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.

Recommended Book: "Microtrends" - A Very Interesting Read

I just finished reading Microtrends: The Small Forces Behind Tomorrow's Big Changes by Mark Penn and E. Kinney Zalesne. I actually read it cover to cover (except for the Footnotes and Glossary of course). The authors goes through the book highlighting 75 small trends (mainly in the US) that have reached the 1% threshhold i.e. 3 million people. Each trend is bitesized at 4 or so pages so you can lay the book down easily and quickly pick up where you left off. It is a great complementary to "Competing on Analytics" in that all these trends were backed up by solid numbers and statistics that Burson-Marsteller is know for (Mark Penn is the CEO of Burson-Marsteller).

Overall, it is funny, well-researched, cleverly written and makes great talking points.

See also review from Publishers Weekly:
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From "Soccer Moms," the legendary swing voters of the mid-1990s, to "Late-Breaking Gays" such as former Gov. Games McGreevey (out at age 47), Burson-Marsteller CEO (and campaign adviser to Sen. Hillary Clinton) Penn delves into the ever-splintering societal subsets with which Americans are increasingly identifying, and what they mean. For instance, because of "Extreme Commuters," people who travel more than 90 minutes each way to work, carmakers must come up with ever more luxury seat features, and "fast food restaurants are coming out with whole meals that fit in cup holders." In a chapter titled "Archery Moms?", Penn reports on the "Niching of Sports": much to the consternation of Major League Baseball, "we don't like sports less, we just like little sports more." The net result of all this "niching" is "greater individual satisfaction"; as Penn notes, "not one of the fastest-growing sports in America... depends substantially on teamwork." Penn draws similar lessons in areas of business, culture, technology, diet, politics and education (among other areas), reporting on 70 groups ("Impressionable Elites," "Caffeine Crazies," "Neglected Dads," "Unisexuals," "America's Home-Schooled") while remaining energetic and entertaining throughout. Culture buffs, retailers and especially businesspeople for whom "small is the new big" will value this exercise in nano-sociology.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
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Customer Reviews for Hotel Site????

HotelMarketing.com pushed out an article from ClickZ titled: "How to Use Customer Reviews to Increase Conversion". In it, ClickZ says:

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Consider dipping into the traditional marketing budget to invest in a customer review system. A review system allows you to let your customers market your products for you. Need more rationale? Consider these facts:

According to JupiterResearch, 77 percent of online shoppers use reviews and ratings when purchasing.

Reviews drive 21 percent higher purchase satisfaction and 18 percent higher loyalty, according to Foresee Results.

In a study of 2,000 shoppers, 92 percent deemed customer reviews as "extremely" or "very" helpful, finds eTailing Group.

BizRate found 59 percent of users considered customer reviews to be more valuable than expert reviews.

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So HotelMarketing is telling hotels to put customer reviews on our own sites? Are they mad?

Seriously, it is one thing to be an online retailer selling products made by someone else and letting customer whine about that product. It is a completely different thing to have a forum on your site to let customers (or competitors or any Tom, Dick and Harry) complain out loud for ALL THE WORLD to see. On your own site where you are trying to convert a sale? Most people know that a hotel's sites (or product maker's site) are marketing spiel. They expect it so if you don't show them the mess in the kitchen... it's ok. Airing your own dirty laundry isn't going to help.

Travelers now have A.D.D.

That's stands for Attention-Deficit Disorder. According to a study by Akamai Technologies and Babson college, "one-third of travel consumers abandoned their online search after waiting for more than four seconds for their results to load".

Lucky our website is on Akamai and we are about to bump up our service level to Dynamic Site Accelerator. Damn that sounds sexy doesn't it. Vroom... Vroom....

We are going to be as sexy as InterContinental Hotels Group as Bryson Koehler, Vice President, Global Distribution Technology said: "Akamai provides us with a complete e-business solution that addresses our requirements for 100 percent availability of critical Web, Voice and Web Service applications, massive reach to support worldwide customer demands, and the use of an extended infrastructure to support widely varying traffic on demand."

As sexy as Pegasus, Steve Lapekas, Chief Technology Officer is quoted: "Leveraging Akamai's Web Application Accelerator will further allow us to increase speed and availability, while reducing infrastructure load and increasing SaaS application adoption of our next-generation travel reservation platform."

Maybe they will quote me too, after I get the makeover to become sexier like the Hilton Brand.

"Hiring For Search (Marketing)"

Digital Media - a magazine for the Asian market by BrandRepublic - interviewed me a couple of months back for a piece they were doing on Search Marketing. Here's the piece:

(Continued below)

My exact answers to the questions were:
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Q1. When it comes to hiring a search agency, what are the advantages and disadvantages of hiring a specialist over a general media agency?

