Website Optimization

The blueprints for a robust direct-to-consumer online distribution strategy

By Jason Price and Max Starkov                          

Direct-to-consumer online distribution should become the foundation, the main focus of any hotelier's online distribution strategy. In the offline world, hoteliers are the best direct salesmen with an estimated 75% of all reservations sold directly to consumers. Online, the industry direct sales average 52% (PhoCusWright, 2002) with many hoteliers reporting less than 5%. As a result, many hoteliers cede control of their inventory and pricing to online intermediaries, at an enormous cost financially and to brand integrity. Website optimization is the first step toward building a robust direct online distribution strategy.

Direct Online Distribution Should Become the Focus of Hoteliers’ Internet Strategy

This year over 13% of all revenues in hospitality will be generated from the Internet. Three years from now the Internet will generate over 20% of all hotel bookings (PhoCusWright).

Roughly 52% of all online bookings in 2002-2003 will be completed directly through hotel-sponsored websites. Forrester Research confirms that people who book online prefer to use a supplier website over intermediaries.

Forrester Research: “Which of the following types of websites

have you used to book travel in the past year?”

Response                                                       2000                 2001

 Travel Supplier (e.g. Hotel website):                    45%                  63%

Online agency (e.g. Travelocity):                          57%                  51%

Consolidator (e.g. Hotels.com):                            7%                   24%

Portal (e.g. CVB website):                                  32%                  20%

      (Forrester Research 2002, multiple responses accepted)

If your hotel is not generating at least 53% of its online bookings directly from the hotel website, but from intermediaries, then you are not competitive on the Web and run the risk of long term price and brand erosion.

The Internet is the ultimate “Direct Distribution Medium”. It provides the hotel with long-term competitive advantages by lessening dependence on intermediaries, online discounters and traditional channels that may soon become obsolete. Any promising, sustainable, and defensible distribution strategy must start locally at the hotel website.

Direct-to-consumer online distribution has the following benefits:

        Puts the hotel in control of its Internet presence and exposure 

   Prevents brand and price erosion

         Lessens dependence on online discounters and intermediaries

         Is the shortest path to establishing interactive relationships with customers

         Provides long-term opportunities to benefit from the lifetime customer value

         Is the least expensive way to distribute hotel inventory--direct to consumer!

Direct Online Distribution Begins with the Hotel Website

The foundation of a hotel's direct online distribution strategy begins with the website. A well functioning, fully optimized hotel website is a real asset that serves as the chief instrument to capture new markets and facilitate transactions.

Unfortunately a majority of today’s hotel websites and web strategies in hospitality suffer from two common flaws:

Websites built with no online distribution strategy

Most hotel websites are performing poorly as far as online distribution and search engine strategy are concerned. Why? Most hotel websites have been developed by web designers who know nothing about the hospitality industry, based on input and concepts by hoteliers who are not experts on Internet strategy, online distribution, and eMarketing. And many of them were designed as online brochures without taking into account fundamental online distribution principles.

Using a “quick fix” approach to undo what’s fundamentally wrong  

Such hotel websites, built without clear online distribution concepts and principles, inevitably produce poor results and few bookings. Hoteliers then turn to Search Engine Optimization (SEO) vendors for a quick fix of the hotel website to boost search engine rankings and increase online revenues. In reality, “slapping” meta tags to a stale, user-unfriendly website and submitting it to the search engines can achieve few sustainable results.

Only a fully optimized website can produce the desired online revenues and position your hotel company ahead of the competition. Website optimization takes a comprehensive look at the website and prepares it for optimal performance (maximum user experience, bookability and conversion rates) and yes, for the search engines. Especially in hospitality, regaining control of distribution from the online discounters and building a presence over the web directly to consumers is increasingly important. Website optimization is an imperative in today’s marketplace.

Hoteliers who have instituted website optimization strategies are ahead of the curve with their own direct distribution strategies. They have higher placement on the search engines and are able to convert more lookers into booker. These hoteliers understand that online consumers prefer to buy directly from the hotel. They recognize the hotel website is a source to control room inventory, hotel descriptions and content, room pricing and availability, group-bookings, and corporate rate programs, something completely unachievable on any third-party channel.

What is Website Optimization?

To begin with, a hotel website is not an online brochure. It is not meant to serve as reference material secondary to a sales pitch. The website is a 24/7 sales and marketing tool, a hotel’s top producing “virtual” sales office. The website is a “living organism” with descriptive copy, images and keyword updates, special packages, email capture, and overall fresh and locally relevant information--all meant to enhance the user experience and all easily achievable at minimal cost.  Therefore, website optimization addresses eDistribution, revenue management, and overall marketing—well outside the role of web designers and more closely associated with eBusiness experts.

Website optimization consists of several core components that combined reflect best practices. These are: user-friendly website, search engine readiness, website bookability, and eCRM. The first two components are further addressed in the remainder of this article. Several features that characterize a user-friendly website and search engine readiness are identified underneath the headings below.

