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Direct Online Hotel Distribution: Review And Prospects. Part 1

According to forecasts for 2019, hotels in France are expected to generate €8.29 billion in sales through various online distribution channels. Direct and indirect sales have increased by 57% over the last ten years. Over the course of the next four years, these sales should even approach €10 billion (€9.84 billion). Online distribution channels have become an essential instrument for hotels wishing to maximize their sales. Part One: Marketing And Loyalty Program To The Rescue Of Direct Booking.

Hilton relies on a movie star to attract new customers

In September 2018, the American hotelier launched an advertising campaign under the slogan “Expect Better. Expect Hilton.”, which featured movie star Anna Kendrick. The idea was to address customers of generations Y and Z (18-34 years-old), with whom the celebrity is known. The ad encouraged them to use Hilton's booking platform and thus benefit from the Hilton Honors loyalty program. The strategy was ultimately to compete with digital platforms by strengthening direct booking.

One year after the first campaign, Hilton renewed this communication operation in September 2019. With the same actress, Hilton released a series of new videos with much of the same humorous and offbeat tone. The objective was to highlight all the advantages that the Hilton Honors booking and loyalty program provide, such as the loyalty points (redeemable for nights after collecting a  certain amount of them), room choice, free Wi-Fi, opening the hotel room via a mobile phone, or the assurance of having the best rates in the Hilton group (with a commitment to reducing the direct selling price by 25% compared to the price posted elsewhere than at Hilton).

With regards to this last point, replicas of online platforms sometimes sell hotel rooms at the same rates as the direct booking originals. Finally, Hilton wanted to take this opportunity to remind customers that all these advantages are valid in all the hotels of the group's 17 brands. Hilton Kendrick

The campaign was a great success according to the group's official results: a 10% increase in the number of potential customers (all age groups combined) who book directly and who usually book indirectly, an increase in the number of new customers who stay at Hilton for the first time, and a 20% increase of the number of Hilton Honors members compared to 2018 (the group now has 95 million members in the program).

The 18-34 age group has been particularly affected, with an according double-digit increase in direct bookings. The Hilton Honors app was a key element in this success, as it serves as an exchange hub that allows clients to both communicate the benefits of their stay and to further refine knowledge about these clients. Indeed, the main strength rested on an improved communication with the users and customers of the loyalty program, an advantage that OTAs simply do not have.

Kellyn Smith Kenny, Marketing Director at Hilton, is moving in this direction:

We want this campaign to continue to give consumers a voice. All this is part of Hilton's ongoing effort to be the traveler's champion, and by developing more direct relationships with our customers, we are able to provide more transparent, personalized and stress-free travel, from the planning stage to the end of the trip.

Especially since Hilton's loyalty program applies to all direct distribution channels, namely the main website, the app, the hotel counter and "authorized" travel agents.

Marriott rewards its loyal customers who book directly

Two years earlier, the world's leading hotel group employed a marketing campaign, which, strangely, had a very similar massage to Hilton’s. The slogan was It Pays to Book Direct and displayed the various benefits of booking directly with Marriott, including its former loyalty program, Marriott Rewards (now replaced by Marriott Bonvoy).

As stated in an official release, “loyalty points, mobile registration and check-in, and free Wi-Fi through a diversified portfolio of brands such as The Ritz-Carlton, JW Marriott, EDITION, Marriott Hotels, Autograph Collection, Courtyard by Marriott, Residence Inn by Marriott, and more” were listed among the strengths of this program.

Karin Timpone, Global Marketing Officer at Marriott International, explained that the interest of this communication was first to remind that the group rewarded "loyal members by offering them a rate that is exclusively designed to show them the value that they have for us". But the aim was also to put Marriott back at the center of its pricing strategy, by promoting its competitive advantage over OTAs, as it features more attractive prices than those present on third-party online booking sites. Karin Timpone concluded by reminding us that “you will find the lowest rates in our portfolio when you join Marriott Rewards and book directly”.

The price advantage is concretely expressed by the commitment to refund 25% of the room price within 24 hours of the direct booking, if an OTA displays the same booking rate. Also, by opening access to Marriott's loyalty program, reservations now offer customers the opportunity to enjoy an event and leisure activity to occupy their stay, through “exclusive events and experiences, including the NFL Super Bowl concerts, Universal Music Group concerts and digital music downloads”.

In other words, the hotelier is developing and diversifying his or her product in order to make it more attractive. In a market where competition is no longer based on price, but also on experience, the latter embodies the new contemporary luxury.  As Remy Merckx, Vice President Digital at Radisson Hotel Group, said at the 2019 edition of the Global Lodging Forum 2019: “There is ONE touch point in the customer journey that GAFAs will never have: it's the experience. This is our fundamental difference”.

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