The document is a thesis submitted by Emilie ALBA NICOLAS to the Hospitality Management Center of Paris on November 15, 2012. The thesis examines how independent hoteliers can increase direct bookings and revenue through a strategic use of Google, while limiting dependence on online travel agencies. It provides an analysis of the latest trends in online distribution, an interpretation of Google's mechanisms for online success, and recommends leveraging strategies to help independent hoteliers meet their goals.
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Thesis - A Direct Booking Strategy for Independent Hotels
1. Academic Year 2011/2012
International Hospitality Management - MBA
IEMI-CMH - Paris
THESIS
INDEPENDENT
HOTELS
&
ONLINE
DISTRIBUTION
How Independent Hoteliers can Increase Direct
Bookings and therefore Revenue, through a Strategic
Use of Google, while Limiting Dependence on Online
Travel Agencies?
S u b m i s s i o n
d a t e :
N o v e m b e r
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2 0 1 2
E m i l i e
A L B A
N I C O L A S
S u p e r v i s o r :
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C r a i g
M B A
2
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+
3 3
1
8 4
1 6
7 2
6 3
a l b a . e m i l i e @ g m a i l . c o m
2. 2
3. HOSPITALITY MANAGEMENT CENTER - PARIS
- Submitted on November, 15 2012 -
How Independent Hoteliers can Increase Direct Bookings
and therefore Revenue, through a Strategic Use of Google,
while Limiting Dependence on Online Travel Agencies?
Compiled and Written by Emilie ALBA NICOLAS
Supervised by Elizabeth Craig
Academic Year 2011/2012
MBA - Hospitality and Luxury Brands Management
3
4. - ACKNOWLEDGMENT –
This thesis has been realized within the framework of my MBA in Hospitality
and Luxury Brands Management, at the Hospitality Management Center of Paris. It
would not have been conceivable without the support and encouragement of my
family and professional surrounding.
I would like to thank Elizabeth Craig, CEO and Founder of the web-marketing
agency Oneglobe Network, for the projects related to the thesis that she delegated to
me. I also really appreciated her regular support, her wise advice, and all the practical
documents and pieces of information she shared with me.
Special thanks should be given to my husband Samuel Alba, Engineering
Manager at DotCloud, who reviewed the technical part about the web pages
optimization, which requires some basics in computer programming.
4
5. - TABLE OF CONTENTS -
- ACKNOWLEDGMENT –
4
- TABLE OF ILLUSTRATIONS -
8
- LIST OF CHARTS -
10
- TITLES -
11
- THEORETICAL AND CONCEPTUAL FRAMEWORK -
12
- METHODOLOGY-
15
- ABSTRACT -
17
- CHAPTER 1 - THE LATEST TRENDS IN ONLINE DISTRIBUTION
20
I- PARTNERSHIP BETWEEN HOTELS AND OTAS: THE REPERCUSSIONS FOR
HOTELIERS
21
A- THE DECLINE IN HOTEL REVENUE DESPITE THE INCREASE IN ROOMS SOLD
21
B- THE EMERGENCE OF “HOTEL-FRIENDLY” OTAS
23
1- “HOTEL-FRIENDLY” OTA: A NEW CONCEPT
23
2- OTAS’ ONLINE PRESENCE
27
II- OVERVIEW ON THE DEVELOPMENT OF ONLINE TRAVEL AGENCIES
28
A- THE VARIOUS FACTORS THAT CONTRIBUTED TO OTAS’ GROWTH
28
1- THE INTERNET BOOMING
28
2- SEPTEMBER 9, 2001 TERRORIST ATTACKS
30
B- THE RECENT CHANGES IN ONLINE DISTRIBUTION
31
1- HOTELS’ ONLINE ACTIVITY TO BECOME COMPETITIVE
31
2- OTA: THE BEGINNING OF THE END?
33
C- A MORE SEGMENTED ONLINE DISTRIBUTION CHANNEL
38
1- HOTEL COMPARISON SITES
38
2- ONLINE TRAVEL GUIDES AND RESELLERS
40
3- FLASH SALES / DAILY DEALS SITES
44
4- AUCTION AND DISCOUNT SITES
45
5- LAST MINUTES SALES
46
- CHAPTER 2 - INTERPRETING GOOGLE’S MECHANISMS FOR ONLINE
SUCCESS
51
I- APPROACHING GOOGLE’S TOOLS FOR SUCCESSFUL ONLINE
DISTRIBUTION STRATEGIES
52
A- INDEPENDENT HOTELIERS’ NEED TO TURN TOWARDS WEB-MARKETING STRATEGIES
52
1- THE CHALLENGES AND STRATEGIES OF HOTEL REVENUE MANAGERS IN 2012
52
2- THE DEVELOPMENT OF DISTRIBUTION STRATEGIES ADOPTED BY HOTELIERS IN 2012
53
B- GOOGLE’S RAPID DEVELOPMENT FRIGHTENS HOTELIERS
55
1- GOOGLE’S EFFORTS TO ALWAYS IMPROVE ITS SEARCH ENGINE
55
2- GOOGLE’S APPROACH TO OFFER A 360° WEB USER EXPERIENCE
57
C- HOW GOOGLE MANAGES THE ONLINE PRESENCE OF BOTH OTAS AND HOTELS
60
5
6. 1- ONLINE EXPOSURE COMPARISON OF HOTELS AND OTAS ON GOOGLE SEARCH
60
2- ONLINE EXPOSURE COMPARISON OF HOTELS AND OTAS ON GOOGLE+ LOCAL
61
3- ONLINE EXPOSURE COMPARISON OF HOTELS AND OTAS ON GOOGLE MAPS
62
4- ONLINE EXPOSURE COMPARISON OF HOTELS AND OTAS ON GOOGLE HOTEL FINDER
63
II- GOOGLE TURNS TOWARDS A MORE SOCIAL APPROACH
65
A- THE DEVELOPMENT OF GOOGLE+ PROJECT
65
1- FROM THE LAUNCH OF GOOGLE+ TO ITS ADAPTATION TO BUSINESSES
65
3- GOOGLE “+1” BUTTONS TO FIX SHARING ON THE WEB
67
B- OVERVIEW OF GOOGLE+ LOCAL TO UNDERSTAND THE GOOGLE+ PROJECT
75
1- GOOGLE+ LOCAL: EXPLANATION, DESCRIPTION AND DIFFERENCES WITH GOOGLE+
BUSINESS PAGES
75
2- GOOGLE PARTNERS WITH ZAGAT TO DEVELOP GOOGLE+ LOCAL
78
3- GOOGLE+ LOCAL EXPANSION
79
C- GOOGLE KNOWLEDGE GRAPH AND THE VALUE OF IMAGES AMONG SEARCH RESULTS
83
1- THE LAUNCH OF KNOWLEDGE GRAPH
83
2- A MORE VISUAL SEARCH RESULTS PAGE ON GOOGLE
84
-‐
CHAPTER
3
-‐
LEVERAGING
STRATEGIES
TO
HELP
INDEPENDENT
HOTELIERS
MEET
THEIR
GOALS
89
I- FACTORS TO CONSIDER IN THE OPTIMIZATION OF ONLINE VISIBILITY
90
A- UNDERSTANDING THE PRINCIPLES OF ONLINE VISIBILITY
90
1- THE ORGANIZATION AND INFLUENCE OF THE TOUCH POINTS FOR HOTELS’ ONLINE
VISIBILITY
90
2- THE CURRENT OBSTACLES THAT PREVENT THE “WHEEL” FROM TURNING UP TO HOTELS’
ONLINE VISIBILITY.
93
B- UNDERSTANDING HOW GOOGLE SEES BUSINESSES’ PRESENCE ON THE INTERNET
96
1- HOTELIERS’ MISUNDERSTANDING ABOUT THE WAY TO TARGET AND ATTRACT POTENTIAL
CUSTOMERS
96
2- THE STANDARDIZATION OF BUSINESSES’ ONLINE PRESENCE THANKS TO GOOGLE+ LOCAL
98
3- MAKING THE ONLINE PRESENCE OF A HOTEL COHERENT
100
II- ONLINE PERFORMANCE RECOMMENDATIONS FOR HOTELIERS
102
A- GOOGLE+ LOCAL MERGER PERFORMANCE: MAPS FOR HOTELIERS
102
1- STEPS BEFORE LAUNCHING THE VERIFICATION PROCESS OF THE GOOGLE+ PAGES
103
2- GETTING GOOGLE+ PAGES VERIFIED BY GOOGLE TO PROCEED TO THE MERGER
104
3- MANAGING GOOGLE+ LOCAL LISTING PROBLEMS DUE TO THE MERGER
107
B- WEBSITE AND SOCIAL MEDIA OPTIMIZATION
112
1- THE IMPORTANCE OF BACKLINKS AND SOCIAL MEDIA
114
2- THE NEGATIVE INFLUENCE OF ADVERTISEMENTS
116
3- THE IMPACT OF KEYWORDS
117
4- THE END OF TRADITIONAL SEO?