User-friendly website

-          Introduce credible and optimized body copy

-          Address the “trust” issue to boost consumer confidence (e.g. Privacy Policy)

-          Streamline navigation by introducing well defined, easy-to-use comfortabltiered navigation

-          Increase conversion rates by introducing a robust real-time booking engine

-          Consider offering lowest price guarantee

-          Set up search/availability box right on Home Page

-          Make all promos and packages bookable in real time

-          Optimize images to improve download speeds

-          Improve download speeds to less than 15 seconds at 56K (“AOL Benchmark”)

-          Introduce rich media features: virtual tours, photo shows, floor plans, etc

-          Develop sections/pages to target specific customer segments

-          Introduce foreign languages to attract foreign clientele

-          Utilize low-cost customer support and FAQ

-          Offer customer email capture

Search engine readiness

-          Implement domain name strategy – does the domain name include all three required components for a searchable and descriptive hotel URL?

-          Introduce credible and optimized body copy

-          Permeate relevant and destination-focused target words and phrases throughout copy

-          Leverage the popularity of the local destination

-          Ensure the website consists of static HTML pages

-          Convert essential copy from .gif or .jpeg to HTML

-          Remove all frames, splash pages, Flash intro pages

Introduce unique page titles, description tags and meta tags throughout the website

As you may suspect the above may or may not dramatically change the look and feel of the website but it will definitely optimize the guts of the website. Once the website is optimized it operates at peak performance, much like a car running on all pistons.

A fully optimized website achieves between 3 to 5 times more online transactions than its competitive set. From the list above, only the meta and description tags are addressed by SEO (search engine optimization) vendors.

Case Study:

Slow download speed results in low look-to-book ratio.

Before realizing the need for a website optimization, a popular global hotel brand paid attention only to the number of website visitors and spared no expense for online advertising, pay-per-click marketing and email campaigns. Such barriers to success identified included the nearly 70 seconds to download the Home page on a 56k modem. This hotel did not achieve the 15 second "AOL Benchmark"-the maximum time people tolerate for a website download. This slowness alone alienated over 35 million AOL users who dial up using a 56k modem. Struggling from low conversion rates (look-to-book ratio) underwent website optimization which included: optimizing download speed, introducing eCRM models, optimizing body copy, and streamlining navigation into a 4-tier navigation structure. Hotel reports conversion rates and online bookings tripled within three months.

Website Optimization vs. Search Engine Optimization (SEO)

Did you that know 85% of Internet users rely on search engines to locate information over the Web? (e.g. Yahoo, Google, MSN, AltaVista, etc). Independent hotels, branded hotels, hotel management companies and lodging companies not part of a major brand must rely even more on search engines for referrals.

A cottage industry of SEO vendors has risen in recent years to take advantage of businesses’ lack of knowledge on how to build a web presence. Unsuspecting hoteliers turn to SEO vendors for a “miracle cure” to boost search engine rankings and increase search engine submissions. In reality, “slapping” meta tags to a stale, user-unfriendly website will achieve minimal sustainable results. Optimizing a website takes a comprehensive approach and goes far deeper in the analysis, as illustrated by the list above, than just by tweaking meta tags.

The problem worsens for hotels with artsy websites built in Flash. SEO vendors sell their expensive service well-knowing search engines cannot read Flash.  Similar problems arise when unwitting hoteliers contract with SEOs to optimize dynamically generated websites and websites with complicated navigational structures. These structures further inhibit search engine “spiders” from indexing and cataloging websites.

Rather than address the core components of website optimization, sadly, SEOs focus primarily on the meta tags of the website, a fraction of what represents best practices. Even internally driven hotel-based SEO efforts are a waste of resources. meta tags are no longer supported by most search engines as this is the easiest place to spam. Improving an existing website requires a closer look at best practices and this comes in the form of website optimization—a comprehensive approach to building a sustainable, competitive, and defensible website.

Not to belabor the point mentioned earlier, but SEO vendors are only too eager to promise you top positioning on the search engines. Many "burnt" hotel clients may tell you to save money considering the negligible results achieved. In reality, no one can guarantee a website will appear on the top search engine results of Yahoo or Google—no one. Only a comprehensive website optimization strategy can assure that your website will be considered seriously by the search engines. The right eBusiness experts will advise you to steer clear of SEO vendors.

The following quick guide on search engines helps dispel myths espoused by the SEO industry.  

A Quick Guide on How Search Engines Work Today

The latest generation of search engines has made many of the SEO’s services irrelevant. 

Search engines use major computational analysis to index and catalog websites. They have grown increasingly intelligent and specific to each search conducted.

·         Today’s search engines are extremely smart. They serve the “Best of the Web” and deliver the most relevant results to the user. Long gone are the years when a little tweaking in the meta tags could influence search engine rankings. As a result meta tags are increasingly less important and germane to the search engine process. In fact, only one major search engine- Inktomi- officially claims to support meta tags while a few others will take snippets.

·         Today’s search engines value the descriptive body copy found on the web page. The body copy must contain relevant target keywords and phrases (destination and product related) that permeate throughout the website. Search engines rate body copy as the only truthful source to pull descriptive data on the website for indexing. Search engine executives constantly reiterate, the body copy is the most important factor for getting high rankings.

