Online Travel Agents: Can we live without them? Part 1

I moderated a panel discussion yesterday at the HEDNA Asia Pacific Conference here in Singapore. The panelist were: Roshan Mendis from Zuji/Travelocity, Boh Tuang Poh from Asiatravel.com, and Craig Hewett from Bezurk.com.

So I had a short "scene setting" presentation (15 minutes). But the first few slides were more of setting the stage, i.e. the stage comes before the scene.


The stage, or the online marketplace, as we know it, is quite convoluted with OTAs, corporate websites, hotel websites, search engines, social networks, user generated content, blogs, etc. etc. etc. How does a revenue manager resolve all this into a revenue management strategy? (remember HEDNA stands for Hospitality Electronic Distribution Network Association so the people here are mostly Revenue Managers/Directors).

So we need to distill this marketplace from the perspective of distribution:

1) The Users, or Consumers, on the left side.
2) On the other side, you have the inventory which resides in the CRS or PMS.
3) That inventory is distributed to brand online websites by the Internet booking engine and distributed to OTAS via CRS, GDS or extranets.
4) So the big question is how do Consumers get the brand online websites and/or OTA?

A) Some go direct to the brand online site like www.millenniumhotels.com and type that in. Some go direct to OTAS like expedia.com or hotels.com.
B) BUT MOST GO THROUGH SEARCH ENGINES! At least 90%!

Look at the number of searches done worldwide (below) and see the share of the search market by the likes of Google, Yahoo and Baidu (yes that Chinese search engine).


Google has 60.8% of the over 61 BILLION searches done worldwide in the month of August 2007 (according to Comscore qSearch). This is from a base of 754 million unique searchers. Each searcher averaging over 21 search VISITS per month. (a visit is a browsing session that is not interrupted by 30 minutes of non-activity, so each visit can have many searches).

So yes.. people search... a whole damn lot. What about Web 2.0 and travel 2.0 and all this User generated content and TripAdvisor and facebook and MySpace? Don't people book from there?

Look to yourself for an answer. What do you do?

1) Research Phase: before you even go somewhere you are influenced by someone about how good or bad the destination is. After you know where you are going, you will then start to "research" into what hotels are good and where they are located. How do you get this informations? You use the search box at the top of your browser window! OK you also might wander through to your Facebook/MySpace or even TripAdvisor to see what people have to say. Now you are influenced by your research and you decide to stay at say the Orchard Hotel Singapore (obvious plug). What do you do now that you are ready to shop?

2) Shopping Phase: YOU GO TO THAT SEARCH BOX AGAIN and type in "Orchard Hotel Singapore cheap discount rate" or something like that!!!!! Don't deny it.. that is what you do. Why? Because it is easy. Just because someone said that they got a good deal on hotels.com 5 months ago, it does not mean that hotels.com has the best deal TODAY. You want to check everywhere, and it's really not that hard to do. With a few click on Google, you will know what is a good rate and what is not. AND WHERE TO BUY IT? And where is this? It is the Brand Online sites or one of the OTAs that our Revenue Managers work with. If you have time to spare, you MIGHT call a travel agent and be put on hold and wait for them to get back to you "later today"... yada.. yada... yada.

3) Purchase Phase: Then you buy....

So search engine are VERY important in this online world, Google being the top dog - BY FAR. Yahoo only has 20% of the market compared to Google's 60%. Google makes over USD 11 BILLION dollars a year and over 60% of that is from the search engine results page (SERP) that you see whenever you do a search.
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“Google reported revenues of $3.87 billion for the quarter ended June 30, 2007, representing a 58% increase over second quarter 2006 revenues of $2.46 billion and a 6% increase over first quarter 2007 revenues of $3.66 billion.

- Google-owned sites generated revenues of $2.49 billion, or 64% of total revenues,
- Google's partner sites generated revenues, through AdSense programs, of $1.35 billion, or 35% of total revenues
- Revenues from outside of the United States totaled $1.84 billion, representing 48% of total revenues in the second quarter of 2007"
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So that SERP page is not as simple as you think....

So that is the stage. My next post will be about the Scene... i.e. What is brand online's medium to long term strategy? What do consumers think about brand online vs OTAs? How many visitors go to brand online vs. OTAs? How much cross visiting is there between OTAs and Brand Online? So hold on for Part 2.