A recent study sponsored by the American Hotel & Lodging Association’s Consumer Innovation Forum, suggests the “billboard effect” for hotels listed on online travel agency (OTA) websites may no longer exist.”
Now this flies in the face of all we have been saying over the past few years and what we recently published regarding Millennials who seem to prefer the Do-it-Yourself approach and favour booking at hotel sites.
There are several factors at play here!
1. It matters who you survey and different demographics have different behaviour.
2. It matters who did the survey or who sponsored it. In the past theses surveys were sponsored mainly by the OTAs and they had a vested interested in showing hotels that it paid to list with their site as a lot of people would book direct at the hotel site after checking option on the OTA listing. This latest study was sponsored by the American Hotel & Lodging Association’s Consumer Innovation Forum, who tend to be ” leery of the large commissions they pay to intermediaries.”
3. It matters which sites you are surveying. Many srudies have looked at the large chains and not the small hotels. The results may be very different for the small independents who can most benefit from the authority given it by listing on the OTA with the more well known chains. We can expect a better bill board effect for the smaller hotels.
What does it mean to hotel and tourism
So what can we deduce with all of these conflicting results and interests. The fine print of the latest study is perhaps more interesting to many than the summary results.
From 2012 and 2014, the number of people who exclusively visit the surveyed major chain hotel sites “has come down from 12% to 10%. Whereas people who visit exclusively intermediary sites have gone up from 48% to 60%. People who go to both types of sites have dropped from 40% to 30%.”
Overall the stats from the latest study do not look good for direct bookings. The Best news is that the conversion rate has gone up. Several years ago 2.5% of site visitors booked but in this study we see that form “2012 and 2014, the number has increased for hotel chains from 7.9% to 10.8%. The number for intermediaries has dropped from 7.7% to 6%.”
Mature markets look good for hotel direct booking with XYZ Generations
In all its not great news for hotels but remember this is a study of chain hotel and is not likely to reflect the rapid rise of the Millennials and the XYZ Generation who are more D0-it-Yourself and prefer to book at hotel sites. As the market matures we have two conflicting trends- On the one had OTAS have positioned themselves as the place to get the beast deals. On the other many travellers like to book direct and hotels can take control of their pricing and rates. With the latest moves in Rate Parity the future looks good for hotelleries who take the initiative and take control of marketing.
In Face of this we must ask is it True that The OTA Billboard Effect is Dying, or is it just a segment of the market.
Point of View by Ian R Clayton – Follow on twitter @irclay
THE CORNELL REPORT: Does the Expedia billboard effect still exist for hotels?
A YEAR AGO: Study: At upscale hotels, guest acquisition costs are devouring room revenue growth
Source Article Author
Sean O’Neill is the Editor-in-Chief of Tnooz and is based in southern New Jersey, in the US.