118
III- A REPOSITION STRATEGY TO GENERATE DIRECT BOOKINGS
119
A- ADAPTING TO THE DEVELOPMENT OF ONLINE TRENDS
119
1- THE INFLUENCE OF ONLINE CONSUMERS’ BEHAVIOR ON SOCIAL MEDIA, OTAS AND
SEARCH ENGINES
119
2- ONLINE CONSUMERS’ BEHAVIOR GOES FROM “SEARCH” TO “DISCOVER”
123
B- THE ELABORATION OF A DIRECT BOOKING STRATEGY FOR INDEPENDENT HOTELS
126
6
7. 1- THE OBJECTIVES OF THIS INNOVATION CONCEPT
126
2- A VISUAL EXPLANATION OF THE STRATEGY
126
- DISCUSSION CHAPTER – DIRECT BOOKING STRATEGY: A 3-PRONGED
ACTION PLAN
129
I- BETTER WORKING WITH OTAS
130
A- HYPOTHESES RELATED TO THE POSITIVE INFLUENCE OF OTAS IN THE DIRECT
BOOKING STRATEGY
130
1- DISCUSSION RELATED TO HYPOTHESIS 1
130
2- DISCUSSION RELATED TO HYPOTHESIS 4
131
B- THE NEW OTA STRATEGY INDEPENDENT HOTELS SHOULD CONSIDER
131
1- A STEP-BY-STEP PROCESS TO A MORE BALANCED APPROACH
131
2- UNDERSTANDING OTAS’ BUSINESS MODEL
133
II- OPTIMIZING THE HOTEL’S WEB PAGES WITH SOCIAL MEDIA
135
A- HYPOTHESES DEMONSTRATING THE IMPORTANCE OF SOCIAL MEDIA INTEGRATION
WITHIN HOTELS’ WEB PAGES
135
1- DISCUSSION RELATED TO HYPOTHESIS 1 AND HYPOTHESIS 3
135
B- THE SOCIAL MEDIA STRATEGY ON HOTELS’ WEB PAGES
136
1- WEB PAGES OPTIMIZATION THROUGH KEYWORDS
136
2- TUTORIALS FOR KEYWORDS MANAGEMENT WITHIN WEB PAGES
137
3- SOCIAL MEDIA OPTIMIZED WEBSITES THROUGH EFFECTIVE DESIGN
144
III- CULTIVATING AND PROMOTING BRAND VALUE VIA SOCIAL MEDIA
148
A- HYPOTHESES HIGHLIGHTING SOCIAL MEDIA POWER TO ENHANCE BRAND VALUE
148
1-
DISCUSSION RELATED TO HYPOTHESES 2 AND 5
148
2-
DISCUSSION RELATED TO HYPOTHESIS 3
149
B- BRAND VALUE PROMOTION STRATEGY ON SOCIAL MEDIA
150
1- THE USE OF ALL POPULAR SOCIAL MEDIA TOUCH POINTS
150
2- THE USE OF UPDATED HIGH VALUE SOCIAL OFFERS AND BENEFITS
151
3- SOCIAL OFFERS’ CROSS PROMOTION AND SHARING
154
- GENERAL CONCLUSION –
158
- WEB REFERENCES -
160
- LIST OF APPENDICES –
164
- APPENDICES -
165
7
8. - TABLE OF ILLUSTRATIONS -
- Page 24: Room Key’s Search System (July 2012)
- Page 24: Expedia’s Search System (July 2012)
- Page 25: MyBestHotelRate’s Search System and Home Page (July 2012)
- Page 26: Global Hotel Exchange’s Search System and Home Page (July 2012)
- Page 32: Genre Hotels’ New Booking Engine on their Website
- Page 32: Genre Hotels’ New Booking Engine Announcement on Facebook
- Page 39: Home Page of Trivago’s Website (July 2012)
- Page 39: Home Page of Hotels Combined’s Website (July 2012)
- Page 39: Home Page of Room77’s Website (July 2012)
- Page 41: Optimized Home Page of Mr. & Mrs. Smith's Website (July 2012)
- Page 42: Booking Platforms Comparison between Hotels Combined and Wanderfly (July
2012)
- Page 43: Price Comparison on Hotels Combined and Wanderfly's Booking Platforms
- Page 44: Groupon Getaways’ Optimized Offer
- Page 45: Voyages Privé’s Registration System through Mailing
- Page 47: Priceline's Tonight Booking Mobile Application
- Page 47: Expedia's Hotels.com Booking Mobile Application
- Page 48: The Strength of Design on "Hotel Tonight" and "Very Last Room" Mobile
Applications
- Page 50: The Five Hotel’s Last Minutes Offer on Facebook
- Page 58: Google’s Enhancement of User Experience on its Search Engine
- Page 59: Google+'s Contribution to the User Experience Improvement on Google Search
Engine
- Page 60: Online Exposure Comparison of Hotels and OTAs on Google Search
- Page 61: Online Exposure Comparison of Hotels and OTAs on Google+ Local
- Page 62: OTAs and Hotels' Direct Competitors Exposure at the Bottom of Hotels' Google+
Local Pages
- Page 63: Online Exposure Comparison of Hotels and OTAs on Google Maps
- Page 64: Online Exposure Comparison of Hotels and OTAs on Google Hotel Finder
- Page 66: The Top of “The Landmark London Suites” Google+ Business Page
- Page 67: The Bottom of “The Landmark London Suites” Google+ Business Page
- Page 69: Google “+1” Button - A Recommendation Tool
- Page 70: Facebook “Like” Button – A Self-Expression Tool
- Page 71: Facebook’s New Sharing Feature to Compete with Google
- Page 72: Google Officializes The Recommendation Function of its “+1” Button
- Page 73: Google “+1” Button Optimization to Increase the Number of Shares through the
Mention of Users’ Contacts
- Page 74: Google “+1” Button Optimization to Increase the Number of Shares by
Mentioning the Number of Recommendations
- Page 75: Google “+1” Button Optimization to Increase the Number of Shares by Suggesting
Additional Articles to Read
- Page 76: CitizenM’s Permanent Google+ Local Page
- Page 77: “The Landmark London Suites” Google+ Business Page
- Page 78: Google+ Local is Adapted to Hotel Search
- Page 79: Zagat Rating has been Extended to Hotels
- Page 80: Google+ Local Integration into Google Search
- Page 81: Google+ Local Integration into Google Maps
- Page 82: Google+ Local Integration into Mobile Phones
- Page 83: Google Knowledge Graph’s “See results about” box Improves Search by
Keywords
- Page 84: Google Knowledge Graph Appearance on Google Search
- Page 86: Keywords Analysis on Google Search for C* House
8
9. - Page 87: Keywords Analysis on C* House’s Google+ Business Page
- Page 88: Keywords Analysis of C* House on Picasa
- Page 95: The Enhancement of Third Party Sites’ Visibility on Google Search Engine
- Page 104: Google Places’ Listing Management Page
- Page 105: Google+ Page Verification Request Form
- Page 108: Google Support for Listing Marked as “Needs Actions”
- Page 109: The "Right Way" to Delete a Google Places Listing
- Page 110: Google Support for Creating a Google+ Local Page
- Page 122: Airbnb’s Wish Lists – A Discovery Oriented Social Platform
- Page 123: Facebook’s “Want” Button – A Discovery Oriented Social Feature
- Page 138: Hotel Sofitel So Bangkok & Bellagio Hotel Source Code
- Page 139: Visual Tags Location on “Hotel Sofitel So Bangkok” Website
- Page 140: Visual Tags Location on Bellagio Hotel Website
- Page 142: Design and Content of a Hotel’s Website Home Page Enhancing Social Media
- Page 143: Design and Content of Palms Casino Resort’s Internal Social Page
- Page 144: Design and Content of Fairmont Hotel’s External Social Page
- Page 149: Hotel Ares Eiffel – Example of an Optimized Facebook Page
- Page 150:
Hotel Ares Eiffel - Example of Communication Management on a Facebook Page
- Page 151:
Hotel Ares Eiffel - Ranked Among the Top Results on Google Search Engine
- Page 152: Example of a Hotel’s Visual Facebook Offer Involving Cross Promotion
- Page 153: The Sharing of Palms Casino Resort’s Offer on Twitter
- Page 153: The Visual Result of Authorship Verified Google+ Profiles on Google Search
9
10. - LIST OF CHARTS -
- Page 21: 2011 – Percentage of Reservation on OTAs and Hotels’ Websites for Branded and
Non-Branded Hotels
- Page 22: 2012 - Percentage of Reservation on OTAs and Hotels’ websites for Chain Hotels
and Independent Hotels
- Page 27: Global OTAs & their Main Acquired Booking Site Brands
- Page 29: Internet Users Trends Surveys
- Page 29: Online Consumer Trends Survey
- Page 33: 2007 – 2011: Percentage of bookings in Top 46 Hotel Brands via Computerized
Reservation Systems
- Page 35: Percentage of Travelers Using Mobile Phones to Access Internet for Travel Info
- Page 35:
Percentage of Travelers Using Mobile Devices for Travel-Related Activities
- Page 36: Percentage of Travelers Using Social Media during their Travel Experience
- Page 49: OTAs’ Presence on Distribution Channels
- Page 52: Hotel Revenue Managers’ Main Challenges in 2012
- Page 54: The Percentage of Hoteliers’ Digital Marketing Practices in 2010-2012
- Page 56: Google's Major Changes Since 2011
- Page 68: Google’s Sharing Principle: Vote, Comment, And Share
- Page 91: Pyramid Model - The Independent Relationship of Social Media, Website and
Google
- Page 92: Pyramid Model – Visibility Insights Wheel
- Page 93: Pyramid Model – The Main Obstacles Encountered on Each Touch Point
- Page 96: The Representation of Independent Hotels’ Online Visibility Strategy (Early 2012)
- Page 97: Google’s Positioning Strategy to Target Businesses’ Online Consumers (Early
2012)
- Page 98: Google’s Social Extension through the Launch of Google+ Local to Target
Businesses’ Online Consumers
- Page 100: The Update of a Hotel’s Online Presence According to Google’s New
Requirements
- Page 102: Instructions Before Getting Your Google+ Page Verified
- Page 104: How to Request a Google+ Verification to Get Your Pages Merged
- Page 107: Process in Case of Merging Failure or Data Issues
- Page 112: Search Engine Ranking Factors in 2012
- Page 114: The Negative Influence of Advertisements in Search Engine Ranking in 2012
- Page 115: The Impact of Keywords in Search Engine Ranking in 2012
