-Recent advances in artificial intelligence’s (AI) handling of digital advertising have increased the possibilities for hotels to grow direct bookings and compete with online travel agencies, a new study found.
Findings from the study, which sought to calculate the real costs of direct distribution, should incentivize independent and smaller hotel groups to pursue more direct bookings, said Jean-Dominique Brivet, chief digital agency officer at D-Edge.
“The first step is understanding that doing everything with OTAs and not working on that direct distribution is not a good thing in the long term,” he said in an interview with PhocusWire.
The report, based on feedback from 84 hotel chains representing 17,406 properties with more than 2 million rooms, concluded that the trend could boost business — but only if hotels continue to push forward on increasing digitalization.
Siteminder’s annual report on booking trends, also released in January, found that direct bookings maintained the momentum built during the pandemic.
Giving AI full control increased bookings — but increased costs even more. It was better to have no restrictions on the AI algorithm while manually bidding on the keywords that drove revenue. And the best alternative combined as many channels as possible. The study concluded the cost of ad-driven bookings is decreasing, in part due to decreasing costs per click, a global increase in the average rate for hotel rooms and the effect of Google’s free booking links. The average cost for direct distribution was pegged at 3.3% of gross bookings, far lower than average commission costs on OTAs.
Using online travel agencies like Booking.com and Expedia will remain an important source of revenue for hotels, some of which use OTAs for three-quarters or more of their revenue, said Jean-Louis Boss, a former executive with D-Edge, now a consultant who oversaw the research for the study.
