Online travel agencies (OTAs) are the latest casualty of COVID-19, and that’s welcome news for the hotel brands seeing their own operations decimated by the global pandemic.
With consumers more focused than ever on personal health, it seems their long-standing obsession with rate parity (the backbone of the online travel agency operating model) is over. Instead of looking for the “book and save” deals, consumers are now looking at booking directly with hotels that offer contactless check-in and other contact-free amenities.
The faster major hotel brands notice this shift in consumer preference, the faster OTAs will find themselves on the outside looking in, unable to compete with direct bookings.
In other words, OTAs will no longer be able to go toe-to-toe with hotels in the arena of marketing, metasearch keyword targeting, and cost-per-click. The second Google starts adding a little “c” next to direct-booking search results as an indication of “contactless check-in” (or something similar), OTAs won’t be able to survive.
(Of course, the whole notion of contactless check-in relies on the continued evolution of digital roomkey technologies—e.g. “for contactless check-in, join our loyalty program, download our app, and book direct.”)
Consumers and brands will learn to love loyalty
In catering to consumers’ growing demand for “contactless everything”, hotel brands should start with their loyalty programs and apps, using them as a conduit to offer exclusive contactless amenities. In doing so, hotel brands will ensure their loyalty programs become the “hottest ticket in town.”
Brands should create supportive marketing that also plays to the cost-saving aspects of loyalty programs (e.g. “Save money when you become a loyalty member”), as well as unique promotional offerings (e.g. “Get 6x points when you use your hotel loyalty card for grocery shopping) which will heighten consumer interest and draw more direct bookings long-term.
Put plainly, loyalty is the new lever going forward—it’s a value-add strategy that will finally upend the discounting strategy (e.g. taking business at any cost) that’s been hamstringing the hotel industry since the mid 1990s.
Invest now. Reap the rewards. Purge the online travel agency.
Now is the time for hotel brands to reinvigorate consumer interest by investing in their loyalty programs and aggressively pushing the adaptation of contactless, app-based amenities.
Will consumers embrace the change from OTAs to direct booking overnight? Of course not.
But the more guests realize they can bypass the lobby and go straight to their room if they start booking directly, the less interested they’ll be in the minimal perceived cost savings offered through an online travel agency.
As that interest declines, the impact and relevance of OTAs will fade away once and for all.