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.

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