The following is a fantastic, in depth article brought to you by HMA and HOSPA Member Vineeth Purushothaman. Vineeth is one of the UK’s leading minds on distribution and channel marketing and Director of White Sky Hospitality.
Last year, I reflected on the counter-intuitive way of looking at growing clusters of businesses as a way of identifying new trends in the industry in “9 online hotel booking trends to watch in 2016 and why”. So, what is new this year and what is likely to take over the imagination of bookers online? Equally importantly what are the changes that are likely to impact the industry over the long term?
1. Trip planning websites on a rocky path but stubborn in its intentions
Trip planning websites address the inherent need of a traveller to “book everything” at one go in one place. Travellers are keen to reduce time spent on travel planning.
Who are the key players? They range from direct to consumer trip planning portals to social booking platforms. Some of them look at business travel while others approach individual travellers. A few mix technologies with personal curation while another set focuses mainly on transport.
Trip planning portal TripHobo enables users to plan trips to over 14000 cities and secured $3 million in Series B funding recently. Google Trips, helps plan your holiday by using data from Google Maps and crowdsourced contributions.
Utrip creates itineraries in 37-plus cities throughout the U.S. and Europe combining artificial intelligence and human experience. Inspirock provides a detailed day-by-day plan of attractions you will see at the various destinations on your personalised itinerary. It also saw an investment from Make My Trip for USD 3 million and according to Tnooz, it has seen excellent growth recently.
Trip planning websites combining technology with human curation include Gojourny which creates tailor-made travel plans with recommendations from top chefs, sommeliers, and local experts for a small fee. Vayable offers a way to directly hire local guides for activities overseas. And the TripScout mobile app helps plan a local and authentic self-guided city tour.
B2B companies like Tripgrid puts everything you need for travel management into one place for quick access. And Whereforbusiness would like to be every employee’s personal booking assistant. It is an AI-powered corporate booking tool, designed to reduce both the hassle and cost of booking a trip.
B2B2C companies include Relovate, a technology platform that allows both travellers and content producers to manage trip saving, sharing and publishing. AXUS Travel App offers a web-based itinerary management and engagement platform that streamlines the way travel advisors and service providers communicate with clients from the initial planning process all the way through to their destination experience.
Social and group trip planning websites like Wetravel helps plan trips with friends. Let’s go there allows travellers to create and manage own group or exchange ideas through a fun, dynamic trip planner. Travefy offers a travel planning platform with tools to collaborate on trip details, build rich itineraries, and collect shared expenses.
Niche tools, apps and websites in this space include TripIt a well-established player that transforms your emails into a master itinerary for every trip so all your plans are in one place.
TripCreator enables users to plan and book their entire trip to Iceland in one place. It provides an instant itinerary checked for availability based on traveller preferences.
Transportation driven and multi-modal companies like Adioso offer a great tool to book flights starting with exploring travel ideas. Roadtrippers in the US helps people discover the world around them in an entirely new way by streamlining discovery, planning, booking and navigation into an engaging and intuitive process. Rome2Rio gives you every possible option for travel from point A to point B. whether by plane, train or city bus. Gopilli does that in the UK.
Mozio connects customers, local companies, and global travel brands to turn getting to and from the airport – into a delightful experience.
A more detailed analysis on this trend and companies applying this trend is here
2. The traditional hotel internet booking engine is dying
The massive proliferation of interactive technologies like messenger apps, chat bots, robots, cobots supported by machine learning and artificial intelligence is changing the way bookers interact with a product. Could this mean changes in the way one books a hotel?
Travel site Expedia released a bot for Skype recently. Dutch airline KLM became one of the first brands to use Facebook’s new branded messenger bots, powered by Nexmo last year.
Aviva has created messaging software for Airbnb hosts who want to automate their messages to guests so that vital, but repetitive/standardized details about the reservation can trickle out over time, at the optimal time.
Lola provides on-demand, personal travel service through a smartphone app connecting users to a team of travel agents who find and book flights, hotels, and cars.
Gartner predicts that by 2020, 30% of web browsing sessions will be done without a screen – one of the reasons to suspect that the booking engine as we know it will go away (and take on a back-end role).
Messaging apps and chatbots are a whole new reservation and distribution channel or should be treated as one. And it will change the hotel internet booking engine as we know it, one way or another, soon!
3. Big data = Big (better) marketing
There are more visible signs of big data being utilised more effectively in marketing initiatives – and involves targeting the micro-moments (a google phrase) to maximise conversion.
Travel Appeal offers a real-time intelligent advisor for hospitality managers. Freespree places every conversation with bookers into its digital context and then feed the entire marketing stack to deliver relevant marketing actions. Marriott uses Freespee to achieve visibility and control over its inbound direct bookings.
