Session 3

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Session 3

  1. 1. WHAT IS THE REAL IMPACT OF ONLINE TRAVEL AGENCIES’s (OTA) IN HOTELS’ REVENUE? WHAT DOES MEAN SOCIAL MEDIA FOR HOTELS? WHY DOES A HOTEL NEED A RELATIONSHIP WITH OTAs?
  2. 2. <ul><li>OTA’s cost: they receive their commission at the point of sale, </li></ul><ul><li>Their cost are not included in the Marketing budget </li></ul><ul><li>OTA: Hotels’ Marketing channel, the way to sell hotels’ products. </li></ul><ul><li>In 2009 : Economic crisis. OTA’s low prices attracted customers for hotels. </li></ul><ul><li>In 2010 & 2011: Market recuperation, hospitality industry’s crisis recovery. </li></ul><ul><li>DO HOTELS NEED OTAs ? </li></ul>
  3. 3. Analyses of cost OTA’s in Hotels’ Business <ul><li>Different regions </li></ul><ul><li>July year-to –date occupancies and average daily rates </li></ul><ul><li>Source: Smith Travel Research </li></ul><ul><li>Cost range from $22,450 at 10% contributions to $173,881 at 25% contribution level </li></ul><ul><li>Higher is the OTAs’ contribution, higher are their cost paid by hotels </li></ul><ul><li>OTAs retain customers’ profile. Therefore, hotels get business, but not customers . </li></ul><ul><li>Customers are the hotels’ real value: hoteliers want customers to become loyal to their chains </li></ul>
  4. 4. Comparison between Reservation costs: directly hotels’ web, GDS and OTA Reservations made through GDS result in 14% less revenue for the hotel than made directly in the hotels’ web and those made through OTAs’ result in 15% less revenue.
  5. 5. <ul><li>Invest in their direct website in order to reduce OTA’s cost and </li></ul><ul><li>increase their revenue. </li></ul><ul><li>Allocate their savings into Internet Marketing. </li></ul><ul><li>Make their web friendly user and provide a call to action to book. </li></ul><ul><li>Develop their Internet Marketing strategies: optimization, pay-per-click, email marketing, social media (Facebook, You Tube, </li></ul><ul><li>Twitter, Flickr). </li></ul><ul><li>Improve their customers service in their websites . </li></ul>Hoteliers should :
  6. 6. <ul><li>Although the booking cost made through Direct Online Channel (Hotel Brand Website) is10-15 </li></ul><ul><li>cheaper than those made via GDS and OTAs, from 2008 OTAs have increased their booking </li></ul><ul><li>contribution by 45%. </li></ul><ul><li>Hotels distribution has changed dramatically over the past 16% since the advent of </li></ul><ul><li>the “commercial” Internet. </li></ul><ul><li>Independent hotels and resorts have not change their channel distribution very much: some </li></ul><ul><li>still work with OTA which destroys rate parity and causes price erosion. </li></ul><ul><li>Those hotels needs to focus on distribution channels which generate the most bookings, </li></ul><ul><li>protect rate parity and price integrity and reach the targeted customers segments. </li></ul><ul><li>Those hotels are overwhelmed by this rapid shift from offline to online distribution. </li></ul><ul><li>They often fail to compete for their fair share of the market. </li></ul><ul><li>The main reason is the lack of understanding that Internet marketing is not an expense, </li></ul><ul><li>but an investment in direct Online Channel will provide immediate returns at very high ROIs. </li></ul><ul><li>/ </li></ul>Can Hoteliers reverse the OTAs trend and take back control of online distribution channel?
  7. 7. <ul><li>Sometimes Hotel brands conclude partnership with OTAs </li></ul><ul><li>Expedia, Inc. the world's largest online travel company, announced </li></ul><ul><li>a new multi-year, global partnership agreement with Kempinski Hotels. </li></ul><ul><li>Reason could be : </li></ul><ul><li>- hotel brand is not enough big to compete with top hotel brands </li></ul><ul><li>http://www.prnewswire.com/news-releases/expedia-and-kempinski-hotels-sign-global-partnership-agreement-124413293.html </li></ul><ul><li>Marriott recently signed an online distribution cooperation agreement </li></ul><ul><li>with Ctrip.com, China's largest online travel agency </li></ul><ul><li>Reason could be : </li></ul><ul><li>- Hotel brand have not reached the target market </li></ul><ul><li>http://hma.hotelworldasia.com/content/marriott-signs-agreement-chinese-travel-agency </li></ul><ul><li>Hilton joins Marriott International and InterContinental Hotels Group in making its lowest available rates and complete hotel pricing available through Worldspan, Galileo, and Apollo </li></ul><ul><li>Reason could be: </li></ul><ul><li>They want to control the price, impose their rules to OtAs and GDS as those indirect online systems have a share contribution in those hotels brands. </li></ul><ul><li>http://hotelmarketing.com/index.php/content/article/travelport_users_get_closer_to_hilton_through_advanced_gds_interface </li></ul>
  8. 8. Social Media & Hotels <ul><li>The tendency of consumption in Social Media such as Facebook is increasing constantly. </li></ul><ul><li>Hotels want to be connected to Social Medias which are the biggest trend communication channel. </li></ul><ul><li>Many hotels brand have recently developed their social media marketing.. </li></ul><ul><li>Hotels are dependent on satisfied guest and customers. Social Media provide a constructive dialogue with their customers. </li></ul><ul><li>Social Media makes hotels to be in touch with their customers. </li></ul><ul><li>Social Media represents a smart way to increase hotels’ revenue. </li></ul><ul><li>Big chains like: Marriott International , The Four Seasons Hotels & Resorts, </li></ul><ul><li>The Ritz-Carlton, Haytt Hotels, Fairmont Hotels Millennium Hotels have their social media very well developed (Facebook, Twitter, You Tube, Flickr and mobile channel) </li></ul><ul><li>Customers ask their friends on social network about their opinion of a hotel. </li></ul><ul><li>Social media is a way to make the guests’ hotels loyal customers. Therefore, more they use hotels’ products, more things they can get for free (like the milles’ program). </li></ul>
  9. 9. Facebook & Hotels <ul><li>Facebook has around 800 million users. </li></ul><ul><li>70% users are involved with Facebook applications. </li></ul><ul><li>More than 20 million applications are installed every day. </li></ul><ul><li>Facebook has a special social media platform : SocialBooker which is easily customized to integrate the hotel central reservation system. </li></ul><ul><li>SocialBooker is important to increase sales, create the customers profile and their loyalty, decrease distribution costs, provide a better customer service. </li></ul><ul><li>SocialBooker personalize and make the reservation easier by encouraging the travelers’ social interactions. </li></ul><ul><li>Hotels are more focused on applications that involve the integrating with Fecabook’s hotels application as it is a way to increase their revenue. </li></ul>
  10. 10. Sources: <ul><li>http://www.hotelinteractive.com/article.aspx?articleid=18354 </li></ul><ul><li>http://hotelmarketing.com/index.php/content/article/why_ota_customers_are_not_your_customers </li></ul><ul><li>http://hotelmarketing.com/index.php/content/article/combating_losses_to_otas_with_a_strong_hotel_seo_strategy </li></ul><ul><li>http://hotelmarketing.com/index.php/content/article/why_ota_customers_are_not_your_customers </li></ul><ul><li>http://hotelmarketing.com/index.php/content/article/combating_losses_to_otas_with_a_strong_hotel_seo_strategy </li></ul>

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