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How OTAs boost bookings on your own Web site

The Choice Hotels-Expedia brouhaha of recent weeks has shined a scorching spotlight on the fickle relationship between hotel companies and online travel agencies. Call it the industry’s version of a celebrity breakup scandal. But while the focus of debate has centered on last-room availability and other contractual terms surrounding room bookings, there’s a fundamental component of this precarious affiliation that’s gone largely ignored: visibility.

The OTAs’ primary purpose might be to generate room bookings, but sites like Priceline, Orbitz and the aforementioned Expedia also create consumer awareness of your product as would an advertisement in a magazine. That awareness then can translate into direct bookings on your hotel Web site, phone reservation lines and other channels outside of the third-party reservation fraternity.

Chris Anderson, who serves as assistant professor at the Cornell School of Hotel Administration, calls this the “billboard effect.” And as luck would have it, he’s just published a report discussing the impact it has on reservation volume.

In the report (which you can download for free here), Anderson describes a pseudo-experiment he conducted from October 2008 through December 2008. During the three-month period, he cycled four JLM Hotel properties on and off Expedia for periods of seven to 11 days. At the end of the trial, each hotel had been displayed on the site for 40 days and not displayed for 40 days. He then measured the average daily reservations booked through sites excluding Expedia during the 80-day period:

"Since the goal was to measure the impact of the OTA display on non-OTA reservation volume (rather than the total impact of the OTA listing), I eliminated the actual Expedia.com bookings. This means that the reservations shown in Exhibit 1 are those that were made through channels other than Expedia during the time of the test. In short, listing on Expedia created a lift of between 7.5 percent and 26 percent for these non-Expedia reservations."

Property	Average daily reservations when displayed on Expedia	Average daily reservations when not displayed on Expedia	Percentage increase
Branded hotel 1	39.4	36.6	7.5%
Branded hotel 2	54.8	49.7	9.1%
Branded hotel 3	39.1	34.2	14.1%
Independent hotel	28.2	22.3	26%

The large variance in incremental reservations from listing on Expedia involves interference from the hotels’ chain connections, which is explained in greater detail in the report. For our purposes here, it’s important to focus on the fact that these results seem to confirm the billboard effect, or, as Anderson states in the report, the “lift in reservations made through channels other than online travel agents that is created by listing on the OTA.”

Could this apparent benefit in listing room inventory on OTAs earn them the favor of embittered companies like Choice? Unlikely. But as the debate wears on, it’s something for the industry to consider nonetheless.

STR reports US performance for week ending 31 October

The U.S. hotel industry posted declines in all three key performance measurements during the week of 25-31 October 2009, according to data from STR.

In year-over-year measurements, the industry’s occupancy fell 7.2 percent to end the week at 51.8 percent. Average daily rate dropped 7.2 percent to finish the week at US$98.99. Revenue per available room for the week decreased 13.8 percent to finish at US$51.28.

Among the Top 25 Markets, Anaheim-Santa Ana, California, experienced the largest occupancy increase, up 9.1 percent to 65.5 percent. Four other markets reported occupancy increases of more than 5 percent: Oahu Island, Hawaii (+8.7 percent to 75.0 percent); Boston, Massachusetts (+7.2 percent to 71.4 percent); Denver, Colorado (+6.2 percent to 58.0 percent); and New York, New York (+5.4 percent to 85.1 percent). Houston, Texas, posted the largest occupancy decrease, falling 29.8 percent to 56.9 percent.

New Orleans, Louisiana, reported the largest ADR increase, up 5.3 percent to US$129.03, followed by San Diego, California, with a 3.5-percent increase to US$141.12. Four markets experienced ADR decreases of more than 15 percent: New York (-17.2 percent to US$265.59); Phoenix, Arizona (-16.7 percent to US$102.52); Miami-Hialeah, Florida (-15.4 percent to US$125.57); and Chicago, Illinois (-15.3 percent to US$122.03).

