Do hotels really need to be flagged under a big brand if online travel agencies are most effective at selling rooms? Hotelbeds' Joan Vila thinks hotel chains may be forced to wind down some brands that aren't succeeding in the marketplace.
Most of the attention in online booking goes to the trials and tribulations of huge global hotel chains as they move to battle each other and online booking sites.
But according to Hotelbeds executive chairman Joan Vila, the movement of hospitality companies into adjacent verticals shows that consolidation and competition have slowed down growth in the hotel sector.
Speaking at Skift Forum Europe in Berlin, Vila said that wholesalers have increasing relevance in a space where the long tail of hotels want to sell their products online without paying a brand for access to their marketing and distribution networks.
As growth has slowed, established hospitality brands are turning to new business areas.
“We’ve experienced many years with tremendous growth,” said Vila. “But if you see the latest [financial reports from travel companies], the growth is shrinking. All the shareholders and the companies are used to a very high growth rate, this is what they expect. This is why the companies are going like crazy into new verticals. Who would think that Airbnb would move into hotels, or the hotels into private accommodation, or the hotels into experiences, or airlines pushing alternative accommodations? Everybody wants to sell everything because this is a source of additional growth.”
Hotelbeds has been in the news recently after being sold off by TUI to a private equity group and later selling its destination services division back to TUI for $136 million.
In the wider hospitality marketplace, Vila sees a race to the bottom on price that devalues prestige hotel brands for hotel owners and operators. Since price and convenience are the most important factors for consumers, online travel agencies may have an edge going forward.
“The loyalty programs are about discounts, it’s about price advantage, and the shift to mobile has given the OTAs a bigger advantage because for the customers it is a more interesting experience than going to a hotel brand,” said Vila. “We will see a battle because they compete for the final customer. The [hotel franchisees] don’t really need a hotel brand. The top ten groups only generate 30 percent of the revenue [of the hotel industry].”
You can watch the entire interview above, or consider reading more coverage of Skift Forum Europe.
At Skift Forum Europe in Berlin, Europe’s travel leaders gathered for a day of inspiration, information, and conversation.
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Photo credit: Hotelbeds executive chairman Joan Vila at Skift Forum Europe 2018. Skift