Brand Erosion, or How Not to Market Your Hotel on the Web - Revisited

By Max Starkov President & CEO, Hospitality eBusiness Strategies Inc | January 27, 2012

Direct Online Distribution Has Become a Top Priority

This has been another difficult year for hoteliers. To begin with, there is a new realization among hoteliers that something has to be done to change the status quo in online distribution. Hoteliers are becoming more and more frustrated with the fact that they are consistently losing leisure and business customers alike to the online discounters. For many hoteliers Direct Online Distribution has become a top priority.

Last year we concluded that travel suppliers in the other travel sectors were well ahead of hoteliers in aggressively adopting direct-to-consumer online distribution. This continues to be the case a year later. Since 9/11 all major airlines and car rental companies aggressively adopted the "Direct Web Distribution Model" i.e. direct-to-consumer sales via the Internet as the centerpiece of their online distribution strategy. If we include Southwest Airlines, which has a very unique direct-to-consumer online business model, the direct-to-consumer share of U.S. airline online distribution will exceed 62% this year. JetBlue generates over 65% of its revenues through its website.

In the offline world hoteliers enjoy more direct sales (75%) than intermediary sales (25%). In the online world hotels are less aggressive than the airlines about bypassing the intermediary channel. This year for example only 52%-53% of online hotel bookings will be direct sales. Unlike the airlines, hoteliers have difficulty maintaining market share and finding the right formula to deal with online intermediaries. The lack of comprehensive Internet strategies, ineffective online distribution efforts and the explosion of the "merchant model" are partly to blame for the current situation.

Very few hospitality companies were able to take full advantage of the Internet as the most efficient distribution medium over the past year. Many hoteliers continued to suffer from their lack of understanding of the dynamics of Internet distribution. The online discounters took advantage of the situation and increased market share at the expense of hotels' direct and traditional distribution.

Hoteliers' online market share fell from 54% in 2001 to 52% in 2002 and it will take extra efforts to increase this share in the future.

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.