Online Travel Agencies (OTAs)

Hotels Now See Online Travel Sites As Rivals - MarketWatch

Excerpt from MarketWatch

Major hotel chains are engaging in an online turf war with the very travel sites that have helped drive their businesses.

Marriott International Inc., Hilton Worldwide Holdings Inc. and InterContinental Hotels Group are using extensive marketing campaigns to claw back business from Expedia Inc., Priceline Group Inc. and other travel-booking sites, which steer customers to hotel properties but also take commissions of up to 30% for each reservation. The chains are starting to treat these sites less as valuable business partners and more as gatekeepers standing between them and their customers.

Many large hotel brands are offering lower nightly rates and other perks to loyalty members who book directly through their sites instead of online travel agencies.

The industry effort faces an uphill climb, however, as travel portals have become ubiquitous tools for planning a trip. Online travel agencies were responsible for $99 billion worth of world-wide hotel bookings last year, according to travel industry-research group Phocuswright.

A survey conducted by travel-data firm Adara Inc. showed that 52% of U.S. travelers between the ages of 18 and 34 prefer booking hotels through online search engines as opposed to brand websites, compared with 37% age 35 and older. Younger travelers are also less likely to participate in hotel-rewards programs, the survey found, raising questions about how much brand loyalty matters to price-sensitive customers. Many prefer third-party sites because they show an array of options and allow customers to package airfare or car rentals.

"I always want to find the good deal, and see what all my options are first," said Nicole Leffew, 28 years old, a bartender and fashion blogger from Ohio. She said she rarely consults the hotels' websites because she feels "they don't have that much."

The new battle is the latest episode in a two-decade "frenemy"-style relationship between online travel agencies and the hotel industry. Sites such as Expedia and Priceline were crucial for hotels during down periods such as after 9/11, but they have gradually eaten into the share of overall bookings ever since. 

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