·         Today’s search engines evaluate popularity measured in the amount of activity on the site as well as links from other sites. When the user cannot navigate, trust, or understand the website does it really matter how it ranks on the search engines? If the room cannot be easily booked, if room descriptions are missing, photos unclear, if overall body copy is barren of keywords, and navigation cumbersome, ranking does not matter-- no one will visit, revisit, explore, and book hotel rooms.

·         Lastly, today’s search engines draw on the aggregation of destination specific content. The relevancy and depth of content works to the advantage of the website and is rewarded by the search engines. Pulling off this exercise requires involvement of the hotel manager, marketing team, and outside hospitality experts. SEO vendors are not hospitality experts but offer their services across all industries to any willing buyer including those in banking, medicine, pornography, technology, and virtually any other business with a website.

Putting Website Optimization into Practice

The Website Optimization Blueprint

With general theory out of the way, let's get to work creating a website optimization blueprint. The blueprint drives the entire website optimization strategy and serves as the vehicle to communicate to the team, including web designer, exactly what goes into the website. A well developed blueprint serves as the backbone for the entire direct-to-consumer distribution strategy.

The blueprint, built by professionals schooled in online distribution, revenue management, and eMarketing strategies, creates a comfort zone in forming the clarity hoteliers so desperately need. The blueprint nicely bridges the gap between web designers who will eventually implement the blueprint and hoteliers who don't know how to use the Internet as a distribution channel.

From a feasibility standpoint, a website optimization blueprint serves a number of purposes:

Focus on Core Competence

Working off a website optimization blueprint allows the web designer to focus on core skills: the look-and-feel, overall website design, HTML code and website functionality. Building marketing messages, learning online distribution models, and understanding ASP booking engine technologies are left to eBusiness experts.

Competitive Bids

Working from a blueprint, a web designer can easily base an accurate quote on what exactly goes into the website. Price quotes for website design, re-design, or simple implementation are much more precise, usually 25%-40% lower in costs.

Expedited Implementation Process

Once the web designer creates the new look-and-feel, the web development consists of simply cutting and pasting each component of the blueprint into HTML code. The contents of the blueprint have already received management approval.

Bridges the “Knowledge Gap”

A majority of hoteliers are not experts in online distribution while web designers do not know hospitality. The optimization blueprint bridges the knowledge gap in best practices as well as prevents unnecessary up-selling by web designers.

Constructing the Optimization Blueprint

According to a recent eMarketer survey, the top two most important website features sought by Internet users is the credibility of the content (80%), which suggests not just the body copy but the extent to which the site promotes its products for building consumer trust, and the quality of the website navigation for ease of use (80%).

Adapted from eMarketer 2002:  

Most Important Website Features, according to Internet users:

Being able to trust the information on the site (80%)

Site is easy to navigate to find what you want (80%)

Being able to identify the sources of information (68%)

Knowing the site is updated frequently (65%)

Being able to find the facts (50%)

In other words, the success of turning "lookers into bookers” is: a) consumer confidence that what you say is for real with provide back-up to support your claims, and b) consumers are able to navigate their way through a website to find the information and make a reservation.

Build confidence with credible copy. With the Internet it is not always clear who is behind the information being sold. For example, who exactly is Hotels.com? When a third party channel promotes a hotel better than the actual hotel, you know something is seriously wrong. Ease of navigation seems simple enough, yet is commonly overlooked. Be sure the navigation is tiered, buttons appropriately labeled and representative of the copy. Enough money has been sent drawing consumers to your site, now don’t drive them away.

Building Credible and Relevant Copy

The body copy plays an essential role in promoting the hotel to web customers. It is the ,copy that  describes the hotel products, features, room services, amenities, and local destination information. The copy should be truthful and written in short, declarative, and descriptive sentences. And remember, bullet points were invented with website copy in mind.

Web readers are unpredictable. They jump from page to page in no particular order and at most scan the copy. Because of this tendency in this respec each web page should be therefore constructed in "chunks" or precise segments of information for quick reference, referral, and transaction. Therefore “chunking the copy” is essential when creating the website content. By chunking content each Main page can act surface as a standalone page fully optimized with copy, meta tags, description tags, and page titles for the search engines. Chunking allows the reader to grasp the essence of the product and click to view, inquire, or simply book a room no matter which page he selects to scan.

.Recall the list of key words and phrases for search engines alluded to earlier? This list must now permeate throughout the copy of the website as well as serve in the form of “invisible” copy: page titles, meta tags and description tags, and speak to not just customers, but search engines. They serve as cues for search engines to index and catalog the website. The real expertise is to weave the keywords into the copy so that the copy reads as  credible promotion and in the same time “speak” to while als the search engines.

Building the Keyword and Key Phrase List

Imagine an army of search spiders, bots, and meta crawlers that sift through the copy analyzing, indexing, and cataloging each submitted pageto be found on the website. Leg work goes into researching keywords and key phrases popular yet relevant to the local destination and then weaving these keywords throughout the "visible" and "invisible" copy.

