HOTELMARKETING.COM

Online agencies represent shrinking percentage of hotel revenue

June 06, 2005 |

In Hilton's case, bookings through Hilton.com sites are up 30% year over year and now make up 14% of all bookings, whereas the growth of third-party sites is in the single digits and represents less than 2% of Hilton's bookings.

Online travel agencies are capturing an ever-smaller piece of hotel-industry revenue. Hotel chains for the past 18 months have tried to seize greater control over the online sales of their rooms by beefing up the capabilities of their Web sites and guaranteeing that those sites offer the lowest room rates.

The industry has made substantial progress. In Hilton's case, bookings through Hilton.com sites are up 30% year over year and now make up 14% of all bookings, whereas the growth of third-party sites is in the single digits and represents less than 2% of Hilton's bookings, Subramanian says.

Whether cutting off noncompliant distribution channels results in a revenue hit to a hotelier is unclear, says Norm Rose, principal of Travel Tech Consulting and an analyst for travel research firm PhocusWright. It's possible that the online agencies are stealing revenue that hoteliers would otherwise get through other channels, but it's likely that some portion of that revenue will be lost if an online agency is cut off from the distribution chain.

In any case, because online agencies represent such a shrinking percentage of revenue, it appears to be a risk hotels are willing to take. "This is all about control of business relationships and trying to ensure that the hotelier can keep price integrity at their site while realizing that there's still some value to third-party distribution," Rose says.

Get the full story at InformationWeek

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