How Will Online Hotel Booking Change in the Near Future?

Via Reader Alan H., TripAdvisor is finally going big in hotel metasearch as a way to drive bookings.

Hotel chains’ have long tried to push guests towards booking through their own channels, such as by denying elite stay credit (and in some cases elite benefits) to bookings made through online travel agents and by offering their ‘best price guarantees’ meant to suggest that customers will get the best deals there (not always true, it just means that on some rare occasions the chains will reward customers who discover they haven’t).

That’s because the payouts to online agents for hotel bookings are huge, although seem to have been coming down somewhat recently. I used to see major chains paying out commissions in the high 20% ranges, while more recently such high payouts seem to apply more to independent hotels. The savvier big chains like Marriott, depending on the online channel, may be down into the high teens.

Whereas flight sales isn’t especially lucrative, hotels bookings are, and TripAdvisor is naturally positioned to get a strong piece of that action — they (in theory, with problems) guide you towards the hotel that’s right for you. They should be better at monetizing that decision. That’s seen as a threat to Kayak.

Interesting, while the leading threat there ought to be coming from Google, which is certainly trying to provide customized answers and advice in the travel space, the conventional wisdom offered in he article on Kayak vs. Tripadvisor is that Google hasn’t made much of an impact. So much for the anti-trust concerned voiced by Google’s rivals in trying to get the US government to shut down Google as a competitor (mostly, to date, in flight search – and fortunately unsuccessful).

I’ve often found TripAdvisor useful (1) for real guest photos, and (2) to scan common themes in reviews. But never for the rankings, and never for the content of any single review.

There are several problems with TripAdvisor. One is fake reviews — hotels with fake personas trashing their competitors, hotels giving themselves high marks. Another is the inherent unreliability of complainers who also may represent outliers among guests. And still another is the rankings aren’t valid interpersonal comparisons. The guest doing a ranking may simply not think about hotels the same way that you do. And rankings are often simply not reasonable reflections of what a hotel is trying to accomplish (knocking down the Ritz-Carlton Central Park because its room service breakfast is expensive, for instance.. of course it is).

Into the space there are several new review sites, few of which have gained much traction. Hotels have tried to compete as well (remember, they really want you to book direct) with their own reviews. And they can even verify that a guest writing a review has really stayed at a hotel!

The competition here is far from over. But Kayak certainly will face pressure because while they can find you lots of different hotels (compared to chain sites which generally offer their brand only), it doesn’t do a good job at guiding you to book the room that’s most right for you.

That’s the big thing that was lost when mass travel became substantially an online booking phenomena — the loss of human agents who could understand your preferences, combine those with personal experience, and make recommendations that were in theory tied to the individual customer.

That’s also the future once again, even in the online booking space as sites race to get better at doing more than just returning results in a city and letting you sort by price or distance or ‘number of stars.’

No one is very good at it yet. Orbitz fumbled when they started returning higher priced hotels to Mac users.. when all they were doing was responding to their data which suggested that Mac users tended to book higher priced hotels than PC users, and so wanted to give those customers tailored results that were more likely to lead to a sale. They weren’t trying to ‘charge those customers more.’ They just didn’t want the customers not to find what they were after and go somewhere else to book instead.

There’s still a lot of room for work to be done, and contra conventional wisdom the future year is yet to be written. Let alone the future in mobile where last minute bookings are increasingly common, and customized advice won’t just be based on other guests’ experiences (social) but on real-time geolocation data.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I’m currently at the IC Miami downtown and have been here for the past two nights. Great property but ill be using HotelTonight to find a place in Ft. Lauderdale for this evening as we have a 7am flight out of FLL. Mobile bookings and last minute bookings are on the rise and are only going to increase. They are always a part of our vacation plans.

  2. It is also highly annoying on TripAdvisor when I read “Best Hotel Stay Ever” for someplace like the Hampton Inn Tulsa or some cookie-cutter place like that…

  3. @theblakefish You mean the Casablanca Hotel Times is not the best in NYC? How about the 4S at 66th best hotel. While it is very nice I’m sure, I can’t imagine it at #1.

    I am going to go out on a limb and say that the 4S is better!

  4. Gary, I agree with you on rankings. Some day, I’d like to see advanced rankings searches where the rankings are done based on filters that I set.

    One other flaw with rankings: I actually don’t know how they rank! Why is #1 ahead of #2? It’s not always clear.

    But I welcome TA’s foray into the booking space — many times I will find a boutique hotel ranked highly, and it’s difficult or impossible to find a price for it anywhere.

  5. If someone can come up with a last minute booking site where I get rates like HotelTonight but am guaranteed Hotel elite credit – I’m interested. It should ideally know my stay history and give me offers based on that. I mean if you get me to stay once and I like it maybe I will spend another 100 nights a year in your hotel.

  6. I agree that TA rankings are unreliable. As you note, they do not rank according to MY standards for quality, which weigh factors differently from the average person’s.

    BUT, I find that they tend to correlate well to value. That is, if a hotel’s room is $400, TA rankings will reflect, somewhat if it is worth $400. The net effect is that lower priced properties which provide value may tend to trump higher priced properties which may, objectively, be of greater quality.