In hospitality, only a Destination-Focused Search Engine Strategy works as the product by definition is destination specific. This strategy involves optimizing the destination pages within a single or multi-market website (multi-property lodging company with presence in several vastly different markets). For example, within a corporate portal a cluster of hotels in San Francisco and Chicago should each have its own optimized destination page and search engine strategy.

Be sure to include product related keywords that speak specifically to the product being sold—in our case hotels and hotel rooms. Developing the destination related keywords list is much more complex and trickier because it requires not only identifying the most popular keywords for the particular destination, but the most popular relevant keywords. "Singapore Airline" and "Singapore Girl" are popular keywords yet have no relevance for customers searching a Singapore hotel.

Creating the keyword list requires a combination of Internet, hospitality and destination-specific knowledge and extensive research. Some required steps include:

-          Identify patterns of consumer online purchasing habits for the hotel/resort and the  particular destination;

-          Destination research to identify relevant copy

-          Research to identify relevant target keywords

-          Research to rank the keywords according to their popularity

-          Develop credible and relevant copy

-          Weave the target keywords throughout the copy

-          Develop the “invisible copy”: page titles, description tags and meta tags.

A major goal of the website optimization process is to leverage the popularity of a particular destination for the benefit of the hotel website. The optimized destination content within a single or multi-market hotel website is very important for the search engines and ongoing marketing including email and pay-per-click campaigns. 

Scoring top positioning on search engines will depend on how well constructed the word and phrase list reflects your product and destination, and only comes after careful research on consumer search behavior and purchasing habits. Building this list requires software to analyze popularity, word matching to analyze relevancy, bench research to dig out unique and specific words and common phrases to the search that characterize the destination, and finally some human discretion hopefull from those with a depth and understanding of online marketing in hospitality and use of search engines. 

Case Study:

Website optimization blueprint for a destination portal boosts direct distribution five-fold.

A leading Hotel Management Company instituted a website optimization strategy for its local destination portal. The portal represented as many as 10 properties in 3 major tourist and business destinations. The website optimization included: 3 optimized destination pages, a 3-tier navigation based on multiple audiences, enhanced body copy with keywords and key phrases, revised meta tags, description tags, and page titles, new functionality, data compressed high quality images, and introduced specially designed foreign language pages. The optimized website underwent a priority registration with top search engines and URL submission to all international search engines. Online bookings doubled within several short months. HMC now projects online revenues generated directly from the new website to increase five fold in 2003.

Building a Better Navigation

Website optimization calls for a clearly defined and well-constructed multi-tiered navigation. We are all familiar with the website navigation bar which delineates the contents of the website. A navigation bar allows users to scan the labels on the buttons of the navigation bar in order to determine which buttons are personally relevant. The labels are also meant to represent the essence of the content behind each button the user selects.

Too often, the origins of a hotel website strategy had  began simply digitizing the hotel brochure and then slapping on a booking engine a few years later. Over time the website grew into a hodge-podge of random content devoid of any strategic logic. The navigation frequently winds up being overburdened with redundant and confusing information, mixing consumer with administrative features ("View King Suite" with “Career Opportunities”, "Investor Relations", "Press Releases"),, and misrepresenting the content  and copy of the website. .

Creating navigation tiers has proven to be a highly successful approach. Based on the hotel strategy, product mix, and target audience, the website navigation should reflect a two, three or four-tier navigation structure. Each tier represents an order of authority that helps layout the organization of the website. By using a tiered structure you can arrange the navigation in such a way that it movescompel users comfortably and easily toward a set of services, including the reservation process.  As a minimum, a hotel website should have:

-          Actionable Navigation

-          Main Navigation Bar

-          Sectional or sub-navigation

Once the tiered structure is defined, label the navigation buttons properly and include a button called “Home”. There is no room for creativity when it comes to having a Home page button—it’s a must. In fact, clicking on the corporate logo to return to the Home page is considered offensive in certain cultures.

The next step is to streamline the navigation to contain only core products and services. Avoid cluttering the Main Navigation Bar with superfluous  activities. What is more important, making a reservation or offering employment opportunities?  A hotel website is a business-to-customer enterprise. Streamline the navigation by removing or shifting non-essential services away from the Main Navigation Bar.

A poorly designed navigation will never turn lookers into bookers. Sadly in this depressed travel market every incremental bit of business is vital yet manyM hotel navigations are poorly designed and confuse users with an overload of unnecessary navigational choices and useless information that neither enhances nor drive consumer desire to make a reservation. the hotel's image

Conclusion

We've covered a lot of ground and hopefully it has become as clear as ice that website optimization is essential for building a direct-to-consumer distribution strategy. It should serve as the foundation of any long-term competitive distribution strategy.

