In February, Hilton Worldwide launched its biggest advertising campaign yet, pointed very directly at one main target: online travel agencies (OTAs), like Expedia.com and Booking.com.
Called “Stop Clicking Around” its message to customers was this: There’s no other place on the Web that has the lowest guaranteed room rate than on Hilton websites.
Needless to say, that advertising campaign didn’t sit very well with the CEOs of the online travel agencies, and it only added more kindling to a fiery booking war between hotels and OTAs.
Hilton and its competitor, Marriott International, have recently launched campaigns to persuade more consumers to book direct with them. Both companies want to take back market share and revenue that is going to third-party travel sellers such as OTAs and, in some cases, traditional travel agents.
Yesterday at the World Travel & Tourism Council’s Global Summit in Dallas, however, Hilton Worldwide CEO Christopher Nassetta seemed to temper his company’s official stance on booking direct.
“I think the OTAs, we’ve had a very healthy relationship with them for a long, long time,” Nassetta said. “I think they are good businesses and they can be good partners. I think it’s like anything, you know, on the right terms. We have great partners that we procure all sorts of products and services from. We always want those to be on the right terms.”
Later, Nassetta said, “Of course I would prefer that they [guests] come to us directly and have a direct relationship. It would be silly for me not to think that way. It’s also silly for me to think that I’m going to be able to get everyone directly. The OTAs are a good partner for us to be able to access customers that we might not otherwise be able to access.”
With regard to traditional travel agents, Nassetta said, “There are some customers that have unbelievably loyal relationships with traditional travel agents that give them a level of tender loving care that means something to them. So I want that customer. I love that customer just as much as any other customer and we have a tremendously positive relationship with a lot of the traditional travel agents that are serving customers that want, you know, a certain, a little bit different type of experience in their booking process.”
Regardless of how a customer prefers to book a Hilton property, Nassetta said, he simply wants them to know the “value proposition” of booking direct.
“In the end, while we want customers to understand the value proposition and we are obviously out trying to make sure they are doing that, we ultimately want to sell to sell to customers the way they want to buy,” he said, later adding, “All we’re trying to make sure is that they understand the relative value proposition. If they do, and they want to come through another channel, I love that customer as much as I love any customer.”
On Becoming the Second-Largest Chain
Nassetta also spoke about consolidation and the need for scale in the hospitality industry during a video interview for WTTC broadcast on Periscope as part of the summit. For Nassetta, scale isn’t just about size or numbers; it’s about the network as a whole, and the benefits that come with that.
“When I think of scale, and we have a lot of it — today we’re the largest in the world. I guess we’ll be number two when they [Marriott and Starwood] complete the [merger] transaction,” he said. “I think scale matters for a different reason. I think about scale, for us, as creating a network effect, which means we can serve any customer for any need they have, anywhere in the world they want to be. When we have the ability to do that we drive unbelievable loyalty.
“And that unbelievable loyalty shows up in very high levels of market share, and those very high levels of market share drive more growth. Because owners who are investing all of that capital for our growth all around the world are investing that capital to get a return. They obviously want the highest market share brands to work with because they drive the highest revenues and ultimately the highest profitability.”
Will Hilton be the next big hotel company to make a big acquisition to compete with the bigness of a combined Starwood and Marriott? Probably not anytime soon, since the company is still in the process of spinning off its hotel properties and timeshare business to boost shareholder value and pursue an asset-light strategy.
Nassetta said, “From our point of view, we certainly believe we have enough scale to do the things that we need to with all our partners, whether it’s the OTAs or anybody else we partner with to provide our products and services. We’re very focused on the network effect: serving more customers in more places for whatever travel need they have.”