Ms. Ochoa

Reservations / Online Pricing / Booking Engines

What Consumers Do Before Booking Online and What It Means

By Grazia Sorice Ochoa, Senior Category Director, Travel Category, Yahoo! Search Marketing

If you are like most hotel marketers, you spend a good deal of time thinking about what consumers are doing in the days and months leading up to booking a hotel stay or vacation package. With PhoCusWright Research forecasting that 28 percent (or $28 billion) of all U.S. hotel bookings in 2007 expected to occur online, and an additional 50 percent of bookings to be influenced by visits to online travel sites, it's no wonder that hotel marketers are spending significant time evaluating online consumer behavior.

To maximize results and ensure an optimal return on investment, many hotel marketers are looking to better understand how consumer decisions influence searches, site visits and engagement metrics.

Understanding when to reach consumers is critical. If consumers aren't targeted at the right time, the sale is likely lost, the brand becomes less relevant to the consumer, and over time, market share may decrease. Based on our understanding and recent research, early engagement with Internet bookers is critical to a successful marketing program, yet it is this stage that is particularly undervalued by search marketers.

Travel Consideration Study Design Overview

To better understand the consumers' thought processes before booking online travel, Yahoo! Search Marketing partnered with Compete Inc. to observe the behavior of two million online travel consumers- their travel site visitation and search behavior. These consumer behaviors were observed over 90 days leading up to an online air, hotel or vacation package booking.

The overall objectives of the study were to evaluate the number and type of travel sites a consumer visits before booking, understand the differences in visitation based on where the booking was made (OTA or supplier) and assess the volume and type of search terms used based on where purchases occurred.

Travel Consideration Study New Findings

Although many of the expected findings were confirmed, there were a few surprises. Among these, it was revealed that on average and across all channels and types of products, consumers that booked online made more than 35 travel site visits in the 90 days leading to a transaction. Moreover, half of the travel site visits were made on transactional sites related to their ultimate purchase and the rest on informational and content-focused sites.

Travel Consideration Study Confirms Consumers Rely on the Internet and Search for Valuable Information Regarding their Travel Plans

By separating the results by the type of travel product purchased, such as air, hotel or package purchase, and site from which it was purchased, a significant but predictable picture emerges. Travelers who booked a hotel on a supplier site visited nearly 80 percent more travel-related sites (44 percent) compared to travelers who booked a hotel stay with an OTA (24 percent).

Interestingly enough, 54 percent of supplier visits occurred outside of the 30 day pre-booking window with a nearly even split between 31-60 days (28 percent) and 61-90 days (27 percent). For consumers using OTAs to book, results showed that site visitation is heaviest in the week prior to a booking with seven visits occurring in that week, but with a consistent pattern of 1.5 visits per week in the preceding 12 weeks.

Amongst hotel supplier purchasers, site visitations were almost evenly split between the supplier sites and the OTAs; 25 percent and 26 percent, respectively. Not surprisingly, a greater concentration of site visitations from those purchasers who booked a hotel stay with an OTA occurred on an OTA site (46 percent), given the multiple brand experiences that OTAs inherently offer to the non-brand loyal customer and/or comparison shopper.

Hotel marketers will likely see this level of site visitation and cross shopping as both potentially opportunistic and also challenging. With multiple occasions for customer engagement and purchase influence, there are also a myriad of occasions where potential customers can be redirected to a competitor or to a more costly fulfillment channel.

Similarly, the number of search queries also presents an opportunity and a threat. Consumers who book hotels on hotel supplier sites conduct more searches than any other point of purchase / product combination in our study - an average of 10.8 searches in the 90 days prior to their booking. Comparatively, hotel bookings on OTAs saw eight searches, a fairly high number given OTAs inherent comparative shopping value. And, no matter where consumers booked their online travel or what they actually bought, a full 60 percent of travel-related searches that consumers performed happened 30-90 days prior to their booking.

For hotel purchases booked on supplier sites, the search queries are evenly split at 29 percent each between 31-60 days and 61-90 days prior to booking.

Furthermore, in reviewing search query information from Yahoo!, it was clear that non-brand searches, specifically destination terms, played a critical role in the travel consideration process. On average, we typically see that an estimated 60 percent of hotel related search volume in any given month is comprised of non-brand category terms. This estimate excludes destination-only search terms (e.g., Miami, Los Angeles) where the consumer's search intention is not well-known. However, queries that include destination + hotel terms (e.g., Miami hotel, Los Angeles luxury hotel) are included in the estimated search volume.