Website optimization starts at the local hotel and encompasses a comprehensive approach for boosting search engine ranking and converting lookers into bookers. The approach underpins the total online direct-to-consumer distribution effort. Successful hoteliers use their websites to communicate directly with consumers and establish long-term interactive relationships. A website optimization blueprint drives the overall direct distribution strategy and blueprint creation is well beyond the skills of SEO vendors and web designers. Partner with experienced eBusiness strategist to help optimize the website and leverage the Internet to its fullest potential.

About the Authors:

Max Starkov is Chief eBusiness Strategist and Jason Price is VP of Business Development and eMarketing at Hospitality eBusiness Strategies (www.hospitalityebusiness.com) in New York City.  Max and Jason combine the best practices in three critical areas: solid hospitality and travel background (22+ years), Madison Avenue advertising and marketing background (8+ years) and Cyberspace experience as founders, CEOs and executives in two consecutive Internet technology start-ups in hospitality and travel (6+ years). In 2001 they won the prestigious 2001 Worldwide Microsoft RAD Award for Web-based technology applications, inventory management and reservation systems for hospitality. To read more click here: http://www.hospitalityebusiness.com/team.shtml

The World's Most Romantic Hotels
By Christina Valhouli    Forbes.com

February 7 is not an especially remarkable date--except for the fact that you only have one week until Valentine's Day.

If that thought causes your heart to beat a little faster--but not in a romantic way--it means that you probably haven't made any plans yet. Fortunately, it's not too late: Rather than taking the easy way out and just sending several dozen overpriced roses, you can still book a room at one of the world's most romantic hotels and turn Feb. 14 into a day that neither of you will ever forget.

From a 17th-century palazzo in Venice to a small discreet hotel on New York's elegant Gramercy Park or a sultry resort in Bali--plus many others besides--Forbes.com presents 11 places that will show her what a romantic guy you really are.

Cendant swings to 4th qtr profit, revenues rise

(Reuters) - Cendant Corp. a travel and real estate services company, reported a fourth-quarter profit on Wednesday compared with a loss the year before, boosted by robust business at its Avis car rental unit.

Cendant, which owns the Days Inn hotel chain and the Century 21 and Coldwell Banker real estate brokerages, reported a profit including certain costs and other items, of $247 million, or 24 cents per share, compared with a loss of $307 million, or 31 cents per share, a year earlier.

Quarterly revenue came in at $3.8 billion compared with $2.5 billion the year before, boosted in part by acquisitions.

Cendant posted an adjusted quarterly operating profit, which excludes a variety of unusual items, of 29 cents per share. Cendant's adjusted earnings per share matched the company's own forecasts.

The New York-based company also reiterated its guidance for reported earnings per share in 2003 of $1.46, and said it expected $17.8 billion to $18.4 billion in revenue for 2003.

6% rise in UK visits beats BTA forecast

e-Tid.com  -  A strong December helped boost the overall number of visits to the UK by overseas residents by 6% year-on-year to 24.16m in 2002.

During the year, visitors from North America increased by 2% to 4.32m and from Western Europe by 9% to 15.33m. Total spend by all inbound tourists was up 4% to almost £12bn. The British Tourist Authority (BTA) had forecast overall visits up 3% and spending up 1% from 2001.

In the month of December alone, inbound visitors rose by 36% year-on-year, while their spending jumped 30% to £960m. The fourth quarter of 2002 was not only an improvement on 2001, but also on 2000, the last ‘normal’ year pre-foot and mouth and September 11.

The BTA said the ‘massive’ growth in December was boosted by the tourism industry’s ‘Only in Britain. Only in 2002’ campaign, which focused on attracting short-break visitors from key European markets during the autumn and winter months.

Commenting on the figures, Tom Wright, BTA chief executive, said: ‘A further positive result for inbound tourism and further proof that a recovery from the terrible events of 2001 is underway.
‘While there is still some way to go and the current climate is causing uncertainty in some markets, BTA’s evolution of its overseas structure and the imminent launch of new lead body for tourism, as well as developments in the way Britain will be marketed overseas all offer great potential for the industry.’

The BTA forecasts that in 2003 both inbound visits and spending will increase by between 3-4% over last year’s figures.

e-Rooms – A New Market Segment?

By: Elaine Sahlins    HVS International

During the past year, HVS International has performed hundreds of market studies and analyses. One of the major trends of the post-September 11th travel world that has become critically important for our analyses is the surge in the use of the Internet as a sales and marketing tool. Reservations for hotels are now almost universally booked through an Internet source, whether the source is a GDS used by travel agents, a website sponsored by a particular lodging company, or a third-party travel agency site such as Expedia or Priceline.

As consumers have become more and more comfortable with using the Internet to research destinations, locate hotels, and then book the hotel room, the importance of these reservations has skyrocketed. These room nights are consistently being categorized by individual hotel properties as leisure demand. Leisure travelers, according to the major hotel companies and consultants, are the only strong growth segment of hotel demand. But is leisure demand, as tracked by individual hotels, really made up of recreational travelers?

