Web 2.0: Hotel ROOM review with TripKick.com

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Just ran across this on site on TechCrunch . Apparently Tripkick.com just launched yesterday on 13 May 2008. What's their unique selling point in this mass of web 2.0 travel portals?

"We prepare you with the little known facts about each hotel room so you can make an educated decision when choosing your perfect room."

That's right! Facts... about EACH HOTEL ROOM. Remember I talked about Web 2.0 increasing transparency? Well here is the microscope.

Out of the 250 hotels that they have information on, they happen to list one of our most popular hotel for online bookings - the Millennium Broadway Hotel New York:

Here is the listing details:


Underneath that are the following tabs:


With the default tab at "Rooms to Request", and it lists the following information on our rooms in the main building:


Our Premier Tower details are as follows:


This is all great stuff. There is tab for "your experience" which is user generated reviews; this currently has no feedback since the site was just launched. The next tab is "Compare Rooms" and here is what you see.


The "Room Basics" tab gives you this useful information. Man, I don't even have some of this info on MY OFFICIAL SITE. Sigh.....


I think this will be great. Just like Seatguru.com for the airlines!

BTW, if you click on the "Book now" button, it goes to Expedia. Are they an affiliate of Expedia? What's their business model? Get bought?

"Experience" from HEDNA Lisbon Conference

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HotelMarketing.com has put out an original article summarizing comments from various speakers at HEDNA's Lisbon Conference at end of April: Henry Harteveldt from Forrester, Michael Ball from WORLDHOTELS, Mike Nelson of Orbitz, Heiko Siebert from Mövenpick and Marc Charron from Trip Advisor.

So I will summarize it even more and, as usual, write some flippant comment. :-)

Henry Harteveldt, VP & Principal Analyst @ Forrester Research:

- Hotel e-business is evolving from selling to engaging the customer and “To succeed, hoteliers need to fulfill the experience expected by customers, not just think of them as heads in a bed"

Oh come on.. They eat too... Seriously, "experience" is about the product. It is about the operations as well as the infrastructure as well as the product position of a hotel. E-business has very little control over that "experience". The control is with the Hotel Owners, Hotel Management Company, the General Manager, the EAM, and the Front Office Manager before it goes to e-business. I am not disagreeing with Forrester by any means, but "experience" is too easy to throw out there. Everyone has been telling us to differentiate our brands, don't become a commodity, and let people "experience the brand". This does not help e-business.

- Social computing, which Harteveldt calls the fifth generation of electronic distribution; “Travel plays a big role in social computing, making social computing a blend of marketing and distribution”

They did not tell me what the first 4 generation was but I guess travel agents, GDS, OTAs, etc. .. Anyway, integrating social computing into a hotel brand website? hmmm... "like maybe not". At least not anytime soon. For an OTA? It's a must have.

- The sixth generation for electronic distribution is mobile technology; “Travelers are an ideal group for mobile-based services and activities”

Ah, THAT's the 6th generation. I never knew. Anyway, this is bull as I wrote here. 1) people don't book hotel rooms and flights on their mobile (imagine filling in your details), 2) roaming data charges are TOO high because the telecoms are ripping us off, and 3) we are talking about users receiving info and offers WHILE ON THEIR TRIP. Us hoteliers, airlines, and online travel agents (which makes up a huge chunk of the travel industry) would prefer users to get offers and info BEFORE THEY MAKE THEIR TRIP and while they are planning their trip.

I agree that these people want these services and this M-info will be provided (possibly by OTAs), but it ain't "e-business". It will provide better "experience" i.e. more capex costs.


Michael Ball, CEO @ WORLDHOTELS:

Five important trends affecting hotel e-business. According to Ball, these trends are: 1) more demanding consumers; 2) more complex distribution channels; 3) changing business models where companies must give more but expect less in return; 4) an emphasis on technology and richer content; and 5) a change in the structure of hotel e-business.

1) is related to 2) and 4) ... and 2) and 3) is related to 5). So it is really only 2 trends right? Demanding costumers will want richer content and better ways to shop, and changing business models lead to more complex distribution channel will force hotel e-business to adapt.

“Five points to ponder.” First, don’t let opportunities for the hotel e-business get hijacked again. The industry must do a better job at managing downturns, says Ball. The other points are: 2) strive to simplify; 3) put distribution at the heart of your planning process; 4) recognize the need for capital expenditures on new technology; and 5) add the social agenda to your agenda, before the environmentalists and regulators do it for you.

