|
|
Report That Makes Sense Growing online distribution drives demand for new intelligence tools |
By Max Starkov and Jason Price, January 2003
This year over 13% of all revenues in hospitality will be generated from the Internet. Three years from now the Internet will contribute over 20% of all hotel bookings and convincingly surpass total GDS bookings. With such an industrial shift toward the web, hoteliers need intelligence tools to measure performance against its competitive set on direct and indirect channels outside of the GDS. Hoteliers are in search of Internet intelligence reports that make sense. Here�s what sales & marketing, and revenue managers should be asking in order to competently formulate their online pricing and inventory control strategy:
Traditional vendors continue to provide the current landscape of intelligence distribution reports and focus primarily on the GDS. Recently some of these vendors added online distribution sections supplementary to their predominantly GDS reports. Unfortunately these reports offer hoteliers only a fraction of the big picture of online distribution--Pricing. These rate-focused reports, like all GDS oriented reports, deal primarily with the daily rate information across online services-- helpful but only a fraction of the information hoteliers realistically need to compete online. Especially since most online hotel bookings don�t even come from the GDS but through merchant programs or Internet only reservation systems. These reports provide little analysis on how hoteliers can increase market share, re-gain control of their online pricing from online discounters, or how to utilize direct-to-consumer channels as opposed to merchant services. Sadly, these reports implicitly suggest overuse of intermediaries at the expense of the hotel�s own direct distribution strategy. If anything, these reports have aided and abetted those intermediaries to become the 800-pound gorillas of today. So what�s missing? When it comes to the Internet, here are the two most critical questions that should be addressed and that are curiously absent from the traditional distribution intelligence reports:
A sensible Internet intelligence report will offer:
Price vs. Positioning Traditional intelligence reports provide GDS pricing data but do not address the critical question of positioning of hotels on major online agency/intermediary services and the search engines. Hoteliers need positioning information (e.g. ranking) in order to make sound and effective marketing judgments. The order in which the hotel appears on a search engine or online travel agency/intermediary website is of absolute importance otherwise no one will find your hotel rates. Here's what Bear Stearns analysts say about Internet positioning on major distribution channels: "Our research uncovered that being listed in the top five assures the highest level of bookings, and that after the fifth slot, bookings drop dramatically.� Survey after survey confirms the existence of the so called �50% Factor� - roughly 50% of people that visit the first page go to the 2nd page, and only 50% of the people that land on the 2nd page go to the third page, and so on.� In summary, positioning is equal if not more important than pricing for the hotelier to make sound revenue management decisions. The "online purchasing behavior" is extremely important to keep top of mind when exploiting any competing hotel�s Internet strategy. Here are three scenarios to illustrate the importance of positioning over pricing:
Roughly 52% of all online bookings in 2002-2003 will be completed directly through hotel-sponsored websites. If your hotel is not generating at least 52% of its online bookings directly from the hotel website then you are not competitive on the Web and run the risk of long term price and brand erosion caused by the intermediaries. The foundation of a direct distribution strategy begins with an optimized hotel website and includes such important items as enhanced user experience, features that improve conversion rates, customer capture data on and offline, and optimized website navigation and body copy�essential for the search engines. Why is direct distribution so important? First of all, the Internet is the ultimate �Direct Distribution Medium�. It provides the hotel with long-term competitive advantages and lessens dependence on intermediaries, online discounters, and traditional channels about to become obsolete. Direct-to-consumer online distribution has the following benefits:
So what is the ideal Internet competitive report? Such a report would evaluate hotel and its comp set�s position and visibility in Cyberspace and measure performance on various online channels. It would measure up the hotel with its competitive set evaluating the use of the direct vs. the indirect online channels�offering pricing and positioning information. It will determine if the hotel�s online distribution is skewed toward indirect channels to the detriment of the hotel brand and price integrity. It would compare website to website, ranking on search engines and utilization of the direct channel, as well as pricing and positioning on major third-party channels. Frankly, such an ideal report does exist. This report is competitively priced and called the Internet Distribution Monitor Report (IDM Report). Key features of the IDM Report The IDM Report offers easy to read tables, commentary, analysis and concrete recommendations:
The Direct Web Distribution is all about benefiting from the Internet as the greatest direct-to-consumer distribution medium. Direct online distribution should become the centerpiece of any hotel's Internet strategy. The most important direct channel is your website. Determine how your website measures up to your competitors, and compare listings on the major direct channels: search engines and pay-per-click services. Direct distribution section covers:
Compare pricing and positioning on the most popular indirect channels. Know which indirect channels are used by your hotel and comp set. Make sure visitors to these well-trafficked websites can find you. Set your pricing strategy with the full picture: Pricing and Positioning. Indirect distribution section covers:
Clearly the need to measure up against the competition on a monthly, quarterly, or annual basis is critical as more and more travel is purchased online. The IDM Report crystallizes such information to allow for revenue and marketing managers to breathe today as they prepare for tomorrow. Build an effective and competitive online distribution strategy, gain clarity and control over your Internet distribution strategy, and measure and maintain your lead online long term. The Internet Distribution Monitor Report is produced by Hospitality eBusiness Strategies, Inc. in New York City, a leading Internet strategy-consulting firm for the hospitality vertical.
|
###
Also See | Hotelier�s 2003 Top Ten Internet Resolutions / Max Starkov and Jason Price / January 2003 |
The Internet: Hotelier's Best Ally or Worst Enemy? What Went Wrong with Direct Web Distribution in Hospitality? / Max Starkov / October 2002 | |
Brand Erosion or How Not to Market Your Hotel on the Web / Max Starkov / April 2002 | |
Do You Know Where Your Hotel is in Cyberspace? / Max Starkov and Jason Price / Jan 2002 | |
Convention and Visitors Bureaus: Ten Action Steps To Soften the Impact / Max Starkov / Oct 2001 | |
How to Turn Lookers into Bookers- Recommendation Engines in Travel and Hospitality / Max Starkov / Aug 2001 |