Accor is aiming to drive more bookings direct, rather than through online travel agents (OTAs), with a new digital development strategy.
Late last year the hotel group unveiled plans to invest EUR225 million (US$258m) in its digital technology, and a large part of this will be directed towards engaging with guests directly via mobile channels.
Speaking in Bangkok this week, Vivek Badrinath, Accor’s deputy CEO, said that the company – and the industry as a whole – needs to rise to the challenges set by indirect online booking channels.
“[The hotel industry] is highly intensive in technology… but has been largely passive in this area,” said Badrinath. “New players have appeared over the years – online travel agents, comparison websites, meta search companies and also companies like AirBnB – and in all these cases the hotel companies have not been active in this transformation. We need to become actors of this digital growth.”
When asked by Travel Daily how Accor planned to compete with the might of the OTAs, Badrinath conceded that hotel companies “will never be able to compete on breadth of stock”, but added that Accor was focused on driving more business from its loyal customers.
“What we’re really trying to do is make sure [loyal customers] think of us first. And that works – it’s not just a pipe dream. Our loyal customers largely book direct because they would rather benefit from the advantages that come with being a loyal customer,” he said.
“It’s more important to us that our loyal customers have that reflex [to book direct]. The OTAs are bringing us the first-timers, and it’s our job to make sure that those first-timers get to like our brand and… become loyal customers.”
Badrinath added that while Accor appreciates the business of OTAs, what it is trying to avoid is loyal customers booking through indirect channels, which means the company has to “pay pretty high commission to acquire a customer who already knows you”.
“It’s that balance we’re trying to achieve, rather than [working in] opposition with the OTAs,” he added.
And this is one of the KPIs of Accor’s multi-million euro digital strategy – to covert more indirect booking to direct. Badrinath noted that at present, about 18% of its bookings come through direct online channels – approximately the same as indirect. But he sees strong potential to increase the percentage of direct business.
“Today the direct channel is slightly above the indirect. On the web we’re pretty much balanced, but we’d like to move at least 10 points worth of volume and we believe this is very much feasible. There is the potential to take that number up,” he asserted.
“Online travel agencies have gained huge power because they have bought a lot from Google, a lot of key words, and they have invested in building a large catalogue, and they continue to spend a significant part of their revenue on key words,” the deputy CEO said. “They are very dynamic and are growing very fast. And to a certain extent they are an expensive channel so understanding and balancing what you have from an OTA to deliver on your own is a key challenge for our industry.”