Online Travel Agencies gain market shares in Swiss hospitality in 2010
According to our survey many Swiss hotels worked with Online Travel Agencies (OTA) during times of economic uncertainties and strong Swiss franc trying to gain new customers and to compensate for foreseen losses. This explains the continuous increase of market shares of such platforms in 2010. Nevertheless direct booking channels of the hotels are still dominant sales’ forces.
A rough estimation of online sales in the Swiss hotel sector based on data from our survey results in an overall turnover of probably more than 850 Million CHF in 2010 and commission costs of some 90 Million CHF. OTA have significantly increased their market share, from 5.7% in 2008 to 13.6% in 2010.
Direct booking channels as dominant sales forces
Despite the growth of the OTA, direct booking channels such as telephone, fax, walk-ins, e-mail, Web form on the own website are still dominant for Swiss hotels. The share of these direct bookings decreased between 2008 and 2010 from 75.4 percent to 71.1 percent. On average more than half of all bookings (55.9%) are mediated through electronic channels, but Swiss hotels realize on average only 4.9% of all sales through this channel (this proportion is 8.7% in city hotels). Booking.com, Hotel Reservation System (HRS), Switzerland Travel Centre (STC) and destination management systems (DMS) of local destinations are the most frequently used online channels in the Swiss hospitality sector. Booking.com has a high penetration rate of 90% among members of the hotel association. Three out of four properties say that this platform is important to very important for their sales activities underlining the importance of this OTA in the Swiss market.
Since 2003 the University of Applied Sciences of Western Switzerland Valais (HES-SO Valais) in collaboration with the Swiss Hotel Association (www.hotelleriesuisse.ch) has conducted regularly surveys in order to monitor the evolution of sales in the different distribution channels. An online questionnaire was sent to over 2’000 members of hotelleriesuisse in January 2011 and resulted in 244 valid responses.
Distribution trends in swiss hospitality industry 2010 (hes so valais and hotelleriesuisse 2011)
Distribution Channels in Swiss Hotels: Online Travel Agencies Gain More Market Shares in 2010 Results of an Online Survey Among Members of the Swiss Hotel Association (hotelleriesuisse) in January 2011 (h t ll i i )i J Roland Schegg, Michael Fux et Thomas Allemann email@example.com / firstname.lastname@example.org / email@example.com February 20111
Executive Summary (I)• Direct booking channels (telephone, fax, walk-ins, e-mail, Web form) are still dominant for Swiss hotels with 71.1% of overall bookings (2008: 75.4%) -> hoteliers have large control over distribution.• On average more than half of all bookings (55.9%) are mediated through electronic channels (e-mail, Web form, real-time booking, GDS & IDS), whereas real-time booking channels with availability check and credit card payment have a market share of nearly 20% (booking engine on own Website 4.9% + GDS 1,4% & IDS 13.6%), an increase of 7,8% compared to 2008.• S l on t diti Sales traditional channels (30 2%) like telephone, letter or fax and through l h l (30,2%) lik t l h l tt f d th h tourism organizations (6,2%) tend to decrease respectively to be stagnant.2
Executive Summary (II)• Booking.com, HRS and destination management systems used by tourism organizations are the most frequently used OTA/IDS in the Swiss hospitality sector.• Booking com has a penetration rate of 90% For 75% of the hotels this platform is an Booking.com 90%. important to very important distribution channel and seems to have become the leader in online sales in the Swiss hospitality sector.• A rough estimation of online sales i th Swiss hotel sector b h ti ti f li l in the S i h t l t based on d t f d data from our survey results in an overall turnover of probably more than 850 Million CHF in 2010 and commission costs for online channels of some 90 Million CHF (out of 160 Mio in total). total)3
