If hotel chains were managed by sensible, tech-aware people, they wouldn't bother with these expensive, rearguard marketing campaigns. Instead, they'd get together and form an industry working group, and design simple, standard data formats and querying/booking APIs, and then make all their data available through them.
This would make it far easier to build a hotel search engine, which would cause an explosion of competition and innovation in this area. This in turn would undercut the power of the leading agencies, and drive down referral pricing.
But they won't do this. You see the same problem in so many industries. Vendors act like data about their offering is more precious than the offering itself. They make it as hard as possible to build an aggregator, so the aggregation market gets tied up by a tiny handful of players who are willing to invest enough to build a scraping infrastructure. Then they panic that these aggregators have too much gatekeeping power, but rather than encouraging greater competition amongst aggregators, they respond by trying to put the genie back in the bottle.
I completely agree. To those pointing out the Sabre/Amadeus "debacle", a few benefits as a reminder:
* To innovate, the GDS only think about how the messaging should be differently handled.
* To buy a ticket, an airline/travel agent uses almost the same syntax throughout the world (this is a miracle, when you can't even order cabs in the same manner in the world).
* Airline companies implement similar interfaces (between different GDS) to handle ticket processing. Which is another miracle: think freight handling done with the same messaging protocol.
Now add to the mix modern protocols and you get nice APIs. The hotels CAN be the only one properly consuming the APIs (w/ gorgeous and easy to use platforms), but if they can't do it well, let tech-aware organisations do it.
Instead, these hotels are fighting for breadcrumbs and insulting companies which have done more to facilitate accomodation than any other hotel in the past 40 years.
Large hotel chain are starting to become tech aware themselves. Why would they let some other company take 30% of their revenue when they can do it themselves now?
That's massive revenue, not "breadcrums". Certainly hotels shouldn't avoid that revenue just because it might "insult" a different company.
Frankly the aggregators provide really low value to the hotel as a stakeholder in the process. They demand concessions and commoditize the hotel itself, which is obviously not in the hotel's interest.
This is a classic channel vs direct issue. The only reasons that travel agents and these aggregators exist is that they provided a way to offload inventory or increase demand. Now we have the internet -- so it is easy and cheap for hotels to engage directly with many customers. Why should my local Hilton Garden Inn give 20% of the gross to Expedia?
For the core customers of the business, the hotel can offer more value to the customer (things like online checkin, etc) while cutting out the commission to the middleman. Travel agents still offer value for complex itineraries, destination travel, integration with corporate ERP systems, etc.
It may be easy to engage the hotel directly, but when you are looking at potentially 20-30 hotels in an area the time the customer spends to check directly each one makes the aggregation a huge value proposition. I use booking.com a lot not because they are so good, but because they are more convenient than searching direct. I use to do motorcycle travels with a group and each day or couple of days we target the next place to go. With such a scenario booking hotels directly is impossible, but booking.com gives me everything in an area filtered by some criteria. I use location and rating as the top factors, price is just a differentiator. What is the hotel answer to that?
PS. Most of the time in my experience the booking.com price was better than direct booking. This is because on booking.com I found some great deals (not picking for, but why not use it?) while the hotels don't want to publish such low prices on their sites. I found out a nice place in Austria where we got by accident for a night, the place and the price were so good we extended the stay (for the same great price), then next year in the same period I checked the "regular" price and it was more than double.
It's all XML based and sometimes it's a bit confused but a lot of hotel booking sites work by forwarding OTA/HTNG schema messages to booking engines (e.g. Siteminder). A heck of a lot of hotels are already bookable through those engines.
> OpenTravel provides a framework where all companies in the electronic distribution supply chain can work together toward the common goal of creating an accepted structure for electronic transmissions using XML messaging. This enables suppliers and distributors to speak the same interoperability language, trading partner to trading partner.
Had you not explained, I would never imagine this is about hotels.
I think that's completely wrong. Very few vendors want their product to be commoditized. From the perspective of a hotelier, reducing their property to a few lines of JSON data is a losing proposition. The result will be the same thing we've seen in the airline industry: a race to the bottom, competing only on price, with ever-crappier service and more nickle-and-dime addons.
On booking.com I take in consideration, in this order: user rating, location and features, pictures, price. The user rating is a hard filter (I don't even look below 8.0), the location is a given, the features and photos depend on the hotel, not the agregator, and are much more than a JSON. For example, no Wi-fi or paid Wi-fi in Europe is a deal killer, not a bonus, while a good food selection and hospitable staff is attractive.
Very few vendors want their product to be commoditized. From the perspective of a hotelier, reducing their property to a few lines of JSON data is a losing proposition.