1) Right on, brother. Don't let the OTAs get ahead of us... if we can. (see my post OTAs are smarter than us hoteliers.) 2) I always do. 3) I wish we had a heart ... and a planning process. 4) it's easier to pull teeth, and 5) this social is "going green" and not going "social network".


Mike Nelson, COO @ Orbitz Worldwide:

Are globalization and localization competing strategies? "No. You need to incorporate local and global to be successful," Nelson says.

It depends on what you are trying to sell I would say. For example with search engine, different markets uses different keywords - even in the same language. How you structure your PPC campaign and ad groups will affect the quality score and hence rankings and cost. But there are commonalities that you can implement across markets, like misspellings, long tail keywords, etc. Also we have to be mindful that some products (i.e. hotel brands) have different brand positioning in different market so you would have to be careful. YAAAWWWNNNN......


Heiko Siebert, VP Distribution @ Mövenpick Hotels & Resorts:

Shaping customers expectations is becoming crucial as customers look for an ‘experience’ rather than just a room.

YIKES!!! The word "experience" again. Yeah, that bloke booking a couple nights at my 45 year-old 3-star hotel in central London is looking to have an "experience", all right - but not at my hotel. He just wants a cheap room.

"No Joe, its about the service experience too!" you say? - Right, you mean the service offered by the Eastern Europeans in the UK, the mainland Chinese in Singapore, and the central Americans in the US? With their perfect command of the English language and 2 month's job "experience"? That service, right? Then I would say, "That's what we pay GMs for. They need to straighten out that service. What's this got to do with HEDNA and e-business?" HEDNA = Hotel Electronic Distribution Network Association

“Content will replace price as a deciding factor for customers”...But who then owns that content and the customers that are attracted by it? Is it the hotel or is it the online service? Siebert strongly believes that his hotel has ownership of its content and customers. But online services feel otherwise. Since this is an area of debate, the panel believes this is an area where HEDNA can make a substantial impact in the industry by developing a solution.

There is a debate in this day and age on "who owns the content?"?!@#$# THE AGE of the internet where music and videos and movies are "freely" distributed - left, right and center? You may legally own certain content, but once you put it on the web, good luck in enforcing that ownership.

1) We are in the hotel business. We sell rooms (oh and "experiences"). And we use content (words, pictures, videos) to sell our rooms (and "experiences"). The more people see them, the better (as long as they are positive of course). AND we are stuck on the ownership of the content issue? We are not recording labels, not movie production studios, and not struggling artists/actors. Content is not our core business.

2) Everyone in the chain - hoteliers and OTAs - need to provide their own UNIQUE content. Yes we may borrow from each other, but hoteliers know how to market their hotels better than anyone (they should anyway) and OTAs offers the choice, information and value that consumers look for. So hoteliers go and keeping on pushing out regular unique content about their properties and OTAs go get traveler reviews, city guides, etc. that will bring in traffic. If we all offer the same content (and if we can agree who would own it), then what's the value in each of us to the consumer? (P.S. Google hates duplicated content in case anyone has not noticed.)

3) And lastly, what kind of "solution" can HEDNA hope to come up with? Not a technical one for sure. A policy perhaps? One that all HEDNA members must abide by? What about non-HEDNA members? What about the 100,000 websites that are "affiliates" of HEDNA members? The entertainment industry is still battling with Digital Rights Management (DRM)... And THAT'S their bread and butter.


Marc Charron, MD Europe @ Trip Advisor:

Consumer generated content, which is more and more in demand, is all about a traveler’s experience, explains Marc Charron

ARGHHHH!!!! "Experience!@#$!#$@" I used to work for Discovery Channel, and back in 2000, our branding team all agreed that the word "experience" is overused and should be retired from our advertising and promotions campaigns. Almost a DECADE ago.

OK OK. Marc is talking about travelers posting up their adventure, exploits and challenges - after the fact. He is not talking about trying to promote an "experience"... OK.. I am calming down.

There’s an incredible reluctance by hotels to post consumer generated content, fearing that it will be negative. However, most people that take the time to write have positive comments about their travel experience.

Well we don't mind putting up the positive experiences, but we don't like the negative ones. You know it seems to go against our Marketing 101 course to put up product defaults or negatives feedback right next to the product that we are trying to sell. You don't see that at a retail store - except for warning labels on pharmaceutical products and cigarettes.

We are totally ok with OTAs having CGM on their sites, but yes, it should be within the hoteliers' responsibility to monitor and respond to feedback and comments properly. By "properly", I mean in an official capacity as the GM, EAM, or whatever. Treat these people as if they were standing in front of you. And if you are really confident in your ability to manage the CGM on TripAdvisor, or VirtualTourist, then - by all mean - link to them from your site. But beware that you do not want they to book from those sites (TripAdvisor = Expedia and VirtualTourist is everyone's affiliate).