- Page 116: The Influence of Images and Text in Search Engine Ranking in 2012
- Page 118: OTAs’ Position in the Online Distribution System
- Page 120: The Decline of Broad Search Terms According to Google Trends
- Page 120: The Increase of Standard Search Terms According to Google Trends
- Page 125: Direct Booking Strategy Visual Plan for Independent Hoteliers
- Page 130: Top 10 Review Sites by Number of Reviews
- Page 131: OTAs’ Main Revenue Streams and Costs Drivers
- Page 136/135: The Strategic Use of Social Media keywords to Optimize the Description of
a Hotel on Web Pages
- Page 137: URLs Optimization through the Use of Social Media Keywords
- Page 137: Links/Backlinks Distribution on Each Web Page
- Page 141: Example of Tag Optimization through the Use of Social Media Keywords
- Page 148: The Influence of Pinterest on U.S. Women Purchase Decision Process
10
11. - TITLES -
- Thesis Title -
How Independent Hoteliers can Increase Direct Bookings and
therefore Revenue, through a Strategic Use of Google, while Limiting
Dependence on Online Travel Agencies?
- Main Subsections Titles –
Chapter 1 – The Latest Trends in Online Distribution
I- Partnership between hotels and OTAs: the repercussions for hoteliers
II- Overview on the development of Online Travel Agencies
CHAPTER 2 –Interpreting Google’s Mechanisms for Online Success
I- Approaching Google’s Tools for Successful Online Distribution Strategies
II- Google turns towards a more social approach
CHAPTER 3 –Leveraging Strategies to Help Independent Hoteliers Meet their
Goals
I- Factors to consider in the optimization of online visibility
II- Online Performance Recommendations for Hoteliers
III- A reposition strategy to generate direct bookings
DISCUSSION CHAPTER – Direct Booking Strategy: a 3-pronged action plan
I- Better working with OTAs
II- Optimizing the hotel’s web pages with social media
III- Cultivating and promoting brand value via social media
11
12. - THEORETICAL AND CONCEPTUAL FRAMEWORK -
1- Definition of Terms
“G”: on some graphs means “Google”
“#-pack”: means “the number of Google algorithms updates”
“rel=nofollow” is an indication that should be placed in the website or blog code
right before the link of an untrusted website or blog. Thus, it prevents Google from
associating your website with other untrusted sites.
AH&LA: American Hotel & Lodging Association
Airbnb is a community marketplace for people to book accommodations around the
world, in local homes or in atypical places run by professionals.
“Brand.com” refers to a hotel’s website.
Backlink: a “link coming from another website to your own website”.
Google Adlinks is part of Google Adsense but it may be assumed that it is less
negatively valued than Adsense, in that Adlinks displays a list of topics that are
relevant to the website. As a result each link points towards an advertisement in
relation to the content of the website.
Google Adsense is Google’s advertising tool that enables web publishers to earn
money by displaying Google ads on their website.
Google+: Google’s social platform that recently merged with Google Places to create
Google+ Local.
Google Places: Businesses’ “ID card” that displays all the information in relation to a
company. Google Places was recently replaced by Google+ Local.
Google+ Local: the merger between Google+ and Google Places. Google+ Local has
been integrated on Google Search, Google Maps and mobiles, which gives more
visibility to businesses.
HeBS: Hospitality eBusiness Strategies Digital is a famous hotel Internet marketing
firm.
Mashable is a famous online news platform about digital innovation.
OTA: Online Travel Agencies
Personal travelers: according to Google Think Travel, are people having taken at
least one trip for leisure in the past 6 months.
“Permanent” Google+ Local page is the result of the successful merger between the
Google Places Listing of a business and its Google+ Business Page.
SEO: Search Engine Optimization
“Stopwords” are all the articles and conjunctions belonging to a language (such as:
a/an/the/ and/in/to/ etc.). They should not appear in a link because they weaken its
value.
STR: Smith Travel Research
12
13. TravelZoo is known as the largest publisher of travel deals on the Internet, and is
appreciated by hotels because it works according to a Pay per Click principle (each
click costs around $0,15 to the hotel). It is similar to Google Adwords but with a bit
less exposure.
TripAdvisor is not an OTA. It is a local recommendation sites that works in
partnership with OTAs.
VCS Principle: is Google optimized sharing process, which consists in “Voting,
Commenting and Sharing”.
2- Theory Integration and Application
Web marketing is a new job in the hospitality industry that implies specific
skills and knowledge in both digital technologies and lodging sectors.
This is why hotel managers encounter difficulty in figuring out and monitoring
the web marketing strategies suggested by marketing strategists. They end up
validating or not strategies they don’t understand, with no idea of the repercussions
their decisions might have on hotels’ revenue.
Board members and stakeholders are in the same situation as hotel managers,
they recognize that online visibility is essential, but they don’t realize what it consists
of, and the time and money it involves. This is why many hotels don’t invest revenue
in website redesign and optimization.
Today, independent hotels are struggling to compete with World Hotel Groups,
and are becoming ruined by OTAs. The need of a direct booking strategy is more than
present. The direct booking strategy is aimed at leading hoteliers to rethink the way
they used to generate revenue. Independent hoteliers will have to convince hotel
managers and stakeholders, that the strategy is the solution to increase direct bookings
and therefore revenue. This is why this thesis reviews the basics of web marketing
before developing the strategy.
Independent hoteliers will be very likely to adopt this strategy because they feel
without arms, and keep working with OTAs even if the latter play a very little part in
generating hotel revenue. Hoteliers will be interested in the way the direct booking
strategy recommends to work with OTAs, namely by optimizing the hotels’ presence
on their websites, and making the most of their billboard effect.
Regarding social media, even if independent hoteliers are not very active on
them, they start valuing the hotels’ presence on this touch point. The direct booking
strategy will therefore convince hoteliers about the importance of being active
through the regular publication of social offers.
Concerning Google+, the direct booking strategy is in part aimed at showing the
value of this new social platform for online visibility. The strategy makes hoteliers
aware of the importance of having a coherent online presence, especially on Google,
because the latter influences ranking on its search engine.
As a result this direct booking strategy will enable hoteliers to generate revenue
according to two ways. First, through the increase of direct bookings, and secondly
13
14. through the update and optimization of hotels’ online presence, which will influence
their visibility on search engines.
To finish, OTAs, social media and Google have to be considered altogether
because they all generate online visibility, and therefore have an influence on hotels’
revenue. OTAs are indeed favored by Google, which explains their high visibility on
Google search engine, and Social media are also crawled by Google to determine
websites’ ranking on its search engine.
The direct booking strategy therefore consists in using and combining the forces
of these 3 touch points to attract online consumers.
14
15. - METHODOLOGY-
The thesis was conducted in parallel of web marketing missions realized for
independent hotels and apartment companies, in the framework of my internship at
Oneglobe Network.
This paper consists of 105 illustrations and graphs, that have been directly included
within the document, because they give visual explanations of the theoretical and
technical points developed.
I created most charts related to hotels’ online presence and Google’s social
development on my own, in order to help independent hoteliers figure out the new
challenges of today, and to further communicate about Oneglobe Network and attract
potential clients.
These charts are therefore the results of Oneglobe Network’s view of the
lodging market on the Internet, according to the measurements and analytics realized
for our clients’ online presence.