New Orleans led the RevPAR increases, up 5.0 percent to US$86.15, followed by San Diego (+4.7 percent to US$89.41), Boston (+4.6 percent to US$111.80), and Oahu Island (+4.5 percent to US$114.94). Houston experienced the largest RevPAR decrease, falling 39.2 percent to US$53.24. Three other markets posted RevPAR decreases of more than 25 percent: Chicago (-26.0 percent to US$70.31); Miami-Hialeah (-25.8 percent to US$75.99); and Nashville, Tennessee (-25.7 percent to US$47.70).

About STR & STR Global: For more than 20 years, Smith Travel Research has been the recognized leader for lodging industry benchmarking and research. Smith Travel Research and STR Global offer monthly, weekly, and daily STAR benchmarking reports to more than 37,000 hotel clients, representing nearly 5 million rooms worldwide. STR is headquartered in Hendersonville, Tennessee, and STR Global is based in London. For more information, visit www.strglobal.com or www.HotelNewsNow.com.

Related Document

US performance for week ending 31 October

The U.S. hotel industry posted declines in all three key performance measurements during the week of 25-31 October 2009, according to data from STR. In year-over-year measurements, the industry’s occupancy fell 7.2 percent to end the week at 51.8 percent. Average daily rate dropped 7.2 percent to finish the week at US$98.99. Revenue per available room for the week decreased 13.8 percent to finish at US$51.28.

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Organization

Smith Travel Research
www.strglobal.com
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USA - Hendersonville, TN 37075
Phone: (615) 824-8664

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Business Travel and the Power of Partnerships

Any agency who is serious about the business of business travel and who is not a member of a global brand-name network is at a competitive disadvantage ...and they probably don’t even know it. So what can they do about it? They have a number of options. They could consider any one of a number of fine global organizations in business travel who accept member agencies; most are TMCs themselves and so compete with their members for the really ‘juicy’ accounts, especially those that are multi-national. Then they might look at the quasi-coops who are owned and run by their members, who are also trying to run their own businesses at the same time. They could play ostrich and ignore the globalization that has taken hold in business travel. Alternatively, they could explore becoming a member of the UNIGLOBE family as a Global Partner agency.

We are presently seeking serious agencies who want to leverage their local success to grow their corporate business far beyond their own borders. This is what our Global Partnership Program (GPP) offers, an international presence built by combining our well-recognized brand with their local brand, to give the best, most successful independent agency owners in previously untapped regions access to our UNIGLOBE Travel network.

UNIGLOBE Travel is the leading global travel management system specifically specializing in the mid-sized corporate market with more than 700 locations covering the Americas, Europe, Africa, Asia and the Pacific, in more than 50 countries, and annual system-wide sales of over $3 billion. In fact, in the last 12 months, new member agencies have joined us in the USA, Mexico, Costa Rica, Thailand, Morocco, France, Poland, the UK, Romania, Slovenia, India, Pakistan, China, Egypt, Israel, Turkey, Jordan and Iraq, Australia and most recently, Russia. But what makes a Global Partnership affiliation with us so attractive is not just the name recognition that says ‘we’re global’ and our buying power that brings customized leading edge technology within easy financial reach. It is our non-competing support and the enduring opportunity for growth in a competitive, ever-expanding global marketplace.

Our Global Partners can promote, share and sell their travel products to other UNIGLOBE Travel agencies. They can access booking and management tools that are faster and far more sophisticated than their current technology. With our UNIGLOBE FareSearch tool, with one click, they can search the world, not just their own market, for best fares. Backed by our resources and expertise, these agencies are perfectly positioned to win lucrative new corporate accounts, particularly at government and multinational levels, and to work with their UNIGLOBE colleague agencies around the world to service them.

Agencies that are serious about business travel partnerships are a good fit for our program, and we are talking to more of them all the time. They are impressed by our reputation, our worldwide presence and our years of experience. But what stays with them is our “small-company” feel, and the fact that we are driven by our customer service culture. You call us, we respond. You partner with us, we partner with you.

None of our competitors, and certainly no other corporate travel entity, offers an equivalent to UNIGLOBE Travel’s Global Partner affiliation program. No one else does what we do and I have the frequent flyer miles to prove it.

