Travel agencies ‘as cost?effective for hotels as selling direct’

Hotels that seek to boost direct bookings risk lower occupancy rates and ‘no measurable’ cost savings, says Ettsa report Continue reading →

Travel agencies are as cost?effective a sales channel for hotels as selling direct, according to a new report seen exclusively by Travolution sister title Travel Weekly this week.

Hotels that seek to boost direct bookings at the expense of agencies and online travel agents (OTAs) risk having lower occupancy rates with “no measurable” cost savings, the report said.

The findings led the European Technology & Travel Services Association (Ettsa) to suggest the main reason for hoteliers to push direct sales “is to reduce transparency for consumers”.

The Hotel Distribution Costs study by economics consultancy Infrata suggests selling direct is no cheaper for hotels than indirect.

Infrata found a mere 0.03% difference in “net profit contribution” between direct and indirect channels, based on an average daily room rate in Europe of €112.

The study looked not just at costs such as agents’ commission, but also at the costs of customer acquisition, customer services and technology development.

Report author Ian Lowden said: “When cost, revenue and consumer behaviour dynamics are modelled, it’s clear the cost of moving indirect bookings to ‘direct’ is marginal for the hotel.”

When “the billboard effect” of hotels being displayed on OTA sites is added, the report concluded: “Hotels benefit from being listed on OTAs.”

The study was commissioned by Ettsa, which represents OTAs and global distribution systems.

Ettsa secretary general Christoph Klenner said: “The belief that direct distribution is cheaper than indirect has been debunked.

“It seems the major incentive for hoteliers to push direct sales is to reduce transparency and comparability for consumers.”