The occurrence of these destination term queries preceding hotel bookings was validated through our study, confirming that nearly one out of every two searches, equivalent to 48 percent of the searches, were made using a destination term. In addition, 23 percent of the queries were branded, 16 percent were non-hotel travel product such as air and car and the remaining 13 percent were hotel product queries such as "discount hotel," "luxury hotel," "destination + hotel," and so on.

When considering the breakdown of search types by time period, destination searches are more prevalent further out from the purchase. Fifty-three percent of searches were destination terms from 61 to 90 days prior to purchase, whereas only 44 percent of searches were destination terms in the 30 days prior to purchase.

What It Means for Hotel Marketers

For hotel marketers, these findings point to some key takeaways, the first being the need to engage with prospective customers sooner in the purchase process via search and other online marketing efforts such as in market "shopper" behavioral targeting or within key travel sites. This early engagement is critical in acquiring the consumer and in keeping him/her from going elsewhere once they get to the booking phase.

Marketers should also break down their search term types into buckets that allow them to evaluate the quality and quantity of interactions such terms ultimately illicit.

For example, acquisition of new customers, who perhaps started their search on a non-brand term such as "NYC luxury hotel," may be more important than reaching someone who typed "St. Regis NYC" and is already brand loyal. You'll have to work harder to get the non-brand loyal customer - perhaps bid higher for better placement, work on your copy to entice them to click and then optimize your landing page so they are more likely to convert once they land on your site. Yes, these terms may also come with a potentially higher cost-per-click when the term is particularly competitive and perhaps result in a lower conversion rate and lower overall efficiency than your brand terms may deliver. But after all, these are new customers - these people represent the opportunity to steal market share from your competitors.

I empathize with marketers who have worked so diligently to include their site URL on every piece of consumer communication piece and collateral, and who are also working hard to optimize their site for algorithmic search results. But what we know is that users, despite brand awareness, search aggressively on non-brand terms when starting their travel planning, and that opportunity to influence consumer decision-making cannot be ignored.

With each progressive movement away from your brand terms, the cost of acquisition will likely be higher as the consumer becomes generally less qualified. That does not make these bookings less valuable or desirable. Simply stated, a "Hollywood hotel" booking needs to be valued differently than a "Hilton LAX" booking.

In light of market share considerations and lost opportunity, advertisers should want to be present on all of those 10.8 travel shopping searches conducted on average and also consider the cost of sale versus other distribution channels and even search initiated offline bookings. Our most sophisticated hotel search advertiser currently includes its search initiated offline bookings in its ROI valuation model and others are beginning to follow suit. Why? Because it's the right way to value the media's impact. Furthermore, there is no disputing that brand term conversions are significantly cheaper. Consider the fact, however, that the industry standard tracks the last click and says nothing about previous searches and clicks.

Few have any line of sight into how the term "San Francisco boutique hotel" leads a user to make a Kimpton Hotel booking 45 days after an initial search because the cookie window expired and there is little tracking of "assists," which is simply defined as the contribution a click has on future searches, clicks and conversions. (Assists help in quantifying the impact of a click on "Hawaii vacation" to an eventual search and click on "W Hotel Waikiki.")

However, this reporting feature is available through Yahoo! Search Marketing, and a similar feature is offered by a handful of bid management tools like Atlas and SearchIgnite. This single piece of information will radically alter your perception of search, your bid management strategy, and very likely, your overall media mix.

Hotel marketers who want to fully capitalize on the opportunity presented by using non-brand terms and interacting with customers sooner in the purchase process, need to strongly evaluate how they are valuing these early interactions. They must look to quantify and qualify, to the extent possible, the impact of these interactions further down the purchase process.

I encourage you to consider the lyrics from Oleta Adams: "I don't care how you get here, just get here if you can."

Grazia Sorice Ochoa joined Yahoo! Search Marketing in June 2005, as Senior Category Director, Travel. Grazia’s primary goal is to develop and implement the company’s travel category initiatives helping top tier travel companies maximize their search marketing campaigns. Prior to Yahoo! Ms. Ochoa was Director of Marketing for Lodging.com where she managed consumer marketing. She was Director of Vacation Rentals while at Cendant and has held positions as VP Marketing with Viator and eGulliver, where she was a co-founder. Ms. Ochoa can be contacted at Grazia@Yahoo-Inc.Com Extended Bio...

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