Logging Lower Reservation Costs
Methods of promotion, Web site care and feeding to grow your online bookings.
By Derek Gale, Associate Editor -- HOTELS Magazine, 7/1/2005
The Internet is all about inexpensive e-commerce transactions. It is the most efficient distribution medium ever invented, and it is a simple fact that driving online reservations reduces costs for hoteliers. But moving bookings to the Internet, even with the tech-savvy guests of today (the percentage of adults who report booking reservations online has increased to 47% this year according to the Yesawich, Pepperdine, Brown & Russell/Yankelovich Partners 2005 National Leisure Travel MonitorTM survey), is sometimes easier said than done. Here are a few trade secrets from hotel companies that are consistently growing their Web bookings.
Best Western International
Through March, Best Western International
had experienced 52% growth in worldwide revenue via bestwestern.com
from the same time period a year ago. The company’s
Web bookings have grown an average of 54% per year during
the past five years, and Internet bookings currently
make up nearly 50% of all Best Western reservations.
How are they doing it?
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For starters, Best Western doubled its online marketing budget this year and likely will continue to increase it next year, says David Kong, president and CEO. Also, enhancements to bestwestern.com are central to the company’s strategy to drive electronic distribution. On the Web site, 100% of the company’s online booking information is available in French, German, Italian and Spanish, and additionally, all property listings and reservations Web pages for Asia, Australia, Bangladesh, India, New Zealand and Pakistan are available in simplified Chinese, and in Korean. “We’re seeing increased bookings coming through (because of this),” Kong says.
Keeping up its efforts, Best Western will roll out a completely redesigned Web site featuring professional photography, 360-degree virtual tours and advanced search features later this year. “Customization and personalization” will come next year, Kong says, where users’ favorite Web pages will be customized to greet them by name, for example. And for booking, loyalty program members will have only to enter their membership numbers—all other fields will be pre-populated so customers can simply select a hotel and quickly and easily make a reservation. “It’s all aimed to build better relationship with customers,” Kong says.
Choice Hotels International
As of mid-May, Choice Hotels International’s year-to-date daily
average for revenue from reservations booked via its Web site was US$1.3
million, and Web site reservations had grown more than 50%. “Business
delivered to our franchisees via choicehotels.com has been tremendous
thus far this year,” says Mary Beth Knight, vice president, e-commerce.
Knight attributes a large part of the surge in online bookings to the
company’s “Earn Nights or Flights 3X Faster” program,
which ran from February through April and offered guests
who booked a room via the Web site triple Choice Privileges points or
triple airline credits. Also, like the Best Western site, choicehotels.com
lets guests book rooms in French, Spanish, German and most recently
Japanese.
Choice’s latest initiative to develop an even more user-friendly Web site is the introduction of a “Click to Chat” feature. By clicking an icon that appears on all search-results Web pages, visitors to the Web site can have online conversations with customer service representatives. “Click to Chat lets a guest ask a question in the middle of the reservation process, get an answer, and continue on with the booking with little interruption,” Knight says. The “Click to Chat” link also appears on the “Contact Us” page of the Web site.
Choice also is expanding its presence on the Web and driving business to choicehotels.com through its relatively new global affiliate program: Choice establishes relationships with third-party, travel-related Web sites worldwide and compensates them for hits and bookings. “Our affiliate program is just 60-plus days old but has already exceeded our expectations,” Knight says.
Morgans Hotel Group
“The percentage of business that we receive from our own Web site
ranges anywhere from 12 to 26% depending upon the hotel,” says
Michael Davis, director of Internet strategy and design,
Morgans Hotel Group, New York City. “We are relentless in our
pursuit to drive business through the Internet channel.”Morgans
uses a variety of strategies to drive online bookings, Davis says, “specifically
exclusive offers to our own database via e-mail and partnerships
with sites that only drive traffic to our site for bookings.” The
company also maintains detailed search engine optimization of the Web
site code,and is exploring new opportunities such as RSS feeds and allowing
corporate accounts to book online.
“Look-To-Book” Crisis
Pending
Leading executives
with reservations service providers along with industry
technology consultants see a crisis facing hoteliers
and their central reservations systems (CRS): ever-increasing “look-to-book” ratios.
Bob Boles, executive vice president and chief operating officer for Pegasus Solutions Inc., Dallas, explains it in simple terms: “The shopping habits of consumers today translate into a lot of looking and checking before they actually make a booking. In the past, hotel central reservations systems were designed to support a relatively low volume of travel agent inquiries (‘hits’) and might see around four ‘look’ inquiries for every one booking. Today, these look-to-book ratios have increased to multi-thousands to one, and promise to go even higher. New metasearch services, such as Kayak and Sidestep, only add more hits to the CRS. Legacy systems around the industry are updated and upgraded and stretched, but at some point they will not be able to withstand the look-to-book levels. There will come a point when the look-to-book ratio will overwhelm the capacity of the aging technology powering today’s reservation infrastructure.”
Sounds ominous. So how are companies responding? “Most of the major sites have implemented caching to head off a multitude of similar requests before they get to the system proper, but the cached response can only be used for so long before it’s out of date,” says Jon Inge, a property-based technology consultant. “There’s a lot of discussion about how to limit the amazing hit numbers, including the somewhat self-defeating one of blocking certain search or affiliate sites, but something has to be done since the hosting servers don’t have infinite capacity.”
One option is to add servers, thus adding capacity to handle increasing workloads, says John Burns, president of Scottsdale, Arizona-based Hospitality Technology Consulting. But that leads to another problem, Burns notes: a guessing game as to how much capacity you might need to handle spikes.
Pegasus is working on a solution, according to Boles, known as the next generation hospitality engine, that will be able to withstand the increasing number of hits and also will be compatible with the range of competitive products that plug hotels into the GDSs, process travel agent commissions, and power central reservations systems and property management systems. But he says the engine is a long-term project, and Pegasus is still in the early stages.
In the meantime, there’s no evidence that the growth of the look-to-book ratios will stop. “With the proliferation of metasearch, and then you look at big search engines moving toward travel—AOL, Yahoo and Google—that may well generate more queries. It’s a scary future out there,” Burns says.
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