Phocus Forward 2017: A Look at Lodging Products and Platforms

Published June 2017 Analyst: Douglas Quinby


Two significant challenges are shaping hotel chains' strategic initiatives – maintaining robust direct distribution and countering competition from private accommodation.

Hotels vs. OTAs
The booking channel balance between hotels and online travel agencies crossed a threshold in 2016: OTAs surpassed supplier websites/apps in U.S. online booking share for the first time ever thanks to marketing spend, mobile prowess and millennial preferences for online intermediaries. With owners getting more bookings via OTAs, hotel chains are under pressure to justify their franchise fees.

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Not-So-Alternative Competition
Private accommodations are hitting the mainstream, shaking up traveler expectations and posing new challenges for suppliers and OTAs alike.

U.S. private accommodation gross bookings are estimated to reach US$34.4 billion in 2017, or 18% of total hotel, lodging and private accommodation (HLPA) gross bookings. Rentals are increasingly considered as an alternative to hotels.

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Hotels Respond With Innovation, Design, Product and Technology
Hotels are rolling out a slew of products to help compete, including:

  • Keyless room entry
  • Virtual check-in/check-out
  • Beacons
  • Room selection app-controlled lighting, blinds and temperature
  • Providing destination content and in-room entertainment
  • Responding to room service requests via bot

Other brands are entering the vacation rental business directly. Choice Hotels launched Vacation Rentals by Choice in early 2016. Accor Hotels is acquiring its way into the vacation rental business. But OTAs have not sat idly. They, too, have been getting in on the action with Expedia acquiring HomeAway and continuing to ramp up its rental footprint.

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