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Social reservations, the new frontier of direct income

A new trend in China is shaking up the “direct booking” paradigm. A hybrid model between third-party distribution and direct bookings is taking the market by storm, requiring a very different approach to traditional OTA bookings and direct bookings. This Social booking The trend is about to change the international markets in the near future, in this article, I discuss what social booking is and how it works.

A new booking engine

Throughout my 26 years in distribution, as we are always on the lookout for the next big thing, one constant factor is a unique differentiator: new USPs and effective innovations that can give us the edge. Traditionally, distribution can be divided into global distribution, OTA, tour wholesale, and meta-category, like Trivago, Google, Skyscanner, etc.

In China, some of what is available on the market is at the next level in terms of efficiency, but, unfortunately, would be difficult to implement in other parts of the world. A few years before the pandemic, we had a lot of business with a pseudo-booking engine on WeChat – a giant multi-purpose platform – which is almost a hotel’s branded booking engine within the app that doesn’t does not lead to very high distribution costs. . Similar solutions are also available on TikTok and AliPay.

Now that the world is recovering from the effects of the pandemic, hoteliers around the world are preparing for the rebound in Chinese demand once border restrictions are lifted and, as a technology provider, we also anticipate the next iteration of these solutions. . . This new category is what we call social booking, and it gives businesses, including hotels, the ability to sell directly to consumers.

Technology providers are currently harnessing the social booking space to create solutions in the form of mini-apps that bypass traditional booking engines, such as OTAs or even the hotel’s website, and suggest properties and hotel rooms based on a user’s behavior on the host social network. or digital platform, using their algorithms to make these suggestions more personalized, which have proven to be more effective in driving traffic at the point of acquisition.

Mini-apps are usually the solution companies adopt to participate in social media markets and, technically speaking from a development perspective, the code that needs to be written is largely the same, which simplifies the process of creating solutions for different platforms.

Since Shiji launched this solution in June for Douyin (the Chinese version of TikTok), 20 hotel chains have onboarded and 11 of them are already online. As the engine is geared towards Chinese travelers and inventory, most of these chains originate from Hong Kong or China, however, there are already early adopters in very large international hotel chains with inventory in China. ByteDance most likely plans to expand Douyin’s vast e-commerce capabilities to global TikTok, and therefore, outside of China, Social Booking will also follow.

Competition in the Chinese market is extremely tight, but there are three major players: WeChat has 1.29 billion users, Douyin around 700 million, and AliBaba reaches 1.1 billion users.

Social booking opportunities for hoteliers in China and abroad

As a hotelier, connectivity partnerships with these players’ booking engines open up a way to target customers based on their propensity to spend and allow hotels to provide their customers with offers that they otherwise would not otherwise have had. access previously only based on hotel loyalty status.

Along with a better understanding of customer data that would otherwise be unavailable, accurate measurement of distribution ROI becomes more achievable. I don’t believe anyone can really, scientifically, achieve measurable, credible results in terms of business benefit without getting so close to the face of coal and spending.

Additionally, when simply trying to deliver advertisements or content based on a customer’s online consumption behavior through today’s targeted digital marketing strategies, the costs involved can be very high, while mini- applications only involve a small percentage of the costs of the distribution agreement and reach customers with much more relevant, potentially lucrative and tempting suggestions.

Source: Shiji Distribution Solutions
Source: Shiji Distribution Solutions

In terms of relevance, current research already shows what the next few years online could look like. In 2020, TikTok had 1 trillion check-in video views and a 159% growth rate on travel video interaction, as well as 147 million searches related to #travel and #tourism. Recent statistics from Google show that 40% of young people between the ages of 18 and 35 do not use text search when looking for restaurants and hotels, they do their searches by video instead.

All this shows us the importance of video algorithms in platforms such as TikTok. When a social network has data revealing that a specific customer out of Guangzhou visits Vietnam twice a year and frequently consumes content related to the country, why not let a Vietnamese hotel chain provide him with offers that may turn into reservation ? The purchase is by no means guaranteed, but it is heavily weighted in favor of this hotel chain.

But one wonders if, on a more international scale, someone would be able to build a platform as inclusive as what the three Chinese giants offer, and if similar solutions could also be deployed for international customers and markets. What I believe is that we can already see signs of distribution moving towards this trend. For example, Elon Musk’s recent announcement of his intention to make Twitter a super app. We wonder if this could be the very first seed, the initial pieces needed to create an app that supports this distribution model in the western world, especially considering the amount of funding such a project would require.

What I also see as a possibility are existing apps like TikTok first extending their social booking connectivity to international inventory and then expanding to non-Chinese travelers over time. We all know there’s a reason TikTok has worked so hard to capture the amount of eye-on-glass they’ve done, and that’s to generate more revenue by starting in different verticals, different opportunities commodity and conversion. User-generated content is a big thing, leading to an even bigger phenomenon with influencers who can help drive these initiatives. Even other platforms, like Facebook, are following suit. When Meta added Reels to Facebook, they already had the advantage of knowing what works and what doesn’t through TikTok’s experience, and it may even lead them to better results because they have the advantage to make fewer mistakes.

Possible challenges

When it comes to the Chinese traveler, there are fewer privacy and governance issues that come into play. Unlike most other parts of the world, pulling all this behavior and consumption data onto apps like Douyin , WeChat and AliPay is not as tightly controlled as Facebook, Apple or Google. For this reason, much more information is readily available for a hotel company that partners with Chinese platforms, while respecting the privacy rules imposed. A hospitality business can give platforms certain offers, range, and distribution so they can identify triggers and send those promotions in a more targeted and effective way.

In China’s domestic market, the three superapps have an unfair advantage over competitors such as Agoda or Trip.com due to regulations, but that doesn’t mean the government can’t one day turn around and realizing that this needs to slow down and the ability of superapps to convert and earn money in this way can suddenly change.

Another factor to consider is exposure, as the majority of people in China use at least one of these three apps every day, but no one visits Agoda or Trip.com unless they have something specific to look for. .

Unlike cross-border payment solutions, which are very heavily and evenly regulated around the world (think how easily a traveler can pay for a purchase in Las Vegas, Singapore, or wherever they use AliPay on their phone), this model doesn’t may not be easily transported to other countries.

Globally, privacy issues remain one of the biggest challenges to keeping these distribution channels as they are. While the status quo can change at any time, even in China, ultimately growth and adoption will depend on creative solutions for working in the landscape, regardless of the country targeted. But that’s nothing new, in the same way businesses currently need to adapt to cookieless ads, being flexible and adapting to how consumers choose and research their interests and products is the way forward. .

And finally, the existence of an application, or applications, as integrated and extensive as their Chinese counterparts is something that remains to be seen in the Western world.

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Greg Berman is COO of Shiji Distribution Solutions. In his more than 31 years of experience in business operations, marketing, sales, software development and IT in industries such as hospitality, government and telecommunications, Greg has led businesses through countless technological improvements.

Shiji Distribution Solutions (“SDS”, formerly CHINAonline), a division of Shiji Group (Shenzhen Stock Exchange: 002153), is a leading provider of online distribution technology and services. Founded in 2007, SDS has built the first online travel distribution platform in China. It has grown both nationally and internationally and now has offices in the US and UK. Over 70 hotel groups, over 200 distribution channels, over 2,500 independent hotels and 30,000 properties use SDS to streamline their distribution.

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