Even though the leaves are just starting to turn, airline network planners are already getting excited for next summer.
14.10.2023 - 15:35 / skift.com
How much will hotel companies pay OTAs (online travel agencies) and similar third-party distributors this year? That was the thought-provoking question raised on Thursday by Max Starkov in a LinkedIn post.
“In 2023, hoteliers will pay the top OTAs and bed banks $50 billion in commissions and markups,” Starkov wrote. “A staggering amount!”
The post went viral among distribution nerds. Putting a figure on third-party distribution underscored its importance.
We’ll highlight some points that many hoteliers misunderstand about distribution in a moment.
But first, is this $50 billion figure plausible?
Starkov — a consultant in New York who formerly ran a digital agency since merged with Cendyn — based his estimate on an “amalgamation of publicly available data for the publicly traded companies and investor presentations for the private ones.”
Skift Research thinks Starkov’s estimate looks pretty good.
Our own estimate is that hotels — both branded and not affiliated with major hotel brands — will spend roughly $47 billion this year on online travel agency commissions.
Hotel companies will spend an additional $11 billion on bed banks — essentially wholesalers, such as Hotelbeds and WebBeds (which typically distribute rooms through tour operators and packagers).
We’re going further than Starkov did by also estimating hoteliers’ total indirect distribution costs. We put it at $75 billion — a figure that accounts for the costs of working with corporate travel agents and traditional travel agencies.
To be clear, we’re making an estimate based on educated guesses because we lack some authoritative data points.
To boost confidence, we’ll show our work. A side benefit: Our explanation will illuminate the contours of hotel distribution — including some nuances that often get overlooked.
First, we assume that 2023 will shape up to be pretty similar to 2019 in revenue for third-party distributors. We have good estimates for 2019 so we will use those and, after all, the hotel sector largely has rebounded to pre-pandemic levels of revenue, if not occupancy.
Our broad assumption about this year’s performance isn’t exact. Some regional markets are underperforming, while others are over-indexing. Plus, the year’s not over yet.
We’re also assuming that what third parties are “taking” from hoteliers as a cut in exchange for their distribution services is roughly the same now as in 2019. We will get more information on that next year after annual financial reports are released.
The calculations above also assume that 70% of hotels worldwide aren’t affiliated with large hotel groups. Thus, we assume they pay distributors slightly more because they don’t benefit from favorable volume discounts.
For its estimate, Skift
Even though the leaves are just starting to turn, airline network planners are already getting excited for next summer.
Saudi Arabia has laid out its ambition to build a hotel of such magnitude, allure and luxury, that travelers from the world over will come to see it. In Dubai, the emirate has the two Atlantis resorts, between them almost 2,000 rooms. In the US, historic hotels such as The Plaza sit in New York and mega-resorts fill the Las Vegas strip. But in Saudi a set of three boutique hotels will be the “global bucket list” destination of choice.
I take the planning of our Vegas trips very seriously.
The Lotte New York Palace looks like it might have been a setting for the HBO period drama The Gilded Age.
Maison Villeroy is a very distinctive hotel in Paris: intimate, private, luxe without being showy about it. Starting November 13th, its parent company The Collection, which operates ultra luxury properties in London, St. Barths, St-Jean-Cap-Ferrat and Courchevel apart from Paris renting for weekly or monthly stays, is bringing that style to New York with the opening of Maison Hudson. This time, though, the property bordering the Hudson River in New York’s Far West Village is being fashioned for a minimum stay of 30 days only. Given the design, accoutrements, and services plus the vitality of the neighborhood surrounding it, anyone planning that length of stay in New York should definitely consider moving in.
New York is a city with an embarrassment of riches when it comes to historic hotels. Whether you want to stay in Manhattan or across the water in Brooklyn, choices include converted factories that once made textiles for NASA, bohemian dens that inspired beatnik novelists and counterculture musicians, and super-luxury boutique pads that have counted presidents and Hollywood stars as guests.
Booking.com says its problem getting payments to European and Asian hotel partners is mostly fixed and that it is even making manual payments in some cases.
If you've visited Phoenix or Scottsdale, Arizona, you already know that the area is flush with luxury hotels and resorts. Big names like Marriott, Hilton and Hyatt operate many of the resort properties, which, depending on your points or elite status in those chains, can help make the getaways more affordable or attainable.
Paris+ par Art Basel's second edition concluded, highlighting the city's cultural vitality and its growing stature in the global art market. With 154 premier galleries, including 61 in France, the event showcased France's thriving art scene. It featured a diverse public program in collaboration with renowned cultural institutions across six Parisian locations. This edition welcomed 15 new galleries from Europe, the Americas, Africa, Asia, and the Middle East. Held at the Grand Palais Éphémère from October 20 to 22, 2023, the fair drew 38,000 attendees. The next edition will take place at Art Basel’s permanent venue: the iconic (renovated) Grand Palais from October 18 to 20, 2024.
During my first night at Le Royal Monceau - Raffles Paris in June, I noticed something was amiss. The large chair in the corner had been slightly repositioned, the curtains were drawn, and the bed looked tidier than I left it earlier that day.
The annual list of the world’s ‘50 Best’ Bars, was announced today in Singapore, to celebrate the excellence of the international drinks sector and pay tribute to the visionary bartenders, enterprising bar owners and trailblazing brands that lead the charge in shaping cocktail culture around the world. The complete list is below.
Coming up with Christmas vacation ideas for this year? It’s never too early to start the search, especially if you’d like to visit a wintry destination in the United States. Though the weather these days can be rather unpredictable, you can dream of a white Christmas—and see it in person—at these 23 winter holiday hotspots.