A new report from D-Edge Hospitality Solutions illuminates some clear trends in Europe and Asia.
The report, Hotel distribution and the pandemic: the travel chessboard, is based on data through May 2021 from the company’s 3,442 clients in Europe and 438 in Asia - independent hotels, regional chains and some small groups that use its channel manager and booking engine solutions.
The analysis finds that while online travel agencies remain the dominant source of online revenue for these hotels, in the last five years the share of bookings coming through OTAs is down 11 percentage points in Europe and 14 points in Asia (not including mainland China).
And while OTA bookings are trending downward, hotel website direct bookings have been increasing in recent years in both Europe and Asia – and have surged since the start of the pandemic.
In Europe, direct bookings had hovered around 20% of revenue from 2017 through 2019 but in 2020 that figure jumped to 30% and 32% for the first five months of 2021. In Asia the gain is more pronounced – from about 25% in 2017 to 2019 to 37% in 2020 and 41% in the first five months of 2021.
A deeper look
But the aggregate data only tells part of the story.
According to data from D-Edge clients, the jump in direct bookings has been primarily at the expense of Expedia Group, which dropped from 19% market share in Europe in 2019 to 10% in 2020 and 7% for the start of 2021.
And in Asia, Expedia Group went from 16% in 2019 to 8% in 2020 and 6% in the start of 2021.
D-Edge chief digital service officer Jean-Louis Boss says Expedia’s drop can be attributed to restrictions in cross-border travel.
“During the pandemic the need for packages – flights and hotels, a key area for Expedia – are totally decreased. And when people need a hotel without a flight, they probably go on Booking.com or directly on the hotel website,” he says. Booking.com or directly on the hotel website,” he says.
“I’m sure Expedia will have a recovery. It’s not a normal situation, so probably it will come back.”
When asked how it explains the sharp drop in share of bookings for D-Edge clients coming through Expedia Group brands, Orla Lee, vice president market management for Expedia Group, says: “The entire travel industry suffered as a result of COVID-19. While we cannot control how and when travel recovers, we know it will come back.
"For our part, we continue to invest in bolstering our technology platform and marketing to drive demand. With a long recovery period, it is important to continuously support travelers as well as maintaining brand trust and credibility when travel picks up. We are focused on powering our partners and helping drive more value for their business to attract a range of travelers by creating personalized and frictionless experiences that meet their emerging needs.”
And regarding the jump in direct bookings for D-Edge clients, Lee says: “We understand hotels wanting to drive direct business, though we have seen no material impact on our business in Q1 2021. We believe partners should employ a diverse distribution strategy that includes OTAs and direct bookings to take advantage of our vast traveler base.
"Pre-COVID research shows that OTA travelers bring greater or equal value to hoteliers compared to direct bookers, spending more on property and staying longer. OTA travelers are also active in the community, generating more revenue for local economies.”
Booking Holdings brands have also seen a drop in market share in the last five years in Europe and Asia, but since the start of the pandemic they have remained strong in Europe, accounting for 47% of hotel booking revenue in 2020 and the first five months of 2021. Booking Holdings did not respond to a request for comment.
Another channel to watch in Europe: Airbnb. While the company’s overall market share for hotel distribution is small, it has been steadily growing, says Boss.
“Today we have more than 300 hotels connected on Airbnb, and we have seen a huge increase of the market share of Airbnb. Absolute value is low – it’s maybe only 2% market share – but it’s coming from nothing a year ago so that’s one of the best improvements we’ve seen,” he says.
“It’s probably the beginning of something that will be important into the next years.”
Domestic demand is also fueling traffic for small local OTAs in Europe, such as Szalla.hu in Hungary and Hotel.cz in the Czech Republic. And in Asia, Traveloka has grown from 8% market share in 2018 and 2019 to 13% in 2020 and 16% from January to May of 2021.
Direct strategies
An important message for hoteliers, says Boss, is to engender loyalty from these travelers who have booked direct in the last year, by providing a positive, memorable experience during their stay and by using data to build that relationship with future relevant offers.
He also advises hoteliers to make sure their properties’ websites are performing well – converting visitors to bookers – and that they are using pricing strategies that make direct bookings appealing to consumers. The user experience on mobile is also more important than ever, as D-Edge reports an increase of 30- to 40% in direct bookings made on mobile devices since the start of the pandemic.
And Boss says the growth in the direct channel also affirms the value of Google.
“Google is the master of the world for digital distribution. When hotels get 30- or 40% of their distribution directly on their website, in a way it’s thanks to Google,” he says.
“Three or four years ago we had some key players like Tripadvisor, Trivago, Kayak and these kind of guys, and today unfortunately maybe we have Google and Google and Google. All the others have decreased drastically their market share.
“Google has understood better than their competitors that it’s the interest of the user to find the hotel website easily. And the strategy of google has always been to facilitate the user experience.”
By Mitra Sorrells
