Hotel Marketing Coach

 

Neil L. Salerno, CHME, CHA

 

Hotel News Articles

Third-Party Booking Sites Still Dominate Internet Sales;

Why Do So Many People Consider this Bad?

By: Neil Salerno, Hotel Marketing Coach April 2005

A few days ago, I was greeted by an article distributed by Reuters, “Online travel giants still rule the roost – But carriers’ Web sites slowly gaining ground vs. rivals”.  The article discussed both airline and hotel web sites, but one thing is clear; many people still consider online travel agents as the opposition rather than travel partners. 

Quote. “Internet travel agencies like Expedia and Orbitz still rule the online travel business, but sites run by airlines, hotels, and car rental services are luring travelers seeking better prices by avoiding the middle man.” Does that mean we are in competition with online travel agents? Aren’t online travel agents selling our hotels too? 

As I recall, it was the hotel franchises who declared war with online travel agents, not individual hotels. We all understand that franchises are fighting for their very existence, but at what cost. Franchise hotel sites are competing with travel agency web sites for popularity on the Internet; and their weapon of choice is your hotel’s lowest available rates. 

Does the lowest available rate really build brand loyalty? I remember a day when great franchise programs, facilities, and service built brand loyalty. 

I also remember when we proudly included “Call Your Favorite Travel Professional” in our advertising. They were our travel partners. Now, that seems so very long ago. 

The terminology in the article may be slightly different, but two things jumped out at me in this article; the data comes from PhoCusWright, a well known authority and one of the best in the business, and second, it illustrates that we still have not found ways to work with, and not against, online travel agents to benefit hotel sales.

Hotels control rates and availability for their franchises and online travel agency sites. They spend $millions to sell our hotels. As an hotelier, does it matter where your reservations come from? There is an acceptable cost associated with both. Do you think that Internet reservations from your franchise are free? Think again. 

A direct quote from the article “PhoCusWright data show that consumer perceptions of supplier-direct sites have improved in recent years. In 2004, 45 percent of online travelers said Internet agencies have the lowest prices. That’s down from 59 percent in 2002. Meanwhile, 38 percent of online travelers said suppliers offer the lowest prices, up from just 14 percent two years ago.” 

Is it improvement that consumers are starting to believe that hotels offer lowest rates on their franchise sites? Sure it’s improvement for franchise sites, but at the cost of overall hotel ADR. 

Isn’t this whole situation like having your right hand compete with your left hand? 

Let me make sure I understand this. I have a hotel and selling my hotel are two sales people; one represented by my franchise web site and the other represented by Internet agency sites. Now, instead of working together for my hotel’s benefit, each one wants my lowest rate so the winner can dominate the Internet. There’s something wrong with this picture. 

I truly admire the work being done by the major franchises. They are brilliant people and we know that choosing the right franchise can make a hotel very successful, but hotels need business from anywhere they can get it; there have to be ways for franchises to work with online travel agencies to partner together to benefit the industry. 

Somewhere down the line, someone discovered that consumers respond to lowest rate guarantees and the race began. Lowest rate was the message, but why do the franchises ignore the fact that online travel agents also spend millions to reach consumers? They have introduced the spirit of travel to millions of people through their advertising. This benefits the entire industry. 

Let’s find new ways to support rather than work against our third-party supplier partners. Both hotel chains and third-party suppliers have their own target consumers, let’s the best of both worlds.

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