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Google & TripAdvisor - Friends or Foes? Newsletter #7

Google & TripAdvisor - Friends or Foes? Newsletter #7

Google & TripAdvisor - Friends or Foes? Newsletter #7


In Newsletter #7: The Google/TripAdvisor Nightmare; Can hotel rooms keep pace with

consumers?; Massive demand for on-demand apps

The Good, The Bad and The Shopper
Hospitality Net | Why “Book on Google” and “Book on TripAdvisor” Will Be a Nightmare for the Hospitality Industry
Hospitality Net | Google Just Upended Hotel Distribution
Hospitality Net | Why Max Starkov’s Google/Tripadvisor Nightmare Is A Blessing In Disguise For Hoteliers Willing To Embrace A New Paradigm

Why it matters: Google and TripAdvisor’s recent introduction of hotel booking tools is dividing early opinion as to how these moves will affect hotels. Let’s look at both arguments:

Against Hotels - Max Starkov says this just resembles two new OTAs in the market as neither program is a direct booking tool (very true, they are charging the customer and sending the booking details to the hotel) and, as such, it will increase hotels dependency on the OTAs (yes, if both booking channels grow they will take market share from all avenues, other OTAs and brand.com alike) and thus worsen ROIs and increase sales costs (hold onto this thought).

For Hotels - John Kearney says this move has increased competition and will lower commissions (to 15% as of now on both platforms - lower than the average 15%-25% commission on a booking today for independent hotels) and metasearch is not a realistic option for most hotels anyway as they are David vs Goliath in the ad space and David does not win this one (fair argument for most independents) .

The third argument, and our favorite, is the Pro Consumer/Guest approach from Greg Abbott. From a standpoint of driving traffic direct to brand.com, this is indeed not a great move for hotels. But that is not what this is about. Google is providing information for the shopper and it is “ignorant to not think this is a seismic shift in the way people will shop.” Free and open markets are the foundation of a vibrant economy and the root of antitrust legislation. Any move to make booking more competitive has to result in hotels improving their product. With Google moving to a commission model, hotels can pick their exact cost of booking anyway… so the shopper (guest) may be the real winner here and the industry, in turn, improves as a whole. This industry, as we have found, is not immune to outside forces (the sharing economy, the on-demand disruptors) and this Google/TripAdvisor move may be just the tonic.

Consumers' expectations are changing faster than our rooms can keep up
New York Times | Hotel Owners Looking to Stay Current Put Money in Properties
The Wall Street Journal | Secrets to Creating a Better Hotel Room

Why it matters: “How quickly is it that the world owes us something we didn’t know existed only five seconds ago?”

Yes, that’s a quote from Newsletter #4, but it pertains here too. Consumer tastes are indeed changing faster than ever.

In an effort to stay current, hotel rooms and hotel infrastructure must adapt just as technology must innovate. “Almost no brand requirement...has been untouched…,” says NYU’s Bjorn Hanson. And these brand’s don’t decide their requirements lightly. After a tough few years, occupancy is hitting record levels and concurrently, this seems to be not just a year of new hotel investment, but also of resurgence in existing portfolios. So, we turn to our friends at Marriott, Forbes’ most innovative hotel company, who continue their outstanding research leadership at the Marriott Innovation Lab. Desks have shrunk 25% in three years, luggage racks are becoming obsolete and most importantly - to 69% of Millennials - Wifi is dominating thoughts.

So what’s next? Well, with all this change, we do worry for the pen industry since hotels must be its biggest customer! For some of you reading, this will hit home, so stock up - we have to imagine they will not be around forever.

Massive demand for on-demand apps
Pollen Insights | Massive Demand for On-Demand Mobile Apps

Why it matters: Not long ago, mobile was the development paradigm of the day.

Industry incumbents raced to develop apps and mobile strategies, while some startups reversed the established order; going mobile first, or even neglecting the desktop web altogether. Now, argues mobile analyst Peggy Anne Salz, the paradigm has shifted again, this time to “on-demand” - the emerging imperative that apps deliver people instant and pervasive access to what they want, when and how they want it.

This shift represents a major opportunity, Salz posits, not only for industries already being transformed by service on-demand (think transportation, dining, groceries and travel), but also for the “long tail” of companies and developers, which because of a “perfect storm” of supply (smartphones and apps) and demand (increasingly connected consumers) can now infiltrate target categories and niche markets and insodoing touch every part of our lives with on-demand experiences.

In technological terms, this new industry is created by consolidating the process of discovery, order, payment, fulfillment and confirmation, made possible by falling hardware costs and ever more sophisticated software and logistics algorithms. In social terms, the on-demand explosion is facilitated by an existing population of already over 53 million freelancers, each with their own mobile device - a population growing larger by the day (this includes, of course, the huge number of us out there that just want a way to earn a little extra income in our off-time).

Salz’s comments are in response to a report published recently that concluded on-demand services have massive market opportunity, and will “continue to grow at unprecedented rates as awareness improves and more consumers adopt mobile commerce for their daily needs.”

Yet, despite these market forces, one has to imagine that with so much funding in the on-demand space ($9.4Bn since 2010 according to CB Insights) success is not guaranteed. Companies and developers will only have the “ace in their hand provided they invest in the activities to produce a great app that keeps users coming back.”