Hotels and Resorts: Challenges of a Digital Revolution

The hotel market continues to undergo a fundamental transformation. Thanks to the industry’s accelerated digitalization, prices have become more transparent and visible, and hotels have become increasingly reliant on online distributors, which have already grabbed 20 percent of the value of the tourism market in less than six years. The rules of the game have been changing rapidly, tilting the playing field in favor of digital players.

But the reality is far more complex than the story of online upstarts overtaking industry incumbents. In actuality, the market has seen the gradual formation of a fragile balance of power. Although digital intermediaries have built large customer bases and a growing inventory of offers, their bargaining power has mostly become stronger with independent hotels. Indeed, the latter are paying a heavy price in the form of high commissions that can reach up to 30 percent of the nightly price in some cases. Hotel chains, on the other hand, have certainly not had their final say. Not only are they supported by ambitious development plans, but more importantly, they maintain control of the entire customer itinerary and can act at each point of contact. Nevertheless, a quiet battle is now being waged for control of the customer relationship – one of the main keys to success in an industry undergoing fundamental shifts.

This point of view is available in English and French.