Third-party sales existed before the internet, but it was the rise of Online Travel Agents (OTAs) in the early 2000s - and their ability to provide quick, easy access to online bookers - that rang the bell on a new bout. Now, hotels need to go back to the future in the battle to secure direct bookings and hold on to guest revenue.
Today’s consumers have a digital-first outlook: 52% of guests who book with OTAs also check a hotel’s own website during their booking journey but leave because of a poor user experience. This eats away at room profitability, with USA-based hotels paying $28 billion in commission fees to OTAs in 2019.
OTAs may hold a grip on distribution and selling rates, but the future looks bright for hoteliers thanks to Artificial Intelligence (AI).
AI provides a sophisticated understanding of business and behaviors and massively changes the way hotels do business - improving the guest experience, conversion rates and revenue within an instant. Forget robots; AI knows how to connect with your customers in a meaningful, human way.
NEW ERA OF WEB 3.0
We are in a new era of travel booking - sophisticated ecommerce dominates, and hoteliers need to meet consumer expectations. Buying and consumption have been disrupted by digital-first tech companies, catapulting the advancement of the internet to Web 3.0.
From simple search and book, Web 2.0 gave us OTAs, Metasearch and smartphone apps. Today’s new generation is shaped by on-demand, direct and convenient digital retail.
The pandemic did more than move people online: it made them demand more, shifting consumers' attention from marketplaces and OTAs to direct channels. Across European hotels, direct bookings surged - up to 59.7% (from 54.5%) of hotel bookings vs. 28.7% for OTAs (down from 29.4% in 2019).
Hotels need to embrace technology that responds to their digital guests and delivers a more fulfilling experience or risk OTAs clawing back market share.
Today’s tech is more accessible and affordable. Systems once only attainable to digital-first, cash-rich companies are now accessible to SMEs. AI has gone beyond chatbots and robot waiters. It helps hotels communicate meaningfully with every online visitor in real-time, increasing revenue as a result.
Artificial Intelligence is already readily deployed in Natural Language Processing (NLP) to facilitate voice assistants, or comprehensive decision trees to support chatbots. And yet AI can still be deployed in a smarter way to support conversion at every touchpoint.
Our daily lives are dominated by recognition technology. Spotify and Netflix wrap the entertainment experience around individual tastes and preferences. Amazon customizes online shopping to your buying behaviors.
These companies use AI to identify and react to user signals. AI learns people’s interests and matches products to people for a seamless shopping experience. Customers are adapting: 76% of customers expect a curated retail experience such as those provided by Booking.com or Netflix.
This is well known and understood - so why is there the delay in hotels using this tech?
AI FOR HOTELS
Hotels now have access to technology to keep up with OTAs to provide an elevated retail and booking experience. Move on from pre-programmed information and formulas; AI self-learns. It analyses and interprets customer behaviors.
In an instant, AI platforms recognize each individual’s preferences and intent. AI acts on these signals, responding immediately with curated content relevant to each user.
When reviewing technology priorities, you need to consider the human elements. Does your tech stack help you connect with people? Can your team work smarter?
HOTEL RETAIL MADE EASY WITH SIMPLE AI CODES
Legacy tech can still be relevant. AI solutions are so simple to integrate they can be embedded through just one line of code - in nearly any existing platform. Hospitality no longer needs to build solutions, with existing platforms capable of running thousands of AI models simultaneously, learning and improving the experience in real-time.
Hotels cannot afford to waste money on poor technology and data that can’t be utilized. Hotels can propel themselves into today’s digital trends, giving every guest the experience and product they desire.
Focusing on real-time (rather than historical) behavior, hotels can respond to each digital visitor. Through self-learning data models, customers receive resonating experiences and products, so hotels can ensure their website commands customers’ attention continually.
Improving a guest’s online experience drives ongoing revenue growth, with increases in conversion and booking value. Hotels using AI in their booking engine experience have seen up to 10% increases in monthly revenue and 30 times Return on Investment.
For hoteliers, AI goes beyond optimizing conversion. It increases the average lead time, decreases the time from search to book, and encourages repeat bookings, as well as delivering deeper insights to visitor behaviors and booking patterns. Intuitive AI continuously develops models that learn, adapt and respond to visitors.
THE FUTURE OF AI IS NOW
AI boosts marketing and revenue: loyalty recognition, upselling and offers all improve with real-time technology. Companies are able to shift marketing engagement from manual deployment to intelligent automation. Rather than replacing human workforces, AI frees up staff time to focus on deeper strategic planning and initiatives, and providing face-to-face guest experiences.
Hospitality marketing tech stacks have been made unnecessarily complicated with singular solutions, like pop-ups and banners, fragmenting the retail journey. With AI, there’s no need for manual segmentation, offers and promotions per audience-type, or setting up marketing interventions throughout the web experience. AI frees hotels to think more strategically around brand engagement, rather than short-term tactical efforts.
Hotels are in the prime position to be travel leaders, developing and presenting fully curated experiences with on-demand customized hospitality products. Hoteliers can utilize multiple touchpoints to inspire, inform and retail - presenting the most relevant products, services and offers - whether it’s upselling or introducing ancillary products to elevate a guest’s stay.
AI enables hotels to address the ecommerce imbalance and win the war for direct customers by seamlessly providing a shopping experience that resonates with every customer.
The future of hospitality is already here; it just needs hoteliers to surge forward and reclaim the technology OTAs previously cannibalized.
About the Author
Mike Webster is CEO and founder of Arvoia. Driven to forge a new way of using behavioural data for economic and social good through the ethical and democratic application of powerful technology, Mike is an advocate of hospitality and travel businesses of all sizes having access to purposeful AI.
Arvoia uses the power of AI to return hotels to the forefront of the traveller experience by fuelling behaviour-based retailing. Their solutions facilitate a closer relationship between hoteliers and guests, cementing customer experience at the heart of hotels. Find out more at arvoia.com