WHAT IS THE REAL IMPACT OF ONLINE TRAVEL AGENCIES’s (OTA) IN HOTELS’ REVENUE?

WHAT DOES MEAN SOCIAL MEDIA FOR HOTELS?

WHY DOES A HOTEL NEED A RELATIONSHIP WITH OTAs?

• OTA’s cost: they receive their commission at the point of sale,Their cost are not included in the Marketing budget

• OTA: Hotels’ Marketing channel, the way to sell hotels’ products.

• In 2009 : Economic crisis. OTA’s low prices attracted customers for hotels.

• In 2010 & 2011: Market recuperation, hospitality industry’s crisis recovery.

DO HOTELS NEED OTAs ?

Analyses of cost OTA’s in Hotels’ Business• Different regions• July year-to –date occupancies and average daily rates• Source: Smith Travel Research

o Cost range from $22,450 at 10% contributions to $173,881 at 25% contribution level

o Higher is the OTAs’ contribution, higher are their cost paid by hotels

o OTAs retain customers’ profile. Therefore, hotels get business, but not customers.

o Customers are the hotels’ real value: hoteliers want customers to become loyal o to their chains

Comparison between Reservation costs: directly hotels’ web, GDS and OTA

Reservations made through GDS result in 14% less revenue for the hotelthan made directly in the hotels’ web and those made through OTAs’ result in 15% less revenue.

Invest in their direct website in order to reduce OTA’s cost and increase their revenue. Allocate their savings into Internet Marketing. Make their web friendly user and provide a call to action to book. Develop their Internet Marketing strategies: optimization, pay-per-

click, email marketing, social media (Facebook, You Tube, Twitter, Flickr). Improve their customers service in their websites.

Hoteliers should:

o Although the booking cost made through Direct Online Channel (Hotel Brand Website) is10-15 % cheaper than those made via GDS and OTAs, from 2008 OTAs have increased their booking contribution by 45%.

o Hotels distribution has changed dramatically over the past 16% since the advent of the “commercial” Internet.

o Independent hotels and resorts have not change their channel distribution very much: some still work with OTA which destroys rate parity and causes price erosion.

o Those hotels needs to focus on distribution channels which generate the most bookings, protect rate parity and price integrity and reach the targeted customers segments.

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Can Hoteliers reverse the OTAs trend and take back control of online distribution channel?

o Those hotels are overwhelmed by this rapid shift from offline to online distribution.

o They often fail to compete for their fair share of the market.

o The main reason is the lack of understanding that Internet marketing is not an expense, but an investment in direct Online Channel will provide immediate returns at very high ROIs.

Big Hotel brands conclude partnership with OTAs

oExpedia, Inc. the world's largest online travel company, announced a new multi-year, global partnership agreement with Kempinski Hotels.Reason could be : - hotel brand is not enough big to compete with top hotel brandshttp://www.prnewswire.com/news-releases/expedia-and-kempinski-hotels-sign-global-partnership-agreement-124413293.html

o Marriott recently signed an online distribution cooperation agreement with Ctrip.com, China's largest online travel agencyReason could be :- Hotel brand have not reached the target market http://hma.hotelworldasia.com/content/marriott-signs-agreement-chinese-travel-agency

oHilton joins Marriott International and InterContinental Hotels Group in making its lowest available rates and complete hotel pricing available through Worldspan, Galileo, and ApolloReason could be:They want to control the price, impose their rules to OtAs and GDS as those indirect online systems have a share contribution in those hotels brands.http://hotelmarketing.com/index.php/content/article/travelport_users_get_closer_to_hilton_through_advanced_gds_interface

Social Media & Hotels

The tendency of consumption in Social Media such as Facebook is increasing constantly.

Hotels want to be connected to Social Medias which are the biggest trend communication channel.

Many hotels brand have recently developed their social media marketing.

Hotels are dependent on satisfied guest and customers. Social Media provide a constructive dialogue with their customers.

Social Media makes hotels to be in touch with their customers.

Social Media represents a smart way to increase hotels’ revenue.

Big chains like: Marriott International , The Four Seasons Hotels & Resorts,The Ritz-Carlton, Haytt Hotels, Fairmont Hotels Millennium Hotels have their social media very well developed (Facebook, Twitter, You Tube, Flickr and mobile channel).

Customers ask their friends on social network about their opinion of a hotel.

Social media is a way to make the guests’ hotels loyal customers. Therefore, more they use hotels’ products, more things they can get for free (like the milles’ program).

Facebook & Hotels

Facebook has around 800 million users. 70% users are involved with Facebook applications. More than 20 million applications are installed every day. Facebook has a special social media platform: SocialBooker which is easily

customized to integrate the hotel central reservation system. SocialBooker is important to increase sales, create the customers profile and their

loyalty, decrease distribution costs, provide a better customer service. SocialBooker personalize and make the reservation easier by encouraging the

travelers’ social interactions. Hotels are more focused on applications that involve the integrating with

Fecabook’s hotels application as it is a way to increase their revenue.

Sources:

• http://www.hotelinteractive.com/article.aspx?articleid=18354

• http://hotelmarketing.com/index.php/content/article/why_ota_customers_are_not_your_customers

• http://hotelmarketing.com/index.php/content/article/combating_losses_to_otas_with_a_strong_hotel_seo_strategy

• http://hotelmarketing.com/index.php/content/article/why_ota_customers_are_not_your_customers

• http://hotelmarketing.com/index.php/content/article/combating_losses_to_otas_with_a_strong_hotel_seo_strategy