Consumers are increasing their use of online resources to make travel arrangements. As a result, hotels have improved their online presence in order to capture the attention of both leisure and business travelers. Many hotels have invested in attractive Web sites with online booking capability and also use online marketing tactics such as search. But as travelers get accustomed to turning to one-stop shopping sites such as Expedia to make arrangements, could hotels which don’t list on these sites be at a disadvantage?
This question formed the basis for a study performed by Chris Anderson and published in the Cornell Hospitality Report. Anderson argues that hotels which choose to list on online travel agent (OTA) sites such as Expedia enjoy a billboard effect. This billboard effect gives participating hotels a “larger reach to consumers, because would-be customers use these third-party websites to research a hotels’ location, brand, rates, and service experience.”
During this study, in which a set of hotels turned off and then turned on their Expedia displays, Anderson measured both the percentage increase in daily reservations and the average daily rate (ADR) increase linked to the incremental reservations. Results indicate that independent hotels can gain as much as a 26% increase in new bookings by listing their properties with a popular OTA such as Expedia. Chain or branded hotels measured smaller increases. In addition, all hotel categories saw an increase in average daily rate.
Though this was a small study, Anderson suggests that a definite billboard effect results when hotels market themselves on OTAs which attract a broad consumer base. The economics of listing on such a site may vary between hotels as the increased cost must be weighed against the incremental revenue. But in these times of reduced travel budgets, reaching for new customers through an OTA site may help a hotel improve business.[Source: Anderson, Chris. The Billboard Effect, Online Travel Agent Impact, Cornell Hospitality Report, October 2009]