Save that 15+% commission!!!

======

Oh that was a fun post.... definitely an "experience".

Joe. Out.

Farecast sold to unknown buyer at USD75 million value

A) The only source of news for this (at the moment) is the Seattle Post Intelligencer. They seem to have gotten it first hand but no more info.

B) The CEO, Hugh Crean , declined to comment on Sunday.

C) Speculations - echoed by Hotelmarketing.com - is that the "one natural choice would be Expedia"

Well that was it for any "news", so let's spin up the rumor mill:

1) Expedia, Orbitz, and Travelocity all would love to get their grubby hands on this web property, but I think USD 75million is cheap. The FareCast founders would demand a higher price for their scruples. So I do not think anyone of them managed to charm this fair maiden.

2) Right on the FareCast website in the About Us section: "We Support Suppliers... We are committed to supporting airlines and hotels. We strive to help our suppliers lower distribution costs and build customer value." So going with an OTA is like "going to the Dark Side."

I think there are only two suitors that FareCast would not mind dancing with:

Firstly, the Kayak/Sidestep merged entity that I blogged about here and here. Together, they would make a potent force. What Kayak/Sidestep missed in their offering is what FareCast has: an algorithm and data to PREDICT fares. What a ménage à trois this would be. There is no inherent conflict of philosophy (be nice to suppliers). The three together would be a powerful meta search engine indeed. Powerful enough to demand ... say.. USD 1.5billion or so from the second possible suitor..... I'll give you a hint:

"Don't be evil."

Yep, if it's not Kayak/Sidestep, then it may very well be Google. FareCast's prediction engine is quite attractive and perfectly in line with Google's overall direction to foretell or create the future. The religious belief of "Don't be evil" can easily tie in with "We Support Suppliers" and wouldn't Google want to work directly with suppliers too? And what start-up would not want to join Google's work force and enjoy all the benefits that are tailored to this Gen-Y workforce?

Lastly, there is a "dark horse" that may be involved here. Remember bezurk.com? Remember that they "received investment from and sold a minority stake to News Digital Media, the digital media arm of Australia-based News Limited." And News Limited belongs to...

... you guessed it...

News Corp. Rupert Murdoch is gettin' in the game people. He can't let Barry Diller have ALL the fun with the travel industry. This charming, genteel old man may be able to convince the fair maiden that he supports her naïve belief of "We support suppliers", as New Corp does not have stake in any OTAs. We will have to see...

=====

Well that was a bit of fun speculation. I would say 40% chance that it is Kayak/Sidestep, 30% chance that it is Google and 20% chance that it is News Corp. The balance 10% are OTAs and whatever other flotsam and jetsam (i.e. vulture venture capitalists) out there.

Travel Agent Commissions (a la Black Eyed Peas rap)

Survey says that "Hotel commission most important income source for agents". See hotelmarketing.com article here. Also Expedia got a revenue boost from hotels as well.

I am reading the article and listening to Black Eyed Peas, so as a hotelier, the question to travel agents comes to my mind:

If we are so important to travel agents, then "Where's the love, y'all?"

(You know this tune. Start singing the following out loud to my edited lyrics below. Come on... You know you wanna.)

What's wrong with the world mama?
PeopleAgents living like aint got no mamas karmas
I think the whole worlds world wide web's addicted to the drama
Only attracted to the things that bring you trauma cost them nada
Overseas Hoteliers yeah we tryin to stop terrorism push hedonism
But we still got terrorists extortionists here livin
In the USA the big CIA 'pedia the Bloodz Orbitz and the Crips C-Trips and the KKK Travel'ci-tay
But if you only have love for your own race OTA
Then you only leave space to discriminate reduce rate
And to discriminate reducing rate only generates hate leads to disintermediate
And if you hatin compete you're bound to get irate lower rate
Yeah madness is margins are what you demonstrate obliterate
And that's exactly how anger failure works and operates propagates
You We gotta have love the spread just to set it straight operate
Take control of your mind sales and meditate mediate
Let your soul gravitate to the love spread y'all

People killing people dying Agents selling, hotels dying
Children Rev Man'ger hurtin you hear them crying
Can you practice what you preach promise that you'll not breach?
Would you turn the other cheek? Would you not just slap our cheek?
Father Father Father AHLA... AHLA... AHLA...** help us
Send some guidance from above
Cause people agents got me, got me questioning
Where is the love spread...?
Where is the love spread...?
Where is the love spread...?

