Phocuswright Europe: European hotels more reliant on OTA business than US counterparts

A heavy reliance on their bookings means it is unlikely that European hotel operators will disintermediate from OTAs any time soon.

A heavy reliance on their bookings means it is unlikely that European hotel operators will disintermediate from OTAs any time soon.

Phocuswright research revealed at last week’s conference in Dublin found direct online and direct call centre channels were the two most important channels for hotel owners.

Instant Book on TripAdvisor was the fourth most important distribution channel and is expected to overtake OTAs, in third, before long.The research found significant differences between the Europe and US markets where, in the latter, 43% of revenue is booked online compared to just 36%.

And Europe has a far more diverse hotel sector with twice the volume of capacity in independent properties compared to the US where chains dominate.

Europe covers a wider range of accommodation types from campsites to inns, bed and breakfasts aparthotels, whereas hotels and motels predominate in the US.

However, hotels in the US generate twice as much revenue per room as their European counterparts.

In Europe of the 36% of revenue booked online 71% come through OTAs, whereas the in the US the proportion of OTA versus direct is 50:50.

Lorraine Sileo, senior vice president of research at Phocuswright said: “How realistic is it to say they [hotels] are going to pull back from OTAs anytime soon?

“They know OTAs give them visibility and are important partners to fill room nights and consumer like them.”

Sileo said hotels are concerned about consolidation in the OTA sector as well as commission and competition, especially when it comes to their investment in technology.

Among intermediaries, Booking.com is ranked as number one, followed by Expedia and listings on TripAdvisor.

“The number one concern is the rising cost of third party reservations followed by their own website and being too reliant on one intermediary.

“A lot of European independent properties are small and three quarters of marketing spend is spent online; that’s high, a lot higher than chains,” said Sileo.

Phocuswright predicts a rise in email campaigns from hotels, saying they can be a cost effective of reaching customers and engaging with them in a way they understand.

And independent hotels were said to really see a value in OTA alternatives like Google Hotel Finder

“Because they want to spread out there distribution and want to have more control over commission or perhaps they can build a more direct relationship with the consumer.”

Sileo said the drive for more direct bookings was being held back by inadequate or in some cases absent IT sales and marketing, reservation and customer management systems to support that.

The main reason hotels were not using such systems was cost and this explained why independent hotels were losing share to chains as they focus on day to day operations.