|The Internet and hotels: Going direct is be$t|
|Thursday, 11 March 2010 22:00|
Rules of the game:
Everyone knows that if you are in the hotel or tourism business, a good web site is important. And that the Internet in general can be a valuable part of how you generate revenue.
But you may not realize just how important until you take a step back and get some data from the industry as a whole, particularly during challenging economic times.
Consider that overall, hotel bookings dropped during the very difficult year that was 2009, it is truly remarkable that there was growth in this particular channel — compared to voice, global distribution service (GDS), wholesaler or travel agent channels that many hotels also rely on.
Here are some other eye-opening statistics that illustrate the growing importance of the Internet:
In very simple terms these numbers show just how important the Internet has become as a revenue producing strategy for hotels. Clearly, even in — especially in — tough times, a well-executed Internet strategy can generate revenue and usually at a return on investment (ROI) much higher than that of other marketing and sales channels.
Not all online channels are equal
But, and it’s a big BUT: Not all online channels are created equal, at least as far as your bottom line is concerned. Yes, spending and bookings on-line have increased, but especially in tough times, many hoteliers resort to deep discounting and a rush to get more booking from popular online travel agencies (OTAs) — which can be a deadly combination.
OTAs like Expedia and Travelocity produce bookings, no question. But at what cost? Their commission structures can leave you with net rates of up to 40 percent less or more than your standard rack rates. You may be filling rooms, and it’s tough to not want that kind of help to improve occupancy rates (especially if you are in the condo-hotel business, as many properties are in the Turks and Caicos Islands, and those pesky owners want to see such things), but are you making money? (And are those pesky owners making money?)
Let’s go back to the survey: In 2009, 70.9 percent of online bookings came from the direct online channel (i.e., the major hotel brands’ own web sites), while 29.1 percent came from the indirect online channel (the OTAs). This constitutes a significant increase of the contribution from the OTAs compared to 2008, when 75.2 percent of online bookings came from the direct online channel, while 24.8 percent came from the OTAs.
So while hotels may be getting more online bookings, it’s important to look at specifically where these booking are coming from — and how much they are costing you.
The best approach is always the direct channel — driving people to your web site to complete a booking there. Your web site should always have the best possible rate a consumer can get anywhere, and even offering value added incentive exclusive to your web site (or social media channel) is a good strategy to keep people coming back to you directly. Sounds simple, but it’s amazing how many hotels can get sucked into the OTA trap and become dependent on them.
And the obvious things make a huge difference in improving direct booking on your site:
Worth a thousand words
Your web site should be a glorious representation of all that you have to offer — pictures, videos, testimonials, awards, etc. — but at the end of the day, it should mainly be a way for people to easily book a stay with you!
There is a cost, of course, in building up the traffic to your web site. We have discussed in previous columns ideas like e-mail marketing, search engine optimization, social media, paid search and other tactics — none of which are free. But in the big scheme of things, they provide a much higher ROI than other marketing tactics, and are better for your bottom line that relying on indirect channels like OTAs too.
I’ll leave you with some words of wisdom from a hotel industry marketing expert, Max Starklov:
“Even in this economy, you should not decrease or eliminate your hotel Internet marketing budget. The Internet, and especially the direct online channel, is the only growth channel for hoteliers and the only “light at the end of the tunnel” in this environment … Whatever the case might be, the online travel channel, and especially the direct online channel, provides hoteliers with the only viable option for any growth during this recession.”
Mike Sottak is the founder of Wired Island, a full service Internet marketing firm based in the Turks and Caicos Islands. He has more than 20 years experience in high technology marketing. Contact him at
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