#HSMAI 2015 ROC Panel @Austin
I had the honor of organizing and moderating one of the most interesting breakout sessions at the #HSMAI Revenue Optimization Conference (ROC) in Austin (June 2015) – “Changing distribution landscape – Is there light at the end of the tunnel?” It was well attended by over half of the conference attendees, ran about 15 minutes over the scheduled time and surprisingly no one left the room. I attribute this to two reasons: (1) Rising distribution costs is an area of concern for most hoteliers today (2) The Allstar panel made sure they kept the audience engaged until the end.
The panel included Dan Wacksman, EVP Distribution, Outrigger Hotels; David Chestler, EVP, SiteMinder; Lew Harasymiw, Director of Connectivity, TripAdvisor and Louis Zameryka, Regional Director, Booking.com. Typically breakouts at ROC are covered by one of HSMAI’s news partners, but unfortunately due to some last minute technicalities this did not happen. Even though I am not a journalist, I will attempt to recreate some of the interesting points that the panelists brought up.
To give some perspective, metasearch is estimated to grow at a CAGR of ~ 40% from 2014-2017 and the current trends show no signs of slowing down. TripAdvisor, Kayak and now Skyscanner have added direct booking functionalities to their arsenal, ensuring that the consumers don’t have to leave the metasearch sites to fulfill bookings. This is primarily driven by a desire to create a frictionless user experience.
As recently as last week, there has been some news around Google experimenting with booking fulfillment features in certain test markets.
Some of the interesting themes that came up during the discussions were as follows:
- Trend of instant bookings on metasearch: One of the most interesting points was the contentious issue of the Book Direct functionality on TripAdvisor and other metasearch engines. Dan from Outrigger raised the point, also echoed by Louis from Booking, that Instant Booking on TripAdvisor bypasses the actual booking channel completely. The primary issue being that the booking path, branding and display as well as the fact that the guest can complete the booking without ever leaving the TripAdvisor site is detrimental to fundamental construct of a metasearch, of sending traffic to the supplier sites. Dan questioned the value of Metasearch, as they only display the lowest rates and not any other premium products, and if the consumer never lands on the brand websites, which are intended to be more experiential, then the metasearch companies are diluting the hotel brand.
- Will metasearch replace OTAs: Lew from TripAdvisor countered that the metasearch companies clearly fulfill a need in the marketplace of providing the best deal to the consumers. Their exponential growth over the past few years has shown that the consumer has the final say in determining market trends. David Chestler mentioned that each of the business models, whether it be a metasearch or an OTA has a place in the marketplace. However the lines are blurring as metasearch companies integrate direct bookings, and OTAs take significant and sometimes dominant positions in metasearch companies, as illustrated by Priceline buying Kayak, Expedia buying a stake in Trivago, etc…
- Google becoming a major force in meta without a metasite: Though the panelists expressed some concern with Google embedding hotel finder results directly into its search results making it a meta company without a metasite, the general consensus was that it’s unlikely that Google will jeopardize two of its main customers namely Expedia and Priceline, that contribute approximately 5% of its total ad revenues. Louis stressed that Google is in the search business and not in the fulfillment business, although all of the panelists finally agreed that it remains to be seen, what shape this trend will finally take. Update: Expedia CEO, Dara Khosrowshah was favorable on Google facilitated bookings, in his Q2 earnings call. See Tnooz article http://www.tnooz.com/article/expedias-ceo-talks-about-google-homeaway-ryanair-and-the-chinese-market/
- Priceline buying Buuteeq (digital marketing), Hotel Ninja (PMS) and Pricematch (revenue management software): Louis from Booking, a Priceline company, allayed the concerns around Priceline getting into the business of hotel enterprise solutions. The primary motivation behind buying these companies is to create a suite of products that help independent hotels and resorts compete in the market place and increase their reach using the Booking platform. David from SiteMinder, which works with thousands of hotels connecting them to various online travel partners and OTAs, also saw this as a positive trend.
- Single platform versus patchwork of technology platforms: From an hotelier’s stand point there seems to be a major issue with inventory and rate parity, with last mile connectivity being a major problem especially for independents. Companies like SiteMinder fulfill connectivity needs in the marketplace, however the real solution lies in integrated systems that can be a one-stop shop including PMS, CRS and channel managers.
- Rate Parity: Talking about rate parity, which seems to be rapidly becoming a thing of the past, the panelists warned hoteliers of getting what they asked for. If not handled well, managing rates across channels will be an issue for hotels and revenue managers. Hoteliers will have to further invest in technology to stay on top of this trend.