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TVNZ-NZ Marketing Awards 2016: Accor Hotels stops the erosion

Accor Hotels was facing increasing commissions from online travel agents, while fewer guests were choosing to book through its direct channel. How could it take back control?

October 19, 2016 | news

The Challenge

Accor Hotels wanted to take back control of its online booking channel.

It, as well as other hotels across the industry, was losing business to online travel agents such as Expedia and Booking.com.

Globally, hotels are reliant on online travel agents for their bookings, to the point where for most hotels these intermediaries are producing more online bookings than on hotel sites. 

For Accor, 35 percent of bookings were coming through online booking channels, and online travel agents dominated this space. 

This meant the hotel chain was reliant on the online agents, despite the fact they were reducing its ability to have a direct relationship with its guests, and eating into profits.

As these online giants took bigger and bigger slices of the online hotel booking pie, they were ramping up their commissions each year, too.

The huge cost commitment of these commissions bound Accor to the online travel agents, not allowing for investment into marketing its own direct channel. 

With no hotels to run, the online travel agents had the benefit of being able to reinvest those big commissions into more marketing for themselves.

Accor Hotels had had enough. 

It needed to find a way to drive business directly to accorhotels.com, reduce its commission payments, and stop these online travel agents from eroding its direct business with guests.

The Response

Accor Hotels first identified that it had to work to its strengths. It couldn’t fight the online travel agents on budget alone, but it was the largest hotel chain in New Zealand, and it could restrict what it offered the online agents and offer better deals on AccorHotels.com, although within the parameters of its contracts with them.

It was also important to build AccorHotels brand awareness because the business had never invested in brand up until this point. 

To achieve awareness, Accor Hotels sponsored TV One Weather, with a nightly opener and closer. 

It also had to become more strategic in its digital marketing. It identified search engine marketing as the most cost effective acquisition lever, and convinced its hotel general managers to increase budgets to over $1 million in 2015 to increase brand visibility. 

It developed a retail marketing calendar that allowed hotels to push value-add offers not available to the online booking agents, like free breakfast and hotel credits.

And Accor revisited its loyalty programme, with a strategic focus on recruiting guests and offering them improved benefits.

The Results

Against the odds, Accor Hotels has begun to claw back control of its booking channel.

“The severity of the task was immense, due to the dominance of the [online travel agents] in the New Zealand market, both by the share of hotel bookings they held as well as the increasing commissions they were reinvesting back into marketing,” its entry reads.

But in 2015, it managed to increase the share of online bookers coming through the Accor direct booking channel. 

This was a huge achievement, bucking the global trend seeing customers increasingly booking through online travel agents such as Trivago, Expedia and Booking.com.

This decreased reliance on the online travel agents also saw Accor make huge savings in the commission it was paying to them.

Not only that, it became the only region within AccorHotels globally not currently losing share to the online travel agents, and now one in 15 New Zealanders are members of the Accor loyalty programme. 

Accor says, with the platform and levers now in place, it will continue to swim against the tide with decreased reliance on online agents and continuing direct online booking growth. 

Category:

Travel/Leisure

Winner:

Accor Hotels

Sponsor:

Judge's comment:

“Multi-faceted campaign, clear relationship between the marketing programme and the business imperative, strong degree of sustainability created, has the ability to change the nature of their negotiations, insightful industry fights back to extensive industry disruption.”

Finalists: Air New Zealand (x2)

  • This story first appeared in the Awards issue of NZ Marketing.
  • To read more on the TVNZ-NZ Marketing Awards 2016, click here.

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