Guest Post: A quest for the guest and pivotal moment for hotels

Frank Reeves, chief evangelist of hotel technology specialist SHR Group, explains why the battle for the guest profile has ramped up

Hotels and OTAs simply can’t live without each other and it’s a relationship that’s been decades in the making.

However, last year brought an attempt by one of these camps to upend the status quo and begin a land grab that threatens to alter this association forever. 

How do we know this? We dug through data on millions of guest nights for 2023 and came away with the clearest picture yet that OTAs are ramping up efforts to own an even greater slice of reservations.

So dramatic was the change that its impact has been felt across the entire length of the lead gen life cycle from ads to reservations. Hoteliers need to be on top of this trend because those that don’t respond risk becoming so dependent on OTAs that no amount of marketing spend will roll it back. 

In our Hotel Industry Trends Report 2024, we analysed data from our channels which represents over 50 million room nights, across more than 2,000 international hotels that are currently using one or multiple Allora products and services. We uncovered the signals for this sudden change of direction. 

In short, OTAs have suddenly begun investing much more heavily in guest acquisition, and their business model means they’re uniquely positioned to do this. While OTAs are fantastic marketing tools, which provide hotels with exposure they couldn’t achieve on their own, the money handed to them by hotels is reinvested in ways that mean those same hotels are less likely to attract direct bookings in future. This incentive for OTAs to throw money at lead gen has doubled the cost of paid advertisements for hoteliers, with Google Ads costs rising by 62.5% and metasearch climbing 128.6% last year. 

The result is that the direct share of reservations dropped by 1 percentage point to 38% in 2023. That doesn’t look like a big shift on paper, until you consider that it’s the equivalent of around 7.8 million global reservations. The change was even more pronounced when we looked at the direct share of room nights, which has fallen from 47% to 44% — a shift worth around 65.6 million nights globally. 

So it’s clear the typical rhythm these two reciprocal players had fallen into is being disrupted by attempts to claim the guest journey. The primary goal is not necessarily greater market share, although that will be the result. Both sides know the real battle is over ownership of the guest profile. Whoever owns that, claims higher margins and more repeat bookings — and it’s no accident that this is happening during a time of great innovation. 

OTAs are seizing first mover advantage because they can see how AI will unlock personalisation and improve their loyalty schemes, making it easier for them to own the guest profile. They’ll threaten to offer the same personalised service that hoteliers themselves always prided themselves on and thereby redefine their role in the hospitality ecosystem. So what should hoteliers be doing about it? 

The answer lies in a combination of innovation, investment, and a deep focus on guest experience. The crux of this battle lies in the ability to 'own' the guest — not just their reservations but their entire journey and loyalty. It’s now less about on-the-books data for the coming season and booking value, and more about the lifetime value of each person.

First, embracing technology is non-negotiable. From personalised booking engines to AI-driven recommendations, content and dynamic pricing, technology offers a way to enhance the guest experience. Hoteliers can show they know, understand, and can anticipate the needs of their customers. 

This is why, secondly, hotel loyalty programmes need a revamp, not least because this is another area seeing huge investment by the OTAs, who recognise their importance. It's not enough to offer points for bookings. Today’s loyalty programmes must offer real value that resonates with guests on a personal level. This could mean exclusive experiences, off-menu services and extras, or perks that genuinely enhance their stay. The goal is to make guests feel valued and understood, creating an emotional connection that OTAs cannot replicate because the most powerful memories will always be made on-property. That’s how hoteliers will turn the tide — by using guest-centric strategies that foster direct engagement and eclipse the experience they get on third-party booking sites.