The Internet has been a medium that has revolutionized the way various industries do business, primarily by providing additional sources of sales as well as other efficiencies. The hospitality industry has not been exempt from this fact. With "Internet Bookings" coming into existence in 1994, the pace that online bookings has grown in the last few years is exceptional. For the most part, two major types of players service the online reservation industry, hotels and third-party travel companies.
For the hospitality industry, the online booking business is a logical extension for their central reservation networks and brand support. It is in the arena of third-party travel companies that we find unique product offerings, innovative business models, and challenging decisions for hotels to know how and when to use these channels. Third-party travel companies such as Expedia, Lastminute, Quickbook, Hotwire, Priceline, HRN, and Travelocity among many others have captured a large amount of visitors looking for a one-stop-shop for all their travel needs.
The recent economic slow down is causing a tremendous decrease in demand and increase in the pace at which hotels are participating with online distribution vendors. Although some of those distribution channels are "non-opaque", its models resembles one of large travel wholesalers, which can offer discounted rooms that have to be prepaid, and usually involve high cancellation fees. Interestingly, because of its non-opaque nature, hotel companies' own websites are in direct competition with those websites.
In addition, flagged hotel companies need to measure what, if any, is the impact of "price-driven" purchasing in the long-term. If the sole decision for a consumer in purchasing a product is price, then where is the need for brand recognition?
However, questions of branding and brand loyalty could probably be deferred until these Internet players start accounting for a large part of total hotel bookings. A property or brand may benefit in attracting guests who may not have stayed at their particular hotel or chain, had it not been for the participation with the third-party travel companies, as the guest may now become a loyal customer down the road.
Although industry-wide, the amount of bookings through Internet channels seems miniscule, it could account for significant source of room bookings for some properties, and on the other hand may not account for any demand for other hotels. For now, at the property level the benefits of participating with these third-party vendors may greatly outweigh the broader disadvantages. However, individual hotel managers need to measure and monitor the performance of the third-party channels with great scrutiny. They need to monitor production from third-party sources not only during peak periods, but also more importantly, during slow periods.
As we go forward, property operators need to constantly evaluate their own situation in relation to third-party Internet booking sources. Operators also need to keep abreast of their competitors and the broader marketplace in terms of pricing and market penetration of bookings through third-party Internet channels.
It is evident that the third-party online distribution channel clients are price focused, which means if they are shopping a city looking for a hotel category, the price will be the main booking motive and if your hotel is not competitively priced on each distribution channel, you most likely lose the business opportunity.
You should be constantly monitoring new and innovative online shopping and maintenance tools, and furthermore be willing to quickly embrace them if such offerings prove to be in your advantage. Hotel operators that successfully monitor these trends can keep ahead of their competition.