While online travel agencies dominate hotel distribution, direct hotel bookings are finally bouncing back.

If online travel agencies dominate the online hotel distribution, hotels have not said their last word.

A D-Edge study on online hotel distribution in Europe shows some interesting things.

Booking dominates hotel distribution

Not surprisingly, the Booking group takes the lion’s share.

Between 2014 and 2018 it was Booking that had the largest increase in terms of percentage of bookings generated and therefore continues to hover at the top of the ranking.

Surprisingly, direct bookings from hoteliers’ websites are holding up well and remain the second most important channel. Expedia is close behind but seems to run into a glass ceiling. Will we see Expedia take second place soon? Well, there’s no guarantee of that.

If the gap is narrowing, Expedia seems, as we said, to have reached a ceiling. But while live bookings have plummeted since 2014 they bounced back for the first time in 2018 and there’s nothing to say that’s a fluke and doesn’t mean something.

OTAs rule revenue, not margin

Another interesting chart is the revenue generated per channel. A quick read would be to say that the direct bookings have plunged but that would be a bit of a quick read.

The figures make one thing clear: online travel agencies (OTAs) are indeed experiencing strong growth which is an undeniable market trend. They have occupied a new and fast-growing space which explains the growth rates compared to the direct hotels that were there historically and for the most part do not have the same marketing power to attract the customer to their site. Nor the same SEO capabilities, but we’ll talk about that another time. But after a steady decline, direct bookings have also rebounded in the last two years.

But income is not the margin! When you know that Booking takes 17% commission and Expedia around 12%, the channel that brings the most revenue is not the one that brings the most margin. It can even be argued that on the cheapest rooms of a small independent hotelier OTAs bring back many customers but little or no money.

This is confirmed by this third table.

And here the numbers speak for themselves.

The hotels strike back

As already mentioned here, hotels do not intend to let the OTAs, at least the most powerful ones, who have the power to negotiate, fleece their backs. The last negotiation between Marriott and Expedia is the proof.

But the figures show that overall hotels are recovering and managing to attract more and more customers on the most profitable channels for them. And even if I found the figure surprisingly high, the fact that Marriott only has 13% of its sales generated by OTAs shows that there are ways to cultivate the direct channel as long as you have a loyalty program that holds up and a critical size.

Now I’m curious to see if the trend will continue and if the OTAs will lose some of their glory. This is largely possible, especially with the arrival of Google Hotel Search, provided that hoteliers manage their channels intelligently and do not appear more expensive than the OTAs’ rates in the Google comparator, which some still do poorly or unevenly.

Finally, a logical bottom line when you consider that D-Edge offers hoteliers a solution that allows them to better manage their distribution through different channels. This is the new name given to the merger under a single brand of Availpro and Fastbooking (owned by Accor), one expert in distribution and the other in digital marketing for hoteliers. Figures that add fuel to the fire of those who produce them (as usual) but are, in my opinion, a fair reflection of reality.

Photo : booking.com by Casimiro P via Shutterstock