Consolidation cooking in distribution space
05 JANUARY 2015 11:14 AM
Sources gave their thoughts on what the distribution and sharing-economy landscapes will look like during the next five years.
REPORT FROM THE U.S.—Consolidation might well befall the online travel agencies, if not outright obsolescence. And the sharing economy is here to stay.
Those are just two of the predictions for the distribution landscape in 2020, offered by industry experts.
“Expedia and Priceline will retain their dominance, and it could be that Expedia outright acquires Travelocity,” Michelle Grant, travel and tourism research manager at Euromonitor International and an HNN columnist, wrote via email.
However, she said the smaller online travel agencies will remain and fight for relevancy. Additionally, all players will look to increase supply beyond hotels, focusing on delivering ideal accommodations to customers.
“I think we’ll see metasearch engines playing a larger role in accommodation bookings. While Google has yet to make significant waves in the distribution space, it could be that in the next five years the company refines its existing products and launches new ones that are ready for a significant marketing push, thus making it a significant player in the distribution space,” Grant added.
“You’re starting to see it. It’s such a lucrative business, these OTAs, that everybody’s trying to jump in and find an angle,” said Bashar Wali, president of Provenance Hotels. “And we all know with the amount of information Google has on us as consumers, and the amount of money there is to be made in the OTA world, it would be shocking that Google doesn’t become a meaningful player in that world.”
And the competition won’t just come from the likes of Google, either.
“OTAs will need to compete with generalist online retailers, such as Amazon and Alibaba, who will increasingly target the online travel category due to it representing a large share of total e-commerce sales,” Angelo Rossini, research analyst with Euromonitor International, wrote via email.
Brian Tkac, senior VP of marketing and sales at Hostmark Hospitality Group, foresees fewer OTAs—as the channel is defined today—in the mix.
“But there will always be third parties that will capture direct market share and take advantage of weak links in the distribution chain, similar to today’s meta aggregators,” he wrote via email.
The sharing economy
Sources said the sharing economy isn’t going anywhere.
“The sharing economy will be more prevalent. We predict sales for private accommodation to be $1.6 billion in 2018 in the United States, up from $622 million in 2013,” Euromonitor’s Grant said.
“Suffice it to say the way shoppers shop is changing every day. In the sharing economy, think about Uber for a minute and how that completely disrupted the whole model,” Wali said. “The traditional way of going on a site and looking at reviews and doing all that stuff, I see that becoming cumbersome for the millennials. It just takes too many steps. And I truly believe we’ll start seeing the Uber way being more common and relevant in our industry.”
And what about hotels being listed on sharing-economy websites?
“Airbnb has stated that it will be curating its supply, removing types of supply, such as hotels, from its listings to ensure that its marketplace meets its community’s expectations. It is unlikely that hotels will be able to leverage Airbnb in the future,” Grant said.
“Will we ever be on the sharing economy? Will hotel rooms become part of Airbnb? I absolutely believe that will be the case. And I absolutely believe that the sharing economy is here to stay,” Wali said.
“It may not be Airbnb … but I think there will be an Airbnb experience for hotels where you are—sort of like the airline model—buying based on demand, buying based on what somebody’s willing to sell a room for and kind of liberating the experience and making it really simple,” he added.