The Study• Objective: Monitoring of booking trends on different distribution channels in the Swiss hospitality sector.• Research instrument: online survey• Administration: Over 2000 hotels have been contacted in early January 2011 by e-mail, all members of the Swiss hotel association (hotelleriesuisse). Relaunch ( ) of the survey end of January 2011.• Response rate: 244 replies -> 12%• Similar studies have been conducted already in the past: 2003, 2005, 2007, 2009 and 20104
Distribution Channels in the Swiss Hospitality Sector 2006-2010 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Telephone Walk-ins E-mail Booking form on WebsiteReal-time booking on hotel website IDS GDS 2006 (n=100) Travel agencies 2008 (n=184) Tour operator 2009 (n=198) LTO 2010 (n=211) RTO NTO (STC) Hotel association Chain/affiliation Event organiser Conference organiser5 Facebook
Distribution Channels in the Swiss Hospitality Sector 2002-2010 .0% 10.0% 20.0% 30.0% 40.0% Tradit. channels (telephone, fax, letter, walk-in) E-mail Hotel website (form & realtime booking) Internet Distribution Systems (IDS) Global distribution system (GDS) 2002 (n=202) Travel agency 2005 (n=94) Tour Operator (TO) 2006 (n=100) Local tourism organisation (LTO) 2008 (n=184) Swiss Tourism (ST) & Regional tourism organisation (RTO) 2009 (n=198) Industry association (e.g. hotelleriesuisse) 2010 (n=211) Hotel chain & affiliation Event organizer Conference organizer6 Facebook
Distribution Trends in the Swiss Hospitality Sector 2002-2010 Distribution through ICT (email,booking form on hotel website, real- time booking hotel website GDS, 2010 (n=211) OTA/IDS) 2009 (n=198) (n 198) 2008 (n=184) Online real-time booking (GDS, 2006 (n=100) OTA/IDS, real-time booking hotel website) 2005 (n=94) 2002 (n=202) Distribution through tourism organisations (LTO, RTO, NTO) (LTO RTO Direct distribution (customer-hotel: telephone, fax, letter, walk-ins, walk ins, booking form on website, real-time booking hotel website) Traditional distribution (telephone, fax, letter, walk-ins) 7 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Importance of Online Travel Agencies (OTA) used by Swiss Hotels 0% % 10% % 20% % 30% % 40% % 50% % 60% % 70% % 80% % 90% 100% % % Booking.comWebsite local tourism organisation myswitzerland.com / STC HRS (Hotel Reservation System) Expedia und hotels.com 0=not used hotel.de hotel de other IDS 1=not important for bookings Venere 2 hotel.ch eBookers 3 GHIX (Global Hotel Index) Lastminute 4 Travelocity 5=very important Hotelguide.com for bookings Tiscover Opodo HostelBookers Rates to go 8 eBay B
Evolution of OTA use 2008-2010 eBay Rates to go HostelBookers 2008 Opodo 2009 2010 Hotelguide.com Tiscover Travelocity Lastminute Global Hotel Index (GHIX) eBookers hotel.ch Venere hotel.de h t ld Expedia und hotels.com HRS (Hotel Reservation System) Website NTO Website LTO Booking.com9 0% 20% 40% 60% 80% 100%
Evaluation of booking.com by Swiss hotels (Source: Schegg & Fux 2010, n=275)Booking.com is an easy booking tool for the customer Booking.com Booking com is a relevant distribution channel in international markets (brings bookings and visibility) Booking.com is easy to handle for the hotelier (e.g. update of availabilities and rates) Booking.com offers good features for describing the 1=very poor property on the platform (text, photos, links, etc.) 2 Booking.com has an efficient and professional 3 marketing 4Booking.com manages the administrative processes in 5 an easy and professional way 6 7 very 7=very good Booking.com i a relevant di t ib ti channel i th B ki is l t distribution h l in the national market (brings bookings and visibility) Booking.com has an advanced booking technology Booking.com offers good sales conditions (commission) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 10
