|
|
.
|
This article is from the Spring 2008 issue of Hospitality Upgrade magazine.To view more articles covering technology for the hospitality industry please visit the Hospitality Upgrade Web site or to request a free publication please call (678) 802-5307 or e-mail. | |
By Mark Haley
What
are some of the major trends affecting travel distribution over the
last several years of increasing rates, occupancy, RevPAR and
profits? In this article, part one of two, some major trends are
discussed. There are probably a dozen trends of varying duration that
could be examined. For the purpose of this series, four key
business-changing trends were chosen that show some clear consistency
and persistence over time: � Transaction
volume continues to shift to electronic channels, particularly to the
Internet.
� The growth in Internet volume, particularly direct Internet transactions, is at the expense of voice channels and third-party channels. � Integration of transaction-oriented booking engines with rich site design, search engine optimization and customer relationship management techniques in order to drive trial by new customers, elevate the dialog with existing customers and increase share of mind and wallet. � Consolidation within the distribution industry continues, as niche players need to combine to gain meaningful scale and larger players acquire broader capabilities. The following section examines how each of these major trends affect how room revenue gets delivered to your hotels.
As shown in Figure 1, over the last five years all electronic channels have grown from 63.6 percent of all CRS bookings to 77.2 percent. Most of this growth has come from the Internet, going from 27.1 percent of reservations in 2003 to 42 percent in the second quarter of 2007.
Growth in Internet
Volume at Expense of Voice and Third Parties Where it gets interesting is when one gets inside of the Internet channel and looks at production by segment as shown in Figure 2. This data is vivid testimony to the effectiveness of hotel companies in assuming control of their inventory, a topic we will explore in part two of this series. As Internet transactions conducted directly with the hotel company�s Web site (Brand.com reservations) have increased to over 80 percent of all Internet bookings, all third-party sources have dropped over 10 percentage points, down to 18.5 percent of Internet bookings. Within
the third-party channels, most of the decline has come at the expense
of retail sites that sell the hotel�s inventory for commission, rather
than merchant sites that sell the hotel�s inventory for a (usually)
fixed margin on a wholesale rate. Retail sites� share of Internet
transactions dropped from 12.5 percent to 5.7 percent. Opaque
sites, which conceal the brand and name of the hotel until after the
sale has been made, have also tailed off from 7.5 percent to 4 percent
of Internet volume. Figure 3 is a screenshot from Wyndham Worldwide�s leading-edge frequency program, Wyndham By Request with TripRewards. This site allows members to maintain their profile, view folio detail from past stays, reservations records for future stays and more.
Figure 3 - Wyndham ByRequest Less
visibly, hotel companies have developed or engaged capabilities in
search engine optimization and marketing (SEO/SEM). These
capabilities include natural search, pay-per-click search and
advertising placement. Cataloguing the strategies and tactics of
SEO and SEM is beyond the scope of this article. These tools can
drive massive amounts of Internet traffic, leading to increased
reservations revenue. For a hotel company to not employ SEO and
SEM essentially means to give up that traffic to third parties without
contest. For more information, please visit http://theprismpartnership.com.
� Hospitality Upgrade, 2008. No reproduction or transmission without written permission. |
###
Contact:
Managing Editor Hospitality Upgrade magazine and the Hospitality Upgrade.com website http://www.hospitalityupgrade.com/ [email protected] |
.