The Current Reality

maingreenwordsworth

Hoteliers have been losing control to Online Travel Agents for their direct bookings because of very average websites, no focus on mobile, legacy booking engines and lack of resources. According to the latest Phocuswright report published in November 2013, for APAC, in 2012, OTAs command 65% of the online hotel market share booking USD 14.7 Billion dollars worth of Online Gross Hotel Bookings while all supplier websites booked only USD 8.1Billion.

One of the main reasons for the success of the OTAs globally is the single minded focus on all aspects of hotel bookings funnel, where every pixel is optimised for better conversion. This coupled with access to huge resources on digital marketing and mastering sources of traffic has made for a formidable combination, definitely that a small to medium size hotel cannot even fathom, let alone compete with.

Online travel agencies build a bulk of their business on independent hotels. Larger, organised chains are also part of their agenda but are tougher and smarter to deal with, leading to lower take rates and more water tight contracts that don’t allow them to bid on brand keywords. Considering that they are only intermediaries, OTAs have created tremendous value for themselves in comparision to asset heavy hotel companies. The most successful of them all, Priceline, along with their international brands- Booking.com, Agoda.com and now metasearch Kayak have a market cap of USD 58.99 Billion as of 20th November 2013.
The combined market cap of leading international hotel companies- Accor, IHG, Marriott and Starwood is USD 48.10 Billion

In India the leading hotel company is Taj Hotel’s (India Hotels Company) with a market cap is USD 733 million. MakeMyTrip’s (NASDAQ: MMYT) market cap is over USD 1 Billion as of today (1st Feb 2013)

Here is an interesting link that lists the top 15 publicly traded travel companies. http://skift.com/2013/07/08/the-real-15-largest-travel-companies-of-2013/

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