By Richard Walsh
A recent article by TravelClick Inc. pointed out how online hotel bookings are shifting from the third party online channels to more direct channels, specifically the brand sites. Some of the third-party sites even had a decline in business in 2004, although the overall growth in ‘Internet reservations increased by nearly 32%‘The one fact in regard to the TravelClick Inc. article was the reference to a brand booking as a “direct hotel booking”. An internet booking from the brand to the property is no different than a GDS booking through the brand or a booking from the brand call center. Hotel analysts or researchers may call this a direct hotel booking, but I am not sure a hotelier or general manager considers it a direct sale.
This market shift does raise some questions, Is the gain in brand online sales really good for the hotel properties? Clearly, the brands are getting better at marketing their brand, but how much will the added site traffic help a branded property? Added traffic has to produce more sales for some properties, but even the new business is diminished by the cost of the booking through the brand site. Can a hotel market direct at a similar cost per booking? The brand cost does of course vary by brand. In some cases, these online brand bookings are perceived as free by the hotelier. Nothing is free, the cost associated with the brand bookings are most likely bundled with other brand services.
Another factor that may diminish the value of the brand site’s increase in traffic is the fact that on the brand website there are other hotels of the same brand or same group of brands in your market. When a shopper goes to the brand site or even your hotel’s page on the brand site, they are generally offered links to see alternative properties of the same brand. The brand sells the brand not the hotel!
There are benefits to having a brand, but Internet marketing is not one of the major benefits. In fact the brands are making more and more difficult for their hotels to capitalize on the Internet opportunities. All of the brands have instituted brand policies and conditions that make it difficult, if not impossible, for a property to retain the brand and promote the property’s unique assets. These policies most often prohibit the property from having their own website, especially a site with a direct booking engine. The brand does certainly have the right to set and protect their franchise standards. It also makes sense for them to protect their intellectual property and copy rights. But, why do they want to inhibit the properties’ rights to market direct if it is done within brand polices. Why do the brands want to limit the properties’ ability to close direct sales?
The brands did not stop direct phone calls to the properties, why stop direct Internet sales? If the brand’s fees are tied to gross property revenues, doesn’t the brand gain no matter how the property receives its bookings? You would think the brand would support a property that is willing to spend additional money attract more sales no matter how they get them.
How can a hotel property ever out market its own brand or a third party site? Let’s not overlook the search engines, when we are evaluating the various Internet opportunities. With a search engine involved in more than 80% of the online sales, you would think you would find more organic optimization of the brand sites to help improve the search engine’s listing of the brand sites or more pay per click advertising of the brand site. Nope! The search engines are still dominated by the big ad budgets of the third party websites. The brands must assume if a traveler wants a particular brand they know where to find it.
A recent research project by Accenture Consulting Inc. indicated that the top two hotel search elements were price and location. The third party sites clearly have the search engines when it comes to keywords promoting price, even if it is “price parity” with the brand. As far as promoting location on the search engines, we see vary little search optimization by the brands focusing on location because this is not to the brand’s overall benefit.
As Internet marketing continues to evolve, it is clear that the value of the search engines in the travel shopping and booking process will continue to increase significantly. The search engine value proposition presented to the properties can only help the branded properties who take the initiative to market their own website, whether the site’s booking are direct or via the brand.
In summary, a brand booking is not a hotel booking it is a brand booking. The gain by the brands in their share of Internet traffic may not necessarily be the brand’s success, but rather the third party’s decline. Both brands and third parties will be around for a long time to come and each has its own value to certain hotels in certain markets. The brand website has to be considered the same as the GDS, proprietary websites, wholesalers, travel agents and whatever other sales channel works best for the property.
I don’t believe how the hotelier chooses to market his or her rooms should be influenced by the brand. The brand should stand on its own merits and if the hotel is not getting business from the brand website, the hotelier should be allowed to market how they choose. The final decision will always come down to the hotelier and his or her ability to implement an effective and flexible Internet marketing plan.