2018 Top Booking Channels Results - Did Consumer Behavior Change?

In the past few years, there have been concerted efforts by hotel brands to offer incentives and advertise to consumers the benefits of booking direct. Brands have ramped up their loyalty programs and spent considerable dollars on marketing campaigns. We looked at industry data and compared our own proprietary data to see if we could determine if these efforts have made a difference. Has there been a shift in the way that guests make their hotel bookings?

A recent study released by Kalibri Labs examined 80 million transactions from 19,000 hotels that had loyalty programs in place. When looking at Transient booking source nationally, the data indicated that hotels depended on OTAs for 14.9% of the Hotel’s occupancy in 2018. [see chart below] However, it is clear that Brands are effectively slowing down the shift to OTA & 3rd Party Bookings.

• Even though some hotels may need to rely on OTA room bookings to be successful, 2018 results show that on average 51.5% of the Hotel business came from their direct Hotel sales efforts and remains to be the largest contributor to occupancies.
• In the 12 months ending August 2018, the U.S. hotel industry received just about half of its room nights (49%) through digital channels (shaded purple colors): Brand.com, OTA and GDS. When examining the split between direct and indirect channels, direct still dominates with 6 in 10 room nights coming through one of the direct channels: Brand.com, Voice or Property Direct.

Measuring ROI - What Does This Mean in Dollars?

Kalibri Labs also took a look at the revenue net of booking costs and found that Loyalty bookings that came directly through a hotel’s website generated an ROI nearly twice that of revenue that came through OTA bookings - $8.33 as compared to $4.77. This is significant and will continue to drive the Brands to promote their Loyalty Programs even more to guests.

Loyalty Room Nights Compared to Total Room Nights

• Looking at the past YOY Growth of the Brand.com bookings of Loyalty Members, there was a consistent increase across all US Hotel tiers; showing 6.6% to 18.2% growth in the past 4 years. This shows that Brands are effectively slowing down the shift in OTA & 3rd Party Bookings
• Economy, midscale and upper midscale hotels all enjoyed double-digit growth in loyalty contribution with steady gains since the launch of Book Direct campaigns by hotel Brands.
•  Upper upscale and luxury branded hotels came in just under 10% growth and although the rate of growth for Upscale hotels is lower at 7%, they had the largest base of loyalty bookings with over 61% of the total base of these hotel room nights.

Comparing to iResponze Data of 500k+ Reviews

Based on 500K+ guest reviews that iResponze responded to in 2018, we see a similar Brand.com contribution for our clients. The Brand is pulling in a healthy 18.2% of their online bookings through their Brand.com in comparison to 81.8% coming in via OTA & 3rd Party Booking channels.

We also compared our data to look at number of OTA and Third-Party bookings. [see chart below] Years ago, TripAdvisor was the first 3rd Party channel to promote their site as "the place to go" when considering where to stay. Their next step was to add a booking engine to their site. However, in the last few years, we have seen Booking.com rise in the ranks. The site began as an OTA leader in the International market but has since seen increased usage in the US market as well. 

We saw Google receive more traction in 2018 for hotels in all locations and every category – and many in the industry see them as the most important channel to watch. The use of Expedia continued to increase and is the leader of the pack at a 28.9% share on their own. When you add in their other products such as Hotels.com, Orbitz and Travelocity (all in blue shading on the chart) you see that they hold a significant share.

Has Consumer Behavior Changed?

Industry statistics show, and our own data confirms, that the efforts by brands to entice consumers to book direct is making a difference. Loyalty member campaigns have helped increase the rate of direct bookings while the OTA channel has either held steady or somewhat declined. Just this week, Hilton CEO Chris Nassetta confirmed that their web direct booking channels are growing at a much faster rate compared to OTA channels.

This is great news for the industry! Gaining more direct customers through the use of strong loyalty programs allows hotels to build invaluable relationships directly with their guests. When brands use this data to provide guests with exceptional personalized experiences this will entice them to come back again and again.

Do You Need a Strategic Partner?

At iResponze, we know that responding to guest feedback & reviews and managing social media requires consistent attention and a strategy for developing and maintaining your hotel’s personality. We have helped many clients meet the challenge, and we have learned a lot about how to be successful with your current and future guests. We would welcome the opportunity to show how we can meet the challenge for you and your staff, leaving you all with more time to interact with the guests in front of you. Contact us for a free consultation today.