The Connected Trip: A Sensible but Perhaps Perilous Obsession
Gino Engels, Co-founder and Chief Commercial Officer, OTA Insight
The travel industry is obsessed with the “connected trip.” For years, we’ve discussed various elements of a frictionless trip, where a traveler flows across the journey supported by technology that adjusts to delays and traveler preferences. Recently, the major travel brands, Expedia and Booking Holdings, have joined Airbnb, Amazon, and Google in an “arms race” to deliver the connected trip.
It’s a sensible obsession. The concept of the whole purchase cycle being within one ecosystem, creating a seamless and simplified travel booking experience, is attractive to consumers. And it works well for brands too, who can provide a better customer experience that also costs less to deliver (for example, by automating disruption management). For that reason, guest-centric hotels will be keen to participate, as it could lead to happier guests, greater loyalty, and increased business.
So, will the connected trip live up to its hype for hotels? Or will it simply be another way that platforms try to wall off inventory, engagement, and guest data from their suppliers?
The promise and perils of the connected trip
There are three clear benefits of the connected trip: transparency, convenience and cost. Consumers get a convenient way to manage trips all in one place, with automated disruption management. OTAs and tech companies make more money by personalizing their offerings and differentiating with a better experience that increases the stickiness of their products.
That loyalty piece is what’s really at stake here, as poor results from both Expedia and Booking have laid bare the weakness of relying too heavily on search marketing. And, with 39% of travelers starting on Google but only 10% following through to booking, everyone’s looking for ways to keep consumers loyal.
So where does this leave hoteliers? Sure, it’s always helpful when a guest arrives in a better mood thanks to a smooth trip. However, there’s added complexity dealing with each platform’s connected trip ecosystem - and those platforms remain reluctant to share data or otherwise help hoteliers better understand the guests booking through those platforms.
The perils of the connected trip are familiar issues: distribution costs, price parity, and apples-to-apples comparisons. Anything that makes OTAs stickier means that acquiring direct bookings becomes more of a challenge for hotels, not to mention the potential for added costs as platforms pass along the costs of connected trip technology. It could also lead to a lack of transparency in pricing if payments for different elements of a trip are bundled together, making it harder to compare your prices to your competitors or creating parity problems.
One way to stay ahead of the connected trip is to consider how to integrate voice assistants into both marketing and operations. While it remains to be seen whether the channel is conducive to booking flights and hotels, voice does add value as a source of information for consumers, who are integrating voice assistants more deeply into their lives. While these integrations won’t unbundle your hotel from the majors, it does give guests the connectivity that drives the connected trip concept.
The future of the connected trip
When it comes to data, Google has a clear advantage: it can use its broad behavioral database to shape a true connected trip. That, alongside Google’s expansive product suite and expertise in artificial intelligence, makes it incredibly hard for other brands to compete with the breadth and depth of understanding that Google has about its customers.
And, as Google consolidates travel functions into its Google Trips app and Airbnb pushes its end-to-end platform ambitions, there’s a fight brewing between Big Tech and Big OTA. Each wants to preserve and expand its portion of the traveler’s mindshare. Weak performance means OTAs are desperately looking for ways to offer additional value beyond their core product. They're keen to distance themselves from Google, where they spend billions on advertising, and give travelers a clear and differentiated reason to use their services instead.
So how can hotels take advantage of this “arms race”? As always, the best way for hotels to compete is on the guest relationship. Platforms may have data from digital touchpoints but you have emotion from real-world interactions. Use that knowledge to segment intelligently and market better. That way you exert greater control over your demand and protect yourself from the isolation that comes from “choosing” one ecosystem over another.
The other thing is to continue developing your team’s analytics mindset. If (or when) the connected trip comes to fruition, there’s going to be a brutal fight to keep travelers within a single ecosystem. To entice traveler loyalty, these platforms may push hotels even harder for discounts, availability preference or blanket inventory access. As such, your hotel’s availability, rates, and inventory must be kept in parity everywhere. The last thing you want to do is to pick favorites and end up limiting your demand pool to only a few walled gardens. Use your analytics to stay flexible and nimble in the face of change!