The other quantitative technics that influenced the carrying out of these charts were
studies realized by research companies specialized in the marketing industry and in
the hospitality industry, namely SearchMetrics, L2 Think-tank, Google Think Travel,
HeBS Digital, eMarketer, Search Engine Land, Search engine Watch, Hotel News
Now, SEOmoz and Tnooz.
As for the qualitative technics, Google’s online customer service was also a main
information source for the creation of the 3 Google maps made to ensure online
visibility to independent hotels.
The other charts were entirely made from the information found in the studies and
analyses, made by the research companies previously mentioned.
Regarding the illustrations, most of them consist of screenshots taken from:
- Our clients’ social media accounts and website
- World Hotel Groups and Independent Hotels’ social media accounts and websites
- OTAs’ websites
- Google’s tools and features (Google Search Engine, Google+, Google Maps, Google
Hotel Finder)
Screenshots are qualitative technics in that they are the visual proofs of the current
trends in marketing and hospitality on the Internet. However, as web marketing and
digital technologies evolves very rapidly, some screenshots will become out of date as
time passes, and will no longer represent the platforms (websites, social media sites)
they currently refer to. This is the reason why, some parts of this thesis have already
been published online, so that hoteliers can use the content to solve the problems they
currently encounter.
15
16. Still about the qualitative technics, the thesis was made through a regular follow
up of the new tools and platforms launched by digital technologies companies, and
through the trial of these new tools and platforms for Oneglobe Network’s clients.
Online consumer behavior is also frequently the subject of research, because it is the
basis of web marketing strategies developed for independent hotels, and because it
enables to anticipate the launch of future tools and platforms created by digital
technologies companies.
To finish, I chose to integrate the action plan of the direct booking strategy into
the discussion chapter, because the hypotheses, whether validated or not, justify the
choice of each action developed. As the actions are based on the researches and
analyses conducted throughout the paper, I could explain why some hypotheses can
be validated, why some other cannot, and why some others can still be questioned.
16
17. -‐
ABSTRACT
-‐
This thesis consists of real researches and analyses, made for the independent
hotels and apartment companies that the web-marketing agency Oneglobe Network
works with. The entire paper is therefore based on current troubles hoteliers
encounter, and the solutions suggested are based on famous web marketing
specialists’ analyses and opinion, and on my own experience in web marketing.
The paper is therefore aimed mainly at marketing specialists working for a lodging
company, and students in the hospitality industry, in that it consists in:
- Developing a direct booking strategy, based on the actual online consumer behavior,
that involves the use of social media and the partnership with OTAs.
- Making hoteliers aware of the importance of a coherent and optimized online
presence.
- Sharing the necessary information to anticipate the future development of OTAs,
understand their way of functioning and their evolving business model.
- Tackling Google’s latest tools and features that influences businesses’ ranking on
search engine, and sharing tips to enhance Google’s validation of hotels’ accounts.
Throughout the thesis, I acquired many technical skills related to website and
social media optimization for online visibility, but I also integrated many trends
related to online distribution.
I indeed realized that OTAs have a length ahead of hoteliers in terms of services
provided to online consumers, and that hoteliers should therefore follow up their
development and draw inspiration from them. However, unlike OTAs, I also noticed
that independent hotels have the necessary resources to provide an online consumer
experience, which is therefore a strength for hoteliers in their competition with OTAs.
In addition, I noticed that Google evolves according to online consumer behavior, and
that the ranking on Google Search Engine is therefore mainly based on the consumer
experience that websites offer. With this finding, hoteliers can review their own
website and make it more online consumer friendly, which will improve their online
visibility.
To finish, I realized that both online consumers and Internet companies (search
engines, social media) are turning towards social environment, which forces hoteliers
to reconsider their web marketing strategies to increase their number of online
reservations. Online consumers indeed more and more discover products and services
(hotels included) on social media, instead of making general search on search engines.
This explains why Google developed its own social platform “Google+” and why
social media are developing e-commerce features.
17
18. - GENERAL INTRODUCTION –
Generating revenue has become a real challenge for independent hoteliers, since
OTAs’ online visibility has increased, and since they have raised the commissions
requested to hotels.
The solution for hotels would be to limit dependence on OTAs, and increase direct
bookings. However, independent hoteliers have limited marketing and
communication budgets, and have trouble remaining visible on the Internet. Google
indeed seems to favor 3rd parties’ presence, and recently changed its criteria to rank
websites in its search engine.
Independent hoteliers feel helpless, in a compromising situation for their
business, which raises the following question: “How Independent Hoteliers can
increase direct bookings and therefore revenue, through a strategic use of
Google, while limiting dependence on Online Travel Agencies?”
After more than one year of internship at Oneglobe Network, a web-marketing
agency for independent hotels, I discovered Google’s potential for businesses’ online
visibility, and Independent hoteliers’ lack of skills in terms of online optimization.
The more I learnt about Search Engine Optimization, the more the gap between
Independent Hotels and Google became obvious.
One year ago, Elizabeth Craig, CEO of Oneglobe Network, came up with the
idea of working on a direct booking strategy for her clients. The strategy would be
based on travellers’ online discovery journey, and would therefore involve skills in
the use of Google, Social Media and website optimization.
As a result, this strategy, whose main objectives are to increase direct bookings and
lead independent hoteliers to rethink the way they generate online bookings, would
also be the opportunity for hoteliers to update and improve their entire online
presence, and therefore get the basics of web marketing. In order to answer these
additional objectives, the paper therefore deals with hotel website and social media
optimization, introduces hotel-friendly OTAs, tackles OTAs’ business model and
insists on Google’s ranking factors on search engine.
Regarding the hypotheses based on the research problem, I expect that the
potential of Google’s social platform “Google+” will make independent hotels as
visible as world hotel groups and OTAs on Google search engine, so that online
consumers are more likely to visit their websites.
Concerning online consumers, I expect that they will more and more refer to
social media websites before, during and after their trips or vacations. They will also
more and more trust booking systems embedded on social media to make hotel
reservations.
I also expect that Google keeps developing its search engine, and keep
launching new tools and platforms likely to encourage businesses (hotels included) to
be active on Google+.
To finish, I expect that hotel-friendly OTAs become as visible as global OTAs
on search engines, due to their efforts in providing an attractive consumer experience,
and in requesting low commissions or no commission to hotels.
18
19. This thesis would not have been conceivable without Oneglobe Networks’
clients that trusted us for solving their problems related to Google, and to their decline
in direct bookings revenue. It could not have been carried out without Elizabeth
Craig, who came up with the idea of setting up a direct booking strategy involving
both OTAs’ presence and social media.
My expertize being centered on Google and Search Engine Optimization, this
thesis does not cover in details the business related to OTAs, nor provides technical
aspects in relation to website and social media optimization.
The study is limited to an overview of OTAs’ history, their main business
model and the latest trends in online distribution channels. It does not provide
information about the most efficient global OTAs to work with, and the strategies to
develop so that hotels can reduce their commissions, because the needs and
expectations of hotels are different in this area.
As for social media and website optimization, the study tackles the elements to
enhance that will improve the online consumers’ experience, and convince the latter
to make reservations on the hotels’ web pages. No technical details are shared
because:
• concerning social media - many guides on the Internet already explain the
step-by-step processes to optimize hotels’ accounts.
• regarding website optimization - hotels should contact web developers
because it requires a specific expertize that most web marketing strategists
don’t have.
Throughout the study, more importance is given to Google+ Local because it is
Google’s new social platform that is likely to increase hotels’ online visibility. In
addition, Google+ Local was automatically generated on hotels’ Google accounts, and
many hotels (Oneglobe Networks’ clients included) encountered problems that
impacted their online visibility, it was therefore essential to cover this topic in details.
Furthermore, in addition to the technical details that don’t belong to web
marketing expertize, some elements the thesis involving digital technologies will be
rapidly out of date, because of the constant evolution of the latter in order to respond
to online consumers needs and expectations.
To finish, the direct booking strategy is currently being developed for Oneglobe
Network’s clients and no results in terms of direct bookings can be measured to date.
As hoteliers closely work with OTAs but are short of time to follow their
developments, the first chapter introduces the latest trends in online distribution,
focusing essentially on OTAs’ segmentation and the impacts on independent hotels.
One objective of the thesis being that Independent hoteliers become as
successful as OTAs in terms of online visibility, the second chapter tackles Google’s
latest tools and features, including its new social approach, that directly influences
businesses’ ranking on search engines.
The third chapter demonstrates the interdependence of online search, social
media and websites for businesses’ online performance, which makes up the base of
the direct booking strategy. The latter is finally developed in chapter four to help
hoteliers optimize their online presence and generate revenue.
19
20. - CHAPTER 1 –
The Latest Trends
in
Online Distribution
20
21. I- Partnership between hotels and OTAs: the repercussions
for hoteliers
Note - OTAs: “Online Travel Agencies”
A- The decline in hotel revenue despite the increase in rooms sold
Over the past few years, OTAs’ strategies to increase turnover and sell hotel
rooms turned out efficient. However, independent hotels can hardly be delighted
about the situation. OTAs indeed enable independent to sell more rooms but they
don’t play a part in increasing their revenue.
