Social Bookings, The Next Frontier in Direct Revenue

15th Oct 2022

Greg BermanNB: This is an article written By : Greg Berman COO, Shiji Distribution Solutions at Shiji Information Technology Co.

A new trend in China is turning the “Direct Bookings” paradigm on its head. 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 trend is poised to change the international markets in the near future, in this article I discuss what is social bookings and how it works.

A New Booking Engine

Throughout my 26 years in distribution, while we’re always on the lookout for the next big thing, one thing constant factor is a unique differentiator– newer USPs and effective innovations that can give us the edge. Traditionally, distribution can be divided into global distribution, OTAs, tour wholesale, and the meta category, such as Trivago, Google, Skyscanner, and so on.

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

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

Technology providers are currently leveraging 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 own website, and suggest hotel properties and rooms according to a user’s behavior on the host social network or digital platform, using their algorithms to make those suggestions more tailored, which are proven to be better at driving traffic to the point of acquisition.

Mini apps are generally the solution companies adopt to take part in social networks’ marketplaces, and, technically speaking from a developmental point of view, the code that needs to be written is largely the same, simplifying the process of creating solutions for different platforms.

Since Shiji launched this solution in June for Douyin (China’s version of TikTok), 20 hotel chains have come on board and 11 of them have already gone live. As the engine is directed at Chinese travelers and inventory, most of these chains are from Hong Kong or China, however, there are already first adopters in very large international hotel chains with inventory in China. ByteDance most likely plans to extend Douyin’s vast e-commerce capabilities to the 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 counts 1.29 billion users, Douyin has around 700 million, and AliBaba reaches 1.1 billion users.

Social Booking Opportunities for Hoteliers in China and Abroad

As a hotelier, partnerships for connectivity with these players’ booking engines open up a way of targeting customers according to their proclivity to spend and allow hotels to show their guests offers that they previously would not have had access to based solely on hotel loyalty status.

Apart from enhanced insight into customer data that would be otherwise unavailable, measuring distribution ROI accurately becomes more achievable. I don’t believe anybody can truly, scientifically get to believable measurable business benefit results without getting this close to the coalface and spend.

Additionally, when simply trying to push ads or content based on a customer’s online consumption behavior via the current targeted digital marketing strategies, costs involved can be very high, while the mini app solutions involve only a small percentage of distribution agreement costs and reach guests with far more relevant, potentially lucrative, and tempting suggestions.

Source: Shiji Distribution SolutionsSource: Shiji Distribution Solutions

As relevance goes, current research already shows what the next few years may look like online. In 2020, TikTok had 1 trillion location check-in video views and 159% growth rate on travel video interaction, as well as 147 million searches related to #travel and #tourism. Recent Google statistics show that 40% of young people between the ages of 18 and 35 aren’t using textual search when looking for restaurants and hotels, they are instead doing their research through video.

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 drive offers to him that may actually convert into a booking? The purchase is by no means guaranteed, but it is heavily weighted in favor of that hotel chain.

But one could wonder whether, on a more international scale, anyone would be able to build a platform that is equally all-inclusive as what the three Chinese giants offer, and if similar solutions could also be rolled out for international customers and markets. What I believe is that we can already see indications of distribution moving towards this trend. For instance, Elon Musk’s recent announcement of his intention to make Twitter into a super-app. We are left to wonder if this could be the very first seed, the initial bits and pieces needed to build an app that supports this distribution model in the western world, above all when we consider the amount of funding such a project would require.

What I also see as a possibility are existing apps like TikTok extending their Social Booking connectivity to international inventory first, and then expanding to non-Chinese travelers with time. We all know there is a reason why TikTok has worked so hard to conquer the amount of eyes-on-glass that they did, and that is to produce more revenue by starting on different verticals, different opportunities to merchandise and to convert. User-generated content is an important thing, leading to an even bigger phenomenon with influencers that can help drive those initiatives. Even other platforms, such as Facebook, are following suit. When Meta added reels to Facebook, they already had the advantage of knowing what works and what doesn’t from TikTok’s experience, and this may even lead them to better results as they have the advantage of making fewer mistakes.

Possible Challenges

When speaking about the Chinese traveler, there are fewer privacy concerns and governance that come into play. Unlike in most other parts of the world, the mining of all that behavior and consumption data on apps like Douyin, WeChat, and AliPay isn’t as tightly controlled as it is on Facebook, Apple, or Google. For that reason, much more information is readily available to a hotel company that partners with Chinese platforms, while still abiding by the imposed privacy rules. A hotel company can give the platforms certain offers, a range, and distribution so that they can identify triggers and send those promotions in a more targeted, effective manner.

In the Chinese domestic market, the three superapps have something of an unfair advantage over competitors such as Agoda or due to regulations, but that’s not to say that the government can’t turn around one day and realize that this has to slow down and the superapps’ ability to make conversions and earn money in that way can suddenly change.

Another factor to consider is exposure, as a majority of people in China are on at least one of these three apps every day, but nobody visits Agoda or unless they have something specific to research.

Unlike cross-border payment solutions, which are very heavily and uniformly regulated worldwide (think how easy it is for a traveler to pay for a purchase in Las Vegas, Singapore, or wherever they are using AliPay on their phone), this model cannot be easily transported to other countries.

Globally speaking, privacy concerns remain one of the biggest challenges for these distribution channels to remain as they are. While the status quo can change at any time, even within China, ultimately the growth and adoption will depend on creative solutions to work within the landscape, whichever country one is aiming for. But it is nothing new, much the same way companies are currently having 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 app, or apps, that are as integrated and far-reaching as their Chinese counterparts is something that still remains to be seen in the western world.

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