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New European Commission Data Sheds Light on Hotels’ Diverse Pool of Distribution Channels and Google’s Growing Importance in Hotel Distribution

Choice is central to competitive markets. This is why multi-homing is considered one of the characteristics of effective competition in digital markets. It refers to a situation in which businesses as well as consumers use different channels to respectively buy and sell goods and services. A study by the European Commission on the distribution of hotel accommodation in the EU released last week presents new data regarding hotels’ sales channels, pointing to widespread and  strong multi-homing in the accommodation sector.

According to the study findings, the majority (72 percent) of independent hotels and all of the respondent hotel chains use more than one online travel agency (OTA) to distribute their rooms. Moreover, 78 percent of hotels sell directly online to consumers, e.g. via their own website. Other important marketing channels include metasearch websites and search/engine keyword advertising. All of these online channels are used in addition to offline distribution, which remains highly important for consumers and hotels: 80 percent of hotels sell offline directly to consumers, e.g. to people making reservations per telephone.

The study findings are particularly important in view of the recent and ongoing debates concerning online platforms and the challenges with online intermediation. In several sectors, businesses have become heavily dependent on a handful of big technology companies to reach consumers. The data collected for the accommodation ecosystem points in the opposite direction, indicating that hotels have a large range of options of sale channels and marketing opportunities to reach consumers including but not limited to online platforms (or OTAs in this case).

In addition, OTAs are found to have a strong positive impact on businesses’ performance. According to the study, a large majority of independent hotels (80%) and half of the hotel chains surveyed find that OTAs increase their total volume of bookings. Moreover, according to 63% of independent hotels, listing their rooms on OTAs also increases the number of bookings they get on their direct sales channels. This highlights that accommodations use OTAs because it is beneficial to them, not because they have to.

Interesting data also relates to the growing importance of Google Hotel Ads in the metasearch space. The study reports that it has become the leading metasearch website for hotels playing an increasingly pivotal role in hotel distribution and the visibility of hotels online. Google search is the gateway to travel tech competitors’ websites and has already been found guilty of anticompetitive practices to favour its own services in other verticals. In 2017, the European Commission fined Google for its abuse of dominant position in Shopping. The study on hotel distribution confirms that there is a risk that Google will soon take over another segment of the vertical search market and that further action by the EU is warranted.