Domestic OTAs to Pass the Limit of Daily Bookings through Personalized Recommendation

mobile

In 2017, domestic hotel reservation businesses centered on last minute deals began to move along the current trends through individualization by analyzing big data. Around 5 years ago, an idea suggesting that it is actually worthy to sell off empty hotel rooms became a popular boom, and therefore daily reservation agencies gradually gained a blaze of publicity by selling unsold domestic hotel rooms at half the price. Accordingly, daily reservation agencies began to spring up everywhere. However, this price war, which first stood as a great strength, ironically has turned into poison.

A number of famous hotels experienced sweetness by filling the rooms with customers at a lower price regardless of the offseason. As these hotels continued to lean on daily reservation agencies, customers were able to stay in 4~5 star hotels at a low price around 60000 KRW. Despite the cost benefit, the customers became accustomed to the low price revealed hostility toward the peak season price that is approximately twice or three times more expensive. With such denial, those hotels that had been leaning on daily reservation sales had to suffer from the reduction in their total sales.

For example, a branch of a famous franchise hotel in Myeong-Dong had to close in less than two years due to the decrease in the peak season sales. Marking this instance as an onset, many hotel businesses began to reduce their dependence on daily reservation agencies. As a result, a number of daily reservation agencies closed business in a row.

However, these consecutive closures of businesses brought some benefits as well. For instance, a number of domestic enterprises who realized the impossibility of surviving solely with last minute deals decisively invested in developments of personalization and individual service using big data.

Daily Hotel, one of the online sales agencies centered on last minute deals, launched a curation and concierge system through big data analysis in March. Since the launch, the total sales have gone up twice more compared to the same month last year. Rather than providing a bulk list of last minute deals, it provides an individualized recommendation by analyzing customers’ prior reservation records and search information.

Today, not only daily reservation agencies but also domestic travel agencies are showing a movement towards individualization. On February, a domestic travel agency Rplay beta launched an individualized curation travel service Travelseed. Travelseed is a platform allowing everyone to make one’s own travel packages and sell them. It collects data on members’ preference and age to recommend the most reasonable travel package for each individual member.

Having been undervalued that they are incapable of passing the limit of daily reservations, however, internal hotel reservation agencies and domestic travel agencies exhibited the rise in sales through individualization by big data analysis. It is significant to notice that these two agencies are closely associated with each other in their recent improvement.

In the global perspectives, a notable American travel startup Hipmunk recommends the most timely travel package for customers based on their Google calendar information in smartphones. Corresponding to the direction of America’s startups who lead the commercialization of new technology, Korean startups are ready to survive the Fourth Industrial Revolution which is upcoming soon.  

Bok Yeon is a Chief Communications Officer at TripBtoZ, an online travel agency that operates based on the personalized recommendation engine. He makes the best out of his passion for travel by writing about innovative travel startups in Korea. If you want to see the story of your startup on Tech For Korea, please reach him at bokyeon.hwang@techforkorea.com.

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *