About this Episode
Chris Anderson, Assistant Professor at Cornell University shares the results of a research study “The Billboard Effect” conducted in partnership with JHM Hotels and Expedia. In the study, four properties were cycled on and off Expedia over a period of three months.
Here’s what you will learn in this episode:
- Hotel placement on Expedia results in a 20% increase in bookings on other channels
- Reservations made on other channels (call center, brand.com, other sites) offset reservations made on OTAs
- Rates attained while being listed on Expedia were about 2-3% higher
The bottom line: Hoteliers need to think of OTAs as marketing vehicles versus reservation engines.
Click for Video Details
- Episode #18
- Posted on January 11, 2010
- Duration: 14:08
- Captions:
Recent Study, Cornell University: The Billboard Effect
Study with JHM Hotels and Expedia
4 properties cycled on and off Expedia for 3 months
period A: property listed on first page of Expedia for location
period B: property not listed on Expedia
both periods: tracked total reservations for all future stay dates
compared reservations made when listed and de-listed
average 20% reservation lift across properties when displayed on expedia
focused on reservations made on other channels: call center, brand.com, other sites
placement on expedia resulted in a 20% increase in bookings on other channels
what does this mean for an individual hotel?
significant lift above and beyond those reservations coming from expedia
OTA commissions are really distributed across a broader set of reservations
reservations made elsewhere offset those reservations made at OTAs
rates attained while being listed on expedia were about 2-3% higher
being on OTAs can have a substantive revenue impact across all reservations
do OTAs truly add to total room nights?
STR Report: hotels not listed haven’t seen degradation of occupancy, ADR, REVPAR
what do you think is happening with hotels that are not on OTAs?
depends on how you look at OTAs – look at them as a marketing vehicle
properties not on OTAs resort to other marketing actions to generate demand
think of OTAs as a marketing vehicle versus a reservation engine
look at OTA commissions as representative of your marketing budget
historically, revenue management haven’t thought much about marketing
in today’s market we have to create demand: it’s a demand management exercise
look at things as marketers versus historical yielders from the yield management context - Embed Link:
11 Comments
You have quickly thought up such matchless answer? Wanna joke?) What do you call a nun who walks in her sleep? A roaming Catholic. http://edcilaisusa.977mb.com/images/top.gif 1]vigera purchase online 1]viagara online 1]vigra generica
That was a fascinating to hear. Yes I too agree that if a hotelier never fills his bedroom stock to 100% and any contribution to fullfilling that would be a bonus. On top of that if you consider the expense as amarketing one then the ROI is almost 100%.
It basically is the way one views them and as hoteliers are all passionatiote creatures i can see why we get worked up. Well done Chris. Excellent!!!!!
Chris… thanks for your time and efforts in conducting this study. Several great points were mentioned. Yes, Expedia and other OTA’s are marketing vehicles and the companies spend a lot of resources on their marketing efforts.
However, from a hotelier’s perspective, it becomes matter of ROI – can we generate the same demand at a lesser cost through Facebook, Twitter, our own website, etc.
The commissions are hefty however, OTA’s can be a good way to fill need periods because of the exposure a hotel can enjoy by being listed.
In essence, OTA’s should be a part of the marketing and revenue management equation, perhaps more for smaller, independent hotels, less for chain hotels.
This was an interesting study and I am not surprised at the results. My hotels does participate with OTA’s but that has not always been the case. At one time our market was different and I felt it would simply displace revenue.
That has been about 3 years ago. Our market became saturated with new condo inventory and the bottom line is if your competition is there, you can not afford to not be. Especially today.
Challenges still remain when I am one of the only branded hotels in this area and I have more pricing restrictions, etc than comp set I am up against but if the guest does not see you on the shelf, they can not buy your product.
I’ve seen for some time that Expedia is a convenient way to shop options in a market beyond price. Looking for positive impact and measuring it is refreshing. I don’t find a zero sum game. Meeting & exceeding peoples expectations increases the size of demand.
I’d be interested in feedback from the folks that don’t use Expedia on what they are doing alternately for their marketing. Probably includes quality content if they are successful.
Its about time Hotels recognize the strength and ability of Expedia to market its properties. I personally do not have the budget to match their capabilities or to compete with them. Using them to market my hotel is an excellant investment that we have been linked with for the past few years. Chris excellant study and observations.
Chris this is excellent data and has been a strategy of Vizergy for over 8 years, I am glad you have taken the time to provide evidence that this should always be part of the online marketing mix! Many people believe that if you have a website, all is well. This build-it-and-they-will-come approach just doesn’t work. Hotels need professional marketing plans that are going to not only foster solid relationships with existing customers, but also garner new ones.
Joe Hyman
Good presentation, I often gripe about paying revenue dollars for an OTA when the hotelier is doing the majority of work… however, in context as marketing vehicle, it seems logical. We are a small Mom and Pop Inn with huge seasonal demand, and even though I routinely question OTA expense, during the shoulder seasons when demand is very competitive, it makes sense.
very interesting interview, we also find similar results for meeting room bookings through http://www.meetingsbooker.com with many users booking direct with the hotels after viewing prices on our site.
Do you plan to hold any interviews around the online marketing of meeting space?
Thank you for covering a theme I asked for some months ago. In my tourism marketing blog (www.bookingblog.com) in Italian, we analysed the same study and hoteliers were actually very interested in it!
Sure, the OTAs offer marketing value beyond their associated sales, but OTAs also cost more than they appear to cost. Hotels that are willing to consistently rely on OTAs not only outsource their reservations sales, they forego building their brand.
I worry that we hoteliers are so willing to 1.) get the quick sale and 2.) dismiss exorbitant commissions as a marketing expense that we sacrifice our own brand to build Expedia’s/Travelocity’s/Orbitz’s brands for them. Are you willing to turn your hotel inventory into a commodity to brokered out by the OTAs?
As GM of an independent hotel I don’t like the idea of paying the crazy commissions that the OTAs demand, but I really HATE the idea that I’m helping shape travelers booking habits. It’s bad enough that I pay that huge commission once, but if a traveler becomes a repeat guest and they rely on the OTAs to book I’ve lost a huge chunk of profit each booking.
In a perfect world we hoteliers would build our own brands, promote them well and book our own reservations effectively without needing the OTAs at all. If we were all willing to do this instead of taking the easy way, the OTAs could not get away with gouging us. Remember, the big brands have enough brand equity that they don’t really need the OTAs (and they pay far lower rates to the OTAs as a result). The rest of us get to make up the difference.
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