Hoteliers faced competition from Online Travel Agents (OTAs) and then along came Airbnb to eat away even more room nights and reduce RevPar.
In a digital economy those companies that own and analyse data are increasingly powerful. Unfortunately for hotels, they seem to be going the other way. The ones that own the data are OTAs and the leviathans of the digital age Google, Facebook, Linkedin/Microsoft, Amazon.
Would Google make a play for the hospitality industry? Today it extracts revenue and profit from the marketing of products and services whilst OTAs extract money from the transaction leaving a shrinking margin for the hotel chains.
Strategic shifts often happen with disruptive speed.
"The growing importance of customer-centricity and the appreciation that consumers will expect a more seamless user experience are reflected in the flurry of recent strategic moves of leading companies across the world. Witness Apple Pay; Tencent’s and Alibaba’s service expansions; Amazon’s decisions to (among other things) launch Amazon Go, acquire Whole Foods, and provide online vehicle searches in Europe; and the wave of announcements from other digital leaders heralding service expansion across emerging ecosystems."
Mckinsey "Competing in a world of sectors without borders" July 2017
In the staid world of insurance Aviva has joined with Tencent to disrupt its own industry. Amazon could swallow any business opportunity not to mention Alibaba. Time for hospitality companies to plan digital strategies and partner with "hoteltech" innovators.
The danger for the hospitality industry is that it is full of analogue expertise and not digital expertise. It needs the right partners to avoid the threat of digital disruption but some of the obvious partners can also be predators.
The market is thriving so now is the time for hotel and hospitality companies to make the digital moves whilst revenues and profits are good.
Worth reading "Digitisation in travel and hospitality: Imperative for change" report from PACE Dimensions
All of these discussions show the power of Google and OTAs over our industry. But this is also a shame. Through lack of vision and investment in technology, the booking process - and more importantly the customer - has been taken away from the hoteliers. Hoteliers in the past would pride themselves on “knowing their customers”. Unfortunately this is difficult to say in the current climate. Google and booking.com know more about the customer than hotels do. It is time for hotels to change this around. However I feel this may be a lost battle as the cost, time and resources a hotel can put into this, versus what Google can do, is quite frankly a David and Goliath scenario.