**(AHLA = American Hotel & Lodging Assoc)

Now all I need a karaoke machine and a video cam, and this will be on YouTube.

TravelMole Web Awards Asia 2008

TravelMole is debuting its TravelMole Web Awards for Asia this year at the EyeForTravel Travel Distribution Summit Asia next week. They will host a lunch in which they will announce the winners. Here is the shortlist and I am lucky enough to be one of the judges.

The categories are as follows:

Best Airline site
Best Online Travel agency site
Best Accommodation site
Best Use of Video site
Best Hotel/Resort site
Best Tourist Board site
Best Car Rental site
Best Responsible Tourism site
Best WEB 2.0 Mash up site
Best Tour Operator site
Best Deployment Of Mobile Technology site

I am not going to tell you who I voted for so you have to either go to the event or come back here to see who are the Oscar Mayer Weeners ...



.... and who are just plain hot dogs made from pig snout, chicken feet, and possibly puppies!!!

Consumers don't trust travel agents

Here's a story from TravelMole about why consumers do not trust Travel Agents:

"Consumers doubt agents provide good value"

A few interesting numbers:

1) Only a quarter of holidaymakers believe travel agents offer good value for money

2) 42% "actively disagreed" that agents offer the best deal

3) 46% who arranged their own holiday themselves preferred the DIY route because they wanted to get the best deal or believed it was cheaper to arrange it themselves

4) Around one in five (22%) thought that agents in general do not give honest, trustworthy advice, and only 38% believing that their advice is independent

5) Half of those who had booked a holiday abroad within the last 12 months had arranged everything themselves without using an agent

6) More than two-fifths used the internet to research before booking, compared to 29% who phone or visited a travel agency to do the same

7) Only 14% of those surveyed asked friends and family for holiday advice and just 13% read a guidebook

8) Of those who booked with travel agents, 18% didn't agree that the agent tried to sell them the most suitable holiday, but the others were mostly satisfied with their travel agents

These are stats from a survey of 3,000 adults by Holiday Which? So I would assume these are UK residents.

I find these some of these numbers kinda low.

- Only 22% don't trust travel agents' advice?
- Only 2/5 used the internet for research?
- Only 14% asked friends and family?

What I want to know is:

- What is the demographics of these respondents? I would say younger people tend to be more DIY and have the time and know-how to research on the web and get the deals, whereas older people prefer face-to-face contact.

- How many of these people are regular travelers? i.e. at least twice a year (whether on business or holiday) to a destination outside of - say - 200km radius. This would give an indication of their "savvyness". No 5 above seems to indicate that the more frequent travelers tend to DIY.

- How many have home computers and are active internet users? How many booked online?

- Was this survey done face-to-face (in front of a Thomas Cook and the like), or a mix of online and off-line surveys?

Similar research in the US market would be very interesting as well....

Google's Advice to Travel Agents

In an interview with Travel Trade, Google's travel industry director - Rob Torres - gives advice to travel agents about the online business.

1) Travel agents should have both online and offline presence, even if the online one is just brochureware with a phone number.

- And you work for who? Google? You should be telling them the virtue and ease of having a website with Google Checkout.

2) Be There 24/7:

"People today can shop for travel any time they want. They can wake up at three o'clock in the morning and shop for travel," Torres said. Like DUHH...

Torres suggests making search engine optimization a core part of online marketing.

Hallelujah!!! Amen to that, Brother!

"Showing up in natural search results costs companies nothing," he said. Yeah right. Proper SEO involves a good platform, good understanding of Google's algo, and lots and lots of time. Or you hire someone to do it. And when was the last time an SEO company said they would optimize you site for FREE? What he meant to say was that natural search results DON'T MAKE MONEY FOR GOOGLE.

3) Social Online Community

Having a social community on your Web site allows people to begin their trip research before contacting a travel agent, a trend that all travel professionals are by now aware of. Providing a setting for pre-booking research on your Web site keeps people engaged with your business.

"You know that people are going to other sites to do that [research travel] so if you provide it on your own site, you're actually keeping people and engaging people longer on your own site," Torres said.

I agree the OTAs needs to do that. But I am still wondering about a hotel groups own site. What can we do?

4) Video on Your Web Site

In addition to social networking, offering travel videos is another way of both engaging potential customers on your site and allowing them to do their own research.

