Consolidation in the global hotel sector will continue: In a fairly comprehensive dispatch from Hotelbeds, Sam Turner, the company’s global director of sales and sourcing, discussed the top issues that the tour and travel industry and, in particular, the accommodations sector dealt with in 2018, and what we can expect in 2019 and, in some cases, beyond. Following are the key points made by Turner.
—The intermediary market for hotel sales strengthened in 2018 and the trend will continue. This has been yet another year where growth in the intermediary market for hotel sales has outstripped the growth in the direct channel for the hotels. This is in part because the three largest OTAs globally–Expedia, Booking.com and Ctrip are growing at double the rate of the direct channel
—The trend for intermediaries growing their share of hotel sales versus the direct channel will continue into 2019 and beyond. It shows that consumers are generally more comfortable–for a range of reasons– with buying from intermediaries and on balance favor that over going to a hotel dot com.
—Consolidation has been a key part of the accommodation sector over the last twelve months and will continue in 2019. Both investors and owners have recognized that the sector is just way too fragmented. How many other industries can you name where the top 10 brands generate less than a quarter of revenues?
—This explains not just the mega deals of recent years, but also the medium sized chain deals of this year such as Minor Group acquiring NH and Accor acquiring Mövenpick– as well as the constant acquisition of smaller brands and start-ups by Accor and other major chains.
— “The bedbank sector too remains highly fragmented and this explains the rationale behind our acquisition of both Tourico Holidays and GTA last year
Other points of note:
- Last year everyone was still assuming that the alternative accommodation sector would just keep growing exponentially. But this year has seen a massive slowdown in growth and we expect that to continue.
- The Chinese outbound market remains largely untapped.
- Strong increase in hotel distributors offering re-seller content is unsustainable and bad for consumers
- Over the last few years we’ve seen a trend for airlines approaching us to start selling hotel accommodations on their website. In 2018 this has increased, but we predict that in 2019 it really will begin to snowball.
- Service will slowly become the key differentiator for hotels, not price – helped by technological innovation
- Trend for greater price transparency driven by metasearch is leading to a technological arms race