Evaluation of Booking Systems of Tourism Organizations (DMS) by Swiss Hotels (Source: Schegg & Fux 2010, n=181)The DMS manages the administrative processes in an easy and professional way The DMS offers good sales conditions (commission)The DMS is easy to handle for the hotelier (e.g. update of availabilities and rates) The DMS is a relevant distribution channel in the 1=very poor national market (brings bookings and visibility) 2 3 The DMS is an easy booking tool for the customer 4 5 The DMS offers good features for describing the property on the platform (text, photos, links, etc.) 6 7=very good The DMS is a relevant distribution channel in international markets (brings bookings and visibility) The DMS has an advanced booking technology The DMS has an efficient and professional marketing 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 11
What are your Selection Criteria for Online Travel Agencies (OTA) resp. Internet Distribution Systems (IDS)? Relevance of IDS for target segements Relevance of IDS as sales channel Marketing power of IDS / presence in marketsInformation, presentation of hotel (photos, texte, etc.) ) Data maintenance (e.g. interface with PMS) 1=not at all important 2 Booking technology & features 3 4 Costs (e.g. commission) 5=very important Added value for guest (e.g. guest evaluation) Back-office efficiency (e.g. biling) User support (hotline, stats for hotel, etc.) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100% 12
OTA/IDS commissions (based on responses from hotels) Lastminute Expedia und hotels.com Opodo Max eBookers Median Venere Average Travelocity Booking.com Booking com hotel.ch hotel.de Hotelguide.com Tiscover HRS Rates to go HostelBookers eBay STC andere Plattform DMS GHIX 0 5 10 15 20 25 30 3513
Estimation of Revenues and Costs by Distribution Channel Revenus R Revenus R 2009 2010 Average Costs per Bookings Bookings (in Mio (in Mio Difference commission distribution (%) in 2009 (%) in 2010 francs) francs) (2010-2009) (estimate) channel 2010Tradit. channels (telephone, 0%fax, letter) 25 23.8 1062 1018 -45 0.0Walk-ins 6.2 6.4 263 274 10 0% 0.0E-mail 27.4 25.7 1164 1099 -65 0% 0.0Reservation form on hotel 0%website 8.3 83 10.3 10 3 353 440 88 0.0 00Realtime booking on hotel 4%website 4.4 4.9 187 210 23 8.6Internet Distribution Systems 12%(IDS) 10.6 13.6 450 582 131 70.4Global distribution system 14%(GDS) 2 1.4 85 60 -25 8.6Travel agency 3.8 2.1 161 90 -72 13% 11.4Tour Operator (TO) 3.6 2.3 153 98 -55 21% 20.5Local tourism organisation 9%(LTO) 2.9 3.5 123 150 26 13.5Regional tourism organisation 9%(RTO) 1.2 1.1 51 47 -4 4.2Swiss Tourism (ST) 1 1.6 42 68 26 10% 7.0IndustryI d t association i ti 0.2 02 0.3 03 8 13 4 5% 0.6 06Hotel chain & affiliation 0.9 1.3 38 56 17 10% 5.3Event organizer 1 0.8 42 34 -8 10% 3.6Conference organizer 1.4 0.9 59 38 -21 10% 3.8 total 4245 4276 31 15714
Use of a Channel Manager 31.8% • In 2009 only 18% of Swiss hotels used a channel No manager; in 2010 one out of Yes three hotels used such a tool tool. 68.2%15
ContactRoland Schegg & Michael FuxHES-SO Valais WallisInstitute of Tourism (ITO)Swiss School f TourismS i S h l of T iTechnoPôle 3CH-3960 Sierre / SwitzerlandTel. 027 606 90 firstname.lastname@example.org / email@example.comBachelor of Science HES-SO in Tourism HES SOSwiss School of Tourism (www.est-stf.ch)Thomas AllemannhotelleriesuisseMonbijoustrasse 130CH-3001 Berne / SwitzerlandTel.Tel 031 370 43 firstname.lastname@example.org
Glossary CRS Central Reservation System DMO Destination Management Organisation DMS Destination Management System (TOMAS Deskline) (TOMAS, GDS Globale Distribution System (Amadeus, Sabre, etc.) hs hotelleriesuisse (Swiss Hotel Association) HRS Hotel Reservation Service IDS Internet Di t ib ti S t I t t Distribution System LT supplier LTO Local Tourism Organisation NTO National Tourism Organisation OTA Online Travel Agency PMS Property Management System (Front Office) RTO Regional Tourism Organisation SEM Search E i M k ti ( S h Engine Marketing (p.ex. G Google Ad l Adwords) d ) SEO Search Engine Optimisation ST Switzerland Tourism (NTO) STC Switzerland Travel Centre (CRS of Switzerland Tourism)17