He suggested that travel agents take a closer look at YouTube. The site, owned by Google, allows users to set up a channel whereby they can aggregate user-generated videos and decide which ones they want associated with their Web site. In this way, "you let your customers produce them [travel videos] and there's no cost to you."

Boost Google traffic even more! From my perspective - as I posted last year - the stuff on YouTube is mixed: The Good, The Bad, The Ugly and the WTF?

As a hotelier, I would prefer to do my own vids. And am working with TVtrip.com to do just that.

5) Take Advantage of the Long Tail

The long tail, in online marketing terms, refers to the thousands of small sites targeted at niche hobbies, interests and themes. And according to Torres, the long tail of Web sites do matter to online marketers.

"That's where their customers are and at the end of the day it might be more efficient and less expensive for them to be a part of the long tail than it is to be on large sites," Torres said.

That's really the value of OTAs to a hotel company like Millennium & Copthorne. We don't have the resources to go after all these niches and long tails. If an OTA can get that niche and speciality, then they should get the commission. Having said that, if a particular part of the long tail starts bringing in a good chunk of the business, then we - as a hotelier - should go after that chunk ourselves.....

TripAdvisor "doubles" conversion rates???

I ran across an article on Hotelmarketing.com that made me want to put TripAdvisor or other user generated review onto my millenniumhotels.com site.

Just kidding. But it was an interesting read nonetheless.

"Online shoppers who look at TripAdvisor reviews on the Hayes & Jarvis site book trips at double the rate of online shoppers who have not seen the TripAdvisor reviews. Hayes & Jarvis is the first tour operator to provide customers with reviews from TripAdvisor."

Details:

"All visitors to the hotel description pages see TripAdvisor ratings (one to five “owls” depending on user popularity) and 20% of them click on the “Read Reviews” button. Over the four months since launch, the visitors who read the reviews converted at twice the rate of those that didn’t."

Obviously I wouldn't put Tripadvisor on my own site, but this data is certainly compelling. However - this being the web - there are a number of questions that need to be addressed before we can trust these numbers:

1) People surf and search across sites all the time when they do research. For their site, people who start looking at user reviews are possibly further along in their buying cycle than those who have not looked at user reviews. So since they are more ready to purchase, the conversion rate would be higher. So how do we know if the conversion is higher because they are ready to purchase or because of the user reviews?

2) On average, people visit sites more than twice before they purchase and for OTAs this is even higher. So if a person visited 3 times before she purchased, the scenario could easily be that she was researching the first 2 times, and the 3rd time she is ready to buy. She checks the user reviews and then buys. This would give the user review visit twice the conversion rate.

3) On the same vein, are we talking Daily Unique Visitors, Weekly Unique Visitors, Monthly Unique Visitors, Lifetime Unique Visitors or are we just talk Visits? The data would be very compelling if these were Lifetime Unique Visitors rather than non-unique Visitors from each Visit.

In any case - if nothing else - for Hayes & Jarvis, the reviews will serve to make the site more "sticky" and also provide additional features that improve usability and relevancy.

So is there anything similar we can do for a hotel group? Something that would be non-destructive, easy to maintain, and trustworthy (from the consumers' POV).

"Big Story Alert - TripAdvisor and Expedia work together" ????

So I was trawling through Wiwih.com and saw the above title which was in the Blog feed. It linked to an article from Travolution.co.uk Blog. It had "++ Big Story Alert ++" so I had to click.

The by-line was "UK media giant Sky has persuaded Expedia and TripAdvisor to put into practice what many have seen as one of the most valuable ways to utilise two mar.."

My first thought was, like, "What's the big deal?"

Doesn't Expedia own TripAdvisor? Yes they certainly do. Check it here. Direct quote: "TripAdvisor and the sites comprising the TripAdvisor Media Network are operating companies of Expedia, Inc. (NASDAQ: EXPE)."

Travolution Blog: "The deal is the first time Expedia and TripAdvisor in the UK have worked together with a third party website." The operative phrase is "in the UK".

Folks, it ain't big news to have two operating units of the same company work together. It's sometimes called "Synergy" (oops.. the "S" word again).

It took InterActive Corp (IAC) long enough. I mean IAC bought Expedia in 2003 and then bought TripAdvisor in 2004. Then they lumped TripAdvisor along with a number of other purchases (Hotwire, Hotels.com; see longer shopping list here) and, in 2005, put the whole freaking monster into the stock market as Expedia Inc. (NASDAQ:EXPE).

Synergy be damned. Money first. I wish I was Barry Diller.

So anyway... three years later... the various "little" purchases start working together. And that's "Big News"?

Hmmm... Then again, may be it is big news.

