Coming Up Of New-Age Hospitality Aggregators
The hospitality industry has witnessed tremendous growth and shifts in the past decades. But, the second half of the last decade has been a turning point for the industry in India. Before 2015, the starred hotels hosted a niche of standardized services. However, in 2015, the industry saw the rise of services that were a combination of cab aggregation model and B&B. The industry has not been the same ever since.
Budget accommodations have always been unlike the starred category hotels where the standards of services are predefined and known to the guests. Despite this, every hotel followed its own SOPs and approaches. The new age aggregators took the challenge to provide the budget travelers with clean rooms and basic amenities at an affordable price. They leveraged the power of technologies like Artificial Intelligence (AI), Machine Learning (ML) and Internet of Things (IoT) to organise an otherwise fragmented and scattered market which caters to around 67.7% Indian population.
These tech savvy companies acknowledged the importance of online presence and focused on improving and rebranding properties’ presence across OTAs and other platforms. Gradually, all the properties under the aggregators were rebranded under a common name. The semi-skilled workforce was trained to follow SOPs and the lethargic front office staff was replaced with young, enthusiastic and skilled word force.
The aggregators did not just stop at revamping the accommodations; they also ensured that customers booked those places. The bookers were showered with substantial discounts and deals without compromising the property’s ADR. They were benefited with reduced booking time, a quicker response to customer queries, and a seamless user interface. The aggregators also brought the limelight on a property’s reviews and reputation (Net Promoter Scores). These ensured more accommodation providers joining the forces with aggregators and travelers choosing these swany accommodations. This in turn led to demand for a skilled workforce for managing operations, business development, technology and other aspects. The aggregators also involved the hotels in programs like Minimum Bookings Guarantee and Money in Bank which ensured enough cash flow even during the low seasons.
However, drinking too much drowns oneself. That is exactly what started happening to these aggregators towards the end of 2018. People by then had become used to booking the rooms at economic pricing. This initiated a price war in the industry.
The aggregators were bleeding, as a result of which, they asked the accommodation providers to share some burden by increasing the commissions they charged. The focus shifted from ADR to filling up the rooms, leading to marginalised profits for the accommodation providers. Hoteliers faced a disruption in their monetary balance owing to unexplained delays in payments from the aggregators. Travelers and bookers started complaining about depleted service qualities. Today, both the business parties involved (aggregators and accommodation providers) are often seen blaming each other rather than fixing the responsibility and prioritising the guests. Many a time, accommodation providers jump ships and join a different aggregator for better margins. It has been observed that several accommodations contract with multiple online budget aggregators (OBAs) to maximise bookings.
Overtime, several accommodation providers have filed lawsuits against the aggregators for wrongful billing, cheating and swindling them of money. Properties are now realizing another drawback with the aggregators, that of the loss of identity. Because they operate under an umbrella brand, each property loses its identity and uniqueness. Properties have to wait for months to get their listings back once they decide to sever ties with the aggregator. Over and above, they need to work harder to rebuild their brand in the market.
The new-age hospitality aggregators have surely left an enormous impact on the industry. They have attempted to bring a well-sought balance in the hospitality ecosystem. However, there is a long way to go before they regain the trust of the stakeholders.
The author is Aeijaz Sodawala, CEO of eZee Technosys
