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But the great thing about increased exposure that a hotel gets from working
with OTAs.
Is that it typically doesn't just result in an increased number of indirect
bookings.
If you know what you're doing, working with an OTA can also help grow direct
bookings as well, a phenomenon that has become coined the billboard effect.
OTAs have the kind of consumer exposure and brand recognition that most hotels and
hotel chains can only dream of.
And also typically spend a fortune on electronic marketing to help
drive traffic to their various consumer-focused web presences.
As a result, they have become the go-to place for
consumers to search for suitable travel products to match their travel needs.
However research has shown that while consumers initially search on OTA
websites, once they find something they like, they also search for and
look at pricing and availability on the supplier's brand dot com website.
For example, a recent study by Google showed that 52% of travelers typically
check out the hotel's website after initially seeing a product on an OTA.
To profit from this, hotels need to do everything in their power
to ensure that once the customer lands on their direct website,
they end up staying there to complete the actual booking.
Highlighting the importance of the website design, content and merchandising issues
that we highlighted in our discussion on direct distribution in module three.
While the original study that proposed the billboard effect idea has been widely
criticized as being far too optimistic, the resistance shown by OTAs to ending
the concept of rate parity suggests that the concept itself may well hold true.
From their analytics, the OTAs understand very well that many, or
perhaps even most customers comparison shop with the brand dot com website.
And that in particular if cheaper prices are available on this latter channel,
consumers would invariably book there, leaving the OTAs with all of the costs of
acquiring the customer but none of the resulting revenue.
This is why increasingly OTAs are using advanced and
even aggressive merchandising techniques.
Three other people are looking at this hotel.
Last room available.
City X is 75% full on this night.
On their websites,
to try to create a sense of urgency and in effect, panic the customer
into committing to the purchase without comparison shopping on other websites.
The force of the billboard effect can be quite substantial.
Another recent study estimated for hotels that participate in the right OTAs,
nearly one-fifth of their direct bookings can occur
after the guest has initially found that property on the third party channel.
And of course, the great thing about such bookings is that in effect their customer
acquisition cost is zero.
As they come as a natural byproduct of being present on the OTA and
thus no commission or other marketing cost needs to be paid for their delivery.
To profit from this phenomenon, as we discussed in module three,
it is really important for hotels to have a really appealing website packed with
relevant content and with a modern, easy to use and intuitive bookings engine.
In particular, room rates need to be displayed very prominently and clearly.
With the advantages of booking directly clearly stated as will be discussed later.
And appropriate merchandising techniques used to encourage
the customer to stop searching and commit to the purchase now.
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As we saw in module three, don't forget to stress your best rate guarantee so
that consumers are reassured that they're getting
the best deal possible by booking directly.
In addition, the hotel needs to be careful to use the same phraseology and
terminology, particularly as it regards room types and
rate descriptions on both the OTA and the brand dot com site.
Any discrepancies could lead to confusion and
frustration, causing the user to leave the hotel site and head back to the OTA.
The idea is to make comparison shopping as easy as possible, whilst at the same time,
stressing the benefits of booking directly.
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Airlines do this very effectively using their loyalty program.
Fairs booked through direct sites typically benefit from a higher number of
air miles and are usually also eligible for
upgrade, while those booked through OTAs get fewer or sometimes no air miles.
And cannot be upgraded.
For the type of customer that they are trying to target, that is,
frequent travelers who are likely to be able to benefit from such systems,
this makes a big difference and indeed often does motivate them to book directly.
Hotels could of course do something similar with their loyalty programs, but
few chains have the kind of geographical coverage that makes loyalty points
such a sufficient motivator.
For that reason, most try to use more concrete benefits, such as, for example,
a free room upgrade, free breakfast, late checkout, or a bottle of wine or
a box of chocolates in the room.
So that while the core product and the room rate displayed remains the same,
the overall value of the deal to the guest is increased.
Thus encouraging them to book directly.
Many also use this as an opportunity to upsell,
creating bestoke packages by including spa treatments, in room movies,
wi-fi access, or tickets to a local attraction or event
to provide significantly more perceived value for a slightly higher price.
Thus far the potential customer comes to the website attracted by the room only
rates which is the same as that which is advertised on your OTA distributors.
In reality, they may end up booking a higher priced package directly
on your brand dot com website as the perceived value is much greater.
It's important also to communicate about these benefits,
both on the website before the sale, and also to customers as they arrive.
Peter O'ConnorProfessor of information systems, Director of the MBA in Hospitality Management
Nicolas GrafProfesseur