Voyat uses data science to identify high-opportunity website users, and increases their conversion rates with a variety of segmentation and targeting strategies. SnapShot created by hoteliers is made for hotels of any size, from single hotels to large chains, to make the most of their hotel data.
LodgIQ’s revenue management system (RMS) analyses market variables when optimising forecasts and room rates – current supply and demand in the destination, room rates of direct and indirect competitors, historical room rates, flight patterns, meteorological patterns and local events, among many others.
Mabrian a travel intelligence platform uses Artificial Intelligence (AI) technologies to provide DMOs and tour operators with insights on travel dynamics and tourist behaviour at the destination to optimise their decision-making.
In the hotel industry, we have never been short of data. The challenge has always been how to use it effectively. While the challenge of disparate systems (typically CRM, PMS, RMS) continue, solutions that assimilate and prepare data will become more widely accessible.
This, in turn, will drive the more static decision model driven by predictive analytics to a more prescriptive one. I see great potential for companies like Travel Appeal. I’d also expect companies like Freespree to help hotels market better with their data.
4. An explosion in demand for boutique hotel experiences
You may well wonder why boutique hotels feature in an online booking trend list. Agreed that it is rather unusual. However, this massive transformation in demand for boutique hotels is having an impact on how hotels and hotel brands are perceived and booked online.
The traveller need that is driving this massive demand and growth in boutique hotels is the increased quest for authenticity, experiences and wellness. Booking.com lists “mind, body and soul” in its eight big travel predictions for 2017. It says, “in a hectic world people are increasingly seeing travel as a way to bring balance back into their lives. Almost half (48%) see going on holiday as a moment to reflect and make better lifestyle choices. The coming year will see many travellers prioritising health conscious trips, particularly those from India, China and Thailand.”
Almost every large hotel chain has also added a boutique hotel brand to their portfolio. Marriott’s Edition is “an evolutionary response to the desire for a sophisticated experience from the guest with a contemporary lifestyle.” And their Moxy is a boutique hotel with the social heart of a hostel. So Sofitel hotels are “a playful mix of sophisticated French elegance and the dynamic style of each locale”. Andaz Hotels by Hyatt. Luxury boutique hotels with sophisticated style, locally inspired cuisine, and vibrant social areas with a kaleidoscope of local culture. And Hyatt Centric hotels are “located in the heart of the destination, designed to be your launch-pad to seeing, tasting and feeling everything a city has to offer”. IHG’s Hotel Indigo “serves the curious – people who are inspired by new places, new people and new ideas”. Another brand from IHG EVEN Hotels helps travellers embrace wellness healthy lifestyles by providing choices that keep them on track. Their “Wellness Advisory Board”, studies latest trends and science behind staying well on the road inside and out. Canopy by Hilton promises “The energizing new hotel in the neighborhood. Where you’ll find simple pleasures, thoughtful extras “and nice surprises that go beyond a boutique-hotel experience. For a stay that’s positively yours. Two Roads Hospitality (previously Commune hotels and resorts) is making waves in the boutique hotel space with a range of unusual and authentic brands focused on design and the guest experience. Their brands include Alila, Thompson, Tommie and Destination.
Will the term “boutique hotel brands” become an oxymoron with its inherent contradiction? Can boutique hotels be scaled many times over?
The answer may well lie in the level of personalisation (without spooking the guest) using the power of big data. Applying prescriptive analytics throughout the customer journey to anticipate needs while training and empowering on-site hotel teams will drive success.
5. Experiences in virtual reality and 360-degree video before booking
Travel has always been about the experience – and that helps explain the huge amount of time spent on research prior to travel. Until recently, there were limited options to experience tantalising destinations and hotels in great detail. But now, that is all changing!
Marriott’s experiment with “teleporters” seemed to have caught the imagination of travellers. With Best Western Virtual Reality Experience (BWVRE), travellers are able to view guest rooms, hotel lobbies and amenities prior to arriving at a property.
Hilton launched a mobile campaign featuring an interactive 360° video that takes the viewer on a virtual vacation, using Opera Media mobile video ad unit designed to create a fully immersive and engaging experience. User moves the device to get a 360 degree experience.
Thomas Cook opened concept stores with Samsung Gear VR headsets to help their customers experience their destination. They also experimented with virtual reality in its marketing mix, rolling out a “try before you fly” online campaign.
Ted Baker created a “shoppable film” directed by Guy Ritchie as well as the first-ever fashion retail application of the Google App’s voice search.
TimeLooper is a location-based virtual reality platform that delivers virtual reality content to consumers when they are at the most incredible sites in the world. The stories are intended to transform the onsite experience and therefore can only be ‘unlocked’ once onsite at the historic location.
