In D-Edge’s latest Hotel Distribution Report for 2024, an analysis of the past five years reveals big shifts in online booking behavior, especially following the challenges posed by the COVID-19 pandemic.

The report, which draws from the data of almost 5,000 independent hotels and small hotel groups across Europe and Asia, provides insights for hoteliers looking to navigate the evolving digital landscape. The report highlights the recovery of international travel, with Europe leading the way. In 2023, international travel accounted for 69% of online booking revenue in Europe, compared with 18% in Asia.

Here’s a breakdown of the key findings and what they mean for the industry moving forward:

Digital revenue hits record highs

The report reveals an increase in digital revenue for hotels. In 2023, the digital revenue index (DRI) for Europe surged by 68% compared with 2019, while Asia saw an impressive 52% growth. These numbers represent not only recovery from the pandemic but also a significant leap beyond pre-pandemic levels.

Average transaction prices (ATP) have also been on a steady climb, with guests paying more per booking in both Europe and Asia. In Europe, guests paid 37.7% more in 2023 compared to 2019, while in Asia, the increase was 23%. The data suggests that despite concerns over inflation, there is still room for further growth in ATP, especially in Asia.

Strong growth in average daily rates

Average daily rates (ADR) have seen strong growth, driven by a combination of strong travel demand and high ATP. In Europe, ADR grew by 33.8% compared with 2019, while in Asia the increase was 33.3%. However, the report notes that real rate growth was tempered by high inflation rates, indicating a potential price ceiling.

While Europe has seen stabilization in the average length of stay (ALOS), Asia is yet to fully recover pre-pandemic numbers. In 2023, Europe’s ALOS matched 2019 levels, while Asia’s remained 7.0% short. The slow recovery of international travel has been a contributing factor to this discrepancy.

Direct bookings vs. indirect bookings

Direct bookings have seen an increase in market share, with Asia leading the trend. In Asia, direct bookings accounted for 32% of online revenue in 2023, while in Europe the figure was 28.8%.

Booking.com continued to dominate the online distribution space in Europe, generating 43% of online revenue for hotels. However, the report indicates a re-diversification of distribution channels, with Booking.com losing some ground to other OTAs in 2023. 

In Asia, the distribution landscape is more fragmented, with direct bookings commanding the highest share of online revenue.

Regional variances in direct market share

There are significant variances in the share of direct revenue by hotel category. In Europe, five-star hotels demonstrated the highest share of direct revenue at 38%, while two-star hotels generated only 18% of online revenue from direct bookings. In Asia, the gaps among hotel categories were even more pronounced, with five-star hotels receiving 56% of online revenue through direct bookings.

Travelers are also booking further ahead, with long-lead bookings accounting for a significant portion of revenue. In Europe, long-lead bookings exceeded 2019 numbers by 21.2% in 2023, while in Asia, the increase was 19.0%. This provides hoteliers with more time for revenue strategy and operational planning.

High cancellation rates remain a concern

Cancellation rates, although back to 2019 levels, remain high. In 2023, 23% of bookings were canceled in Europe, while in Asia, the figure was nearly one-quarter. This makes forecasting and revenue management quite challenging for hoteliers.

The report also emphasizes that while the hotel industry has shown admirable recovery, economic and geopolitical factors, including inflation, high interest rates and trade disruptions continue to pose challenges to the recovery of international tourism.

The report suggests that hotels employ new strategies to capture greater market share and higher profitability, from increasing direct bookings to diversifying distribution channels and investing in technology, as the industry adapts to a post-pandemic world.

*This story originally appeared in WebinTravel, a fellow Northstar Travel Group publication.