In January 2012, the author of the article “Report says Hotels Lose Out with Merchant
Sales on the Web” (made from data collected by Smith Travel Research and the
American Hotel & Lodging Association) mentioned, talking about US hotels, that
“when they distribute rooms through OTAs in merchant sales, they give up twice as
much in lost revenue as they pay out in commissions on standard agency sales”1. The
study based it results on more than 25000 hotels between January 2009 and June
2011.
The main reason for the revenue decline of independent hotels is the
commissions OTAs applies to each hotel room sold. According to Max Starkov2,
President & CEO at HeBS the commissions applied by OTAs to hotels today stand
for 20% to 30% over the room price, which represents twice or three times as much as
the traditional travel agency commission (10%)3.
Note – HeBS: Hospitality eBusiness Strategies Digital is a famous hotel Internet
marketing firm.4
As a result, hotel groups and independent hotels’ sales have been impacted in recent
years. Mark Starkov also shared the following figures that he got from PhoCusWright
STR HSMAI Foundation, corresponding to the distribution of hotels’ total bookings
in 20115.
1
http://www.travelweekly.com/Travel-‐News/Hotel-‐News/Report-‐says-‐hotels-‐lose-‐out-‐with-‐
merchant-‐sales-‐on-‐the-‐Web/)
2
http://www.linkedin.com/in/maxstarkov
3
http://www.hebsdigital.com/blog/the-‐end-‐of-‐the-‐ota-‐merchant-‐model-‐%E2%80%93-‐this-‐
time-‐for-‐real/
4
http://www.hebsdigital.com/
5 http://www.revenueyourhotel.com/index.php?option=com_content&view=article&id=402%3
Athe-‐2012-‐dos-‐a-‐donts-‐of-‐hotel-‐distribution-‐part-‐1&catid=7%3Ae-‐commerce-‐gds&Itemid=14
21
22. 2011 – Percentage of Reservation on OTAs and Hotels’ Websites for Branded and
Non-Branded Hotels
OTAs Hotels’ websites
Top Hotel Brands 8% (1) 18%
Non-Branded Hotels 32% 10%
By Max Starkov, The 2012 Do's & Don'ts of Hotel Distribution, Part 1, (PhoCusWright, STR, HSMAI
Foundation), Article, Revenue Your Hotel, 2012, Appendix 46
(1) % of total bookings
The results of 2011 clearly show that the majority of non-branded hotels bookings
come from OTAs, which explains the decline in revenue for independent hotels
despite the increase in number of rooms sold.
It is also important to point out that OTAs’ success is currently higher than what
the table highlights, because a huge percentage of total bookings made on the Internet
go directly in OTAs pockets. In fact, to compete with the growing success of booking
sites, OTAs created or bought back many of the currently existing booking sites.
The best examples are Expedia that owns Hotels.com and Hotwire; and Orbitz that
owns HotelClub and CheapTickets and Priceline that bought back Pegasus’s
Travelweb.com7.
In addition, an EHL (Ecole Hôtelière de Lausanne) and Rate Tiger study8 about the
distribution channels, shows that independent hotels are much more impacted by
OTAs than are Chain Hotels.
2012 - Percentage of Reservation on OTAs and Hotels’ websites for Chain Hotels
and Independent Hotels
OTAs Hotels’ websites
Chain Hotels 32% 33%
Independent hotels 38% 31%
By H.Tudori and R.C. Haynes, The Distribution Challenge - A viewpoint of 2010/2012,
Rate Tiger and EHL study, 2012, Appendix19
Although Chain Hotels have a balanced percentage of reservations made from OTAs
and their website, the reservations for Independent Hotels through OTAs are higher
than the ones made through their website.
Independent hotels’ situation being more critical than the one of Hotel groups, this
thesis brings analysis, strategies and solutions more adapted to independent hotels.
6http://www.revenueyourhotel.com/index.php?option=com_content&view=article&id=402%3A
the-‐2012-‐dos-‐a-‐donts-‐of-‐hotel-‐distribution-‐part-‐1&catid=7%3Ae-‐commerce-‐gds&Itemid=14
7
http://www.hotelnewsnow.com/Articles.aspx/7511/Low-‐commission-‐models-‐no-‐threat-‐to-‐
OTAs
8
http://www.nihf.co.uk/DatabaseDocs/new_9521542__thedistributionchallenge2010-‐2012ehl-‐
rt.pdf
9
http://www.nihf.co.uk/DatabaseDocs/new_9521542__thedistributionchallenge2010-‐2012ehl-‐
rt.pdf
22
23. Given the heavy competition on the OTAs market, in recent years low
commissions OTAs (also known as “hotel-friendly” OTAs) were created in an
attempt to seduce hoteliers.
B- The emergence of “hotel-friendly” OTAs
“Hotel-friendly” or “low commissions” OTAs are actually OTAs requesting a
commission around 10% or less, just like the traditional Travel Agencies.
1- “Hotel-friendly” OTA: a new concept
Who are these revolutionaries of the online distribution, then? The first that
made huge noise is Room Key, an attractive concept for hoteliers in that 10%
commissions are requested. Room Key was launched in January 201210.
Now the question is “what is their business model?”
The answer is “the same as OTAs…” but the thing is that Room Key is on World
Hotel Brands’ initiative including Marriott International, InterContinental Hotels
Group, Hilton Worldwide, Choice Hotels, Hyatt, and Wyndham. Their objective
simply was to take market shares back from OTAs. To achieve so, they differentiated
themselves from OTAs by offering an easier and faster search system; along with
loyalty program points, last room availability while reducing the commissions on
room sold11.
a- The comparison between Room Key and Expedia
The difference between Room Key and basic OTAs’ websites like Expedia is
obvious. Room Key provides customers with a simple and fast platform, contrary to
Expedia. We can notice this fact by simply comparing the search system of the two
companies.
10
http://www.hotelnewsnow.com/articles.aspx/7927/Is-‐Room-‐Key-‐keeping-‐up-‐with-‐OTAs
11
http://www.travelweekly.com/Travel-‐News/Hotel-‐News/Report-‐says-‐hotels-‐lose-‐out-‐with-‐
merchant-‐sales-‐on-‐the-‐Web/
http://www.hebsdigital.com/pdf/mag/12_HOTELS_Magazine_blog-‐Are_the_New_Anti-‐
OTA_Sites_Ready_to_Take_the_Spotlight-‐HeBS%20Digital%20Blog%20Summary.pdf
23
24. Room Key’s Search System (July 2012)
By Emilie Alba, Room Key’s Search System, Screenshot, July 2012, Appendix 712
Expedia’s Search System (July 2012)
By Emilie Alba, Expedia’s Search System, Screenshot, July 201213
12
http://www.roomkey.com/
24
25. Expedia search system looks more overcharged than Room Key, in part due to the
flight, car and cruise choice options. However, according to Choice Hotel CEO
Stephen Joyce, Room Key will soon provide the same choice options (except cruises),
the challenge will be therefore to keep the airy way and rounded design. In addition,
according to Max Starkov, Room Key plans on adding “independent customer
reviews, and the ability to compare, plan and share with friends and family”14.
b- My Best Hotel Rate, a similar concept to that of Room Key
MyBestHotelRate is a reservation site operated by The Asian American Hotel
Owners Association (AAHOA). AAHOA consists of 11000 members who run more
than 20000 hotels. The organization was created in 1989 in order to join together
under a reference brand aimed at inspiring confidence and increasing customer
loyalty15.
In 1989, this association was certainly created to compete with traditional Travel
Agencies on the American and Asian markets. In 2011, to remain competitive with
OTAs, they created MyBestHotelRate 16 , which enables the member hoteliers to
increase direct bookings. Just like Room Key, they request a 10% commission and
make the reservation process fast and easy for web users.
MyBestHotelRate’s Search System and Home Page (July 2012)
By Emilie Alba, MyBestHotelRate’s Search System and Home Page, Screenshot,
July 2012, Appendix 917
13
http://www.expedia.com/
14
http://www.travelweekly.com/Travel-‐News/Hotel-‐News/Report-‐says-‐hotels-‐lose-‐out-‐with-‐
merchant-‐sales-‐on-‐the-‐Web/
http://www.hebsdigital.com/pdf/mag/12_HOTELS_Magazine_blog-‐Are_the_New_Anti-‐
OTA_Sites_Ready_to_Take_the_Spotlight-‐HeBS%20Digital%20Blog%20Summary.pdf
15
http://www.aahoa.com/AM/Template.cfm?Section=About_Us
16
http://www.hotelnewsnow.com/articles.aspx/6717/Can-‐niche-‐OTAs-‐compete-‐with-‐the-‐big-‐
guys
17
http://www.mybesthotelrate.com/
25
26. The screenshot above highlights a simpler search system than Expedia, and an
attractive design for web users. It also inspires confidence in terms of price with the
mention of “Best Available Rates” and makes itself different from competitors by
ensuring the possibility to “make multiple bookings in one reservation”18.
c- Global Hotel Exchange: a no commission hotel-booking site
Launched in 2011 19 , Global Hotel Exchange’s search system is all about
travelers and hoteliers’ well being. They ensure that travelers won’t have their credit
card charged before their arrival, and will be able to change or cancel their reservation
without any fees. Concerning hotels members, they won’t be charged with
commission or distribution fees because they will control their own rates and
allocations through Global Hotel Exchange extranet. Global Hotel Exchange only
charges travelers with a 2,99$ service fee for each booking, in order to cover the costs
of credit card processing, search engine marketing and the Global Hotel Exchange
technology20.