  7. TripAdvisor’s rankings are widely used and better than no ranking at all. It is good for travelers because the hotels focus on it. They compete and try to fix problems. Look at how many hotels now have TripAdvisor reps who respond and follow up to complaints left there. Being on the first page of ranked hotels on TripAdvisor drives a lot of incremental guests to their hotel. GMs know it, and they are doing things at the margin to improve themselves. So, yes, we might not agree with their top 10 in every city, especially when we think we are “experts” in the hotels in that city, but it’s a very useful site and one we should be rooting for.

  8. You say you never use TripAdvisor “for the rankings, and never for the content of any single review.”

    Not relying on a single review makes sense, but not relying “on the rankings” makes NO sense.

    I think I stay in at least 50 hotels a year. I look at the rankings on tripadvisor for each and every one of them. I can assure you that the odds that you will be “very satisfied” with a hotel that ranks below 3 1/2 stars on tripadvisor is virtually zero (assuming there are a handful of reviews). Anything below 3 stars isn’t likely to be satisfactory in any regard.

    Hotels that get 4 and 5 stars are generally the ones you want to look at more carefully. The rare hotel that gets 5 stars is almost always excellent. The 4 and 4 1/2 star properties are rarely bad, but once in a while a mediocre property creeps in. Like a cheap motel near Disney that gives folks good value, but is otherwise pretty blah. But that’s where you need to read the reviews. If you dismiss everything below 4 stars, you won’t miss anything.

  9. @iahphx I agree completely. I find TA rankings extremely useful, but mainly as a filter for “acceptable” and “not acceptable”. I, too, have a 4 star cut-off.

    In terms of numerical rank, though, there is definitely usefulness. While it is silly in almost EVERY ranking of any sort to say “#1 is better than #2”, it is very useful to know #5 out of 100 vs #50 out of 100. Rarely if ever is the #50 better than #5 in any sense.

    So, take the rankings in percentiles. The upper 25% is usually a good cutoff.

    Lastly, I agree with you, Gary, that TA’s photos are great. I really like to see my room, and especially my bathroom!

  10. Very interesting outline of the impact of change from agent assisted to online booking of hotels. Top notch thinking and very well explained.

  11. When I’m reviewing a hotel (usually for, Hotwire, or another site that requests my feedback after a stay booked through them), I weight my own personal rankings based on expectations, price, and star level.

    For example, I was driving from TPA to PNS and started to get really drowsy around TLH. I pulled over and found an EconoLodge on the east side of TLH that was cheap ($49ai) and had a good rating on (4.0–I am usually fine in anything that’s rated at least a 3.2 or so on

    It actually blew away my expectations for a 2-star hotel. Crispy clean room, comfortable bed, large, flat-screen TV, nicely redone bathroom, etc.–I remember thinking that I had no idea how they were making any money, as they’d obviously spent a lot of money to redo the place but had low rates and a crappy location (right off the Interstate 10 miles outside of town). I rated it an A, because for what I was expecting (a roadside EconoLodge), it vastly exceeded my expectations, and I was quite comfortable and happy there.

    Contrast that with my recent stay in DC at the Hyatt Arlington. With a name like “Hyatt” and a 4* property in a major city, I was expecting more than I got–OK but not great breakfast, no lounge, tiny room, poor elite recognition (no welcome amenity choice offered, no room upgrade, etc.)–a friend on FT even commented that he couldn’t be paid enough to stay at that property. 😉 I’d rate that Hyatt a “C”–even though, in every measurable aspect other than room size, it was objectively nicer than that roadside EconoLodge in northwest Florida.

    It’s the same reason that WN always seems to win in passenger satisfaction surveys. No one expects anything from WN, so it’s really easy to exceed (or at least meet) expectations. But, as another poster on FT said earlier today, when you fly a legacy carrier and your FA isn’t as chipper as you’d like and your IFE is broken, you’re going to say you were dissatisfied, even though you likely still received more amenities than you would have on WN.

    It comes down to a fundamental flaw in ranking reviews: accommodating differences in expectations. My frugal road-tripping grandfather (probably where I got it from 😉 is perfectly happy in a Comfort Inn, and when I booked us in the Crowne Plaza Changi Airport in SIN (the one attached to the terminal–admittedly pretty nice for a CP), he thought he had died and gone to heaven. He rated it as an 11/10 and said it was the best hotel he’d ever been in and must be one of the nicest in the world. But some of you guys here would pooh-pooh such a lowly hotel as that CP and give it a moderate rating. So, when I read a review of a Courtyard and see it gets a 6/10, is that 6/10 from a bunch of Motel 6 types who found the Courtyard to fail to meet even the most basic expectations (i.e., avoid it!), or is it a 6/10 from a bunch of Ritz-Carlton types who expect the world to be handed to them on a silver platter? And what does it say when you have an Extended Stay Deluxe with a 9/10 rating right next to a Park Hyatt with an 8/10 rating? Is the ESD really better than the Park Hyatt? Of course not! But the PH is going to attract a more discriminating clientele who will be more critical of small failures, whereas someone looking at a $40 ESD is going to be happy if basic expectations are met. Actually, let me modify my “of course not” statement with an asterisk: is the ESD better than the PH? When you consider what you get per dollar spent ($40 vs $400), maybe it is. In any case, it makes it hard to do real comparison shopping when you have such a wide spread of expectations.

    For me, I find rankings to be pretty in line with my personal expectations, likely because a site like that tends to attract middle-of-the-road people who don’t have elite status, don’t need to stay in fancy places but want to avoid crap-holes, are price-sensitive, and are just looking for a decent deal.

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