A report released by Cornell University has highlighted that “for each reservation at the OTA, 3 to 9 reservations at the brand’s website are directly influenced by listing at the OTA”.

Published: 12 Apr 2011

A report released by Cornell University has highlighted that “for each reservation at the OTA, 3 to 9 reservations at the brand’s website are directly influenced by listing at the OTA”.

“One lesson here for hotel firms is that the magnitude of the billboard effect indicates the effectiveness of OTAs in marketing to consumers and educating them on product assortment and characteristics. Additionally, the billboard effect leads to an effective decrease in the cost of OTA transactions. Given the additional bookings that clearly result from being listed on the OTA, a hotel firm can average the margins paid to OTAs four or more reservations. Thus, a 30-percent commission would effectively be reduced to single digits,” according to the report, titled Search, OTAs, and Online Booking: An Expanded Analysis of the Billboard Effect, authored by Chris K. Anderson.

The study used publicly available data from comScore on brands operated by InterContinental Hotels Group to assess the impact of listing at OTAs upon bookings on the “hotelbrand.com” site.

Anderson, an assistant professor at the Cornell School of Hotel Administration, replicated and expanded an earlier study, which found that a hotel’s listing on Expedia increased total reservation volume—not including reservations processed through Expedia itself. This larger study looks at 1,720 transactions for InterContinental Hotels brands during the summer months of three years (2008, 2009, and 2010).

“It’s clear that there is increased reservation volume on the 'brand.com' site as a result of having the hotel appear on the online travel agent site,” said Anderson, “and it appears that the commissions paid to online travel agents actually should be considered a marketing expense.”

Anderson also tracked the surfing behaviour of would-be hotel guests. He found that almost 75 percent of the consumers who booked at the brand’s site visited the OTA, with 83 percent performing a web search prior to the booking (and two-thirds doing both).

“Some travellers spend enormous time researching hotels online,” he said. “On average, hotel consumers made 12 visits to an OTA’s website, requested 7.5 pages per visit, and spent almost five minutes on each page before booking.”