It was interesting to read Joe King’s blog on the marketing mental challenge that CMOs will face in the next digital decade. It reminded me of the article by Chris Anderson from the Cornell School of Hotel Administration where he mentions an experiment he conducted to figure out the impact on online booking of a hotel’s own website on listing through online travel agency (OTA) sites like Expedia.
The outcome of the experiment had indicated that online booking on the hotel’s own website (eg. SomeHotel.com) had increased by 7% to 26%, according to conservative estimates, on listing the hotel in the OTAs. The increased percentage does not include the OTA bookings, where the hotel would have incurred a commission expense. He calls this the Billboard Effect in the digital world. He indicates that the listing/commission expense in the OTA site should be considered as marketing expense by the hotel.
In one sense, it indicates the consumer behavior of most of the online booking user segment in the travel industry. They search for availability, price, etc. of a good hotel in a consolidated portal(s) which has content from multiple providers, double check directly at the provider’s website and then book at the provider’s web site. For simple travel itineraries, it would work for the cost conscious traveler and make him/her save some money.
This is similar to the experience I went through once while buying a small bicycle for my son, couple of years back. I went to a big toy shop in Bangalore which housed all the brands of bicycles, but with a higher price tag. After choosing the brand that we liked, I went to a small shop in KR Market and bought the same chosen brand. The price at the shop in KR market was lesser by almost 40% and it was worth the drive to buy the same brand from a smaller shop.
I guess this is where the OTAs are insisting on complete content to be available at their site.
Another interesting point to note is that, when a traveler books a hotel after booking the air ticket, normally the time window available would be around 1 to 2 weeks between these two transactions. In the meantime, the OTAs have an opportunity to position some packages including hotels at the destination city depending on the air itinerary.
On looking at the above, depending on the provider’s size/profile from a marketing perspective, they cannot ignore being present with OTAs, at the least during this digital decade. But, we need to wait and see Google’s strategy with their acquisition of ITA, having conditionally been approved by the U.S. Department of Justice. Is it going to change the game of search and meta search in the travel industry? Is it going to change the way mobile transactions are being done?