Eight years ago the notion of making a hotel reservation via the internet was a new concept.
Now it is an everyday occurrence with the likes of Expedia, Travelocity and Hotels.com taking thousands of bookings a day for hotels across the globe. Many of the major hotel chains have got in on the act as well. You can now book direct with them too.
In the U.S. more than 64 million people bought or reserved an airline ticket, hotel room, rental car or package tour online during 2005—up nearly 20 million from 2004, according to the Travel Industry Association of America. And each leisure traveler spends more than $1,000 online.
Now a new far-reaching hotel-focused website is about to enter the marketplace, called VLMdirect.com, the website is a ground-breaking system for hotel booking—where travellers deal with the hotels directly.
Brainchild of the World Travel Group, the site has taken three years to develop with information on the site available in ten languages from Portuguese to Mandarin.
Hard work is paying off for the entrepreneurial team that developed the Website, which already provides a catalogue of over 66,000 properties in over 160 countries and territories across the globe. The crew have ambitious plans to grow the business further, with another 40,000 properties earmarked for the site.
“Once completed VLMdirect.com will have the biggest accommodation database in the world,” says Kelly Footit, director of the Website.
“We are not just including the hotel chains but all independent hotels as well, many of which are preferred by individual travelers. New destinations are also constantly being researched and added to the listings.”
The VLMdirect.com model is different from its competitors in that it is not involved in any transaction at the point of booking a room. Travellers pay fees directly to the property and they make their own arrangements. The site provides details such as telephone, fax, website, facilities and visuals about hotels so that potential guests can make their own choices and decisions.
“We do not take a commission from the hotel or the consumer for that matter,” says Damian Goude, global sales manager for VLMdirect.com
“The business model involves charging properties who want to put more than just their basic details on the Website, such as rich media including streaming video, IPIX 360 visuals and photos.”
Focusing on the visual experience that hotels offer comes after an Eyefortravel conference on Sales & Marketing in Travel, Europe 2005 in Berlin highlighted the importance of hotel visuals in selling travel on the web. Guest reviews and price also featured highly.
Disenchanted with portals
VLMdirect.com was conceived by the World Travel Group after a number of well-travelled directors became disenchanted with trying to book online with the major travel portals.
“I was traveling to Stuttgart at late notice. When I went to book a particular hotel with one of the major travel portals, I got a notice saying no rooms were available for my dates,” says director David Falkener.
“This seemed a bit odd, it was out of season - November - so it is hardly a busy time. Eventually I got their telephone number directly, no small feat on Google or Yahoo! and called the hotel directly and of course they had rooms,” he explains.
The problem occurs with third-party travel websites that buy blocks of rooms at special merchant prices. These rates are lower to the portals but may not necessarily be to the consumer.
When some portal runs out of inventory for a particular hotel they tell travellers there are no rooms left. They then try and steer people to a nearby hotel where merchant-rate rooms are available. This activity is more profitable for the websites but may not be giving consumers the rooms they want in the area they want.
InterContinental Hotels Group (IHG) has stopped doing business with Expedia and Hotels.com over such practices and have set up their own direct booking system.
This has led IHG to see online bookings increase on its websites, including Holiday Inn and other brands, from 78 percent of total online sales in June 2004 to 85 percent in June 2005. Other major hotel chains are following suit with direct booking systems.
Also many hotels have pricing agreements with the travel portal sites, so consumers are not likely to find a lower rate than at the hotel’s official site. While others portals now check real-time inventory.
“In reality most people want to go to the hotel directly, they don’t need a middle man. A direct E-mail or a phone call to the hotel is likely to get them the same rate as they would do booking through a portal,” says Falkener.
“The problem with search engine technology now is that the travel portals - Expedia, Travelocity and Hotels.com—dominate in any search for accommodation online. It is especially hard to find those smaller, independent hotels on the Internet that offer good rates and good service,” he explains.
“VLMdirect.com readdresses this balance. We do not favour any single property. We are there to document the facts. And the strong visual element allows travellers to make their own choices through what they see.”
It is not just hotels. Booking direct is a trend that has gripped the industry over the last few years. The airlines were first to stop paying commissions to travel agents and focus on their online offerings allowing clients to book direct. Easyjet was one of the first to pioneer direct booking resulting in cheaper fares for the customer. Most airlines have followed suit proving that this formula works and in turn increases profitability.
“However, booking online only works if you have a valid credit card. The penetration and use of the Internet by travellers has risen much faster than that of plastic payment” says Goude.
Also a proportion of people in Asia still prefer to pay cash for travel because of the vast grey market. Putting travel payments on a credit card makes it public knowledge. A problem Cendant, one of the globe’s largest travel distribution companies, is experiencing in China.
“Travellers browse online but prefer to book hotel rooms and air tickets by telephone. VLMdirect.com gives people that option and in the language of their choice,” explains Goude.
The team at World Travel Group is now in the promotion phase of VLMdirect.com on the Internet. Achieving high rankings on search engines is the main goal, so that it is the first to come up when travellers search for accommodation. This is being achieved already since the Website has a growing number of Weblinks—over 1,000—to different destination specific VLMdirect.com websites.
“We are looking to be the encyclopaedia of accommodation on the Internet, the Craig’s List or the Yellow Pages for the travel and hotel industry worldwide. There’s never been anything quite this comprehensive before. It will empower people and give them the choice to book what they want whether it’s an Italian traveller looking for a hotel in Indonesia or a Chinese person booking in Cuba,” says Footit.