Hotel Tech- Initial signs of turbulence in platform-hotel relations but fundamentally well-placed relationship
Published on: Feb 2019
The online travel aggregator space has seen strong growth in the last couple of years, as visible in strong partner and room inventory growth coupled with rapid growth in total industry bookings. Yet, once the high growth and honeymoon period ended, we were bound to see a transition into the initial turbulence stage. Multiple indicators show that this is indeed the case- hotel partners complaining of high discounts, business model shift to revenue share rather than minimum guarantees and platform’s growing focus on inhouse brand creation for quality and margin control. We have seen this story before in other sectors- all these are indicators of a sector shifting into turbulence phase.
However, a more balanced analysis also shows that despite the challenges, many hotel partners find significant positives in working with the hotel chains. For many of the partners, revenue have improved significantly while not eroding margins heavily due to strong tech efficiencies.
This tells us that hotel tech players can accelerate the shift to a ‘Stable Relationship’ (Stage 3) with partners by doing the below-
- Focus on continued cooperation and strong support to the high quality and highly satisfied hotel partners
- Let the lower value/highly dissatisfied partners organically leave the ecosystem, thus bringing up the overall quality of the partner base
- Ensure a balanced and steady rather than highly aggressive growth of inhouse brand to avoid direct conflicts with hotel partners