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Hotels own distribution channels are on decline with an increasing dependency on OTAs, a study from Hotrec has found.
The research from the European trade association of hotels, based on responses from 2,000 hoteliers, showed nearly one in four bookings were generated through an OTA.
In parallel to rise of the share of OTAs in hotel bookings, the share of direct bookings dropped to 55 per cent for 2015. The study claimed this trend shows online platforms are gaining more and more control over the distribution market.
"The study clearly shows that online platforms are steadily acquiring bigger and bigger shares in hotel bookings, while the hotels’ own distribution channels are on a decline making dependency on OTAs growing,” said Hotrec CEO Christian de Barrin.
“The situation is especially critical as it seems that the OTA market tends to become a duopolistic (or even monopolistic?) one in Europe, with one player (Booking.com) controlling closely 2/3 of the market.”
The study showed the OTA market is being dominated by the ‘big 3 OTAs’ which have a common market share of 92 per cent. The most dominant player is the Priceline Group (Booking.com) with a share of over 60 per cent. The second Expedia increased its market share over the past year, however HRS “lost ground significantly” over the past two years.
The European trade association of hotels, restaurants and cafes has unveiled the results of its second hotel distribution study, based on responses from over 2,000 hoteliers.
The study said from the introduction of the narrow parity clauses in summer 2015 by Booking.com and Expedia, competition authorities were expecting a rise in competition in the OTA market. However, the study showed that regarding one of the main aspects of competition, the commission rates by hotels to OTAs, there has not been any significant movement.
Only 8.5 per cent of hoteliers reported a reduction of the commission rates over the past year, while the rest continues paying at least the same rates as before.
Is it the end for rate parity in hotels?