Travel2020: Of bots or brawn — The changing booking trends in travel
Monday, October 08, 2018
At the recent Digital Travel Summit in Las Vegas, the word of the hour was "chat bot." Those are the pesky pop-up boxes that interrupt site research with Anna or Lola, who is ready to help with nifty on-the-spot answers to anything that ails.
For most of us, these are an annoying inconvenience, as we know, despite friendly jargon and seemingly responsive wording, the only thing human behind the name is the programmer that created it.
Image: Las Vegas Convention and Visitors Authority
Bringing on the Bots
Yet, at the Summit, where big brands, such as Wyndham, Four Seasons, United Airlines, NCL and Caesars Entertainment, met quant companies, such as iSeatz, Oracle, Navistone and Rokt, the challenge to replace the human was the next great space race.
Bots talking to bots? Now that is a future worth talking about.
As developments in artificial intelligence move toward evolutions in augmented reality it is becoming increasingly easier to manage the full sales funnel online. Suppliers are able to condense their products into a simple range of choice, and bots are able to offer those chunks up in palatable bites of information.
Hotels are now interfacing with guests through algorithmic chatterers such as "Rose," which manages guest services via text messaging at the Cosmopolitan Las Vegas, or even a ChatBotir, such as Marriott is rolling out. Consumers can book their rooms, seats, transport and packages in a few easy strokes, thinking they have saved a bundle by cutting out the human touch of travel advisors.
Unfettered Rise of the Middle Man
Or not. As the Summit took place in Las Vegas, chief "experience" executives from Sands Corporation, Caesars Entertainment, and the Cosmopolitan were on hand to discuss what this meant.
Online travel agents (OTAs) are taking a sizable swath of the inventory available in Las Vegas. But retail travel agents are still selling a good 10 percent of the inventory. Considering Las Vegas currently offers close to 149,000 rooms, that is still 14,900 rooms for 365 yearly room nights that travel advisors can count as their own.
"Travel agents are an important part of our distribution strategy. We realize that customers have different booking preferences, and travel agents are a preferred booking method for many of our guests," says Mark Molinari, corporate vice president of revenue management and e-commerce at Las Vegas Sands Corporation.
Image: Las Vegas Convention and Visitors Authority
The Agent Equation
Hotels still prefer to partner with travel agents and consortia accounts to drive leisure travel, says Molinari. "Agent bookings tend to have a higher ADR (average daily rate) and a lower distribution cost relative to other third-party channels, so hotels will continue to find ways to drive volume through this channel, especially as margins continue to erode from an increase in OTA volume."
However, the market share for OTAs is only climbing. And travel agents may soon find themselves competing not only with the Expedias and Trivagos out there, but also Google and Amazon in an increasingly crowded and confusing space.
"We know that many guests rely on the OTAs when researching their travel plans, and we believe they’ll be a critical part of our distribution strategy well into the future," said Molinari. "Phocuswright stated recently that online booking revenues from the OTAs outpaced hotel websites for the first time in 2016, and they were projected to widen the gap in 2017. As mobile continues to grow, we expect to see the OTA share continue to climb."
However, Molinari sees more middle men rather than less in the future — a state that will lead to an even greater margin erosion for hotels.
"'I Google' is becoming more prominent in the metasearch space, and I look for Amazon to enter this space in a meaningful way over the next five years. It will be difficult for these major tech companies to compete with Expedia and Booking.com because of the inventory and distribution platform they’ve built over the past 20 years."
"Additionally, because there’s been so much consolidation in the OTA space, it will be difficult for the big tech companies to enter the space via acquisition. The easiest path for the Google and Amazon’s of the world to make money in travel is to act as a middle man by connecting travelers that are in the research phase of their journey with the retailers. Adding middle men means more cost for hoteliers, and I look for hotel brands to renegotiate their margins with the OTAs if more and more of the volume is being referred by Google and others. Meanwhile, hotels will continue to partner with travel agents well into the future."
As Google launches its new assistant app and as pop-up texts take online searchers ever deeper into murky landscapes of no return, those managing the supply side of travel see a message that is loud and clear: Bring on the bots, but humans are here to stay, at least in solid mass tourism destinations as Las Vegas.
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