It’s been few years now that social media has been ''rocking'' the Internet. Headlines talked about the one billion Facebook deal, many columns wrote about Twitter as a revenue generator for hotels and encouraged to sell rooms on Twitter. But let’s be honest! Social media has never been and will never be a distribution channel; it is more like a customer engagement channel.
The new report released by HeBS Hospitality eBusiness Strategies entitled ‘’Controlling Distribution Costs in Hospitality’’ suggests that the main focus for any hotelier should be to sell as much inventory via the most cost-effective distribution channels that can potentially generate the most bookings, while preserving rate parity and price erosion.
More than a decade ago famous hotel chains like Marriott International, Hilton and Intercontinental understood that the most cost-efficient bookings are those made directly on the hotel's website. Today, top hotel brand's CRS made directly bookings is 62.5% (Q3 2010) - Source 2010 eTRAK.
For the other hotels however, in 2010 alone, revenue leaked to OTAs in the form of abnormally high merchant commissions reached US$5,4 Billion (HeBS research). There is no reason anymore that hoteliers do not sell their rooms themselfs. Besides the fact that relying on your OTAs only to sell your hotel rooms is the ''lazy-man'' approach to distribution, selling rooms through OTAs is 15 times more expensive than the direct online channel. Moreover, some hoteliers do not understand that Internet marketing is not an expense, but an investment with immediate returns at every high ROIs.
While in the states 40% of hotel bookings are made online. The eTRAK quarterly benchmarketing report, which summarizes booking data from the top 30 chains worldwide, illustrates well the significant shift from traditional to online channels - In Q3 2010 internet bookings reached 56.9%. This is a major share increase compared to 37.6% level back in 2006.
Hoteliers must find a way to dominate the digital information cloud with their own marketing message and customer interactions, or the OTAs and the competition will control the conversation
Download the full report in pdf format at www.hospitalityebusiness.com