Nearly 37 million of America’s more than 162 million active Internet users have already purchased travel online. Online travel bookings exceeded $23 billion in 2001, and are expected to reach $63 billion by 2005. During 2002, while the use of the Internet for hotel reservations was surging, the hotel industry was suffering from the downturn in travel and tens of thousands of hotel rooms were empty. What happened when technology and new consumer behavior met a hotel industry in need? 

Increased consumer savvy and the need of hotels to fill rooms have combined in a sort of “Wild West” sales and marketing event. Hotels began to provide rooms online at exceptionally low rates to attract business as the economy receded. While discounting is not a new strategy in the hotel business, the proliferation and breadth of the availability of low-priced hotel rooms have reached new heights. Using with Smith Travel Research numbers of sold rooms in a sample of major market areas, TravelClick discovered that Internet bookings in the first three quarters of 2002 accounted for over 23% of rooms sold in New York, and over 15% in Los Angeles, Chicago, and San Francisco. Anecdotally, for some properties, hotel managers are reporting Internet bookings ranging from 30% to 50% of all room nights in 2002.

The use of the Internet by all guests to book hotel reservations has blurred the traditional market segments. Correlating the number of Internet rooms sold with the traditional segmentation techniques of market analysis is one of the challenges posed by the changing trends. During the course of our fieldwork and research, we have interviewed management from numerous properties where Internet bookings from auction sites and discount sites have accounted for over one-third of the rooms sold in the first three quarters of 2002.

For lack of a thought-out strategy regarding Internet bookings and their effect on yield management, these rooms are consistently tracked as “leisure” or sometimes “wholesale” demand. These hotel operators are literally in the dark about their true market mix and the purpose of their guests’ stays. Hotel management companies are struggling to identify and implement corporate programs to adequately track demand and effectively manage Internet bookings. And despite all of the technology available to hotels, many property management systems do not interface with Internet reservation systems resulting in faxed reservations to the hotels from Internet bookings sources and front desk clerks querying guests orally as they check in about the purpose of their visits.

The lack of effective use of the Internet by hotel operators is resulting in an erosion of effective yield management. While internet hotel reservations are viewed by the consumer as a source for obtaining discount hotel rooms, hotel operators need to reeducate the consumer and yield manage internet reservations with the same motivations as airline pricing.  Higher rates will be offered on intenet sites during periods of peak demand, particularly for travelers generating short-term bookings. Market segmentation is still critical in that hotel operators need to know their customers and seasonality, and market and price room inventory to maximize revenues. Room inventories on the internet should adhere to the same seasonality and be priced according to demand. 

This year, we have all been hearing and reading about the growth of leisure demand and its importance to the post-September 11th recovery of demand for hotel rooms. Similar to trends experienced in the early 1990s, drive-to destinations are performing better than fly-to destinations and weekend travel has increased. But room rates in some of these markets continue to be depressed and, in some areas, continue to decline. Looking at the specifics, a great deal of the decline can be attributed to the Internet bookings. But labeling the Internet room nights as leisure is a misleading and dangerous trend. In fact, hotels would be better served to identify more specifically those guests that are booking online.

During the week, most of those guests are probably the same guests that have a higher preferred corporate rate or used to pay rack rate, some six to 12 months ago. In fact, many corporate travelers are now required to book online. According to the results of a survey released by GetThere, a Sabre company, in August 2002, “43 percent of [the respondents’] employee trips are now booked online.” In addition, the majority of respondents (52%) are “either using or considering a full or partial mandate of their online booking site; a trend which continues to increase due to economic pressures, executive awareness, and employee comfort booking online.”

Distinguishing between the source of demand and the purpose of the stay remains a challenge for yield management. With true recreational (leisure) travelers, business travelers, and meeting and convention attendees using the same site to book the same hotel for the same rate for the same nights, how should the room night be categorized?

If the purpose of the stay is business, should the room night be classified as commercial and resultantly, the overall commercial rate tracked by the hotel is then diluted? If meeting attendees can book on the Internet outside the meeting or convention block and obtain lower rates, whose responsibility is it to guarantee the room block? Hotel management and meeting planners are reacting to this conflict with short-term strategies such as charging meeting and convention attendees who book outside the block higher fees and/or requiring hotel management to identify all attendees registered for the meetings and conventions but booked outside of the block to manually determine if the room block is meet. With all this confusion, how can hotel managers confirm that true leisure demand is actually increasing?

Effective use of the internet as a yield management tool requires a knowledge of the guest and their reasons for booking the hotel but now also means managing the room inventory on line for rate maximization. We are aware that many of the large hotel companies are actively working to deflect the impact of discounting from Internet bookings. By carefully regulating their inventory available to online sites such as Expedia or Priceline and by offering lowest-price guarantees on their websites, hotel companies are attempting to influence market share and pricing. Using frequent guest programs and user interfaces, these companies are likely to be able to track demand segmentation from their users. But even if demand can be identified, how will yield be managed?

These issues remain to be uniformly approached by hotel managers during the next 18 to 24 months. Many hotel companies are formalizing yield- and revenue-management policies and accounting, however, the process of identifying, tracking, and anticipating consumer behavior regarding room bookings has to be managed to effectively improve average rates.

