Look at back office tools to deliver competitor advantage, says Steve Endacott
Last week saw a war of words break out between the alternative accommodation giant Airbnb and its more mainstream competitor Booking.com.
A recent Morgan Stanley report highlighted Booking.com’s rapid growth in the ‘alternative’ accommodation sector, leading bookings owner’s Priceline to crow about how their growth would squeeze Airbnb’s market share.
Fascinatingly, Airbnb’s response was to trumpet their back office tools for owners as the key to its future success, criticising Booking.com’s lack of investment in its own tools and resulting inconsistency of customer experience.
Airbnb issued an open challenge, that unless the major OTA’s invested at least 5% of its marketing budget into these tools, the peer-to-peer giant would win this crucial battle.
From a consumer point of view, I personally think Airbnb’s back office experience is far superior to Booking’s, with customers being put into direct contact with owners by phone or chat tools within the Airbnb app.
This creates a much easier dialogue with owners than Booking’s more traditional email route.
I’ve never been left waiting outside an Airbnb property but have several times struggled to get access to properties booked via Booking.com.
Given the importance of customer retention in controlling ever escalating Google or aggregators’ marketing costs, the UK’s beach holiday OTA community may need to take note and look at its own back office tools as a means of delivering competitor advantage.
How long before we see OTA apps offering online check-in for all low cost carriers and tracking technology to show how far away a coach is from picking up customers from their hotel to take them back to the airport?
Customers may also want to use the same app to book in resort restaurants or attractions, using consolidated consumer reviews of other like-minded UK guests, who have stayed in the same hotel previously.
Why not combine the provision of a 24-hour duty office with tools to help customers access medical assistance via virtual doctors over skype and app tools to capture medical expenses and assist with insurance claims?
The options are many and the bottom line is that when you are operating in a commodity market place, where competitors can source the same hotels at the same costs, it’s going to be a race to the bottom in terms of margin, unless brand loyalty can be created.
Ironically, in its core city hotel market Booking.com is a market leader in this art, using its higher frequency of booking, to drive stickiness via its secure retention of credit card details and clever suggestive marketing. However, in the beach sector, like most UK OTAs, it is guilty of the so-called ‘Tarmac wave’.
This is where an OTA lavishes care and attention on the booking journey and pre-departure communication, but then waves goodbye at the airport and simply hopes that the most crucial part of the purchase – the holiday itself – goes well.
In-resort experience is crucial to holiday enjoyment and this is where traditional tour operators like Tui score massively over OTA’s, with their extensive in-resort infrastructure and customer care.
In the past, concerns about principal status and triggering higher VAT liabilities have caused OTA’s to steer well clear of operating in-resort structures and consolidated third party services like Destination Care, which I invested my own cash in before it failed and was written off as being ahead of its time.
However, has that time finally arrived? Possibly, but I think it will be a while before the back end, drives the OTA car.