To learn more, see www.uniglobetravel.com or contact me at jhenry@uniglobetravel.com

Global hotel roundup

After third-quarter profit fell 65 percent, Starwood Hotels & Resorts Worldwide plans to sell its Bliss spa unit for $100 million to Steiner Leisure Ltd., a 75-year-old, Nassau, Bahamas-based company that sells spa services and products to cruise lines and resort customers worldwide.

The transaction will add $125 million in asset sales to Starwood's ledger, the White Plains, NY-based lodging company said in a prepared statement. Starwood also is cutting its annual dividend by 78 percent, to 20 cents a share from 90 cents in 2008. The common stock is trading in the $27 to $28 range.

"We are having a hard look at assets that are non-core or that are so attractive that we can still get a good multiple," Starwood CEO Frits Van Paasschen told analysts in an Oct. 22 conference call. "There is more money and interest (by investors) than a few months ago."

(CHICAGO, IL) - Workers at Starwood's downtown Chicago hotels have authorized their union representatives at Unite Here Local 1 to strike if a new contract can't be completed shortly. Similar strike authorizations have previously been posted by workers at the downtown Hyatt and Hilton hotels.

Union contracts covering 6,000 workers at 31 downtown Chicago hotels expired Aug. 31. Meanwhile, the workers continue to stay at their jobs. Hyatt Regency Chicago is one of the hotels involved in contract negotiations.

Health insurance is one of the sticking points in the contract talks. Union spokesman Jim Baker told the Chicago Tribune new health insurance guidelines proposed by Starwood could cut coverage for about 50 percent of the workers.

(NAIROBI, KENYA) - London-based Intercontinental Hotels Group sees ample growth opportunities in Africa over the next several years.

Karl Hala, IGH director of operations, says the 19-hotel company is studying key sites in Angola, Nigeria, South Africa, Tanzania and Senegal.

"We plan to develop our Africa network with more than 30 properties in prime locations and high growth cities over the next three to five years," Hala told a gathering while marking IHG's 40th anniversary.

In Kenya, IHG will open the 163-room, five-story Crowne Plaza Nairobi in the city's Upper Hill section in December with a staff of 200.

(CHICAGO, IL) - This is a big week on Wall Street for Chicago-based Hyatt Hotels Corp. The chain's initial public offering on the New York Stock Exchange hopes to raise up to $988 million. Its stock symbol will be H. The stock is priced in the $23 to $26 range.

"We are running into renewed volatility in the market that we haven't seen in some time," Jim Rossman, head of U.S. equity capital markets at Macquarie Capital, told The Wall Street Journal. "One essential requirement for a robust IPO market is stability in valuation."

Bill Buhr, head of IPO research at Morningstar Inc., tells the WSJ he is seeing "a wider range in the quality of some of these deals. Unlike Rossman, Buhr believes the IPO market is "returning to normal, with quality companies such as Vitamin Shoppe Inc. doing well when it debuted last week, even while AEI couldn't find buyers."

(MOSCOW, RUSSIA) - Moscow is being touted by industry sources as the strongest city in Russia for new hotel development these days, even though total tourism arrivals for the first half of 2009 have shown a double-digit decline of 19 percent, or about 1.5 million visitors.

The global economic crisis started to affect Russia during the last quarter of 2008 and caused the tourism numbers' decline, according to the Committee for Foreign Economic Relations of Moscow Cituy. However, over the past 10 years, total visitation to Moscow grew at an annual compound rate of about 12 percent.

Hotelnewsnow.com says that based on data from the Moscow Department for Hotel Coordination, in 2008 there were an estimated 247 hotels with about 79,400 beds. New development under way is expected to increase branded hotel rooms by nearly 6,000 in the next three to four years.

(ST. PETERSBURG, RUSSIA) - Fraport AG has signed a multi-million-dollar, public-private-partnership agreement for developing, reconstructing and operating St. Petersburg's Pulkovo Airport, the fourth largest airport in Russia.

Fraport chairman Dr. Stefan Schulte says his company plans to make Pulkovo Airport the main transportation hub for one of Russia's most popular tourist regions. "We intent to make the development of Pulkovo a model project for the Russian aviation industry and for us as an airport manager."

St. Petersburg, often called Petersburg, is Russia's second largest city after Moscow with 4.6 million inhabitants. Over six million people live in its vicinity.

The 306-year-old city is a major European cultural center and an important Russian port on the Baltic Sea. St. Petersburg is often described as the most Western city of Russia, with its vast array of hospitality and entertainment sites.

(LAS VEGAS, NV) - Echelon is on the shelf. In a conference call with analysts, Boyd Gaiming CEO Kenneth Smith says the planned $4.8 billion, 87-acre project will not be completed for another three to five years.

A glut of hotel rooms in metro Las Vegas and a national financing squeeze have curtailed the project. Foundation construction began in June 2007.

Echelon was initially envisioned to open in late 2010 with 5,000 rooms in five hotels, 750,000 square feet of convention and meeting space, 300,000 square feet of retail, two live entertainment sites, 30 dining and nightlife attractions, a 140,000 square-foot casino and parking for 8,000 cars.

(LONDON, UK) - London-based Premier Inn once again has been ranked as the leading economy hotel brand in Europe. The Park Inn brand was rated best in the mid-scale category. The ratings were announced in the fifth annual JD Power European Hotel Guest Satisfaction Survey.

Right behind Premier Inn were Travelodge, Etap Hotel and Comfort Inn. The Forumle 1 chain finished last, according to The Independent, an industry publication in London.

Following the Park Inn were Dorint, Clarion, Ramada and Best Western.

The poll covered 42 hotel brands and queried guest satisfaction in seven categories - costs and fees, guest room, hotel facilities, food and beverage, check in and out, hotel services and reservations.

The study was based on responses from 13,000 guests who stayed at a hotel in Europe between May 2009 and September 2009.

(ORLANDO, FL) - Hotel tax revenue to Orange County for fiscal 2008 that ended Oct. 31, 2009 totaled $142.2 million, a 15.4 percent drop, or a loss of $26 million from fiscal 2007.

Average room rate was down 14.5 percent from a year earlier, according to Smith Travel Research. It was the worst September in rates since 2001.

Orange County Comptroller Martha O. Haynie and her staff had projected total revenue for fiscal 2008 to be $$17.5 million higher than recorded.

The hotel tax revenue finances major Orlando area entertainment and sports projects like the Citrus Bowl, new NBA Arena and a planned performing arts center.

Source: realestatechannel.com

Fla. sues online travel sites over hotel taxes

The state of Florida is suing online travel reservation companies over hotel taxes, the latest in a string of lawsuits nationwide claiming the sites owe local authorities millions of dollars.

Attorney General Bill McCollum sued Expedia and Orbitz on Tuesday, claiming they failed to pay Florida the full amount of taxes collected on hotel room rentals through their sites.

"The customer is paying the tax already," said McCollum, who is running for governor in 2010. "Orbitz and Expedia are not remitting to the state all the taxes they have collected."

Consumers are charged a rate when they book a room online, and the company later reimburses the hotels a lesser amount, allowing them to pocket service fees. The taxes are paid on that less expensive rate, prompting legal action by cities and states that claim they're being cheated out of millions of dollars in tax dollars.

Expedia and Orbitz did not immediately respond to requests for comment.

The Florida lawsuit — filed in a state Circuit Court in Tallahassee — claims the companies have been keeping some of the tax as profit.

Similar complaints against online travel companies have been filed by cities including New York, Chicago, Philadelphia, San Francisco and Atlanta and the tourist town of Branson, Mo. Officials have alleged that online travel services charged customers for local tourism taxes but never remitted those funds.

"In these tough budget times, I hope we can ensure that these companies pay what may be owed to Florida, instead of pocketing the tax our citizens have already shelled out," Florida Chief Financial Officer Alex Sink said Tuesday.

Sink applauded her political rival's decision to sue the companies. Sink, a Democrat, and McCollum, a Republican, are seeking their respective party nominations for governor and could end up facing each other in Florida's 2010 race.