Elaine Sahlins 
Suite 620
116 New Montgomery Street
San Francisco, CA 94105
415-896-0868
415-896-0516 FAX

Corporate Social Responsibility: Are you putting it to work?

There are fundamental environmental and social concerns in our society that will inevitably lead to changes in the way businesses operate - but what will the changes be, at what pace, on what issues and in which geographies? How best can a company manage these changes and leverage value from good practices?

Tourism Concern, a membership organisation concerned with promoting an understanding of the impact of tourism, highlights a couple of issues:

“Spain’s 12 million visitors a year leave behind 100,000 tonnes of rubbish”

“13-19 million children are working in the tourism sector all over the world. More than one million of these children are forced into tourism’s sex industry”

In the current debate around corporate transparency and accountability, having and communicating responsible business practices is moving from a ‘nice to have’ to a ‘must have’ for all industries, and is no longer purely the preserve of traditional ‘dirty’ industries. In addition to risk management, active pursuit of responsible business practices can drive innovation and creativity, can assist companies to attract and retain a talented workforce and can enhance and protect corporate brands.

There has been a growth in environmental and social reporting within the travel, tourism and leisure industry over the last few years such as British Airways, Six Continents and Accor. There are a number of initiatives to support improvements in the industry such as the International Hotels Environment Initiative and the Tour Operators Initiative whose members are tackling a range of issues, including performance measurement.

For many companies however, the subject can still seem nebulous, imprecise and lacking in practical connection to the core business issues.

To demystify the business implications of CSR, Deloitte & Touche and The New Academy of Business have developed “Putting CSR to work”, a training workshop for senior executives. This workshop will assist companies to identify and take practical actions on CSR within organisations. It has been developed following discussions with many executives currently in the process of defining the best approach for their company. The Workshop will provide knowledge of the concepts and an insight into the practices that are key to a successful engagement in these potentially complex and dynamic matters, as well as an opportunity to network and learn with other professionals in large companies facing similar challenges.

http://www.hotelbenchmark.com

Malmaison's founder to launch £100m hotel chains

McCulloch and Coulthard aim to take on business and budget markets

The Herald  -  KEN McCulloch, the multi-millionaire who founded Malmaison hotels with Mick Hucknall, the pop singer, is to launch two new chains across Europe in a venture with David Coulthard, the formula one racing driver.

Mr McCulloch, a hotelier and a tax exile in Monaco, said both chains will be business-class but will offer budget-prices and compete with the Malmaison group he sold in 1998.

The Glaswegian is believed to have raised around £100m for the ventures and is backed by Peter Morris, a prominent US property developer, and Coulthard, his current partner in the upmarket Columbus hotel in Monaco.

Mr McCulloch also intends to open more Columbus hotels around the world in competition to existing Grand Hotels. The brand name for the first chain will be announced in the next few weeks but it has the working title of L'hotel.

Average room rates will be around £60 and will include amenities such as plasma screen televisions, air conditioning and walk-in power showers.

The other brand will be positioned above L'hotel in the mid-market range and will take on established chains like Marriott. It is planned that the first L'hotel will open in the UK by the end of the year and both chains will be pan-European. L'hotel will also be launched across the US if the UK rollout is successful.

The hotels will compete directly with Malmaison in several sites and are expected to come to Scotland, although specific locations have not yet been disclosed.

Mr McCulloch's previous business ventures such as Malmaison and the critically acclaimed restaurant One Devonshire Gardens have attracted an array of famous names including Bob Dylan, Annie Lennox, Billy Connolly, Robbie Williams, David Bowie, and the Spice Girls.

A fierce critic of the mediocre standards of design and comfort he says are offered by most hotel chains, he defied sceptics by setting up Glasgow's glamorous One Devonshire Gardens hotel which netted him £3m when it was sold in 2000.

For L'hotel Mr McCulloch is targeting sites beside motorways or industrial estates where competition is either almost non-existent or of a poor standard and the hotels will be predominantly new builds.

He said the project has been in the planning stages for almost two-and-a-half years.

The first details about it were revealed in November 2001 when he was reported to be working on a new chain with the working name of Inn Coach.

However, Mr McCulloch told the February issue of EuroBusiness magazine that he has "scrapped the whole thing and started all over again".

With backing from Simply Red singer Hucknall, Mr McCulloch brought boutique hotels to UK cities when he launched the Malmaison chain in 1994.

He made £35m when the chain was sold to US group Patriot in 1998 and the hotels are now owned by Marylebone, Warwick Balfour, the property fund management group.

Mr McCulloch said that given a lucrative opportunity, he would consider floating or selling the new chains as he has done before, but explains that should that happen, he would not be left without any assets again.

"That's another reason why we have three brands," he said.

McCulloch, whose cousin Ron owned the Big Beat night club chain until it was forced into receivership in April, 2001, severed his ties with Malmaison in 1999 to begin work on new ventures from tax exile in Monaco.