Millennium & Copthorne Online Performance in 2008

Well 2007 has come and gone and we are well into 2008.

For Millennium & Copthorne Hotels' eCommerce initiative, the results speaks for themselves:

Region: Change Booking Revenue (2007 vs 2006)
=====================
USA: +43.2%
Asia Pacific: +85.9%
Europe & M.E.: +47.2%
New Zealand: +93.2%
=====================
Global Total: +49.6%

This is for our direct to brand website bookings and does not include any OTA or TPI internet bookings. Graphed to scale, the monthly revenues for 2006 vs 2007 looks like this:


Needless to say (but I am saying it anyway), we are very please with the results. This was a very eventful year for us with extensive PPC campaigns, major initiatives in SEO, and a huge ecommerce platform upgrade (along with a redesign!). We are still trawling through the data to figure out which part contributed to the increase and by how much.

2008 is going to be an eventful year as well since we have many plans that we want to execute. Hopefully we will get a good increase this year as well over 2007!

Hotels.com Launches iPhone App

This is not new news as the application was first launched on 10th December '08 (see here). But it seems to be getting picked up by hotelmarketing.com and others (and now me!).
It's not big news, but it is at least interesting to me since I have my own hacked iPhone. With the iPhone's browser being the one of the fastest and most popular mobile browsers, this is certainly interesting. It is getting almost 0.1% which is a big deal:

View Trend Windows XP	78.37%
View Trend Windows Vista	9.19%
View Trend MacIntel	3.59%
View Trend Mac OS	3.22%
View Trend Windows 2000	2.97%
View Trend Windows 98	0.76%
View Trend Windows NT	0.63%
View Trend Linux	0.57%
View Trend Windows ME	0.43%
View Trend iPhone	0.09%
View Trend Windows CE	0.06%
View Trend Hiptop	0.02%
View Trend Windows 95	0.02%
View Trend Web TV	0.01%

I tried to access http://www.hotels.com/iphone from my iPhone but I get redirected to an Asian page of hotels.com.... sigh....

Anyhow, mobile access for hotel bookings is a tricky one. I have a proposal from a vendor to take my millenniumhotels.com site and build an interface for mobile. I just can't get an ROI calculation for it. How many bookings do I have to do to get my money back? OR should this be mostly for branding? Would it help for SEO as well?

Well those questions don't have any immediate answers, but at least for now, my investment my iPhone seems to be ok (despite hotels.com not letting me view their iphone app... yet!).

Evolution of OTA vs Direct Marketshare

I ran across an article on Hotelmarketing.com by Neil Salerno that reminded me of a slide that I used in the recent OTA panel. The article was titled "Supplier direct hype: Who needs third-party travel aggregators?" - see link here.

"...it amazes me that there are still many hoteliers who reluctantly participate in third-party travel portals."

But that reluctance is due mainly to the fact that they are worried about the loss of control of their rate. Even if they don't work directly with travel portals, they put their rates to wholesalers who then resell to travel portals and any hope of rate parity goes out the door. Check Kayak.com and Sidestep.com and you see so many cases of OTAs selling cheaper than hotel direct. So they are worried that this would get worst.

That is understandable, but obviously, not engaging aggregators is not the solution. The hotels must tighten up their contracts with wholesalers and engage directly with the OTAs to cut out the wholesalers from selling to those guys. Not easy, but it is a start towards rate parity.

"I read another article which stated that supplier web sites are gaining more ground against third-party sites in overall market share; they state that like it’s a really big deal. Don’t these people realize that hotel supplier sites had nowhere to go but “up” in market share? They are now where they could and should have been several years ago; that’s nothing to celebrate. "

In M & C's case, we are still not there. We are only crossing the 50% mark for online between OTAs vs direct. Here is a repeat of the chart that I posted earlier:

(Click to see a higher resolution). Here is the original post.

So I do celebrate as we break 50% and start going to where the rest of the industry is heading. I celebrate because we are winning the war and clawing back marketshare that should be ours. There is a place for OTAs and there is a share that is fair. This "share" varies hotel to hotel depending on a hotel's brand, location, and infrastructure.

A few more of Neil's points:
- While the hotel industry was in Internet denial during the late 1990’s, third-party aggregators like Expedia, Travelocity, and the rest were already actively promoting travel on the Internet.
- Since the explosion of a new hotel Internet awareness in 2002, hotel suppliers have been playing catch-up on the Internet
- third-parties do what most hotel franchises cannot do; they aggregate or combine air, hotel, and car rental, and market them to all corners of the world.

