Savings from online hotel bookings evaporating

22nd May 2002

Greater price consistency among the hotel industry means consumers are less likely to see huge savings they once enjoyed when booking online according to a survey by KPMG.

The findings in the å‘Hotels and the Internet 2002å’ show corporate customers have seen the savings made by booking online fall from an average of å£12.50 in 2001 to å£3.75 in 2002.  The survey points to hotel websites becoming just another booking channel with little incentive for corporate travellers to benefit commercially from booking online.

Forty five per cent of those hotels surveyed had a consistent pricing policy across their websites, central reservation systems and booking direct.  This compares to just 18 per cent in 2001.  However, while 55 per cent of branded hotel websites still offer the cheapest way of booking, customers can get the same cost savings by calling the hotel direct or booking via central reservations.  Only one hotel website offered online bookers the outright cheapest rate, and another hotel website proved the most expensive channel.

KPMG surveyed eleven of the major international hotel brands including Hilton, Holiday Inn, Jurys, Marriott, Millennium & Copthorne,  and Thistle, from the viewpoint of an independent corporate traveller.  The results were compiled by examining the price differences when booking mid-week either via the hotel website, calling the hotel direct or via its central reservations system.

Since the survey began in 1999, the findings highlight the rapid change in the hotel industry with branded hotel websites penalising corporate customers for booking online and offering the highest room prices in 1999; the industry’s recognition of the internet’s potential as a distribution channel and offering the consumer significant rewards by booking online in 2001; to the industry’s move towards greater price consistency this year and raising questions as to whether cost savings on the internet can be realised.
The majority of hotel websites have improved since the last survey with the introduction of multi-language sites and the implementation of e-customer relationship management.  Fifty per cent of hotels are now able to distinguish their website visitors enabling them to collect commercial data from customers.  However, hotels in general continue not to realise the potential of online partnerships which would further improve site content and drive online revenue.
Nick Pattie, director of hospitality at KPMG said:  “The ‘wow’ factor of booking online is diminishing.  The industry must analyse if managing online bookings brings any cost savings and whether it can capitalise any revenue generation opportunities;  or if managing numerous booking channels, be it online or offline, is eroding potential e-savings for both the industry and consumers alike. 

“As the internet matures, hotels will have to continue to find innovative ways of appealing to the traveller online.  One hotel chain, for example, is offering to give a 10 per cent reduction on the price of its internet room rate if a cheaper rate can be found elsewhere on the internet.  Other hotel chains may jump on the band wagon and replicate these offers to vie for business.”




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