ILLUSTRATION: GETTY


Hotel trends


Battle for bookings W


Te big U.S. hotel players are fighting to gain a tighter grip over how reservations are made and how much they can charge. By Karl Cushing


hile the domination of the highly competitive U.S. hotels market by large chains is hardly new,


the mergers and acquisitions activity of the past two years has seen unprecedented consolidation, with Marriott International alone now controlling 30 hotel brands after acquiring fellow giant Starwood in a $13.6bn deal back in March 2016. Te following month saw China’s HNA


Tourism Group buy Carlson Hotels Inc in a deal which included 1,400 Carlson properties across brands such as Radisson and Park Plaza, along with its 51.3 percent stake in Rezidor Hotel Group. Tis comes after French hotels giant Accor had stumped up $2.9bn in late 2015 to buy FRHI, a holding company for Swissotel, Raffles and Fairmont. Having consolidated power bases, the


big U.S. players are locked in a battle with the distributors to gain a tighter grip over the booking process and their rates. In the words of travel industry research body Phocuswright, 2017 has seen them “continue to ratchet up the pressure on the online intermediaries”, from launching direct booking campaigns to offering member-only rates, backed by lobbying from the American Hotel & Lodging Association (AHLA).


To an extent, this situation has been driven


by the fact that the concentration of over-the- air (OTA) power rests with two major players. Expedia and Priceline Group, which includes booking.com, currently enjoy a combined 90 percent control of the U.S. OTA bookings market. Moreover, OTA lodging bookings in the U.S. exceeded total hotel website gross bookings for the first time in 2016, and the OTA market is growing much faster than the U.S. hotel market. As Phocuswright concludes, “OTAs are crushing it.”


New buzzword in tourism Another major challenge facing today’s


hotel operators is how best to adapt to the ever-changing customer landscape and effectively address the needs of millennials. According to Phocuswright, these 18 to 34 year olds account for a 40 percent share of the U.S. leisure travel market, speeding the shift to online where sales growth is currently outstripping overall market growth in the travel industry by more than four times. Meanwhile, North America accounted for just over a third (34%) of the global online travel market as of 2016. Phocuswright has also found the level of mobile bookings in the U.S. grew from 16% to


24% during 2015 to 2017, making it a priority for agents or hotel operators to engage meaningfully with these consumers before they book, for example, by using tools such as chatbots to handle queries. Meanwhile, a new breed is snapping at the millennials’ heels. Generation Z is “the new buzzword in tourism,” proclaims luxury travel agency network Virtuoso in its 2017 study about family travel, referring to people born between the late 1990s and 2010s. “By 2020, this generation will account for 40 percent of all consumers with disposable income to travel,” it concludes, while noting the weighty influence and sway they already enjoy in family travel booking decisions. However, operators forget other key


markets — such as baby boomers — at their peril. According to the 2017 Travel Trends report from AARP Travel Research nearly all (99 percent of) baby boomers will take at least one leisure trip in 2017, with an average of five or more trips expected throughout the year. Significantly, just over half (51 percent) are expected to travel only domestically. Adding to this group’s attractiveness from an operator perspective is their strong attachment to loyalty programs, with most being members of at least one. Indeed, 70


ASTAnetwork | Fall 2017 | 39


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