Hotel E-Commerce 2011 Asset Manager Update 2011 Student Competition Garrett P. Ross.

Hotel E-Commerce 2011 Asset

Manager Update

2011 Student Competition

Garrett P. Ross

1. The Internet: a “growth channel” for hoteliers

2. Direct: branded/stand-alone websites1. What’s new with Google?2. Website Design3. Social Media

3. Indirect1. Online Travel Agencies (OTAs)2. We-Commerce

4. What does this mean in terms of ROI?

Presentation Outline

The Internet: A Growth Channel for Hoteliers

The Internet: A “Growth Channel”

GDS = Global Distribution System

Source: HVS

The Internet: A “Growth Channel”

Source: HVS

The Internet: A “Growth Channel”

Source: HVS

Where do we go from here?... Focus on:

• ROI-centric online marketing campaigns

• Solidifying brand presence on the web• Establishing social media marketing

with a plan of action• Remember, the customer begins to

plan their trip with Google…

The Internet: A “Growth Channel”

Direct Marketing

Direct = branded or stand-alone property website

Why is this segment so important?...

“In 2009, 71.4% of the online bookings came from the direct online channel (i.e. the major hotel brands own websites), while 28.6% come from the indirect online channel (the Online Travel Agencies-OTAs).” (HVS)

Direct Online Channel

What should we do?... Remember Google!

1. Search Engine Optimization (SEO)– Before discussing website ROI, proper SEO must be in

place to ensure the website is high-ranking in search results.

Produced for the HAMA 2011 Student Competition by Garrett Ross (Michigan State University)

Search Engine Optimization

“According to Google, search replaced OTAs as the #1 typically used resource for travel planning in the spring of 2009 and continues to increase in importance. 64% of personal leisure travelers and 65% of business travelers use search engines to begin their travel planning.” (HVS)

In response, Google has recently enhanced their hotel search function within Google Maps…

What’s New with Google?

Google Maps Hotel Search

Pay-Per-Click strategy ($.50 - $2.00) Additional fee if booked, based on

amount paid

In the future…Rates from direct sites to be includedPay-Per-Action: fee only upon booking

Tips:

1. Download speed is crucial... make sure your site is performing

efficiently.

2. Focus on conversion… prioritize information to make your site

user-friendly.

3. Include a wide variety of high quality photos… promote the strong points without creating

false expectations.

Website Design

What is it? Ans: Internet and mobile technologies that turn

communication into interactive dialogue.

FIRST STEP= Create a Strategy…Having no social media presence is better

than leaving your content unmanaged.Strategy Examples:

- Increase ratings- Engage guests- Community awareness- Drive sales

Social Media

4. Optimize your site for mobile devices…

Mobile Compatibility

Website traffic from smart phones and other devices is rapidly increasing, and hoteliers MUST adapt to capture this new source of business.

Offer mobile-specific discounts and connect with location based services such as Foursquare or Facebook Places.

Facebook is known as the most effective and versatile platform.

- Create a Facebook Business Fan Page- using a normal profile page may violate Facebook

rules

- Assign an existing employee as the media manager- Must have excellent interpersonal skills- Ensure that they can convey your message

appropriately- Monitor their time spent vs. outcomes

Social Media: Where do I start?

Hotel Page Example…. Mix social dialogue with sales initiatives.

Social Media: Facebook

Social

Business $$

Facebook Tips1. Treat your Facebook “Likers” like an artist treats their fans. That is, realize

they make you important and therefore you need to make them important. Special treatments etc. when they arrive at the hotel is a minimum.

2. Keep your Facebook page as personal as you can. This is an information communication channel to friends. Try to involve them as much as you can.

3. Find out what people want to know about the hotel and give them more of that. It’s not about what you “think” is important; you may be totally off the mark. Listen to them and your page will be a success.

4. Use all the media of Facebook, write articles, post photo albums etc.

5. Treat every post like a “news story;” don’t give it all at once. Give it to them bit by bit and maximize the yield from your stories.

Tips from Martin Soler - Vice President, World Independent Hotel Promotion

Opened Paris’ Seven Hotel using a Facebook–only PR strategy

- Mix professional videos with homemade footage.- Website and Facebook Page should link to YouTube.- Show viewers the “personality” of your hotel… showcase

your best assets.

YouTube

Google.com/RealTime Search real-time status updates, including Twitter, to see what people

are saying about your hotel.

What Are People Saying?

