Online Travel Agents: Can we live without them? Part 2

So next is 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?


1) What is brand online's medium to long term strategy?
Well brand online is in direct competition with OTAs on most fronts online since 90% of Shopping traffic is generated from search engines. Hence search engine marketing is the battleground i.e. SEO and PPC. Search for any hotel and you will always find at least 8 of the top 10 results are OTAs (or their affiliates) in the natural search results. And look at the pay per click advertising and you will see many ads from OTAs - unless the name is trademark protected (only on Google!).

Since the cost of sale for direct online channel is a maximum of 10% vs the average OTA commission which is over 20%, it makes sense for a hotel group/hotel to want the traffic direct and save on the additional commissions. So the medium to long-term strategy is to channel shift the consumer from booking with online travels agents to booking brand direct.

2) What do consumers think about brand online vs OTAs?
Consumers prefer to book brand direct primarily because they get the best rate guarantee, they think the get special prices and promotions, and they can earn loyal points and rewards.

Consumers also feel that they are more satisfied when buying direct.

So while they say they like to go direct, what do they actually do in practice? Where do they go and how do they shop?

3) How many visitors go to brand online vs. OTAs?
Here is Comscore's August 2007 data for the worldwide Travel Category. Of the 791 million internet users worldwide, 38% go to travel sites during the month (or 301 million users). Expedia tops the travel category with 62 million users, followed by Travelport, Yahoo! Travel, Priceline and Lastminute. The first hotel company that comes on the list is IHG at number 12 with 7.4 million users. So even though consumers say they like brand online sites better, most of them still shop at OTA websites.

4) How much cross visiting is there between OTAs and Brand Online?
What's more interesting is to see this overlap. Here the column data is from Hilton and InterContinental groups crossed with the same Travel Category report in the slide above. So 48% of hilton user also go to Expedia, 26.2% also go to Travelport sites during that month. The Index column reads like "hilton users are 6.11 times more likely to visit expedia sites than the average internet user". So take a look at the InterCon column against the Travel Category.

Now check out the Index for Hilton vs InterCon and Marriott and Wyndham. The Index is over 2 times that of OTAs; 18.48, 23.58, and 14.83 respectively. This means that consumers are looking everywhere and not just your brand online and OTAs. They are looking at other hotel sites too. Probably your direct competitive set for your particular hotel.

Think about it. It's not that hard. Just a few click of the keys into Google and you can see it. Better yet the OTAs may very well tell you who is in the area. You can start your research there.

So that's the end of Part 2. In the next part, we will look at: Why do OTAs dominate the top of the visitor report by so much? Why have hotel brands not been as successful? And we will come to some sort of resolution.