IN-DEPTH: As consumers are spending more and more time shopping and comparing hotel options online, global hotel companies are focusing on capturing most of this traffic and boosting conversion rates on their brand websites. They are also looking at new initiatives, including new mobile sites and apps, in order to develop a more profitable channel mix.

By Ritesh Gupta

Hotel companies have been focusing on educating customers about the value and benefits of booking direct on their websites.

These companies have been investing in improving their websites and web value proposition to ensure hotels and customers understand and believe in the value of booking direct with them online.  

In general terms, travel sites today offer more consumer information than ever before. At the same time, however, they have become more complicated to use and have alienated those that not be as online savvy. And hotel companies acknowledge the associated challenges.

Customers continue to have a lot of choices in where they book their travel and for their part hotel companies intend to make sure they are fully educated and understand their options and what they get from all of them. Major hotel organisations provide a number of education tools and resources to their hotels to ensure they have the right knowledge to best manage their distribution costs. It is acknowledged that there is no one size fits all solution.  One of the best things hotels can do to better manage their distribution costs is just to fully understand what all of the costs are in the first place and what levers they can pull to drive the right mix into their hotel at any given time.

Results

This month major organisations including Wyndham Worldwide, Marriott and Choice Hotels International shared their quarterly results.

Referring to general shopping behaviour, Wyndham highlighted that consumers are spending an increasing amount of time shopping and comparing hotel options online, often visiting between 8-15 different websites to make an informed decision. “Our goal is to capture maximum amount of that traffic and to ensure that page views result in booking click-throughs or conversions. We’ve developed a comprehensive multifaceted plan to drive more room nights to our hotels through our online direct distribution channels. The launch of our new hotel brand websites and improved content were the first steps. Most of our brand websites have now been updated. Results are excellent with conversion rates up on average 20 percent,” said Stephen P. Holmes, chairman and chief executive officer of Wyndham Worldwide, as he discussed Q4 2011 results (Earnings Call Transcript available on SeekingAlpha).

Marriott International, in its Q4 results, shared that marriott.com revenue reached nearly $7 billion in 2011.

Sharing Choice Hotels International’s Q4 results, Stephen P. Joyce, president and chief executive officer, said, “Our proprietary central reservation channels meaning our choicehotels.com website and our call centres provide our franchisees the highest average daily rate at the lowest cost.”

He added that the company delivered more than $1 billion in gross room revenues through these channels alone to its franchisees last year and importantly delivered through these proprietary channels grew by more than 12 percent in 2011. “Another highlight is the exceptional growth we experienced in revenues delivered through our mobile apps last year,” he said. “Gross room revenues delivered to our franchisees through mobile channels more than doubled last year increasing more than 250 percent and we continue to expand options for consumers in this area.”

New Initiatives

Holmes also shared that in December, the company piloted TripAdvisor ratings and reviews on wyndhamrewards.com. He mentioned that according to industry research up to half of consumers will not book a hotel without reading a review.

“Making ratings and reviews readily available on our own sites ensures consumers don’t have to leave our site to get that information,” he said, adding that the initial results of the pilot have been positive.

The group plans on adding TripAdvisor ratings to all its brand websites in 2012.

Last month Wyndham Hotel Group launched a new website in www.wyndhamhotelgroup.com, designed to engage consumers with the company’s family of brands while helping to drive incremental bookings for hotel owners. The launch is part of Wyndham Hotel Group’s direct strategy designed to recapture business by driving more bookings through the company’s own channels.  The strategy calls for improved brand websites, several of which have already been unveiled, as well as enhanced alternative sell, a distribution model enabling Wyndham Hotel Group brands to be sold on sister websites.

Hotel companies are also focusing on website testing and personalisation for their sites. It is recommended that testing and optimisation will not only help improve revenue and customer retention, but will also help in providing a better experience that caters to travellers’ needs, preferences and behaviours.

Late last year, InterContinental Hotels Group (IHG) introduced what the hotel company described as the “most powerful website guarantee ever by a global travel company”.

IHG chose to offerguests a free night if they find a qualifying lower price on any other website.  This promise is part of the company’s new initiatives - the launch of `Best Price Guarantee’ and the `Book With Us Advantage’. Any guest who finds a qualifying, lower room price for an IHG hotel elsewhere online will receive their first night free, and the rest of their stay will match the price found. The benefits of the `Best Price Guarantee’ are available at all eight of IHG’s hotel brands.

“We feel as though this is a very significant move on our behalf to educate customers about the value and benefits of booking direct on our websites. Though there is more transparency across all channels, many customers still believe they will get a lower price or a better deal on a third party website, and this new guarantee is our effort to re-educate consumers that they will get the best price, and many other benefits like earning Priority Club Rewards points, when they book direct with us online,” Michael Menis, Vice President - Web and Interactive Marketing, IHG told EyeforTravel’s Ritesh Gupta in an interview last year.

Joint Effort

Last month a group of leading hotel companies unveiled a new online hotel search engine in Roomkey.com. It will initially focus on serving US travellers, followed shortly after launch by the expansion of the site to English-speaking regions outside the US.

The engine has been founded by Choice Hotels, Hilton, Hyatt Hotels, IHG, Marriott International, and Wyndham Hotel Group. And soon, Best Western International signed a deal with Roomkey.com to become the online search engine’s first commercial partner.

These companies believe that roomkey.com will drive incremental reservations by showcasing their brands to more consumers who might not otherwise book on their sites.

Wyndham believes this venture will offer consumers “with a trustworthy and uncluttered way to compare and book hotels through a superior hotel shopping experience, while driving bookings directly to our own online channels”.

“roomkey.com provides a new cost effective channel for our owners and will better meet the needs of consumers who currently shop across multiple sites before booking,” said Holmes.

For their part, travel start-ups are trying to address a real imbalance in the hotel purchase process by empowering travellers with better information about the specific rooms in a hotel during the research and shopping phase. They believe that within the hotel and lodging space, travellers are looking for more information but finding largely commoditised information. It would be interesting to see how suppliers and intermediaries help out travellers in finding rooms that suit their preferences and needs.