The hotel booking industry is, we have said before, an enormous economy in its own right, conservatively valued at $500bn annually and projected to double in the next few years. Currently that industry is dominated by two major players, Priceline and Expedia, who are on course to account for up to 90% of hotel bookings. The general public is aware of these two behemoths but are still labouring under the delusion that there is much more choice in the market than there actually is. For example under the Expedia brand are the companies Expedia.com, Hotels.com, Hotwire.com, Travelocity, Orbitz, HomeAway and the “independent” travel comparison site Trivago. Priceline owns amongst others Booking.com, priceline.com, KAYAK and agoda.com. The public is therefore under the illusion that there is a lot of choice, which is not necessarily the case. We will address this in a separate blog on why the Trippki revolution is great for hotel guests/consumers.
The upshot of this situation for hotels is even more blunt. The business model employed by these giant Online Travel Agencies (OTA’s) is to dominate both the Search Engine and Advertising markets (both online and offline). Their combined spend is north of $5bn a year and growing. When you search even for a specific hotel, more often than not it is not the hotel’s website that comes up first on search results but the OTA window onto their hotel. Of course someone has to pay for this spend and the chief victims are the hotels. In order to bring the hotels customers, OTA’s charge high commissions on the room rates, sometimes up to 30%, hurting the bottom line of the hotels and further reducing their own marketing and brand budgets. This makes them ever more reliant on the OTA’s and the “death spiral” continues. In addition to this, the hotels own brand is further minimised as the OTA’s effectively “white label” each constituent hotel under their own branding. Unsurprisingly, hotels are not happy with this arrangement but have had to endure it for lack of a credible alternative.
Trippki’s business model is not based on delivering through SEO and advertising. Our commission structure is so much lower than traditional OTA’s (2.5% to our platform) that it positively incentivises hotels to take bookings through our channel rather than existing ones. We will not create skins over the hotels existing brand and we further give them an automatic rewards based scheme which is both smart and transferable. The building of the Trippki universe will be through network effect and we all know how fast and powerful that can be. Both customers and hotels are incentivied and the middle man is cut out. The desire for Trippki is tangible in the hotel industry and our growth will be unstoppable because of it.