Tag Archives: direct connect

Hotels Delivering Customers To TripAdvisor

Did you ever visit a hotel’s website and see something on their homepage that led you to say to yourself “Self, what the h.ll were they thinking about when they made that decision?”

That’s what happened today while conducting a search for a particular hotel, landed on their homepage, and noticed that little TripAdvisor owl icon displayed prominently between two of the hotel’s calls-to-action.

I clicked on the icon and guess what happened.  Your right, I was immediately transferred from the hotel’s website and delivered to the TripAdvisor page that displayed the hotel’s reviews.  Advantage TripAdvisor.

OK so your saying what’s the big deal!

One, this and every hotel that battles and pays to get prospective customers to their site lost this prospective customer in a matter of less than 10 seconds.  If the hotel spent hard-earned money and their e-Commerce team achieved their goal to get the hotel to rank in the top third of the search return then why risk this sort of “marketing strategy” that sends prospective customers to a competitor’s site?  Advantage TripAdvisor

Two, and this is even more confusing, guess what caught my attention while on the TripAdvisor site?  Your answer doesn’t count because you’ve done this before.  For those of you that haven’t I had the option to book that very same hotel, after I read their stellar reviews, with seven different OTAs.  Yes, Expedia, Hotels.com, Booking.com, Venere, Priceline, Travelocity, and Orbitz.  Advantage TripAdvisor and OTAs

Now, why would a hotel spend time and money to get me to their site then turn around and send me to a competitor’s site that could potentially cost that very same hotel eight times the transaction cost as compared to a direct booking on the hotel’s website?

Now I’m totally confused!

Tom Costello is the CEO, Partner & Co-Founder of Groups International, a company that provides marketing, consultative services, and technology solutions to the group and leisure travel markets.  Connect with him on LinkedIn, Facebook, and Twitter or contact him by email.

Where Oh Where Are These Hotel Brands In The Top US Sites?

In today’s Tnooz release “Expedia and Priceline stretch lead – Top US travel sites – August 6, 2011” these two brands were sited as to have extended their dominance of US travel websites by securing almost a quarter of all traffic from agency sites.

If I were an agency site I’d be rolling my eyes, again, because this isn’t the first time that these two OTAs have dominated their one/two rankings and won’t be the last.

Now I don’t belittle these giants for what they have achieved but I wonder what it feels like when a Director of e-Commerce or Revenue Manager has to meet with their owners and explain why some of their distribution channels are achieving strategic dominance over the hotel?

That said, in the category of “Destinations and Accommodations” (kind of a confusing combination) only three of 10 were major hotel brands namely Marriott, InterCon and Hilton.  So where were Choice, Wyndham, Best Western, Starwood, Hyatt, and Carlson?

If you click on the link that I’ve provide above, scroll down a bit until you get to the Airlines category.  Do you see any OTAs included as distributors in the list of top sites?

Well then how can these OTAs dominate travel sites and “destinations and accommodations” sites and have no influence in airline distribution?

Tom Costello is the CEO, Partner & Co-Founder of Groups International, a company that provides marketing, consultative services, and technology solutions to the group and leisure travel markets.  Connect with him on Twitter, LinkedIn, and Facebook or contact him by email.

Why hotels shouldn’t sell a $200 hotel room for $50

This is a reprint of an article written by Tom Walker with Teradata.

Tnooz’s June 22 article “Expedia: What Groupon Getaways with Expedia means for hotels,” (why a hotel should sell a $200 hotel room for $50) posits an interesting case. But does it withstand a closer look?

To make the argument, Jennifer Mellet, Expedia’s senior director of new channel sales, presents the following hypotheticals.

$100: What the customer pays
$ 50: What the hotel receives
$ 40: Cost per occupied room (CPOR)
$ 10: Net to the hotel

Assuming 1,000 people buy the offer, the hotel nets $10,000.

Ms. Mellet further claims that “those are 1,000 largely incremental room nights that would have otherwise gone unsold.” No doubt some of the business would be incremental, but how much is really an unknown. It is also true that some cannibalization would occur, which again is an unknown.

At a gross level of analysis, $200 is four times the $50 that might otherwise be sold. On the margin, however (using the article’s $40 CPOR), the Expedia/Groupon deal is sixteen times less than what the $200 sale is worth:

$200 – $40 = $160. 160/10 = 16.

Is it realistic to believe that the Expedia/Groupon offer will deliver sixteen times more sales than the hotel would realize without running the special? Anything is possible, but as a hotelier I would be more than a little skeptical.

To further strengthen her case, Ms. Mellet points out that:

– In fact, Groupon customers have been shown to spend as much as 60 to 80 percent on top of the value of the Groupon.

Illustration continued:

– Cross-sell revenue per room (70% on top of $100 voucher at 70% margin to hotel): $49

– Total margin generated if 1,000 vouchers are sold: $59,000.

But is there any reason to believe that Groupon customers are more likely than other customers to spend additionally once staying in the hotel? Perhaps, but the proposition is far from self evident. If the hotel sells one sixteenth of the rooms at $200 that Expedia/Groupon would sell, it would achieve equivalent profitability. And the customer would be the hotel’s, not Expedia’s.

There is a pitched battle today between OTAs and hotels over which of them “owns” the customer. Expedia is aggressively positioning itself to be the owner of what might otherwise be hotels’ customers. Unquestionably, Expedia and other OTAs provide hotels a valuable service, but that value is delivered at a comparatively high price.

Rather than abet Expedia in its drive to become a traveler’s supplier of choice, it might be wiser to gamble that hotels’ own channels can achieve more than one sixteenth of what Expedia/Groupon could produce. In the bargain, hotels retain their loyalty position with the customer, which represent a value far greater than the $10 Expedia/Groupon might deliver.

Hotels Testing New Direct Connect Model

A new Google Maps feature that aggregates real-time hotel rates and availability has passed a seven-week beta test and has gone live, and at least one Central Reservation System provider is on a global road show informing hotel clients of their appearance on the new distribution channel.

Distribution experts still are hypothesizing about what kind of effect the search-engine giant will have on where travelers book hotel rooms, but some say the program should be embraced by hoteliers who don’t want to lose bookings to online travel agencies. Brands have taken notice and are discussing whether to alter their distribution strategies.

Check The Buzz About Hotelmine

There’s a lot happening since the recent launch of the Hotelmine.com website this past week.  Thanks to all of the hotels that are participating and we look forward to adding more hotels this week.

Tom Costello is the CEO, Partner & Co-Founder of Groups International, a company that provides marketing, consultative services, and technology solutions to the group and leisure travel markets.  Connect with him on TwitterLinkedIn, and Facebook or contact him by email.