Meh. For that to be true, it would have to be the case that all consumers care only about price. I'm pretty sure that's not actually the case. As long as there are consumers who will pay more for $WHATEVER, there will be a market for $WHATEVER. The point is, you can still price discriminate, even if you make your data available as a simple JSON (preferably JSON-LD) file.
Maybe. I can see how if you're only looking at "airlines" (eg, Delta, Southwest, American, etc.) then it might seem that way. But I'd argue that that's a somewhat overly narrow view and that there is still price discrimination in terms of people who charter private jets and what-not. And even among consumer airlines, choice is sometimes dictated by other factors like route availability / timing / etc., and that further complicates the picture.
The barriers to entry are much higher for new airlines than for new hotels. Airlines need far more capital and labor, and getting access to airport gates at most major airports is extremely difficulty. There are also far higher economies of scale in operating airlines than in operating hotels. (In fact, most hotel chains are simply franchises; the properties aren't owned by the brands on the buildings.)
That's why we don't see a lot of competition and innovation in the airline industry.
I can see counterarguments...
First, standardization & data sharing across a very decentralized industry is hard. How many industries have something like that?
Second, messing around with price & doing complicated, on the fly pricing helps them cut a little extra margin (price differentiation). One price for a regular business customer. Another price for last minute online booking engines. A whopper of a price for the couple deciding to take a date from the bar to a room. This is a low margin industry, largely. These things matter.
Third, they're afraid of commodification. Standardization & informational liquidity are the path to commodification. They like the idea of a travel agent recommendation, not a spreadsheet with a "book now" button.
So maybe the solution would be to build a decentralized aggregator, where the aggregator send query and user data to each hotel, hotels adds more data, and uses it to send detailed, customized offers. Aggregator assembles page.
And since the job of the aggregator is simple, more competition ?
This would reduce the hotel's value proposition to a commodity. It would only work for the most impersonal of hotels, the hotel equivalent of McDonalds, competing on price and standardized features. The kinds of hotel you wouldn't want to stay at, if you had a choice.
I love staying at those hotels. In fact, I wish hotel rooms were commodities that competed on two factors: cleanliness and quietness. Everything else to me is frivolous, as I'm not interested at all in spending any time in a hotel outside of the time it takes me to get ready in the morning and sleep at night.
Commoditized market does not mean lack of options or low quality goods. It just means the differences are predefined aka it's X octane gas without lead and a bunch of other things that you don't need to see on the pump.
People don't just buy generic meat they buy Grade A (means something) Prime Rib (means something) Angus Beef (means something).
> Commoditized market does not mean lack of options or low quality goods.
No, but it does mean that goods are perfect substitutes that compete only on price, although it is a condition which in practice is approximated more often than actually attained.
> People don't just buy generic meat they buy Grade A (means something) Prime Rib (means something) Angus Beef (means something).
Right. "Meat" isn't even approximately a commodity. A particular cut and grade might be approximately a commodity (though makers will actively seeking to decommoditize it by building brands; no one wants to sell into a commodity market, since basic economics mean that competitive factors will drive market prices in such a market down to producer costs and eliminate profits.)
I don't think that would be the case at all. People choose hotels based on price, location, amenities, and reviews. Making it easier to compare vacancy listings isn't all of a sudden going to make the customer seeking a 4 star hotel, choose a $50/night motel because of the price differential.
I no longer travel frequently for business, but when I was a consultant I was constantly traveling around the US and staying in various hotels. I would say that to a large extent, I always saw them as just commodities. I only had one or two pet issues that occasionally cropped up, but 99% of the time I didn't care a lick about the "brand" of the hotel, nor did I want to.
Maybe it's different for recreational travelers, but for at least one business traveler my hotel room was just a place to park my clothes and stuff during the day, and to sleep at night. As long as the AC worked, and the bed was anything close to reasonable, the rest was moot.
And this is the fundamental issue with the traditional hotel industry, and why AirBNB has found a successful niche. When I travel with my family, I care greatly about the space I will be in. I desire a living room space, multiple bedrooms, a kitchen, maybe even an outdoor or backyard space, and I don't want to pay to rent two attached hotel rooms at twice the price.
Hotels seem to aim their products at their primary customers (business travelers), and the product they sell is designed to primarily meet their needs. They compete on non-room amenities (bar quality, workout rooms, etc.) and on loyalty points, which frequent business travelers can use to make personal trips to vacation destinations. None of these things have any value to a family that makes 1-2 trips a year.
