The Tug-of-War Between Hotels and OTAs over Customer Data

The Tug-of-War Between Hotels and OTAs over Customer Data

In the intensely competitive world of the hospitality industry, an increasingly contentious battle is unfolding between hotels and Online Travel Agencies (OTAs) over the ownership, access, and utilization of customer data. This tug-of-war threatens to reshape the industry’s dynamics as it pits giants against each other in the pursuit of customer loyalty and superior service delivery.

The Value of Customer Data

Customer data is the new gold in today’s data-driven business environment. As research published in 2022 highlights, understanding customers’ preferences, behaviors, and booking patterns can enable businesses to personalize their services, create targeted marketing campaigns, and maximize revenue. In the hotel industry, the power of data extends beyond these operational benefits—it also fosters stronger relationships with customers and enhances overall guest experience.

Data Ownership: The Core of the Dispute

The core of the dispute lies in who owns, controls, and gets to use the customer data. When a booking is made through an OTA, the agency collects a wealth of data about the traveler, including their booking history, payment details, preferences, and more. This data is incredibly valuable to hotels who could leverage it to personalize guest experiences and build customer loyalty.

However, OTAs have traditionally been reluctant to share this information with their hotel partners. As a 2023 study points out, the OTAs argue that they collect and manage the data, and thus, it’s their intellectual property. They further claim that sharing data with hotels might jeopardize customer privacy and data security.

Hotels, on the other hand, feel shortchanged. They argue that since they deliver the service and host the guests, they should have access to the customer data to improve service delivery and retain customers. 

The Struggle for Direct Bookings

One manifestation of this data tug-of-war is the growing emphasis on direct bookings by hotels. To bypass OTAs and reclaim their customer data, many hotels have launched campaigns encouraging guests to book directly. By doing so, hotels not only regain control over their customer data but also avoid paying commissions to the OTAs. 

To illustrate this, consider the “Book Direct” campaign launched by Hilton in 2016. Through incentives like exclusive discounts and perks, Hilton successfully drove more direct bookings, regaining control of precious customer data and improving its bottom line.

Navigating the Data Tug-of-War: Possible Pathways 

In the face of this tug-of-war, it’s important to remember that both hotels and OTAs serve the same end customer, and an antagonistic relationship could harm the customer experience. Therefore, a collaborative approach could be beneficial.

While it might seem ambitious given the current climate, it’s conceivable to envision a balanced data-sharing agreement that respects the interests of both parties. For instance, OTAs could share non-sensitive data with hotels, enabling them to personalize guest experiences, while holding back sensitive information to ensure data security and privacy. 

Moreover, technology might offer a solution. The advent of data privacy technologies like homomorphic encryption allows for the utilization of data without exposing sensitive details. Adopting such advanced solutions could strike a balance between the hotels’ need for data and the OTAs’ concerns about privacy and security.

It is, however, uncertain how this tug-of-war will ultimately play out. As negotiations continue and the data landscape evolves, the stakeholders must prioritize customer service and experience above all else. After all, it’s the customers who empower both hotels and OTAs and it’s in their best interest to create an ecosystem that best serves their mutual clientele.

The battle over customer data between hotels and OTAs is a compelling reflection of broader trends in data ownership and privacy. This tug-of-war, which sits at the intersection of technology, business strategy, and customer experience, underscores the central role of data in today’s hospitality industry. 

While the future of this dispute remains uncertain, one thing is clear: customer data will continue to be a highly prized asset in the hospitality industry, shaping the industry’s strategies and dynamics for years to come.