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Have the Major Hotel Brands Lost Their Main Competitive Advantage over the OTAs?
By Max Starkov
Friday, 5th January 2024
 

SKIFT recently reported that the membership in the loyalty programs of the major hotel chains is increasing and now Marriott already boasts 192 million members, Hilton - 173 million, Wyndham-105 million, etc.

IHG has over 120 million and Accor - over 90 million members of their loyalty programs.

This is great news for the major hotel chains, but there is another side of the coin: the OTAs are not asleep at the wheel.

While the hospitality industry was struggling to survive during the pandemic and experiencing layoffs and 50% reduction in technology and marketing spend, Expedia and Booking were hard at work to build and expand their loyalty programs.

The results?

Both Expedia’s One Key and Booking’s Genius loyalty programs boast cutting-edge loyalty tech platforms, 185 plus million loyalty members each, 360,000 participating hotels providing both programs with special membership rates.

Ex. Expedia Group’s new rewards program, One Key, launched last year, allows members to earn and use rewards on bookings through all of the company’s brands.

Why is this important?

These loyalty programs will help the OTAs increase repeat business and market share at the expense of the direct channel, and lower their performance marketing spend, currently exceeding $12 billion/year!

A loyalty program is not just a “point- or discount-dispensing machine”, but a database of first-party membership data, which is priceless in this era of search engines and browsers (Google’s Chrome, Apple’s Safari and Firefox) discontinuing their support of third-party cookies and privacy protection moves.

Loyalty member preferences, lifetime value (LTV), past purchasing and browsing behavior are now being actively used by the OTAs to engage, convert and retain loyalty members and to improve brand marketing, CRM, personalization, customer service, upsells and in-destination experiences.

I believe these newly invigorated and expanded OTA loyalty programs have negated or at least diminished the major hotel chains’ main competitive advantage: their humongous loyalty programs.

And the OTA loyalty programs and their hundreds of millions of members are a direct threat to all independent hotels worldwide: less than 8% of independents have adopted CRM technology and have any kind of a reward or guest appreciation program in place

Max Starkov
Hospitality & Online Travel Tech Consultant & Strategist

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