Sounds good to me:


"Every hotel needs to be actively involved with all forms of electronic marketing to have a complete and balanced marketing effort... supplier sites and marketing efforts are improving, but that fact doesn’t lessen the need to work with all business sources, including third-party travel aggregators. Get business from as many sources as you can. "

Agreed, but the main issue at play is rate parity and revenue management. If a hotel is not actively using analytics to optimize its relationship with OTAs, then there is a higher risk in working with them.

Expedia's new hybrid OTA model

Last week, Expedia announce an agreement with InterContinental Hotels Group "under which consumers can now book IHG hotels on Expedia® sites globally." As we all know, IHG stopped distributing via Expedia about 3 years ago when Hotels.com was yield managing cities and killing rate parity. Hotels were checking hotels.com to set their "rate of the day".

But now the largest OTA and the largest hotel group have kissed and made up. And they have given birth to a new hybrid. From Expedia's press release:

"IHG is participating as the launch partner for Expedia, Inc.'s new media-based pricing model. The dynamic, two-part economic model will blend transaction pricing with media pricing based on clicks on specific IHG properties in Expedia.com and hotels.com search results. Expedia and IHG collaboratively developed this innovative approach to distribution marketing -- a first in online travel -- where IHG will receive significant benefits from value-added media placement throughout the Expedia network in addition to the bookings they receive from Expedia."

This is about as clear as mud. I am not clear what this means from an implementation perspective. It sound a lot like the restatement of Expedia's "Marketing budget recontribution" in which 2% or so of the commission from the hotel is put back into a Marketing kitty so that you can use it to boost your presence in Expedia's own site. This is of course going to direct people to booking your hotel on Expedia still and hence contribute back to Expedia.
Markus Busch from Hotelmarketing.com offers an explanation:

"The media pricing element is part of a dynamic, two-part economic model that blends transaction pricing with media pricing based on clicks on specific IHG properties in Expedia and Hotels.com search results.

When a customer clicks on a hotel in the Expedia or Hotels.com search results, they are taken to that individual hotel’s customized info-site that contains not only rates and availability and the ability to make a reservation, but also rich and deep content, such as traveler opinions, virtual tours and photos of the property.

IHG hotels will be shown just like all the other hotels on Exepdia, but the agreement differs from other partnerships in that the compensation structure accounts not only for the bookings IHG receives through Expedia, but also for the clicks on IHG properties in the hotel search results on Expedia and Hotels.com sites."

Hmm.... it still sounds like a different cut of the marketing contribution kick back. Expedia is incentivized to promote IHG properties and will collect commission. I do not think that is much of a significant change for most of us at this point, but yes, it is a hybrid model and it remains to be seen whether Expedia is a good as Google in list IHG in relevant searches (not!)

What is significant and unsaid, however, are the commercial terms of this deal. Expedia has been courting IHG for years, and IHG's hotels have been pushing Eric Pearson's department to do a deal as well. IHG would not accept any commissions unless it was around 10-15% (or less!), whereas a typical Expedia commission ranges from (18-25%). Expedia then tries to make up the revenue difference by getting on the PPC bandwagon; and in exchange IHG gets increased brand exposure on Expedia networks.

Hopefully, this opens the doors for the rest of us hotel groups to DECREASE our commissionable rates with Expedia. HOORAY!!!!!

TripAdvisor's Users Predict 2008 Trends

A press release from Tripadvisor.com last week starts "Green & Clean Freaks Dominate; Traveler Say No to Cell Phones in the Air".

Germaphobia:
"Eighty percent of respondents are concerned about germs, bacteria and viruses when traveling. Airplanes are the most germy, according to 28 percent of those polled. Public transportation was next, followed by restaurants, hotels, and airports... Forty-five percent of travelers said their worst experience at a hotel was a dirty bathroom or dirty sheets, and 17 percent said their worst experience was the presence of vermin."
JOE> I don't know what the survey actually asked, but I think it is already urban legend that airplanes circulate viruses around. Additionally, Michael Crichton along with discovery channel and National Geographic has done their part post-SARS to increase awareness of how fast diseases can spread because of the ease of international travel. Lastly, if you ask a bunch of people what their "worst experience at a hotel is" and they answer something else besides dirty bathroom or dirty sheets, then you take notice. 45% saying that is a good thing; too bad it is not higher. The 17% presence of vermin - now that is disturbing. I am glad I have not experienced that in one-fifth of my hotel stays; I can't remember if I have had that experience in the last few years actually. Where do these 17% of the people stay anyway? Motel 8?

