Trivago, its parent Expedia, and Booking.com all want to provide business services to hotels. It’s easy to see the potential value to resource-strapped hotel managers. Still, many hoteliers remain suspicious of these giants.
In the past few years, global online travel giants Expedia Inc. and the Priceline Group have been digging deeper into the hotel industry with a slew of new services mostly for small and independent properties.
In 2015, Priceline created a new unit called BookingSuite with paid services to help hoteliers manage their businesses. Soon after Expedia began offering services, including promises of more insights into how to set rates and maximize online distribution.
Now, we have another sign of just how interested online travel businesses are in pursuing this strategy of deepening their ties with hotel partners. Expedia-backed hotel-search company Trivago said it has formally reorganized its operations to create a subsidiary that focuses on the marketing, sales, and maintenance of its business software services and technologies that are used by hotels to improve booking.
It’s the first online travel player to commit to this type of initiative by formally creating a subsidiary. The company won’t see any change to its financial reporting, though.
Trivago Hotel Relations is a fully consolidated subsidiary, but its earnings and revenue won’t be broken out, the company said.
While Trivago provides the technology, Trivago Hotel Relations will provide the salespeople to entice hoteliers to use its supplementary tools, the company said.
BROADER BUSINESS-TO-BUSINESS TREND
The big picture trend here is that the global players, including Trivago’s parent Expedia and its arch-rival Priceline Group, are increasingly experimenting with enterprise software services for hotels. While these new business lines often generate incremental revenue, the key strategic goal is to increase the interaction each brand has with hoteliers in the hope that increased engagement leads to further business overall.
These services may be more effective in hotel markets outside of chain-dominated North America. In Europe, for instance, a majority of hotels are independently owned.
But lately, the large online players have dedicated more of their engineering and user- experience resources at building business-to-business tools that are useful to hotel partners.
Trivago’s move also plays off another larger trend, which is that hotels are increasingly looking to metasearch as a way to drive so-called direct bookings and reduce their dependency on online travel agencies, as Skift Research has reported. Hotels don’t like how online travel agencies tend to charge high commissions and control customers’ booking experiences.
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