While the current emphasis with Virtual Reality (VR) and Augmented Reality (AR) is to enhance the travel experience and inspire, it shouldn’t be long before we see an intersection with the “online booking process”.
Why not have travellers engage and book during the VR experience? If you are inspired by what you see, why not be able to say, show me the best prices (metasearch) and best periods to travel? And from there proceed to book – a completely immersive and natural simulation of a laptop or mobile booking!
The only difference being that you are “at the hotel” while making the booking and “speaking normally” to complete the process!
6. Business travel is really, finally, truly ready for disruption
Business travel continues to grow, confuse and excite. Everyone gets excited about the still untapped opportunities in business travel, but it has been hard to pin down a great revolution. There are some drivers for change and signs, however, that it is beginning to change faster.
Bleisure is here to stay. Expedia has profiled the Bleisure customer here in great detail. Travelling to an exciting destination, additional costs to extend trip and how close the trip is to the weekend are the key factors. Another key takeaway is that the path to booking is short (1-4 weeks), especially the inspiration and research stage.
Flexibility and the shared economy – the continued evolution of the shared economy and its leading players are having an impact. Corporate company policies increasingly allow for ride-sharing and home-sharing services. U.S. corporations spent more than $282 billion on corporate travel last year, and the latest data from T&E company Certify says more of that money is going to the sharing economy.
Regional growth – China is poised to overtake the US as the #1 business travel market in the world. It will surpass US in spending by 2017. Overall spending on business travel that originated in India was expected to reach $33 billion in 2016, an increase of more than 11 percent compared to the previous year.
IATA’s new distribution capability (NDC) challenges the legacy architecture of Global Distribution Systems (GDS’s). NDC is a set of technology standards, which will give airlines the ability to distribute all their content through third parties while maintaining consistency.
In the legacy structure, airlines have limited opportunities to generate additional revenue through the GDS’s outside of passenger seats. For example, use of lounges, food, luggage options, preferential seating and more. While the sale of ancillary revenue can be achieved by selling through their own direct booking websites, it is hard to do through the GDS and their current infrastructure.
IATA, which represents about 240 airlines or 84% of total air traffic, recognises that selling ancillaries holds the key to its members becoming more profitable.
And as a large percentage of the Travel Management Companies (TMC’s) which book corporate travel and flights continue to use GDS, airlines are looking for better ways to generate additional revenue. Travel technology companies supporting this change include Farelogix, and Travel Fusion.
At the same time, hotel companies are taking an active interest in Bleisure. AccorHotels has a strategic investment in Squarebreak, which offers “hotel like homes” in France, Spain and Morocco. Accor is also buying Travel Keys, one of the leading players in the private vacation rental market.
Wyndham Worldwide invested $7.5 million in Love Home Swap, (a company that facilitates home exchanges for vacations), in hopes of expanding beyond hotels. There is a new wave of travel technology companies working to tap into lessons learnt from individual travel – and help travellers manage the entire booking process themselves while staying compliant.
Rocketrip is a travel management tool that provides employees with a real-time Budget to Beat and motivating them to save. Business travel management startup TripActions just raised $14.6 million in Series A funding according to Tnooz. It looks to reward business travellers for keeping an eye on spend.
Umapped is a collaborative B2B2C itinerary & experience solution that consolidates bookings, curated content and real-time context-sensitive content into a social tool for travellers. Travellers collaboratively build on their trip plans together, share recommendations with friends & discover curated content.
MagicStay offers private accommodation for the corporate market – a booking platform for short-term rentals dedicated to business travel.
Companies like Travog, an on-demand travel & expense management system with an integrated pre-book policy compliant system through an internal self-booking tool supports a high-level automated payment flexibility. Business expenses will be recorded and reimbursed automatically.
Another on-demand digital corporate travel solution like TravelPerk helps corporate travel managers to streamline travel quickly and drive business travellers towards compliance and self-bookings.
According to IATA, 15 of the top 20 airline groups (by revenue) including BA and Qatar Airways have either deployed components of the NDC standard or plan to do so during 2016/17. Most recently, Sabre announced it is using the NDC baseline standard to enable travel agents to have access to American Airlines’ Preferred and Main Cabin Extra products.
Considering the growth in Bleisure, increasing business travel from emerging markets like China and India, availability of prescriptive analytics and IATA’s new distribution capability to the equation and I’d say the time is ripe for disruption!
PS: Don’t miss out on the consolidation and mergers too!
7. Companies leverage Uberisation to maximise bookings
The sharing economy model has made such an impact that it is increasingly being referred to as Uberisation – an alignment of supply and demand in a free internet enabled market.
