Google and Airbnb: A revolution of hotel distribution will happen?
Online travel distribution is always evolving, and it’s getting harder for hoteliers to keep up with the many changes. How do you identify which channels are actually going to lead to success for your hotel and when is the best time to jump on board? Airbnb made the long expected leap by opening its platform to hoteliers, and Google announced it is expanding its reach on travel search. Here are some benefits and disadvantages each of the channels have and how they could impact the hotel distribution landscape.
Airbnb is paving the way for the hotel distribution
Airbnb has officially made the leap and has enabled hotels to add rooms to their ever-growing inventory. The news wasn’t exactly a surprise for hospitality professionals, as it always seemed a logical next step for the accommodation distributor.
There are a few limitations for hotels looking to sell their rooms on the Airbnb platform though. There is currently only one official third party distributor (SiteMinder) and on top of that, Airbnb has put criteria in place for hotels.
Airbnb is refreshingly transparent about its service fee, which is kept open to the public. The distribution fee of 3% to 5% is low, very low even compared to traditional OTA commission fees which are much higher. A direct challenge to OTAs who often face criticism for charging so much more perhaps? It definitely seems Airbnb could be cost-effective for hotels and help bring your overall distribution cost down.
Another thing to note is the service fee Airbnb charges its customers, which is added to the final price travellers pay. Will this mean the rooms on Airbnb will be coming up as more expensive on metasearch comparison sites? With their core inventory of apartments, this was never much of an issue. There simply aren’t all that many distribution channels which can be compared. But for hotels this is a different story, as hotels are continuously fighting to keep their rates in parity. It begs the question whether Airbnb will be able to sustain its service fee for hotel properties.
Google is improving customer journey experience
The other announcement this month came from Google. They are continuing their move into the travel landscape by aiming to offer a better experience for travellers, especially focused on mobile devices. Mobile is increasingly popular in all global markets, and Google is unsurprisingly a driving force behind mobile growth. They are especially focusing on the customer journey of the traveller on mobile. Their latest updates highlighted an optimised mobile interface, adding a new navigation bar that puts common tasks on one screen with swipe-and-click functionality.
Google is very aware that OTA mobile website and app quality and user-friendliness varies widely. By offering an easy-to-use mobile interface, they’re aiming to streamline the online experience for online travellers. If they do the job right, it is likely this could drive more bookings via Google.
Moving into direct booking is a complex issue for Google?
However, Google’s foray into travel does not come without complexities for the search giant. Google needs to consider its direct booking move very carefully. It currently has a very lucrative relationship with Online Travel Agents (they pocketed an estimated $12 billion in travel revenue in 2016). As such, Google needs to take care not to alienate big advertisers like Priceline Group and Expedia. Realistically, it is unlikely Booking.com and the likes would stop paying for top links on the search engine. But if it no longer pays for OTA’s to spend their advertising budget on Google search and they start diversifying their advertising spend into social platforms, the impact could be real.
OTA’s position seems stable
What does this mean for the current leaders of hotel distribution? OTAs have a lot of leverage and power and it’s worth wondering how they will react to hotels moving more budget to Google and Airbnb? If OTAs see a drop-off in search and conversions (bookings = commission = conversion) for your hotel OTAs have the power to take action. They could potentially de-rank hotels on their own platform, or push up hotels that are not actively moving towards these new distribution platforms. If Airbnb and Google manage to put a significant dent in OTAs’ revenue, the latter may decide to increase commissions to make up for the losses in revenue.
Innovative change in hotel space
On the whole, the possibilities offered by Google and Airbnb are a good thing for accommodation providers. Innovation moves us forward and opens up opportunities for both hotels and travellers. These new hospitality players with an already established online reach diversify the market which is greatly needed. Especially as OTAs have been leading the charge for a long time, and have never really been challenged. But OTAs are in their position because they are very strong players, so expect them to find ways to outmaneuver this challenge, so watch this space.