Hotel Online  Special Report


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Use Look-to-Book Ratios to Monitor Online
Distribution Channels and Your Competitive Set
By Paolo Torchio, October 2004 

Look-to-Book ratios are becoming more and more prevalent in measuring the effectiveness and Return on Investment of hotel Website marketing strategies.  But what has not yet been fully understood is that these ratios can be highly effective in actually monitoring the other online distribution channels and your competitive set.

To explain this concept we need a quick economics refresher on the concepts of Supply, Demand and Price Elasticity.  An extension on the classic definition of price elasticity of demand would have buyers purchase goods through the lowest priced channel should the same good be available via multiple channels.  The online hotel distribution network in which we conduct business today provides consumers this easy access to rate information for each online channel.

Recent studies have shown that travel buyers are using multiple Websites to research and compare prices before purchasing from the Website or hotel that offers the best deal.  This behavior is being encouraged by the best price guarantees offered by many of the large hotel chains and has resulted in a market that is extremely price elastic.

In simple terms this means that if a potential guest shops your Website but finds a better deal with either a competitor or on a third party Website they will complete their purchase elsewhere. 

One of the great things about the online marketplace is that shoppers are leaving behind detailed logs of everything they viewed on your Website.  Also, due to the dynamic pricing hoteliers use to set rates based on stay dates, additional intelligence can be derived from booking engine visit logs that are not available to online retailers selling fixed price merchandise.

One of the much touted online metrics being used to measure e-commerce effectiveness is Conversion Rate or our hotel industry equivalent: Look-to-Book ratio. 

There are several interpretations of Look-to-Book or Conversion ratios:

  • Number of Website visitors per reservation made (Visitor-to-Book)
  • Number of availability requests per reservation made (Availability-to-Book)
  • Number of Website visitors per request to your booking engine (Visitor-to-Look)
  • Number of requests to your booking engine per reservation made (Look-to-Book)
By acknowledging the price elasticity of online hotel commerce and closely watching your Website activity through a few of these simple metrics you can effectively monitor both your online positioning and your competitive set. 

Over time if you are accurately pricing your hotel in all the distribution channels and within your competitive set you should see very consistent Look-to-Book ratios for a given level of interest in your hotel.

As long as your Internet marketing partner is keeping you exposed and well ranked in the Search Engines even seasonal hotel interest fluctuations will not affect these ratios.

The actual dynamics are quite simple:  If you price yourself above your competitive set for a given date range, or if your hotel is available for less through a third party Website, you will see an immediate decrease in the Look-to-Book ratio while your Visitor-to-Look ratio remains consistent.

If the Look-to-Book ratio decreases the following actions may be necessary:

  • Check the Lead Times being shopped to determine if shoppers are looking at stay dates that are not available 
  • Check competitors rates for the dates that are not converting and adjust as necessary
  • Check your rates on the third party channels to make sure you have Rate Parity 
The Visitor-to-Book ratio, although easier to determine, is not as accurate as comparing reservation activity to actual booking engine “looks”.  If you are generating a lot of unqualified interest in your hotel Website your Visitor-to-Book ratio will decline, not necessarily for price related reasons.  This metric can be misleading in that the visitors may have never checked rates.  This Visitor-to-Book ratio is more of a marketing tool in that it is a good way to measure the effectiveness of your Internet marketing program in generating qualified visitors to your Website.

In the end Look-to-Book ratios can be used for more than simply justifying Return on Investment.  These ratios can be used as an effective monitoring and positioning tool in order to accurately determine market activity. 

For more information on how to take advantage of these techniques contact Paolo Torchio at ptorchio@esitemarketing.com or Felix Laboy at flaboy@esitemarketing.com

About the author
Paolo Torchio recently joined E-site Marketing as Vice President where he is responsible for product planning and strategy consulting with E-site Marketing’s extensive portfolio of hospitality clients.  Prior to that he was Director of Decision Support at Pegasus Solutions, a leading global provider of hotel reservations-related services and technology  His career in the hotel industry began at Vail Resorts where he held various positions both at the property and corporate level.

About E-site Marketing
E-site Marketing, located in Bethesda, MD, specializes in creating Internet marketing solutions and Websites exclusively for the hospitality industry. The company’s unique approach to building successful online marketing programs combines hospitality expertise, innovative Internet marketing techniques and an emphasis on return on investment. Customers include world-class hotels, resorts and destinations in the U.S., Canada, Europe, Mexico, Australia, Africa and the Caribbean. For more information on E-site Marketing and its products and services, please call 301-986-9566, e-mail information@esitemarketing.com or visit our Website at www.esitemarketing.com.

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Contact:
Paolo Torchio, Vice President
E-site Marketing, L.L.C.
4835 Cordell Ave. Suite 101
Bethesda, MD 20814
301.986.9566 
www.esitemarketing.com


 
Also See: RezTrack™ Offers New Product To Measure Hotel Web Activity, ROI / June 2004
E-site Marketing Wins Big with HSMAI's Golden Click Awards / March 2004
E-site Marketing Announces New Clients and Record Growth in 2002 / March 2003
E-site Marketing Delivers Maximum Return on Investment for Destination Hotels & Reorts / March 2003
Bethesda-based E-site Marketing Expands With Prestigious New Clients / March 2002
Four Distinctive New Clients Seek Out The Internet Marketing Services of E-site Marketing in Bethesda, Maryland / June 2002
Puerto Rico Convention Bureau and El Cid Mega Resort Use E-site Marketing to Improve On-line Marketing / March 2000 


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