that I can be first choice with on every occasion?”

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19. Wedding planning goes digital Weddings are big business for the hotel sector, but one of the problems has been how can a hotel target the right customer base? Conversely, couples looking to wed can spend hours or days trying to find the ideal location for their nuptials. Cork, Ireland -based weddingdates.ie /.co.uk provides a solution both for couples looking for the right venue and hoteliers looking to attract customers. In an exclusive interview, Ciara Crossan, founder and CEO of weddingdates.ie/co.uk, explains how her business model works. HA: What motivated you to found weddingdates in 2008? CC: I always had a desire to “be my own boss” and work for myself. Back then the term “entrepreneur” wasn’t as much of a sexy buzzword as it is now! I’ve always enjoyed a personal challenge and I was at a cross roads in my life at the time in my mid 20’s, I knew that if I didn’t jump in and try my business then I could get stuck in a steady comfortable job and then I might never do it.

HA: Please explain your business model. What is your revenue stream? How do you charge the hotels and suppliers who list on your website? CC: WeddingDates is a lead generation platform. Our promise it to deliver leads to hotels and venues for dates they are trying to fill. We do that in a number of ways; via our consumer facing websites (www.weddingdates.ie and www.weddingdates.co.uk) as well as a Facebook app for the venues own FB page allowing them to capture leads from FB and finally we provide them with a software plugin for their own website which allows their website visitors to check date availability and make enquiries. As we are a “lead generator” we charge our hotels based on the volume of leads – we have 3 packages available which have max caps on the volume of leads a hotel can receive. We also provide additional online marketing & promotion services. HA: How has weddingdates been financed? Are you the sole owner?

CC: WeddingDates has been self-financed. I took out a small business loan when I started which in 2008 at the beginning of the recession the bank required my father to go guarantor on the loan with me! We have grown organically in that time and ploughed the profits back into the business to support the growth and development. I am a single founder and own 50% of the business. The rest of the shareholding is also in my family; my father and brother (who worked in the business for 6 years) are also directors.

HA: About how many hotels do you work with? CC: We currently have 650 hotels and venues on our books all over the UK and Ireland. We have a very strong retention rate as the revenue reporting in the system demonstrates very transparently the effectiveness of the system – enquiries in, wedding bookings, conversion rate and revenue generated. It makes for a compelling reason to renew!

HA: What is the average sized wedding party you deal with and how much does the average wedding cost?