AirBNB does target my needs, with detailed pictures of exactly the space I'll be living in, diverse housing options, with many of the amenities that I desire above. I also care a lot less about cleanliness when I'm traveling with family. Yes, I want clean sheets, towels and other personal items. However, I don't care about a little dust in the kitchen cabinets, some spots on the windows, aging/peeling paint, or a few spiderwebs in the corners. My kids are going to make a mess no-matter what, and I certainly don't clean my home to hotel-standards every night.
I have seen a few mainline hotel chains offer family-focused properties (The Hyatt House in Anaheim is one.) However, the family-focused ones aren't that common. An AirBNB apartment I can rent almost anywhere.
I am currently a traveling consultant, and I now care very much about staying at Hilton properties because I have Diamond status and get better rooms at lower prices and free Wi-Fi. I know I could stay anywhere else and expense these expenses, but why would I?
Yeah, I guess once you get to that level with a given brand then it comes more of an issue. I never had enough points with any given property to get enough perks to really make me care. And since the company I worked for took care of all the hotel bookings / payments / etc. anyway, there was no real friction for me to pay for wifi or something when it was needed.
The one place where I do feel some brand loyalty, is actually on the airline side, where I have a strong preference for Southwest. And that was even more true back when I still had elite status with them and got free early-bird boarding. That was something I actually cared about since my company wouldn't pay for early-bird, seat upgrades, and the like.
Plenty of people choose McDonalds for the reliable consistency of the experience. Sure, it's a mediocre hamburger, but you're virtually guaranteed it won't be a horrible one.
> they'd get together and form an industry working group, and design simple, standard data formats and querying/booking APIs, and then make all their data available through them
Are you familiar with SABRE/AMEDEUS? The flight industry did exactly this and it's been a disaster for them. Heck, they even handle hotel bookings as well.
every single airline uses a common messaging format for reservations, routing and itinerary generation BECAUSE of SABRE/Amadeus and doesn't have to roll their own systems to do it.
Airlines can't publish their inventory because they agreed to only allow GDSes access to that data.
Getting access to the GDSes as a small startup is extremely difficult, and the obvious value-add (searching many possible trips) is punished by the pricing structure.
There are many hotel search engines out there already, and I don't really understand why new search engines would pick up meaningful market share. The priceline and expedia web properties (Booking.com, priceline.com, KAYAK, Expedia.com, Hotels.com, Hotwire, Travelocity, trivago, etc.) have pretty decent customer loyalty, a lot of app downloads, and highly optimized customer acquisition and conversion.
Couldn't you have said the same thing about Agoda, Kayak, and Momondo? All of the other Priceline and Expedia/TripAdvisor properties are from before the 2001 bubble. Most in the mid to late 90s. The three newer companies I mentioned all came in the mid 00s. And the latter two acquired for good money.
Hipmunk came around this decade. But no clue on how good the acquisition is. Trip.com and HotelTonight are the last two properties I know off the top of my head and they were also founded this decade. Both seem to be doing decently.
I guess maybe you're right and now there isn't room anymore. But if things could come out 5 to 7 years ago, we could see some more pop up.
The difference is vs the '00's is the big sites have 1) scale (= operating leverage and the best deals with hotel chains and better SEO), 2) years' of data and testing (which leads to higher conversion and an ability to pay more for inorganic traffic than newcomers), and 3) organic traffic (which subsidizes inorganic traffic).
HotelTonight fills a niche but I think the market they play in is pretty small.
But yeah I mean, wasn't that all true, albeit to a lesser extent, by 2005-2006, when the 3 mid-00 companies were fully launching?
I agree, HotelTonight fills a specific niche and maybe that's what we'll see more of. A few sites filling niches. Trip.com itself also has to do some more superficial than substantial features to try to differentiate itself.
And maybe Hipmunk was always more hype than actually being big with it being a YC company and by a reddit co-founder.
Expedia is ~5x larger that it was in the mid-aughts and Priceline is ~10x larger and each has the benefit of a decade's worth of data. So if the barriers were not insurmountable then, I think they are now.
This would make it far easier to build a hotel search engine, which would cause an explosion of competition and innovation in this area. This in turn would undercut the power of the leading agencies, and drive down referral pricing.
But they won't do this. You see the same problem in so many industries. Vendors act like data about their offering is more precious than the offering itself. They make it as hard as possible to build an aggregator, so the aggregation market gets tied up by a tiny handful of players who are willing to invest enough to build a scraping infrastructure. Then they panic that these aggregators have too much gatekeeping power, but rather than encouraging greater competition amongst aggregators, they respond by trying to put the genie back in the bottle.