The search system’s design also highlights the Global Hotel Exchange’ philosophy.
Global Hotel Exchange’s Search System and Home Page (July 2012)
18
http://www.mybesthotelrate.com/
19
http://www.hotelnewsnow.com/articles.aspx/6717/Can-‐niche-‐OTAs-‐compete-‐with-‐the-‐big-‐
guys
20
http://www.globalhotelexchange.com/
26
27. By Emilie Alba, Global Hotel Exchange’s Search System and Home Page, Screenshot, July 2012,
Appendix 1021
What transpires from the screenshot of GHE website is the design neutrality and all
the empty space, which conveys the fairness and simplicity of the booking site for
both travelers and hotels. The emptiness of the page also conveys GHE’s effort in
showing that their platform is easier to use than that of competitors, and that what
matters is what travelers and hotels need and expect.
Travelers’ search is made fast and easy through the search system, and hotels’
booking management is easily accessible at the bottom of the page.
GHE clearly differentiates from businesses like Room Key and MyBestHotelRate
although the aim for each business is to be hotel-friendly and to simplify the booking
process for travelers.
As a result, by the growing number of “hotel-friendly” OTAs, we can notice the
real need for hotels to increase revenue through fairer booking practices. The arrival
of these “hotel-friendly” OTAs is a hope of a better future for hotels. However hotels
will have to make efforts on their own websites if they want to increase direct
booking. For example, hotels should start by reviewing the booking engine displayed
on their website. The booking engine should be as simple, visible and easy to use as
the search systems displayed on “hotel-friendly” OTAs. This is why it is important to
analyze the strategies of OTAs and hotel booking sites to attract customers.
Although the arrival of the “hotel-friendly” OTAs might seem like a revolution for
hotels, they will still have to work with OTAs. As these latter invaded the hotel
booking space a few years ago, they have gained hotel guests’ confidence and are
present everywhere through the creation of many brands.
2- OTAs’ online presence
What most hotel guests ignore is that many hotel reservation sites belong to
global OTAs such as Expedia, Travelocity, Priceline, Orbitz, etc.
Global OTAs & their Main Acquired Booking Site Brands
OTAs Corresponding Booking Site Brands
Expedia Hotels.com + Hotwire +Venere
Travelocity LastMinutes.com
Priceline Booking.com + Agoda
Orbitz HotelClubs + CheapTickets
By Emilie Alba, Global OTAs & their Main Acquired Booking Site Brands, Table, July 201222
This large presence on the travel market influences OTAs to request high
commissions to hotels. According to Glenn Gruber 23 , a technology-marketing
executive at Software Industry Insights who attended the Hotel Distribution Super
21
http://www.globalhotelexchange.com/
22
http://fr.hotels.com/,
http://www.hotwire.com/,
http://www.venere.com/,
http://www.lastminute.com/,
http://www.booking.com/,
http://www.agoda.com/,
http://www.hotelclub.com/,
http://www.cheaptickets.com/
23
https://twitter.com/ggruber66
27
28. Session at HITEC 2012 (High Impact Technology Exchange Conference), “OTAs
think they still provide a strong value proposition alongside the hotels direct
channel”24.
As a result, in 2012, OTAs have no good reasons to reduce the commissions they
apply to hotel partners. They were able to answer travelers’ needs and expectations at
a time when hoteliers needed customers, and as time went by, they kept adapting to
customers’ online behaviors. In my opinion, this is what Glen Gruber means by
“strong value” talking about OTAs.
Today, Hotel-Friendly OTAs are not as visible as global OTAs on search engines,
because we could see through this chapter that they were launched very recently.
However, if Hotel-Friendly OTAs keeps growing, it means that there is potential on
the market. This doesn’t validate the hypothesis through which I expected that Hotel
Friendly OTAs would become as visible as global OTAs, however independent hotels
can consider working with them. Furthermore, as global OTAs are very present on
search engines, we can think about including them within the direct booking strategy.
But now, the questions are, how long the OTAs’ monopoly can last? Is there
any possibility in the future that they will reduce their commissions? Do Independent
Hotels have a chance to get higher revenue while still working OTAs?
So far, no experts in the hospitality industry can predict the future of Independent
Hotels in front of OTAs. However, getting interested in OTAs’ history can help
independent hotels to anticipate OTAs’ future orientations or at least to become as
attractive as they are for web users.
II- Overview on the development of Online Travel Agencies
A- The various factors that contributed to OTAs’ growth
1- The Internet Booming
OTAs started to develop 15 years ago, with the access to the Internet for the
general public.
According to the chart below, in 1999, more than half of the people aged 35-54
already had an Internet access and in 1998, the Online Travel Industry was the most
successful, after the book industry and the software and hardware industries. This
encouraging activity from web users rapidly reassured OTAs regarding a potential
success25.
24
http://www.tnooz.com/2012/07/02/news/what-‐is-‐new-‐in-‐hotel-‐distribution-‐not-‐a-‐lot-‐
actually/?utm_source=dlvr.it&utm_medium=twitter
25
http://web.it.nctu.edu.tw/~etang/Internet_Marketing/eTravel.pdf
28
29. Internet Users Trends Surveys
Online Travel Industry, Internet Users Trends Survey, Statistics, National Chiao Tung University,
Internet Marketing Class by Dr. Edwin Tang, Date Not Mentioned26
Online Consumer Trends Survey
Online Travel Industry, Online Consumer Trends Survey, Statistics, National Chiao Tung University,
Internet Marketing Class by Dr. Edwin Tang, Date Not Mentioned27
26
http://web.it.nctu.edu.tw/~etang/Internet_Marketing/eTravel.pdf
27
http://web.it.nctu.edu.tw/~etang/Internet_Marketing/eTravel.pdf
29
30. 2- September 9, 2001 terrorist attacks
Soon after the Internet booming, the terrorist attacks of September 9, 2001 in
New York, hugely contributed to OTAs expansion. The travel decline (especially in
the United States) forced the hospitality industry to turn towards the OTAs in order to
attract travelers and increase their number of bookings.
According to the study from “Smith Travel Research and the American Hotel &
Lodging Association” previously mentioned, in 2001, OTAs represented 1.4% of US
hotel revenue; they doubled their market share in one year to 2.9%. Then, they kept
growing up to 7.7% in 201028.
Turning towards OTAs compelled hotels to provide OTAs with “the best access
to inventory and rates possible” 29 along with “bigger discounts and attractive
promotions like 24-hour sales30.
This is why today, hotels, which used to be known for selling rooms at the highest
possible rates, start communicating about the fact they provide the best available rates
on their web pages (websites, social media sites, etc.), in order to increase their
revenue through direct bookings.
3- 2008 world economic crisis
In addition to communicating about their best available rates, hotels had to
increase their marketing budget to get their website redesigned and their online
presence optimized. These strategies were made still in the objective to increase direct
bookings by being more attractive and visible than OTAs.
However, the economic crisis of 2008 was another considerable challenge for hotels,
especially for independent hoteliers. First of all, they were more budget limited than
branded hotels, and secondly they were loosing customers.
As a result, they had to rely a lot on OTAs to at least, increase their number of
reservations.
Given the massive demand growth that OTAs were benefiting, the latter decided
to increase their commissions. In the HeBS study previously mentioned, Max Starkov
reveals the following figures concerning OTAs’ market shares:
- in Q3 2008: 25.4% of booking for the top 30 hotel brands
- in Q3 2010: 37.5% of booking for the top 30 hotel brands
Which represent an increase of 12.1 points in 2 years concerning hotel reservation
through OTAs’ websites, namely a revenue loss for hotels of $5,4 billion in 2010
mainly because of OTAs’ high commissions31.
28
http://www.travelweekly.com/Travel-‐News/Hotel-‐News/Report-‐says-‐hotels-‐lose-‐out-‐with-‐
merchant-‐sales-‐on-‐the-‐Web/
29
http://www.travelweekly.com/Travel-‐News/Hotel-‐News/Report-‐says-‐hotels-‐lose-‐out-‐with-‐
merchant-‐sales-‐on-‐the-‐Web/
30
http://www.hebsdigital.com/blog/the-‐end-‐of-‐the-‐ota-‐merchant-‐model-‐%E2%80%93-‐this-‐
time-‐for-‐real/
31
http://www.hebsdigital.com/blog/the-‐end-‐of-‐the-‐ota-‐merchant-‐model-‐%E2%80%93-‐this-‐
time-‐for-‐real/
30
31. OTAs clearly took advantage of this demand growth because (except for online
marketing & selling that represented 1/3 of their revenue) they did not have as much
expense as traditional travel agencies have32.
