TripAdvisor’s deal with Priceline pushes hotels further down the customer relationship food chain
TripAdvisor’s big move to bring Priceline on to its instant booking platform puts even more distance between consumers and their hotel suppliers. Each time another intermediary gets in between the hotel and the guest, the hotel is pushed further down the customer relationship food chain.
Today TripAdvisor’s announcement that it was adding Priceline hotel listings to its instant booking platform was rewarded big by the financial markets. According to Benzinga.com, shares of TripAdvisor Inc. surged higher by more than 25 percent in Wednesday trading (creating a few billion more dollars in value).
The painful reality is that the companies which best connect consumers with hotels have higher value than the companies actually serving the guests. The market capitalization value (updated today for the announcement) of the top 3 online travel businesses is $96 Billion, compared to the 5 leading hotel brands at $70 Billion.
The ecommerce-obsessed market places more value on the digital handshake than the face-to-face service provided by hoteliers, because the OTAs own the guest connection.
In 2014, Expedia and Priceline spent $6-8 Billion (capital “B”) on marketing, approximately 35% of their total revenues. That capacity to spend creates an uneven playing field for hoteliers who just can’t compete against these mammoth marketers to capture the attention of online shoppers.
There are just too many intermediaries between the consumer and the supplier (the hotel). And are the intermediaries adding true value to the travel consumers and their experiences?
In the announcement today, heads of TripAdvisor and Priceline focused on the enhanced consumer experience. Darren Huston, President and CEO of Priceline Group stated:
“Our mission is to help people experience the world, and we are constantly innovating how and where we engage with consumers to help them do this. We now believe this branded channel can help introduce more customers to our brands and the experiences we provide.”
Let’s be clear on the definition of experience.
The experience offered by these online intermediaries is the shopping experience. Streamlining access to the right travel venue at the right price. They’re not providing the live “travel experience.” Wouldn’t it be much better than adding another third-party layer on the “experience” to instead improve the actual human guest experience? Improvements such as:
- Resolving customer service issues on-property without calling a third party
- Translating value for the consumer into value for the hotel so enhanced processes translate into more smaller fees, and savings can be invested into the live travel experience
- Providing guest connectivity between the hotel CRM and the third party so the hotel can nurture the guest relationship (consumers will always go the OTAs to shop)
There are ways hotels can start getting control of that relationship back. Here are just 3 of them:
- Understanding the traveler shopping behavior, not just purchase behavior
- Realizing how price affects the share of consumer searches and bookings achieved for any given arrival period versus competitor hotels
- Making digital marketing extremely agile and focused – targeting specific consumers types within the most active source market by future travel dates
Big data offers big learnings for how hotels compete online. To understand how to move the needle, you need to first know where you stand.
To see how your hotel website benchmarks against the OTAs, sign up for a FREE 60-Day Trial of the nSight Hotel Online Traffic Report.