HOTREC 2020 Online Distribution Channels Study

HOTREC, the umbrella association of Hotels, Restaurants and Cafés in Europe, carried out its biennial study on the European hotel distribution market together with the HES SO Valais University of Applied Sciences at the beginning of 2020.

This series of studies is the fourth conducted since it began in 2013. The aim of the research is to track the evolution of distribution channels in the European travel industry, with a focus on the role of online travel agencies.

EXECUTIVE SUMMARY:

The results for 2019 show that, across Europe, more than 2,800 hotels' dependence on OTAs continued to increase while the share of direct bookings declined.

Developments in the distribution market between 2013 and 2019:

• In HOTREC's 2013-2019 distribution channels study, the market share of OTAs in the European hotel sector rose steadily from 19.7 in 2013 to 29.2 in 2019. (weighted results including data obtained from hotel chains)

• At the same time, the share of direct bookings across Europe fell by more than 10 points, from 57.6% in 2013 to 47% in 2019.

• In 2019, the total gross revenue of OTAs is estimated to have been between USD 28 billion and USD 40 billion, and the commissions paid by the hotel industry to OTAs in 2019 across the 27 EU countries are estimated to have been between USD 4 billion and USD 6 billion.

Who dominates the Online Travel Agency market?

• The 3 main players in the OTA market are Booking Holding, Expedia Group, and to a lesser extent HRS, with a combined market share of 92%.

• Booking.com is by far the most influential player in the OTA market, with a 68.3% share. Booking.com's dominance rose from 60% in 2013 to 68.4% in 2019.

• Expedia has maintained its market share over the last 4 years, with 16.8% in 2015, 16.6% in 2017, and 16.3% in 2019.

• HRS's market share fell from 16.6% in 2013 to 7.2% in 2019.

The OTA-Hotel Relationship

• On certain aspects of relationships with OTAs, hotels (56% of them) feel pressure to accept platform terms and conditions (e.g., regarding cancellation policy, special discounts) that the hotels would not voluntarily accept. As is known, the higher the volume of overnight stays provided at a hotel by the OTA, the higher the pressure felt.

• About 60% of hotels have disputes with OTAs, and only one in four of these hotels (26%) found a fair and effective resolution to the disputes.

• The standard commission rate remained the same for approximately 69% of participants, but for a significant portion of 27% the commission rate increased.

• Two-thirds of hotels use the online payment options of Booking or Expedia, and one in every two hotels uses the various tools offered by OTAs to effectively boost their ranking.

Distribution Channel Technology

• Compared with 2013, the rate at which hotels manage their prices and availability manually fell from 56% to 37%, while the use of online channel managers rose from 39% to 54%.

• Compared with 2013, when about half of hotels were unaware of the options for integration with travel metasearch engines, around 80% of the participants in this study are aware of this distribution channel, which is used by 41% of hotels.

• In 2013, TripAdvisor was the dominant metasearch platform in the market with a 71% usage share. In 2019, Hotel Ads published by Google was the market leader with 60%, followed by Trivago at 54% and TripAdvisor at 51%.

For the full study: https://www.hotrec.eu/european-hotel-distribution-study-2020/