It is important, however, to look beyond Uber and AirBnB and identify the underlying reasons for the success of the shared economy model. And to identify how related areas are evolving. Only then can hotels respond creatively and leverage its power rather than dread the decline in occupancy and average rates.
One of the main drivers of the shared economy is the ability it provides owners or managers to monetise excess or idle inventory. And buyers can take a practical approach to prioritising access over ownership. An equally important element is technology – access to people or other resources requires “portability”.
Despite the obvious challenges, several niche hotel booking companies inspired by AirBnB and Uber’s shared economy model success have emerged. Some of them are very similar while others leverage a related customer need.
Auction sites like Bidroom and Tansler are part of a wider trend where accommodation providers sell inventory differently. Room Storm offers to protect your brand from the negative effects of overbooking.
Other travel related areas where Uberisation has taken off include…
Aviation: Blade a short distance aviation company allows users to launch their own crowdsourced charter or book individual seats on flights already created through an app. Russia-based metasearch engine Aviasales has collaborated with private jet search platform JetHunter to start including its unfilled segments in search results for flights returning to base. Jetsmarter connects members to idle jets and unused seats around the world.
Tours and experiences: Vayable allows providers to list experiences and Localeur provides access to local guides. So does Get Your Guide. Cookening allows you to attend or host home cooked meals and meet people from all over the world.
Transport: Swift, a new Uber-like taxi app, is run and owned by drivers themselves. Car pooling, renting a car and parking at a house are possible through companies like AmigoExpress, GetAround, Parkatmyhouse, RelayRide or Zimride.
What are hotels doing about it?
Hotel Schani in Vienna brings co-working to its lobby. Hyatt experimented with Hyatt has it! and Marriott collaborated with Liquidbookings to sell unused meeting space.
W Hotels partnered with Desksnearme and Candlewood suites have the lending locker initiative. “Smart business hotels where work meets play” lists a range of different hotels across the world which builds on the sharing economy.
The sharing economy brings challenges and opportunities. Innovative hotel companies will use the opportunities to strengthen their brand proposition and add value to their guests. Partnerships and collaboration with third-party companies will need to go beyond the traditional models and extend into a true understanding of guest needs and catering to them.
8. Blockchain technology to transform loyalty programmes and improve booking margins
According to the Harvard Business Review, “Blockchains ensure integrity and trust between strangers. They make it difficult to cheat”. “In other words, it’s the first native digital medium for value, just as the internet was the first native digital medium for information. And this has big implications for business and the corporation.”
Blockchain technology is often confused with cryptocurrencies like bitcoin. However, blockchain technology is really the enabler and not the currency.
The discussion on minimising distribution costs for hotels has so far focused mainly on the OTA and GDS costs. Channelling direct bookings through the hotel’s own website has always been the holy grail.
At the same time, the financial costs of processing each payment directly have been rather a constant and marginally impacted by volume. What if that could change? And if there were to be little or no cost to almost all your financial transactions?
Webjet and Microsoft have today announced the creation of a new blockchain proof-of-concept [PoC] solution that they believe will transform the travel industry. They believe that the solution has the potential to change the way online payments are processed and managed for hotel bookings. The size of that market globally – a million transactions a day in a $100 billion industry. The total savings if the model worked could run into billions of dollars.
Another exciting impact of blockchain is on loyalty. “Imagine paying for your morning Starbucks with the American Airlines miles you earned from last night’s flight. Or paying for your Panera bagel with your Starwood points. Or how about a free Uber ride with your dinner tonight?
Loyyal has developed a universal loyalty and rewards platform, built with blockchain and smart contract technology
In the U.K., Curve has combined a payment card and loyalty card combined into one digital wallet. Curve Rewards are different from other loyalty schemes in that consumers can earn Curve Rewards with any card they select via the Curve app.
The most well-known product of blockchain technology to date, bitcoin, has had mixed success. However, adoption of blockchain technology more widely including by a consortium of nine of the world’s biggest banks including Barclays and Goldman Sachs has made it more mainstream.
It is very early days yet for blockchain technology applications in travel and hotels and for that matter in other industries. However, the fact that leading global banks are investing time and effort into developing solutions using blockchain technology is promising.
While the saving implications in terms of booking transaction costs are tremendous, I am equally excited at the possibility of a robust loyalty programme – one that allows easy exchange and use of rewards based on context and location rather than one that is unusable.
This is an extract from 8 hotel online booking trends to watch in 2017 and why!, published on the White Sky Hospitality blog. You will find a more detailed analysis explaining what is driving these changes, emerging customer expectations in the area, more businesses applying these trends and trend potential and takeaway here.