Hoteliers, if you haven’t heard it yet, it’s probably because you either don’t participate in Expedia’s Affiliate Network or you never need to discount your rate!
Earlier this year, Smarter Travel Media, a TripAdvisor company, launched a new platform called Tingo that optimizes prices paid by consumers. The service monitors any changes in hotel rates travelers have booked and then rebooks them at the lower rate at no cost to the client should the rate drop and as long as the rate is refundable (i.e. before the cancellation deadline set by the hotel).
Many other distribution channels, such as Expedia and TripAdvisor, offer best rate guarantees and refund travelers the difference if they see a better offer at the time of booking. Tingo removes the risk from the client associated with being too late to gain from a price drop as it is no longer the date of booking but rather the cancellation date that truly matters.
I was curious to understand the benefits and challenges that Tingo presents hoteliers, so I did some investigation. Sadly, the service seems to benefit guests exclusively, while hoteliers are left in the lurch. (Tingo, however, maintains that guests who book using the channel book further in advance and for longer stays.)
Instead of simply taking their lumps or ignoring the emergence of this new channel altogether, hoteliers would be wise to consider the broader implications—specifically, the convergence of online marketing, distribution and pricing strategies amid increases in online bookings.
In 2012, the Hospitality Sales and Marketing Association International Foundation published a study based partially on data provided by STR, parent company of HotelNewsNow.com, that analyzed distribution channels and in particular the online-travel agencies. The results indicate that in the last decade, and particularly in time of crisis, OTAs have increased their market share as part of the total hotel revenues from 1.4% in 2001 to a projected 8.2% in 2011.
According to another study published by Buuteeq, a business software company for boutique hotels, online hotel bookings grew from 1% in 2000 to more than 50% in 2010. The study found that seven in 10 Americans consider reviews before making a purchase, and 61% of Internet users in the U.S. research travel online before purchasing.
It is interesting to consider the influence of social media, whereby hoteliers can have a direct and positive influence through channels such as Facebook, to drive direct business.
According to Buuteeq, surprisingly only 10% of hoteliers offer full booking capabilities on their Facebook page. But the industry is only second behind the retail industry in terms of optimized website for mobile engagement with two-thirds of hotel brands supporting mobile booking.
Whilst hoteliers have recognized the value of allowing on-the-go interactivity, the question remains whether hotels can strengthen their communication with travelers far enough in advance to build a long-term relationship via social media, where guests can also post their views and personal experiences, building trust and most importantly brand awareness.
Arriving at my point with regards to OTAs, hoteliers have contributed to the growing market share of the OTA business, and though they also may have witnessed their own distribution channel increasing over time, the true question remains whether the hotel website and social channels have met customers (or future customers) expectations, and in terms of information, the best price guarantee and interactivity. OTAs certainly have answered customers’ expectations, and Tingo likely will push the industry to a whole new level.
Maybe the future for a hotel’s online presence will see the emergence of a new type of online activity linking distribution, price and social media, into a single experience, replacing the dated concept of “best rate guarantee” on brand.com with “best online experience guarantee,” further enabling hotels to create and capture brand value.
David can be contacted on dgrossniklaus@strglobal.com. Follow him on Twitter @dgrossniklaus.
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