Hotel room bookings through online travel agencies on the rise

The number of luxury hotel rooms in Vietnam booked through online travel agencies (OTAs) continued to rise last year, making up 23.4% of the total, compared with 21.4% a year earlier, according to Grant Thornton Vietnam.

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A luxury resort on Phu Quoc Island off the southern province of Kien Giang. The number of luxury hotel rooms booked through online travel agencies is expected to continue to rise – Photo: Dao Loan

Its latest survey on the local upscale lodging industry, called "the Vietnam Hotel Survey 2019," found that the remaining rooms were sold through other channels, such as direct booking with hotels (18.2%), wholesalers/global distribution systems (7.1%), tour operators and travel agencies (27.6%) and corporations (16.4%).

Reservations through travel agencies and tour operators, though they continued to be the largest channel, fell a sharp 5.1% in 2018, when four-star hotels suffered a heavy fall of 7.1%, while their five-star counterparts fell by 2.8%; they were replaced by the increase in the use of OTAs and other channels.

By star rankings, the highest change in reservation channels was 2.3% for wholesalers/global distribution systems among five-star hotels and 2.8% for OTAs among four-star ones.

The corporate channel’s portion slightly increased from 16.1% in 2017 to 16.4% in 2018, mostly due to the rise in this channel for four-star hotels.

Statistics from the Vietnam National Administration of Tourism show that so far this year, the country has operated some 29,000 lodging facilities, including 280 four-star and 146 five-star hotels, which are able to offer a total of more than 590,000 rooms.

According to some hotels, they have invested heavily in marketing and website design and have adopted more flexible pricing policies, but their rates of direct bookings remain modest. As a result, they are still cautious about reducing the number of rooms they offer for sale through OTAs.

A director of the business division of a five-star hotel in downtown HCM City, who declined to be named, told the Saigon Times that the rate of room reservations through OTAs at his hotel is currently at 20%, lower than the 2018 figure of 25%.

One of the hotel’s precautionary measures is to make the provisions of their contracts with OTAs stricter so that these agencies cannot offer their rooms at prices lower than those listed on the hotel’s website.

He pointed out that a large number of OTAs have reduced part of the commission they receive from their hotel partners to cut prices for their own clients, so the prices on this online channel are usually lower than those offered by the hotels. This has enticed scores of clients to book their rooms in this manner.

“This leads to unhealthy competition and must be strictly prevented,” he stressed.

Foreign OTAs are dominating the local market, he said, adding that as a major downtown hotel, his hotel only pays an 18%-20% commission on the sales of rooms through OTAs.

However, hotels that are small or located in unfavorable places are charged much higher fees.

Saigon Times