In fact, traditional agencies had to cover the costs of brochures, trade shows, print ads,
etc. and they were requesting a 10% commission. As a result, the 20% or 30%
commissions OTAs request is not really justified33.
B- The recent changes in online distribution
1- Hotels’ online activity to become competitive
Many hoteliers ceased to wonder if the OTAs’ monopoly will stop someday and
started to think about a way to increase direct bookings. For a long time, they
remained focused on the objective to appear among the firsts on search engines. Then,
they realized it was not sufficient and started considering investing in a new website
or finding strategies to get potential guests to book on the hotels’ web pages (whether
websites or social networks).
From a personal experience at Oneglobe Network, last year most hotels we
worked with, regularly requested an analysis of their ranking on search engines
through the use of keywords. Then, from November 2012, with the arrival of Google
+, Google algorithms that used to rank businesses on the search engine changed,
leaving hotels and web marketing strategists in the uncertainty concerning the future
of the online visibility of their business.
Since the beginning of 2012, many hotels are present on Google+ (even if they doubt
that someday they will be able to attract hotels guests from this social network) and
have had their website and/or booking engine redesigned.
The most recent example of website redesign was announced today (July 11, 2012),
on Facebook by Genre Hotels.
32
http://www.hotelnewsnow.com/Articles.aspx/7511/Low-‐commission-‐models-‐no-‐threat-‐to-‐
OTAs
33
http://www.hebsdigital.com/blog/the-‐end-‐of-‐the-‐ota-‐merchant-‐model-‐%E2%80%93-‐this-‐
time-‐for-‐real/
31
32. Genre Hotels’ New Booking Engine Announcement on Facebook
By Emilie Alba, Genre Hotels’ New Booking Engine Announcement on Facebook, Screenshot, July
11, 201234
Genre Hotels’ New Booking Engine on their Website
By Emilie Alba, Genre Hotels’ New Booking Engine on their Website, Screenshot, July 11, 201235
What can be inferred from Genre Hotels is its effort in simplifying its booking
process, thus improving the online experience of its potential guests. Genre Hotels’
booking engine and airy website design reminds us of the ones provided by Room
Key and MyBestHotelRate, the “hotel friendly OTAs” introduced earlier.
34
http://www.facebook.com/Genre.Hotels.Co?fref=ts
35
http://genrehotels.com/
32
33. As a result, we can clearly notice the desire of hoteliers to beat the OTAs (who
usually display overcharged booking engines and home pages) and increase direct
bookings.
The current harsh competition against OTAs in which hoteliers have entered,
made them realize the importance of knowing web users’ online behavior, in order to
give them the online experience they expect.
2- OTA: the beginning of the end?
a- A decline in hotel bookings for OTAs
2011 was the first year OTAs had seen a decline in hotel bookings. This light
fall is certainly due to the growing competition with “hotel-friendly” OTAs and the
strategies set up by some hotels (like website redesign) to get more direct bookings.
According to a HeBS study based on Top 46 hotel brands, published in The Smart
Hotelier’s Guide to 2012 Digital Marketing Budget Planning36, the figures for the
online distribution industry are as follow:
2007 – 2011: Percentage of bookings in Top 46 Hotel Brands
via Computerized Reservation Systems
By M. Starkov and M. Mechoso Safer, The Smart Hotelier’s Guide to 2012 Digital Marketing Budget
Planning, HeBS Digital Study, September 11, 201137
Between 2007 and 2010, OTAs kept gaining market shares (+ 8,6 points) while brand
hotel websites were loosing direct bookings (- 8,6 points). However in Q2 2011
(which correspond to the period between April and June 2011), OTAs’ bookings had
reached only 31,8%, which means that by the end of the year they would hardly reach
32,7 (the percentage they got the previous year). As for, brand hotel websites, in Q2
2011, they already got 2% more bookings than the previous year.
36
http://www.hebsdigital.com/blog/the-‐smart-‐hotelier%E2%80%99s-‐guide-‐to-‐2012-‐digital-‐
marketing-‐budget-‐planning/
37
http://www.hebsdigital.com/blog/the-‐smart-‐hotelier%E2%80%99s-‐guide-‐to-‐2012-‐digital-‐
marketing-‐budget-‐planning/
33
34. This change in the online distribution industry that hotels start taking advantage of,
can be due to a change in the online consumers’ behavior. It is also certainly the result
of all the efforts made by hoteliers on their web pages and on mobile, and of the
growing increase of “hotel friendly” OTAs.
b- Online consumer expectations
The way web users act on the Internet influences the creation or the
development of new tools or platforms. When OTAs started to expand on the web,
they were selling the simple possibility to make several reservations in a short time,
all of it at the best available rate. Consumers are still looking for the most convenient
way to make reservations. However, today they also value a memorable or unique
online experience. This is why, more and more consumers want to directly deal with
hotels’ manufacturers according to Max Starkov, in its HeBS study “End of the OTA
merchant model – This time for real”38.
This trend is certainly in part responsible of the increase (+2%) of brand hotels’ direct
bookings in 2011, because hotels belonging to brands or chains usually provide
attractive websites, entertaining blogs and dynamic activities on social media. As a
result, Max Starkov’s assumption in 2010 that “we should be witnessing a decline in
the indirect channel contribution” revealed true in 2011.
Another trend in customers’ behavior is the quest towards a personalized price
through a personalized reservation system39. Before the web became social, people
used to make hotel reservations mainly through OTAs. Years later, web users started
making only their first reservation on OTAs’ websites, then they would book directly
with the hotels for future venues. This is why we can assume that occasional travelers
will keep booking with OTAs (it is actually more convenient for packages) but on the
other hand, regular travelers will get used to booking directly with hotels through
their websites, mobile apps or social media sites.
c- The increase of mobile connected travelers
Lastly, the Internet and mobile development have made travelers hyper
interactive, which results in more and more reservations made from mobile devices.
38
http://www.hebsdigital.com/blog/the-‐end-‐of-‐the-‐ota-‐merchant-‐model-‐%E2%80%93-‐this-‐
time-‐for-‐real/
39
http://www.tendancehotellerie.fr/articles-‐breves/banque-‐finances-‐economie/2476-‐
article/le-‐regne-‐des-‐otas-‐a-‐t-‐il-‐atteint-‐son-‐apogee
34
35. Percentage of Travelers Using Mobile Phones
to Access Internet for Travel Info
By Google, The Traveler’s Road to Decision 2011, Study, July 201140
Between 2009 and 2011, personal travelers using mobile phones increased 19 points
(from 8% to 27%). Concerning business travelers, their number doubled in 2 years,
reaching 51% in 201141.
Note:
Personal travelers: according to Google Think Travel, are people having taken at least
one trip for leisure in the past 6 months.
In regard to the number of hotel reservations made from mobile devices in
2011, about half the travelers (business & personal) now use these devices in a natural
and comfortable way, as it is through desktop computers or laptops.
40https://docs.google.com/gview?url=http://www.thinkwithgoogle.com/insights/uploads/213
96/&pli=1&chrome=true
41 https://docs.google.com/gview?url=http://www.thinkwithgoogle.com/insights/uploads/213
96/&pli=1&chrome=true
35
36. Percentage of Travelers Using Mobile Devices for Travel-Related Activities
By Google, The Traveler’s Road to Decision 2011, Study, July 201142
This graph also shows that the number of travelers using mobile devices to check in
has increased (+ 6%) in one year. Mobile applications download also increased 6% as
well.
As a result, it is important to point out that the investment in mobile optimized
websites and in mobile applications should be considered by hotels trying to boost
direct bookings. The priority is currently given to computer websites optimization, but
hotels have to start thinking about mobile development and optimization as a next
step. According to David Millili, CEO of Pegasus Solutions, the world leader in
technology and corporate services for the hospitality industry43, lately many hotels
saw an increase in voice bookings, which is in part due to the development of mobile
applications and mobile optimized websites44.
Additionally, the popularity of mobile devices resulted in more and more
activities from travelers on Social Media websites, especially Facebook and Twitter.
This is why many booking engine applications are being developed on Facebook, and
more and more promotional offers are being posted on these social sites. They all are
additional opportunities for hotels to get direct bookings.
42https://docs.google.com/gview?url=http://www.thinkwithgoogle.com/insights/uploads/213
96/&pli=1&chrome=true
43
http://www.pegs.com/
44
http://www.tnooz.com/2012/07/02/news/what-‐is-‐new-‐in-‐hotel-‐distribution-‐not-‐a-‐lot-‐
actually/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Tnooz+%28T
nooz%29
36
37. The online customers’ behavior is especially observed on Social media
websites, and from these observations, hotels and OTAs can adapt according to
travelers’ needs and expectations. The graph below highlights the main social media
activities travelers enjoy the most. It also shows how social media activities influence
the consumers in their decision making process.
