Article: Good News and Bad News for Small Hotel Owners

The good news is that the percentage of Internet-based hotel reservations is expected to triple to 15.4 percent by 2004 from the current 4.9 percent, according to Andersen LLP, and total volume is expected to reach $5.7 billion in 2004, according to Forrester Research.

It would appear that many leisure and business travelers have discovered that all of the very good travel deals are to be found not through a travel agent, or calling a supplier directly, but on the Web. And according to Nielsen/NetRatings over 37 million out of 162 million active Americans Internet users have already purchased travel online.

The bad news is that many smaller hospitality companies, except for the major brands, have not taken full advantage of the Internet as the cheapest and most efficient distribution medium for their inventory. Unfortunately many have suffered due to insufficient expertise in understanding how the Internet works. This has allowed a number of major online discount companies to increase their market share at the expense of many hotels' direct and GDS distribution.

In fact, many independent properties have been left out of GDS (Global Distribution Systems) such as Sabre and Galileo due to high booking fees and the need for dedicated telecommunications. Also many new booking networks require a property to maintain rates and inventory in a web-based system that can be difficult to manage.

This can make it impossible to list independent property inventory on the GDS’ or popular travel website such as AOL Travel, Yahoo!, Travelocity, etc.

Although using online hotel consolidators to sell your accommodation online is not an issue, it becomes a serious problem when these online services are your primary or only Web distribution channel.

Simply put. If your hotel only appears on the Web through your discounted rates offered by the online consolidators, Internet users would always find your discounted rates and nothing else.

Therefore, as far as the Internet consumer is concerned, these discounted rates are de facto your published hotel rates. In effect they become your published rate. The resulting brand erosion and price dilution can seriously effect your future financial health. How do you ever convince travelers to pay your full room rate?

The answer is very simple. As an Hotelier you must adopt a distribution model which focuses on two major areas, Direct and Indirect Web Distribution.

When an Internet user is searching for accommodations at your destination, they should be able to find your hotel website directly through the search engines, your website affiliates and destination portals.

The Indirect component of marketing your hotel web site on-line is to search and use channels other than your website and is probably already familiar to most hotel owners. Such as, establishing relationships with online leisure travel services, corporate services, meeting and event planner services, wholesalers and discount companies, Internet reservation systems, local portals, hotel directories, etc.

Direct Web Distribution involves energetically marketing your hotel website by turning your hotel website into a 24 hour by 7 day sales force, complete with booking engine, website optimization, website functionality, customer e-mail capture and a strong customer service component.

Your hotel website is not just an online brochure. Yes, it should be simple, nice, informative, useful and efficient. But, do you have a real-time booking engine? The booking engine should be prominently displayed on the Home Page and become the centerpiece of your hotel website. All web pages within the website should prominently feature the "Online Reservations" or a "Book Now" buttons.

Numerous studies show that most Internet users will not book a hotel that does not offer a real-time booking on its website. And if you have a booking engine is it capable of booking in real-time transient, corporate rates, preferred rates, special accounts and promotional rates, hotel packages and group reservations?

Other issues, such as, affiliate programs and customer e-mail capture programs should be an essential part of your website marketing strategy. Focus on permission-based email marketing to your customer list, weekly e-Newsletters, and Web-only and email promotions.

A further requirement is the optimization of your website for search engines. You need your website to be visible to the search engines with effective use of keywords and Meta tags, etc. Plus, all of your key pages should be submitted to the major search engines and directories. This positioning of your hotel web site is an ongoing task that is critical in providing you with cost effective traffic.

It is a fact that 85% of Internet users rely on search engines to locate relevant information on the Web (e.g. Google, Yahoo, AltaVista, etc). As an independent lodging company that is not part of a major brand and without the marketing budget and name recognition of a major brand you must rely even more on search engine referrals.

Online distribution is here to stay. Travel suppliers, including hotel owners, are beginning to realize that online distribution is changing the "classic" distribution spectrum. Three years from now the Internet will contribute 18% of revenues in hospitality (PhoCusWright) and online bookings will surpass GDS bookings.

If your hotel does not currently generate at least 8%-10% of your bookings from the Web, you should be concerned. Why? This year over 7% of all revenues in hospitality will be Internet-generated. If you do not fare better than the national averages, you are already behind your pro-active competitors.

Taking care of the bad news in this article could certainly bring you much more good news.

 First published in the 'Montreal Times' by - John Shenton - April, 2002