PPC is easy set up and run, so the general media agencies can compete with the specialists. However, to really optimise the return-on-ad-spend or ROI, you need a specialist who understands the ins and outs and knows the "tricks". Over the last few years, general media agencies have hired specialists to run their PPC campaigns. So this is more balanced. But as a
client, I want direct access to that specialist and not through an Account Manager. This is because even specialists would not have experience in my industry, and industry input is needed to optimise.

SEO is still such a hazy field, maybe a large part is due to the fact thatthe search engines keep everyone guessing at their algorithms. Specialists are in a better position to keep up to date with the search engines and have the necessary tools and knowledge to do this effectively. General media agencies will claim to perform SEO, but they really do not understand this
field. Many focus mostly on search engine submissions and basic meta tagging, but do not understand the need content optimise based on keyword popularity.


Q2. In general, do you think the extra revenue gained from a specialist's expertise is worth the extra management and research it may require on the part of the advertiser?

For my PPC campaigns, I use both a specialist and a general media agency. I learn a lot from the specialist and at the same time can work with them to test out ideas and tweak my campaigns further. I then try to implement these learnings into my other campaigns with the general media agency. This is the same approach I take to regular reports in order to establish
consistency across campaigns. If the advertiser does not have the domain knowledge or the resource dedicated to PPC, then it should engage a specialist. It is worth the money if the terms are correctly defined - especially for "pay for performance" contracts.

For SEO, I have not encountered a general media agency that I would feel comfortable giving my account to.

Q3. Do you need to understand the technical side of search to go with
a specialist?

You go with the specialist to get that experience. As an advertiser, you need to understand and develop the right key performance indices (KPIs) for your SEO and PPC marketing. You do not need to get "technical" but you should understand the basics of what search engines do and how SEO and PPC works. This knowledge must be integrated with your knowledge of your
industry and business. The KPIs are specific for you because even specialist do not understand your business as well as you do.

Q4. Using a general media agency usually means better integration with the rest of your media strategy. How important do you think this is?

The general media agency should be able to understand your industry and business better than the specialists because they have had a long relationship with you. For a specific integrated campaign with online, print, TV etc (with specific campaign periods), general media agencies are in a better position to understand integrated marketing. It takes more time to get the specialists involved in such a campaign.

For a hotel group, over 90% of our PPC and SEO activities are constant and on-going, rather than fixed-period "campaigns". I have been promoting internally the concept of "PPC As A Sales Channel". So this "edge" that the general media agencies have are really for a minor part of the search engine marketing portfolio.

Q5. How can advertisers best choose which option (specialist or generalist) is best for them? How important is the pitch process in doing so?

It depends on how knowledgeable the advertiser is and how much resources the advertiser can put into it. If you know your KPIs and are comfortable with steering from a strategic direction standpoint (or only have resources to do so), then engage a good general media agency. If you do not have the time and resources, or need to understand more in order to establish KPIs, or
want to get deeply involve in tacticals and new developments, then look for a specialist.

With the pitch, you want to talk to the specialist within the general media agency. You need to establish that the person doing the work understands your needs and KPIs. If you have a good AM or AD that can facilitate this, this is good, but you still want to meet the brains.
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I don't have a link, but I will find it.....

eCommerce & Revenue Management

In the Who Is Who In Hospitality (wiwih.com) forum, there is a group called Hotel Department Group that is meant for hoteliers in the various departments. There are groups like General Managers Group, and Sales & Marketing Managers Group. There is one group is called eCommerce & Revenue Managers Group.

My first thought (and I have posted most of the below in this forum) was "Why was eCommerce & Revenue Management placed in the same group?"


At Millennium & Copthorne Corporate, both teams fall under Global Distribution & Revenue Management, which in turn comes under Global Sales & Marketing. eCommerce is categorized as a sales channel. I think in Hilton both fall under a larger group of Revenue Management and Distribution as well. Marriott seems to put eCommerce under Sales & Marketing and includes "Reservations, Inventory, and Distribution" under eCommerce too. So there does not seem to be a right or wrong way.

It is not uncommon that Revenue Managers have moved into eCommerce or have taken that additional responsibility/role - not unlike the move of Reservations Management into Revenue Management. But the move from Reservations into Revenue Management seems to be more complementary...

Reservations managers have:

• Familiarity with the tools and interfaces to control rates
• An idea of the business mix and seasonality of a property
• One could argue that this is the natural evolution, or career progression for Reservations Managers.
  