Percentage of Travelers Using Social Media during their Travel Experience
By Google, The Traveler’s Road to Decision 2011, Study, July 2011, Appendix 1645
The results on this graph show that almost half of travelers use social media
websites before, during and after their trips, which partially validates the hypothesis
through which I expected that online consumers would more and more use social
media during their travel experience. As we don’t know if these figures will increase,
the hypothesis can’t be totally validated.
It can be noticed from the graph that there is not many differences in the use of
social medias between personal and business travelers, which is a good point for
hotels in that their social media strategies will be effective for both type of guests.
Another important point is the importance given to pictures and reviews.
With the recent launch of Google+ Local (the merging of Google Places and
Google+), Google announced that more visibility on search engines will be given to
reviews and pictures. It can therefore be inferred that consumers’ behavior also
influences search engine development. As a result, the level of customer engagement
a hotel can get is an indication of its chance to increase its visibility on search
engines.
45https://docs.google.com/gview?url=http://www.thinkwithgoogle.com/insights/uploads/213
96/&pli=1&chrome=true
37
38. To sum up, as OTAs made the most of the Internet at its early stage, they were
able to analyze and anticipate online customers’ needs and expectations. As time
passed, customers became more and more active online, which enabled OTAs to get
specialized and develop specific reservation sites for specific customers’ needs. This
why, we saw the development of hotel booking sites (like hotels.com, HotelClub,
booking.com, etc.), comparison websites (like hotelscombined, kayak, etc.), flash
sales (Groupon, LivingSocial, etc.) or last minutes booking sites (likes hoteltonight,
lastminutes.com).
As a result, with the recent launch of Room Key and MyHotelBestRates (“anti-
OTA reservation sites”, made on hoteliers’ initiative), we can notice that now
hoteliers start paying attention to customers’ behavior. Hoteliers indeed realized that
what customers want today is to start enjoying the hotel experience online, which
consists in getting in touch with them directly.
C- A more segmented online distribution channel
1- Hotel Comparison Sites
Comparison Sites exclusively for hotel rooms appeared around 2005 in order to
make it easier for web users to choose the right hotel for the best price among all the
existing OTAs. They obviously differ from travel comparison sites, such as Kayak or
Liligo, that compare prices for hotels, flights, cars, etc.
The newly hotel price comparison sites concept could not be ignored by OTAs
because it was the opportunity to get even more visibility and additional chances to
sell hotel rooms. However, price comparison sites increased the competition between
OTAs and became an additional obstacle for hotels to get direct bookings.
As time passes, price comparison sites are turning visual in an attempt to enhance the
travelers’ experience, and the competition is getting harder and harder among price
comparison sites.
Note:
Hotelscombined was launched in 2005, Trivago in 2006 and Room77 in 2011.
38
39. Home Page of Trivago’s Website (July 2012)
By Emilie Alba, Home Page of Trivago’s Website, Screenshot, July 201246
Home Page of Hotels Combined’s Website (July 2012)
By Emilie Alba, Home Page of Hotels Combined’s Website, Screenshot, July 201247
Home Page of Room77’s Website (July 2012)
By Emilie Alba, Home Page of Room77’s Website, Screenshot, July 201248
46
http://www.trivago.com/
47
http://www.hotelscombined.com/
39
40. When comparing the home pages of the main comparison sites, it can be noticed that
Trivago is the most overcharged site, Hotelscombined mainly attracts customers with
a visible booking engine and many photos, and Room77 differs from the others with a
visible booking engine and a strategic summer offer.
As a result, it can be inferred that the customers’ need and expectations has
changed since 2005. Room77 has launched a better-adapted site than its competitors,
by highlighting the simplicity of booking through a well-designed booking engine,
and also the assistance of an online room concierge. The customers’ experience is
therefore more complete.
2- Online Travel Guides and Resellers
From the years 2000, travel guide websites were being created to promote
destinations. As they were well designed and very visual, people spent time on them
to look for holiday destinations. They also made themselves different from OTAs and
other booking websites by choosing attractive names. For example, we can quote
“Mr. & Mrs. Smith” and “Wanderfly”. Nothing in these names refers to booking or
hotel. However, as they became popular they ended up displaying booking engines by
partnering either with hotels or OTAs.
“Mr. & Mrs. Smith” became a specialist of boutique hotels, guesthouses and luxury
spa hotels. They never involved OTAs and take care to visit each accommodation
structure before accepting a membership. Partnering with “Mr. & Mrs. Smith” is a
win-sin situation because the travel guide requests a 2 or 2.5% commission to
accommodations structures49.
In addition, Travel guides and resellers’ website is generally fully optimized for
visibility, and inspires confidence and proximity with web users.
The screenshot of “Mr. & Mrs. Smith” home page below highlights the elements that
make the website’s strength.
48
https://www.room77.com/
49
http://www.allaffiliateprograms.com/mrandmrssmith/
40
41. Optimized Home Page of Mr. & Mrs. Smith's Website (July 2012)
By Emilie Alba, Optimized Home Page of Mr. & Mrs. Smith's Website, Screenshot, July 201250
Many hotel websites, especially independent hotel websites do not highlight all the
elements framed in red on the screenshot, namely:
- Business’ phone number, description, rewards, etc.
- Booking engine, membership and social media boxes etc.
As a result, people spend less than a minute on non-optimized web pages and go back
on the search engine to click on another link, which most of the time belongs to an
OTA51.
Given the success of travel guides, OTAs indirectly found a way to position on
this channel as well. For example “Wanderfly”, unlike “Mr. & Mrs. Smith”, is a more
complete travel guide that displays hotel and flight bookings, along with local
recommendations and all the possible leisure activities offered on each destination52.
Wanderfly is also well designed and attractive but chose to partner with the price
comparison site Hotelscombined to position on the hotel booking segment. When
surfing the Wanderfly website, nothing indicates that Wanderfly uses
Hotelscombined’s platform. However when comparing the 2 platforms, we realize
that they are similar because it is indeed the same platform.
50
http://www.mrandmrssmith.com/us/
51
http://www.allaffiliateprograms.com/mrandmrssmith/
52
http://mashable.com/2012/03/07/wanderfly-‐relaunch/
41
42. Booking Platforms Comparison between
Hotels Combined and Wanderfly (July 2012)
By Emilie Alba, Booking Platforms Comparison between Hotels Combined and Wanderfly,
Screenshot, July 201253
It can be noticed that the two web pages are organized in the same way and provide
exactly the same offers illustrated with the same pictures.
The screenshots below compare the prices.
53
http://www.hotelscombined.com/,
http://hotels.wanderfly.com/
42
43. Price Comparison on Hotels Combined and Wanderfly's Booking Platforms
By Emilie Alba, Price Comparison on Hotels Combined and Wanderfly's Booking Platforms,
Screenshot, July 201254
It can be noticed from these screenshots that the prices are exactly the same. As a
result there is no doubt concerning Wanderfly’s partnership with Hotelscombined.
54
http://www.hotelscombined.com/City/Myrtle_Beach.htm,
http://hotels.wanderfly.com/City/Myrtle_Beach.htm
43
44. Hotelscombined’s partnership with Wanderfly is a way to convince OTAs to go
through their price comparison site. With Wanderfly, Hotelscombined differentiates
from the other price comparison sites because they ensure more exposure to hotels
through the travel guide channel. However, given Hotelscombined has to pay for a
commission to Wanderfly on all the bookings made via the travel guide site, OTAs
have to apply a higher commission to hotels in order cover their costs.
In summary, online travel guides entered the “OTAs vs. Hotels competitions” because
of the attractive visibility they gave to destinations. As a result, online travel guides
can be dangerous for hotels whether they decide to partner with OTAs. On the other
hand, travel guide sites can be hotel friendly, if they partner directly with hotels. In
this case, the online travel guides have to have an additional source of revenue to
ensure the continued existence of the business. Concerning “Mr. & Mrs. Smith”, as an
additional source of revenue, they sell gifts related to travel.
3- Flash Sales / Daily Deals Sites
Flash Sales and Daily Deals Sites were launch between 2006 and 2008 to
provide Internet users with exclusive and limited offers that can go up to – 70% off.
Daily offers, such as the ones on Groupon and LivingSocial, first concerned products
and services delivered by local businesses but it was then extended to travels. It is the
reason why Groupon created “Getaways” in partnership with Expedia. These websites
are usually well-designed, displaying attractive pictures and are not overcharged. The
reduced prices are highlighted and the booking engines are fast and easy.
The screenshot below from Groupon getaways is one of the best illustrations of the
offers appearance online.
Groupon Getaways’ Optimized Offer
By Emilie Alba, Groupon Getaways’ Optimized Offer, Screenshot, July 201255
55
http://www.groupon.com/deals/ga-‐emerald-‐dolphin-‐inn?c=all&p=0
44