Price comparison websites disrupt UK hotel industry

07 June 2019 Consultancy.uk

The way travellers arrange accommodation for vacations has seen seismic shifts in the last few years. Price comparison websites are increasingly determining which hotel to book with, meaning traditional brands face major uncertainties going forward. 

Offering a rich cultural and countryside experience, the UK remains a major beneficiary of global tourism, drawing close to 40 million international travellers each year. Amid this booming trade, however, the hotel industry faces a myriad of challenges. In addition to Brexit uncertainties, a slowing economy and bad international press mean that long-standing brands have begun losing business, even as the number of tourists visiting British shores has risen.

In an age of digital disruption, the traditional criterion by which hotels are judged – their brand – has taken a backseat to the increased use of third-party comparison websites. These sites offer price comparisons and reviews, from which decisions are increasingly being made. The shift has created opportunities as well as risks for the industry, as public opinion and price take the helm.

Growth confidence in hospitality industry

As part of PwC’s CEO survey, the firm asked hospitality CEOs about conditions affecting their industry. The research involved 51 hospitality and leisure CEOs and more than 1,300 global CEOs.

According to the study, the rise of comparison sites – through which bookings are made – has negatively impacted the industry as a whole. Rooms are increasingly commoditised, which reduces hostels’ abilities to have a customer relationship that is more than just commercial. Meanwhile the sites siphon off considerable revenue from the hostels themselves, at 10% to 15% for large chains and 18% to 22% for independents.

Hotels bosses are increasingly pessimistic about the industry. Overall, the number of hotels which are very confident about revenue growth over the next 12 months stands at 27% for the hotel & leisure sector, well below that of all CEOs at 35%. Meanwhile those not very confident in hotel & leisure came in at 29%, well above that of all CEOs at 15%. Those not very confident at all, meanwhile, stood at 6%.

Key areas of difference between industries

While comparison websites offer potential guests the possibility of booking through their site, hostels can continue to have guests book with them directly – if perceived hotel quality and customer loyalty are high enough. Creating a strong brand that allows for the bypassing of such websites is, thus, increasingly important. The firm notes that a number of moves can be made to stimulate customers to book directly. These include the modernisation of services – from offering working spaces that create additional revenue streams, to 24-hour snack bars and unbundled room offers.

The hotel & leisure industry remains relatively stable skills-wise, with 9% of respondents noting changes in skills requirements against 19% of global respondents. 13% of respondents, meanwhile, said that candidates' views of the industry had changed, compared to 8% of global CEOs.


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