Hotels See More Direct Bookings But Still Rely on OTAs, Says HOTREC Study

Despite hotels last year seeing an increase in direct bookings, their reliance on online travel agencies (OTAs) remained almost at the same level as before the Covid-19 pandemic, according to a study released recently by HOTREC, the umbrella association of hotels, restaurants, bars and cafés and similar establishments in Europe.

The study, which is the fifth hotel distribution study by the association, provided new insights on the evolution of distribution channels used to reserve hotel rooms, with a specific focus on the role of OTAs.

Almost 3,900 European hoteliers from across Europe, of various locations, sizes and star-rating provided responses covering the source of reservations made during the 2021 pandemic year. Five countries (Germany, Italy, Austria, Switzerland, Greece) with more than 250 responses provide around 70 percent of all the responses in the sample.

Direct bookings see increase, Reliance on OTAs still there

According to the study, the share of direct bookings for hotels in 2021 increased, largely through reservations made by email or via hoteliers’ own websites, for the first time since HOTREC began conducting the hotel distribution in 2014 (for the reference year 2013).

Between 2013 and 2021, the market shares of OTAs steadily increased in the European hotel sector from 19.7 percent in 2013 to 29.2 percent in 2019 while at the same time, the share of direct bookings decreased across Europe by over 10-percentage points from 57.6 percent in 2013 to 47 percent in 2019.

The results for 2021 show that while direct bookings increased significantly during the pandemic episode, hotels’ reliance on OTAs remained almost at the same level as 2019. According to the results, the share of OTAs in 2021 was 28.8 percent while direct bookings increased to 55.2 percent (an 8-percentage point increase over 2019).

“The increase in direct bookings would be warmly welcome if it were not for the more devastating impacts of the pandemic on the European hotel sector. Direct contact with hoteliers was undeniably reassuring for travellers during the pandemic because specific concerns and queries can be easily addressed via a simple phone call or email,” the chairman of the HOTREC Working Group on Distribution and CEO of the German Hotel Association (IHA), Markus Luthe, said.

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He added that the advantages of booking directly are just as valid in normal times.

“We hope this trend persists during the recovery of tourism and hospitality,” Luthe added.

The OTA – hotel relationship

More into the study, most hoteliers (55 percent) said they feel pressured by OTAs to accept platforms terms and conditions (e.g. regarding cancellation policy, special discounts) that hotels would otherwise voluntarily not offer. As expected, the higher the volumes of room nights generated by OTAs in a hotel, the higher the perceived pressure.

Who dominates the OTA market?

As highlighted in HOTREC’s study, the 3 main players within the OTA market remain Booking Holding, Expedia Group and to a lesser extent HRS, with an aggregated market share of 90.4 percent.

According to the study, Booking Holding is by far the most influential player, with a share of 71.2 percent in the OTA market. The dominance of Booking has been rising over the last 8 years by more than 11-percentage points, from 60.0 percent in 2013 to 71.2 percent in 2021.

“When it comes to online intermediation, the hotel distribution market is more than ever concentrated in the hands of one single company. We look forward to repeating this study in 2024 and 2026 to concretely assess the impacts of new EU rules affecting online platforms, like the Digital Markets and Services Act,” HOTREC Director General Marie Audren said.

Another key trend that emerged from the responses of hoteliers was that in 2021, Hotel Ads by Google was the meta-search market leader (73 percent) followed by Tripadvisor (57 percent) and Trivago (44 percent). Back in 2013, Tripadvisor led the market with a usage share of 71 percent.

The responses of the 5th HOTREC Hotel distribution study were gathered and analysed by Prof. Roland Schegg of HES-SO Valais-Wallis Institute of Tourism.