However eCommerce role requires three competencies that are not necessary found in Revenue Managers:

• General understanding of technology platform (hardware/software - which is IT's domain)
• General understanding of web technologies (which is more web development domain)
• Good knowledge of the online marketplace (which is a sales/marketing domain)

What is complementary is the fact that Revenue Management are numerate and analytical. Something that is extremely important in the eCommerce field and a mindset that is not always found in Reservations Managers.

I am curious to find out:

1. How many people have made the move from Revenue Management into eCommerce?
2. How many people are doing two roles at the same time?
3. Since Revenue Managers tend to report directly to the General Manager, how has that helped push out eCommerce initiatives?
4. What difficulties you have encountered moving into this role and how have they been overcome? (that's a big question, but hey you might be helping someone else!)
5. And lastly, does anyone disagree with anything that I have mentioned above? What are other views?

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The above only generated one reply which is why I am posting this in the greater marketplace as wiwih.com is members only and the Hotel Departments Groups are only for hoteliers.

The reply that did come in was by an Area Revenue Manager of a very large hotel group and he pointed out:

"What you pictured is an example of how the role of Revenue Managers can be seen from different perspectives and how often the position of a Revenue Mangers might be confused with a yield/distribution manager... Room revenue is impacted more and more by on-line distribution but should a revenue manager stop at room revenue? As you know total hotel revenue is the optimal/most profitable combination of Room, Conference & Banqueting and Food & Beverage revenue. The role of a revenue manager is much more complex and in my view must covering all hotel's revenue generating area's."

What he says is very valid and also points out that the role of a Revenue Manager is already quite complex. And there is an overlap as explained in this article? But can you realistically place the additional role of eCommerce onto these people's shoulder?

If successful, would you end up with something like this?


Here's one for the Revenue Managers reading this: Will Your Next CEO Be A Revenue Manager?

One Page Booking Engines

You have seen it at iHotelier and others. While a One-Page Reservation Process may seem simple and straight-forward, it does incorporate business logic and workflow. From the users’ point of view, they will only access one webpage during the whole booking process, which means this page has to be quite dynamic. The Reservations Workflow will have to be designed and implemented to guide users through the process. Users should also be provided with seamless integration with other internal systems as well as any relevant third party systems.

One-Page Reservation Process

In a typical multi-page booking process, a user may enter the reservations process from a number of different points: from the hotel’s website (using the Quick Reservations functionality), or from a link provided by the sales team, or from a promotional or advertising campaign. But once the user is in the reservations page, he/she typically follows through a linear booking process that loads one webpage at a time and then presents a summary at the end. This can be a tedious and slow process and making changes mid-flow can also be quite a hassle. Even increasing the reservation server’s speed and bandwidth can not remove the user’s perception that they have to wait while another page is being loaded.

A one-page reservation process eliminates the need for loading a new webpage every step and also allows users to see each step in the process and make changes quickly and easily at any time. Typically the user interface is a web-browser friendly client-side application that integrates with a CRS or GDS to get availability, room types, rates, rate descriptions, etc. as well as to communicate back to these systems with other essential reservations information. This application can be developed with JavaScript, however Macromedia Flash is a better environment for this kind of development as it is: 1) more secure, 2) a more robust development tool, and 3) able to provide a more user friendly, interactive experience.

The First Generation of One-Page Reservations

The first generation of this type of one-page reservations processes is provided by companies like iHotelier and SynXis. An example of the iHotelier interface is Hotel Nikko Düsseldorf (is it still there?); see Figure 1 below. An example of the SynXis interface is the Aztec Hotel & Spa Bristol (); see Figure 2. Users can select dates from a calendar, select from available rooms and rates, view photography and description of the room, and enter their details including credit card information – all on one page.

While many of the benefits of one-page reservations are there, these interfaces are platform specific and are more applicable for individual hotels rather than a hotel group. They require the hotel to use specific PMS or to allocate inventory into a separate database that is accessed by the one-page reservations process.

Figure 1 - Nikko Düsseldorf’s iHotelier One-Page Reservation

Figure 2 - Aztec Hotel’s SynXis One-Page Reservation

Users Guide

One thing lacking from the first generation one-page reservations interfaces above is a step-by-step guide through the process for visitors. To display the whole interface immediately can be daunting to a user that has never been to the site before or has not used one-page interfaces before. BookingEdge has a demo of a one-page interface that leads a user through the process; see Figure 3 below for a screen capture of the demo.

However this “guide” function should be able to be turned off by advance users and regular visitors.

Figure 3 - BookingEdge.com One-Page Reservation with Users Guide