Web Presence Re-Vamp: HVS Case Study

In-Direct Marketing

Online Travel Agencies (OTA’s)

Site Market ShareExpedia 30%Hotels.com 28Travelocity 16Priceline 11Orbitz 6CheapTickets 6Hotwire 3

Source: PhocusWright-2010

JupiterResearch estimates that $128 billion in travel will be sold online in the United

States in 2011

“Hotel Cocaine”

#1 Rule: Focus on driving bookings to your own site… - Decrease commission costs and increase your negotiating power.

- Promote your “guaranteed rate” and cancellation policies if they are better than OTA’s.

Set a goal… aim to achieve no more than 10% of occupancy from OTA’s.

Online Travel Agencies (OTA’s)

Forecast, Forecast, Forecast…- Don’t follow a strict distribution structure. - Reduce reliance on OTA’s when high demand is expected.- When occupancy is expected to dip, allow OTA’s to

package rooms to conceal the reduced rate.

Practice rate and content parity across channels…

- Avoid OTA discounting wars.- Ensure the customer that they are getting the best rate.

Online Travel Agencies (OTA’s)

http://madiganpratt.com/Calculator/

Presence on OTA’s is still important…

After studying 2,000 IHG.com bookings, Cornell University’s Chris Anderson found:• Approximately 10% of consumers went to IHG.com directly. The other 90% first

conducted a search on an engine such as Google, a travel site or an OTA. • Roughly 75% shopped on an OTA site before booking on IHG.com. • The average person who booked at IHG.com spent about an hour on an OTA site. • Of all OTA site visits prior to booking at IHG.com, approximately 75% of traffic was

conducted on Expedia.com or an affiliate website (e.g. Hotels.com, Hotwire.com).

This also demonstrates the importance of the branded/independent website booking experience.

Online Travel Agencies (OTA’s)

“We- Commerce”

• Offer flash sales for luxury hotels, typically 50-70% discount to “members-only” consumer base… however anyone can become a member.

• Bring in new customers and control a relatively small amount of inventory.

• Unfortunately, this may create a negative signaling effect. Consumers will always think there is a cheaper rate to be found which deteriorates luxury ADR and diminishes consumer impression of direct hotel website rates.

“We- Commerce”

“We- Commerce”

• 1. Value – Provide an incredible value and consumers will line up around the block.

• 2. Scarcity – Nothing gets people talking like something they can’t get their hands on.

• 3. Exclusivity – Exclusivity is the velvet rope of social media: everyone wants to be special enough to be on the right side of it.

• 4. Status – Nobody wants to be anonymous. Our personal value is derived from status, and the more public it is the better. The key to status is everyone wants to share it, especially if you make it easy to highlight what they know or have accomplished.

Why are these sites so successful?

Source: Brian Cavoli – BzzAgent Blog

Conclusion

Conclusion

“RACK” Rate “WEB” Rate “BEST” Rate

Offline Operations Online Operations Integrated Operations

Offline Operations DotCom Era Electronic Distribution

Offline Channels Online Channels Online Channels -Property -IDS (OTA) -Web-direct -CRO -GDS -CRS -T/A -CRS -GDS -Wholesalers -Web-direct -IDS (OTA)

-DSP -Extranet (alt DSP)

Strategy: Strategy: Strategy: - Hold to Rates - Variable Rates - Stabilized Rates - Infrequent - Frequent - Revenue Discounting Discounting Management

Conclusion

Mode(s) 1985 1995 2005 2015PMS/CRO 95% 70% 10% 5%

CRS 0 10 15 10GDS 5 20 15 15IDS 0 0 15 15

Bookings 2006 2007 2008 2009 2010

Hotel Websites: 56% 54% 54% 54% 60%

OTAAgencies: 44% 46% 46% 46% 40%

P/Website 0 0 45 55Source: John Cahill, Affinia Hotels NYC, Emeritus

Conclusion

Key Points:All evidence indicates branded/independent website

bookings are becoming more popular…

- Focus on solidifying your online presence.

- Embrace SEO… make your page appear on the front page of search listings.

- Ensure that you are well connected with Google Maps hotel search function.

- Increase your investment in website design with focus on conversion.- Execute a social media campaign with a clear strategy.- Reduce reliance on OTA’s… excessive fees cut into your ROI

Thank You!

Acknowledgments:

Dr. AJ SinghThe School of Hospitality Business

Associate Professor: International Lodging, Finance, and Real Estate

Dr. Michael KasavanaThe School of Hospitality BusinessNAMA Endowed Professor, CHTP