Accommodations are the fastest growing sector in the U.S. travel market.1 And where growth exists, so does opportunity.
Travel insurance presents an attractive new ancillary revenue stream for hoteliers and OTAs in lodging, offering benefits that help protect their travelers and guests.
The lodging industry is in the middle of a revolution now, triggered by market disruptors like Airbnb, rising distribution costs, and competition for online bookings.
Last year online hotel bookings grew in sales by 23 percent for OTAs and 34 percent for private accommodations through online intermediaries like HomeAway and Airbnb. Meanwhile, traditional hotels are expecting to see 5-6 percent increases in annual sales through 2020, according to Phocuswright.2
As private accommodations gain market share, PricewaterhouseCoopers forecasts hotel occupancy rates to decline for the first time in eight years, with revenue per available room (RevPAR) increasing just 1-2 percent in 2017.3
These factors explain hotel leaders’ recent moves to increase revenue by attracting more direct booking, testing out advance-rate discounts by Hilton and Marriott, and heavily promoting their loyalty rewards programs. Reports from Skift show hotels made promising headway last year in these areas.4
However, one opportunity that’s been largely overlooked by both hotels and OTAs is the ability to earn strong commissions from hotel travel insurance products that some consumers are already buying when booking rooms online.
Just look at the airline industry. It has successfully developed billions of dollars in new ancillary revenue streams over the past decade that drive its profitability, including travel insurance.5
OK, so what’s the value to my customers?
Like our popular flight and rental car insurance, many of our hotel insurance products can give American travelers financial protection, emergency medical care and assistance benefits, and peace of mind in case travel plans are disrupted.
Low-cost, flat-fee insurance policies for a domestic reservation of any length include benefits such as baggage loss, delays, and trip interruption. Hotel guests can also select benefits to protect add-on activities such as golf, spa services and conferences.
As advance-rate rooms become more prevalent from large brands like Marriott, Hyatt, and Hilton Hotels, there’s greater consumer risk to mitigate. Guests who book a non-refundable room and purchase our cancellation protection products can also get trip interruption and a range of other benefits for less than the cost of a refundable room. If a customer must cancel for a reason such as a covered illness or injury, their plan can reimburse prepaid, non-refundable costs. This saves the hotel from the burden of refund requests and potentially unhappy customers.
Additionally, we can provide 24-hour assistance services to travelers that some hotels aren’t equipped to provide.
For U.S. residents traveling abroad, our hotel products offer robust benefits for emergency medical/dental care and emergency medical transportation. Not covered by most healthcare plans, international medical evacuations typically generate out-of-pocket expenses ranging from $25,000 to more than $100,000, depending on location.6
For one of our customers, this medical benefit and assistance saved him from becoming a paraplegic while on vacation with his family in Aruba.
After seemingly minor back pain near the pool developed into loss of feeling in his lower body, Stuart was directed to a nearby hospital. There he was advised to undergo an operation to remove pressure on his spine that might otherwise leave him permanently paralyzed. His wife, Linda, contacted our assistance line, and we promptly guaranteed payment of Stuart’s medical bills upon verifying it was a covered medical emergency. We then conferred with Stuart’s doctor and dispatched an air ambulance to transport Stuart back to the U.S. for surgery.
But his condition deteriorated rapidly, requiring immediate surgery. Thankfully Stuart’s surgery was successful, and we later returned Stuart and Linda to the U.S. with a medical escort. To this day, Stuart and his family are grateful for our emergency care that saved him from potentially spending the rest of his life in a wheelchair, as well as staggering medical bills (watch Stuart’s video).
So no matter where travelers like Stuart book their hotel rooms online, we can provide valuable benefits for your customers while generating an attractive ancillary revenue stream. We’ve also developed products specifically for hotel vacation rentals, timeshares, and the self-managed business travel sector.
We make the process simple for you. We manage hundreds of integrations in the online booking path every year that can be performed seamlessly within weeks. And using best practices developed by our marketing analytics and optimization team, we can implement and optimize low-friction offers that have no material impact on partners’ conversion rates.
For a free consultation or more information about our hotel travel insurance products, please contact our sales team.
Terms, conditions and exclusions apply.
Insurance benefits underwritten by BCS Insurance Company or Jefferson Insurance Company, depending on insured's state of residence. Plan(s) may not be available in all jurisdictions. Allianz Global Assistance and Allianz Travel Insurance are brands of AGA Service Company. AGA Service Company is the licensed producer and administrator of these plans and an affiliate of Jefferson Insurance Company. The insured shall not receive any special benefit or advantage due to the affiliation between AGA Service Company and Jefferson Insurance Company. Non-Insurance benefits/products are provided and serviced by AGA Service Company. Consumer may be responsible for charges incurred from outside vendors for assistance or concierge services. Contact AGA Service Company at (800) 284-8300 or 9950 Mayland Drive, Richmond, VA 23233 or firstname.lastname@example.org.
1. “Here to Stay: Increasingly Mainstream Private Accommodations Reshaping Lodging Distribution,” Yahoo Finance.
2. U.S. Online Travel Overview 16th Edition, Phocuswright (January 2017)
3. “This Is What Next Year Will Be Like for the U.S. Hotel Industry,” Skift.com.
4. “Hotel CEOs Aren’t Slowing Down Their Push for Direct Bookings,” Skift.com.
5. “Airline ancillary revenue forecast to hit almost $70 billion this year,” Tnooz.com.
6. “Five myths about medical evacuations,” USA Today.
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