Go Green:
"Twenty-six percent of respondents said they will be more environmentally conscious in their travel decisions in the coming year. The green trend may be evident in their choice of transportation -- 22 percent said they'll go biking while on vacation this year, compared to 13 percent, last year. Forty-seven percent of travelers plan to go hiking this year, up from 43 percent, last year."
JOE> Wait... how does taking biking or hiking vacation make you any more environmentally friendly? I mean.. you are still taking a plane to get there right? Are you going further on the plane to get to that out of the way destination? That flight to the mountains might be half full rather than the full flight to a major city (fuller flights are more efficients and have lower carbon emission per passenger.).

Mobile Phones:
"Seventy-eight percent of travelers believe that mobile phones should not be allowed on flights."
JOE> So even if they were allowed on flights, the roaming fees would be freaking exorbitant. Look at what happened to Connexion by Boeing for internet access on flights. Crashed and burned because they charged too much. Let's hope some poor startup listens to TripAdvisor and keep their money in their pockets for another day.

Skewed Survey?
"Thirty-two percent of travelers (and 34 percent of Americans) are planning to engage in educational activity on vacation this year, such as a cooking or art class, up from 25 percent (and 28 percent of Americans), last year. Sixty percent of respondents from the U.S. said that the possibility of terrorism is still a consideration when planning where to go on their next vacation. Forty-five percent of Americans said the possibility of natural disasters (such as a hurricane, tsunami or earthquake) is on their mind, and 36 percent said the cost of fuel influences where to go on their next vacation, despite the recent decline in gas prices. Five percent said uncertainty with mortgage rates is affecting the way they plan travel in the next year, and six percent said the volatile stock market is affecting their travel decisions."
JOE: "US", "Americans"... how many of these 2500 surveyed were actually non-Americans? Is the press release skewed towards the US press or is the survey? Enquiring minds want to know.

R-rated to X-rated Vacations
"Twenty-four percent of travelers said they are likely to dress more provocatively while on vacation and 19 percent of travelers have had to impose the "whatever happens in X destination, stays in X destination" rule with their travel partners. Twelve percent of respondents have been to a clothing-optional or adults-only resort."
Joe> Again who is being surveyed? It looks like 12% are Europeans. At least 19% have been to Vegas. And 24% are women (men dress provocatively?).

Top 3 World Destinations:
1) Jerba, Tunisia
2) Makandi Bay, Egypt
3) Phang Nga, Thailand
JOE> So those survey either watched Travel Channel a lot or they watched a lot of E! Wild On with Tara Reid (where she just runs around in exotic destinations getting drunk.). I mean those aren't destination that just immediately come into your mind when you ask people. But then again, if TV is influencing people, then what else is new. It's just that those locations are just too small to support being "Top" destinations. Talk about being anti-ecotourism; just tell the world this tiny little place is the TOP destination. I am not going to those places next year; if I don't make it this year, then I won't bother because it will be trampled by 2009.

OTAs & TPIs are smarter than us hoteliers

This is from a wiwih.com posting (Login needed):

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I am going to quite frank in my opinion here (And forgive me for the over generalizations):

1) Yes, TPIs are smarter than us hoteliers in the online space. They are more dedicated, more focused, and "hungrier". They invest in technologies to scrape sites for content and rates; they understand SEM techniques and how to game the search engines. They are numeric and analytical....

2) Despite travel being the top ecommerce industry online, hotel companies are not very internet savvy. Most sales and marketing people in the hotel industry come from the offline media. When it comes to branding online, we are comfortable. But when the discussion turns to search engines, spiders, pageranks, ROAS, tags, analytics, etc, many people have a hard time pulling it all in.

3) The large hotel companies/brands have done it by centralizing eCommerce as a corporate function and have the understanding and the willingness to spend CAPEX to put together a good system. Medium and smaller hotel chains and independents in many cases do not have the human resources and do not want to spend the capital. But this is obviously changing as you noted that you expect the ratio to be at 75:25.

4) Large OTAs like Expedia and Travelocity will always have the upper hand because they offer consumers the choice across brands in any particular destination. And they do have brand equity which consumers are comfortable with. So there will always be a share to TPIs.

I would guess that the TPIs will always be trying to innovate faster than hotel companies and take advantage of new technologies in order to retain or increase their share. This is good for us hoteliers as we do not have to spend money on R and D.

However, to effectively increase its ratio of direct vs indirect, a hotel company must adapt faster than TPIs innovate.
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OTA = Online Travel Agents (the other OTA is here)
TPI = Third-Party Intermediaries

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