How has the internet changed the way that hotels operate and what does this mean for hoteliers?
The Internet has been a business transformational experience for hoteliers who have fully embraced the Internet as a sales channel. According to a report from PhoCusWright Inc., next year for the first time transactions on the Internet will account for over half (54%) of all U.S. travel bookings.
This is not however the whole picture as other studies highlight that 75% of all hotel bookings are either booked or influenced through online research. Internet usage is of course driving the demand. Internet usage in the UK now stands at over 65% of the population with similar figures throughout Europe and the United States.
Consumers are turning to the internet over the high street travel agent due to speed, choice and flexibility. If we look back to the process involved in booking an independent hotel fifteen to twenty years ago it is easy to see why the hospitality industry has benefited from the Internet.
A telephone call or letter to the local tourist board may or may not result in a brochure being sent. Further calls or written requests direct with the hotel, a deposit would be required and written confirmation received. Little wonder that consumers are booking with shorter and shorter lead times!
Internet users will book either directly with the hotel (direct) or via 3rd party commissionable agents like Super Break or Active Hotels (in-direct). The management of these and other channels is a key component of the revenue management function. Third party agents can be a savoir for many businesses, particularly if their own Web sites online presence is poor.
Relying too much on the in-direct channel can also be detrimental to your business. Occupancy might be reasonable but are you achieving the Revenue per Available Room? (RevPAR). In-direct channels sometimes also require room allocations throughout the year, even though the hotel might be able to sell some periods many times over at higher rates.
The Town House Company, the Edinburgh based hotel operator who own and operate four 4/5 star hotels in the city are a case in point. Hans Rissmann, Operations Director explains "we have worked very hard on our Internet presence over the years and this channel now accounts for 40% of our accommodation sales. It has been noticeable however the last few years that at certain periods we could have sold more of our inventory direct, at higher net revenue. By analysing denial reports we have cut back on agents and are seeing the benefits."
Jeremy Legg, Commercial Director at Easy Breaks, a UK short break Web site operator with over 200 hotels sign up is quick to point out that 3rd party intermediaries play an important role in the revenue mix. "Our business has grown 100% a year for the last three years and online business has gone from zero to 35% of our sales over the same period. Without the business we provide some hotels they would literally shut their doors."
The major hotel brands have been fighting the in-direct channel for control over the brand and rate parity for years and the direct channel is clearly emerging as the winner in this territorial battle. This is likely to also be the case for independents as they increasingly become frustrated by the in-direct channel using brand name for paid search marketing and demanding lowest rate commitments.
Having established the growth in online business, let's look at how customers research and book accommodation online. Customer research by Yahoo within the travel sector indicates that consumers visiting a site are 5 times more likely to book in the 6 months following the first visit than at the first visit. This has implications for hoteliers:
- If you utilise an online booking system ensure rates are published 12 months out
- Make it easy to bookmark your site or send to a friend
- Update your content regularly
- Allow brochures and information to be downloaded / printed
With so many users using the Web for comparison, rate management is critical. The biggest deterrent to booking online is rate disparity. If your rates are higher on your own site than the in-direct channel, your direct online bookings will suffer. Consider offering "lowest rate guarantees" on your Web site.
The internet offers more information to consumers researching hotels than was ever previously envisaged. More and more of this content is Consumer Generated Content (CGC), images, reviews, video, sound, etc. Because of the explosion in CGC content it is more and more important hoteliers monitor their brand online and respond accordingly. You might not be monitoring TripAdvisor but over 24 million consumers are each month.
TripAdvisor allows management to respond to reviews and correct any inaccuracies. With so many blogs and social media sites and bulletin boards, monitoring your brand is simplified by setting up alerts. Google Alerts is a free service that alerts you any time your domain name or company name is mentioned online. Alerts can be received daily, allowing you to respond to any articles in a timely fashion.
What steps can you take to market your site online? Online visibility is vital and the at the most basic level this means being found for your own hotel name. Having in-direct channels site appear above you in the major search engines will mean you are selling your own inventory at reduced RevPAR, or worse not selling because you are closed out.
According to HitWise, 53% of UK visits to Hotels websites came from a search engine in April 2007 with 79% of that from Google - up 14% year on year. Yahoo Search was the number 2 search engine, with search to UK hotels up 28% year on year in April. Organic search and paid search programmes should focus on these two search engines.
Your online marketing specialist or marketing team should then be able to analyse conversion rates using a Return on Investment (ROI) tracking tool or web analytics programme (Google Analytics being a good free tool). These tools allow you to determine the conversion rates for key phrases in search engines. Particularly important if you are purchasing key phrases via a paid search programmes at up to £2 per visitor.
Don't forget the 47% of visitors who don't come from search engines. The vast majority of these will be referrals from other Web sites, some paid and some free. Make sure you track the business from each site so you can make educated decisions about where to advertise in the future.
Customer Relationship Management should be viewed as an extension of online marketing. Do you harvest and segment customer data for direct mail and e-mail marketing? Response rates from customer loyalty and opt in e-mail marketing programmes offer significant revenue opportunities.
Web 2.0 has become the most talked about aspect of Online Marketing over the last 12 months. This is the term given to second generation of Web sites which encompass key features of the social networking sites like uTube & Facebook. Social Network sites aim to build a community by liking groups of people with a common interest.
The power of this is easy to see, social networking sites are extremely popular and by gaining exposure on these sites, the visitor numbers can be significant. Some interesting Web 2.0 trends to look out for include:
- Consumer Generated Content (having visitor feedback on your site)
- Setting up a blog site
- Sharing imagery (video / pictures)
- Tagging your site for social media sites
- Offering content via Really Simple Syndication (RSS)
The impact of Web 2.0 on the travel industry is currently minimal; with HitWise indicating that only 3 or 4% of traffic to travel sites is currently coming from social media sites. Considering search engines deliver over 50% of visitor traffic to hotel Web sites in the UK, perhaps it is time for you to focus on Web 1.0?
About the Author :
Mark Forrester is the founder and Managing Director of Occupancy Marketing, an Internet Marketing services company focussed on the hotel and tourism sector. The company specialises in driving direct, non commissionable bookings via the World Wide Web. www.occupancymarketing.com, 