Putrajaya opens first hotel

TravelWeeklyEast.com  -  Malaysia’s new Federal Government administrative capital, Putrajaya, proudly showed off its first hotel, Shangri-La’s Putrajaya, with its official opening by Prime Minister Datuk Seri Dr Mahathir Mohamad on Tuesday night.

According to Putrajaya Corporation president Tan Sri Azizan Zainol Abidin the hotel was built to fill up an important gap in the facilities offered in the new administrative capital.

The five-star 118-room Shangri-La Putrajaya was designed as "a hotel within a park and a park within a hotel". It also boasts of a 24-hour business centre, the latest technology in all its meeting rooms, and a spa.

Shangri-La’s Putrajaya also broke records of sorts as it was completed in a record 16 months.

Shangri-La’s area director of communications, Rosemarie Wee, told TravelWeekly the hotel opened for business with 20 rooms.

"The rest of the room inventory will be opened progressively, with all the 118 rooms to be operational by the end of the week."

Philip Dailly is the new hotel’s general manager. He was most immediately the executive assistant manager of Shangri-La’s Edsa Makati in Manila.

Cambodian business returns to normal

TravelWeeklyEast.com  -  As political relations between Thailand and Cambodia moved a step closer to normality yesterday, inbound tour operators contacted by TravelWeekly said disruptions in Cambodia remained minor.

Trade members said most disruptions were related to flight cancellations and the re-booking of clients into alternative hotel accommodation.

Asian Trails’ Cambodian office issued a newsletter to clients yesterday saying, "Today’s situation in Phnom Penh is absolutely calm after the anti-Thai protests of January 30. Visits resumed and the town has returned to its normal activities. Siem Reap has not been affected at all and is busy as usual."

Richard Brouwer, marketing executive of Diethelm Travel said the company was advising clients that the situation in Phnom Pehn was safe.

"Our clients booked to visit Phnom Penh and Siem Reap can do so and will not be in danger or any physical harm whatsoever.”

“However, tourists visiting Phnom Penh will have to contend with flight problems until both Thai Airways International and Bangkok Airways will have resumed normal flight operations to and from Phnom Penh," he said.

Clients staying in or back at the Royal Phnom Penh or the Juliana Hotel have been transferred, said Brouwer.

A Cambodia tourism ministry release notes, “Tourism activities are continuing unabated and all airports are fully operational. The streets of Phnom Penh were peaceful by the morning of 30 January as the government moved swiftly to restore social order.

“The heartland of the Cambodian tourism industry, Siem Reap, was unaffected by the events of last Wednesday. Foreign tourists continued to flow through the Thai-Cambodian international border crossings. In addition the newest airline in the region, Phnom Penh based Mekong Airlines, commenced services last week in a further boost for Cambodia’s tourism sector,” the release noted.

Sarawan Murray, publication relations manager for Indochina Services agreed that while the incident was regrettable, it had been contained.

"The incident was isolated even within Phnom Penh, and for the most part business has returned to normal. It was really clear early on which tours would be effected – we’ve had a lot of inquiries but we’ve actually tried really hard to get people the information before they ask us. I think people have been pretty much reassured."

WSJ publishes bleak snapshot for Europe inbound 

An article in yesterday’s Wall Street Journal Europe points out that US outbound travel to Europe is still subdued despite trips from the US to Europe costing as little as €200.

The paper comments that ‘rock-bottom prices do little to entice people to fly internationally with many Americans opting for domestic travel instead’. Jeff Katz, chief executive of airline-backed portal Orbitz, admitted that the site has recently experienced slow bookings to Europe and some cancellations.

Bob Deiner, president of Nasdaq-listed Hotels.com, meanwhile, said bookings internationally were down but domestically ahead.

The WSJ also talks to a Houston-based travel agent who says that cruises to the Caribbean and Mexico are still booking well, as they are perceived by Americans as safe destinations. Agents in the US, like those in the UK and Germany, also note a trend towards late booking.

Park Plaza enters resort arena

TravelWeeklyEast.com  -  Park Plaza Asia Pacific (PPAP) has signed a management and marketing agreement for the Park Plaza Resort, Nakha Island, just off the East Coast of Phuket in Phang Nga Bay. The Resort is due to open in the early part of 2004.

Park Plaza Resort, Nakha Island, is a first for the group in terms of resort accommodation.

Vice President of Operations South East Asia, Chris Ryan said, “The addition of the Park Plaza Resort, Nakha Island, Phuket is an important landmark for the group in terms of their expansion plans within the region. We are very pleased to have this opportunity to work in close partnership with this unique resort’s owners from the very beginning of this exciting development.

“The resort will also be a benchmark for the group in terms of resort accommodation, an area that we are planning to expand throughout Asia,” said Ryan.

The development will consist of 99 newly-built deluxe guestrooms housed in Thai-style villas.

Facilities will include a Wellness Center and Health Spa, focused on a variety of holistic offerings and indulgences for both body and soul.

Park Plaza Resort is designed around a traditional Thai village theme. The reception pavilion will have open sea views and an outlook over the infinity edge swimming pool, to Phang Nga Bay’s limestone karsts.