Not long ago, the two segments within the hospitality industry – OTAs and hotels – maintained a friendly relationship. Their cooperation benefited everyone, including them; hotels gave online travel agencies their long-standing business to market to, and OTAs returned the favour by providing hotels the visibility that would improve their bookings.

That relationship has slowly soured, as OTAs have gradually widened their market share and raised commissions, undercutting hotel companies’ bottom lines. In a recent case involving Westgate Resorts and Swiss website Amoma.com, the former has accused the latter of selling Westgate rooms for unauthorized wholesale rates, taking the matter to federal court. According to Westgate, Amoma was securing its wholesale rates from travel site operators and then offering these low rates directly to consumers with only small markups, which was undermining Westgate’s established business model.

This is definitely not the first case to have put the spotlight on the frosty relationship between hotels and OTAs. Last year, Hyatt and Expedia were at loggerheads over crafting a new agreement on commissions and other issues. Like many of its peers, Hyatt also wanted to negotiate lower commission rates from Expedia.

Online travel agencies came into the picture in the 1980s and gained more momentum in the next decade. Today, reports predict that the Priceline group (which includes Booking.com) and Expedia alone will account for 94% of all online bookings by 2020. While so far, hotels have been happy to take increased visibility, but on the flip side it has meant less money for them, with a sizeable chunk of their revenue stream now going to OTAs. As hotel companies are growing their technology capabilities, major players are questioning the need for OTAs when they now have the capacity to get customers directly. Hotels are trying to better capture the guest through improved user experience, user-driven design, and an emphasis on making booking as easy as possible. For instance, hospitality giant Hilton introduced a global advertising campaign ‘Stop Clicking Around’, complete with broadcast and digital spots that encouraged consumers to book directly through Hilton rather than waste time on third-party sites.

Commenting on these efforts by hotels, Sanjiv Agarwal, Chairman & CEO, Fairfest Media, said, “Rate parity and MFN led to imperfections in the market. Hotels have rightly fought against these practices. The whole point of the hotels seemed to be that they should be able to compete in a free market by showing prices lower than the big OTAs. Now by the same logic, a hotel should not mind an OTA offering lower price to consumers. Hotels would also do well to keep in mind ‘direct’ business does not come free.”

The hotel lobby has long been asserting that OTAs are practising a sort of monopoly. This, however, is not possible, because travellers have many options, online and off, besides Expedia and Priceline. Besides, OTAs don’t set the retail prices; it is the hotels that set pricing, based on multiple factors. OTAs only set commission and contracting terms.

The reason that the skew towards OTAs remains is due to the fact that travellers associate cheaper costs with them. Hotels have limited control of their operational costs, have less inventory than OTAs and invest significantly less in marketing initiatives, which leads to consumers being exposed more to OTAs.

So, how will all of this ultimately play out? Considering all the efforts that hotels are putting towards increasing direct booking, it will grow. That, however, will not prove detrimental to OTAs, as independent and boutique properties will continue to benefit from their offerings. The question that will ultimately beg an answer is how the short-term attempts by hotels to divert business from OTAs will convert into bringing long-term, brand loyalists on board.

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The Priceline Group announced that it has signed a definitive agreement to acquire the Momondo Group in a cash transaction. The Priceline Group will acquire all outstanding shares of the company for USD 550 million. The deal is expected to close by the end of this year subject to regulatory approvals.

The Momondo group operates momondo and Cheapflights, both travel metasearch platforms popular in Europe. Cheapflights started off as a travel deals platform but switched to a metasearch model in 2015. Both the brands will roll under Priceline Group’s metasearch brand KAYAK and would help the brand in strengthening presence across European countries while keeping potential competition at bay. KAYAK has built a strong presence in some countries like France and Germany but will get help from the acquisition in markets like UK.

“Metasearch is appealing to consumers and we’re keen to expand our global footprint,” said Glenn Fogel, CEO of The Priceline Group. “Momondo and Cheapflights will be nice additions to our meta portfolio under KAYAK.”

“Momondo and Cheapflights have built great products serving loyal users across Europe,” said Steve Hafner, CEO, KAYAK. “We’re looking forward to learning from them and sharing best practices as our brands expand globally.”

“The Priceline Group has a proven track record of operating successful, customer-centric travel brands all over the world,” said Hugo Burge, CEO of Momondo Group. “We couldn’t be more excited to join such an esteemed group of loved brands and join forces with KAYAK to bring the best in meta search to our growing customer bases worldwide.”

The development would put KAYAK in a stronger position against UK based rival Skyscanner which was acquired by Ctrip recently. It is worth mentioning that Priceline group has close to 9 percent stake in Ctrip.

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ITB Asia 2016 will open its doors to usher in its biggest and best show to date, featuring industry movers and shakers including Google and Priceline Group who will helm the show’s opening keynote. For the first time ever, the keynote sessions will stretch across all three days, exploring pertinent topics such as the impact of mobile and digital disruption in the travel industry. 

In its ninth year, ‘Asia’s Leading Travel Trade Show’ will take place in Singapore from 19 – 21 October 2016 at the Sands Expo and Convention Centre, Marina Bay Sands.

“We have seen strong attendance and received great feedback for our keynote sessions over the last few years. With this in mind, we have extended this year’s programme to cover all three days of the show, providing a platform for like-minded players to learn, network and discuss trends which are key in shaping the future of the travel industry. We are very honoured to have speakers of such high calibre grace our show and are confident that attendees will be able to leave with useful insights,” said Katrina Leung, Executive Director of Messe Berlin (Singapore), the organiser of ITB Asia.

Day 1

In a world where start-ups are seen as digital disruptors, industry heavyweights including Priceline Group’s Senior Vice President, Adrian Currie and Google’s Asia Pacific Head of Hotel and Airline Suppliers, Jenn Villalobos, will take centre stage to share more about the impact of digital disruption and trends driving customer experience in travel. Moderated by renowned BBC World News presenter Sharanjit Leyl, Villalobos will make a case for how hospitality incumbents can remain competitive, while Currie will touch on key trends shaping travellers’ digital experience and how travel organisations can adapt to leverage these trends.

Day 2

With OTA sales in the Asia Pacific region skyrocketing, we will see industry heavyweights like Expedia group, Agoda, Zuji and Ctrip provide in-depth insights into this burgeoning sector. ITB Asia’s first strategic partnership with MasterCard will bring together a thought leadership panel discussion, moderated by Alex Thanopoulos, Vice President MasterCard Enterprise Partnerships Asia Pacific. This panel will welcome the opinions of Greg Schulze, Senior Vice President, Commercial Strategy and Services, Expedia group, Timothy Hughes, Vice President Business Development from Agoda, Chua Hui Wan, CEO, Zuji Singapore and Jenny Wu, Chief Strategy Officer, Ctrip.com.

Day 3

The last keynote session will shine a spotlight on China, a high growth market that saw $11 billion spent in bookings through online travel agencies in 2015, a 70 percent increase from 2014. Shanghai Jin Jiang International E-Commerce Co., Ltd’s Vice President Joseph Xia, Yiqifei Travel’s Founder & CEO, Morton Huang, Dida Travel Technology’s CEO Rikin Wu and Tuniu Corporation’s CEO & Co-founder Dunde Yu will provide their perspectives into current Chinese market conditions and how to leverage opportunities in this growing market.

Last year, ITB Asia attracted close to 760 exhibitors from 73 countries, as well as 880 buyers and more than 10,300 attendees over three days.

You can find more details or sign up for ITB Asia here.

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