by eye for travel Dec 29, 2011
IN-DEPTH: Gareth Gaston, Senior Vice President, Global eCommerce, Wyndham Hotel Group describes mobile and ratings and reviews, in addition to increased efforts to drive more business directly to owners and franchisees, as the top e-commerce trends for next year.
By Ritesh Gupta
The travel industry has undergone some major and permanent changes in distribution with a lot more transparency across all channels. Hotels acknowledge that many customers still believe they will get a lower price or a better deal on a third party website. In order to combat this, hotels took significant initiatives this year to educate customers about the value and benefits of booking direct on their websites.
For instance, a couple of months ago, a major hotel company introduced what it described as the “most powerful website guarantee ever by a global travel company”. Guests are being offered a free night if they find a qualifying lower price on any other website.
Even as hotel companies are engaged in educating customers about the full value of booking direct with them, they also realise one of the best things they 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. Hoteliers have realised that they have to focus on direct distribution and increase their focus and spend on building a better performing website. Improved SEO coupled with paid search, social media efforts, content freshness and great pictures have become critically important to drive the direct strategy. Links from strategic websites such as TripAdvisor and destination focused website elevate the relevance of a visitors search and also help organic rankings. Plus, the e-commerce space needs to be backed by a robust booking technology to ensure higher conversions of the demand generated.
Commenting on the outlook of hotel distribution, Gareth Gaston, Senior Vice President, Global eCommerce, Wyndham Hotel Group, says, “The economy has begun to recover and when that happens, customers tend to become less price-sensitive. What also happens as the economy recovers is that suppliers become more discerning about how they distribute hotel room inventory. I believe this year has been like a splash of cold water in the face of hotel suppliers with regard to channel performance and contribution from intermediaries.”
“The next big thing (in hotel distribution) is not really a “next.” We’re sure to see the continued battle for the consumer and I for one expect a turn for the better,” Gaston told EyeforTravel’s Ritesh Gupta in an interview.
What according to you are going to be the top trends in 2012 as far as e-commerce in this industry is concerned?
Firstly, mobile will establish itself as a mainstream channel. The user base and device proliferation is there and companies are seeing tangible traffic from smartphones and tablets. The time is definitely now. Secondly, ratings and reviews is a hot topic with several hotel suppliers trying different approaches. Regardless of the approach, it seems there is broad understanding of the importance of ratings and reviews. Thirdly, I do see in the industry a significant amount of talk about increased efforts to drive more business directly to our owners and franchisees.
What do you recommend when it comes to assessing the real costs and benefits of all channels that can help in finalising strategies for maximising profitability in marketing and distribution?
Be completely honest regarding rates. For merchant models, count the difference between the net rates given to an intermediary and the actual selling price, and of course commissions and booking fees. I am sure most hotels would be quite shocked if they were to add up what they are paying in commissions and margins as compared to what they spend on marketing themselves directly. Inversely for direct channels, take into account all the marketing, people and technology costs. For any supplier that has scale, I’d venture to say that the cost of driving direct business is far less than the cost of business from intermediaries.
Hotel companies are opening avenues for guests to leave comments and ratings on their sites. If on one hand, hotels are ready to form deeper relationships with their customers, on the other, it is being pointed out that consumers are savvy enough to know that not all social commerce content is equal. What do you make of the challenges around how best to generate this social content to give a balanced picture of your business that consumers will trust?
It is important for guests to know that comments are being made by guests of the hotel – in other words that the comments are relevant in that instance. Comments from friends are obviously more relevant than strangers’ comments, which make the integration of sites such as Facebook and Trip Advisor an interesting proposition.
However, unless one’s friends travel frequently, the instances of your 130 Facebook friends having stayed at a particular hotel may be rare. For now, simply having qualified reviews is definitely important.
Where do you see Google placing itself from the hotel’s industry perspective? How do you assess your reliance on Google to shape up?
It’s great that Google is entering the online travel shopping arena; this has the potential to alter the dynamics of how people shop for hotel rooms. And we on the supplier side of the industry need to embrace the way customers are shopping and engage and market to attract those customers directly to our brand websites which is what Google Hotel Finder can do. As suppliers we have to accept that there is always a cost in competing for customers and I would certainly rather put my money in a medium that drives customers directly.
Search queries and transactions are rising via mobile for hotels. What role is mobile playing today – is it predominantly for purchases driven by serendipity and spontaneity?
There is no doubt that mobile will be major for travel, especially last-minute travel. The industry trend is that mobile is used on the day, for the day and with many consumers that are near a hotel. Major players in the economy segment, like Wyndham Hotel Group, are uniquely positioned to capitalise on the mobile revolution given the last minute decision making that is prevalent in this sector.
Established OTAs acknowledge that they are learning to better monetise their site traffic and deliver improved marketing channels for their partners. How do you assess the situation?
The OTAs business is selling hotels online – and they have done a great job of figuring out how to monetise the customers on their site. Whilst these opportunities can drive results, it’s unclear how much of this business is incremental. I do believe that historically, suppliers have not done enough to equal the OTAs efforts in leveraging their scale, continued R&D, etc. I believe suppliers recognise they need to make this a major focus and are doing just that.
The industry is witnessing a major change in the interplay between marketing and e-commerce. How do you assess the situation at this juncture?
Facebook purchasing and coupon flash sales are just a small fraction of online sales and I’m not sure that they will ever have a significant impact. Again it’s unclear whether flash sales generate incremental revenue and certainly some research I have seen recently suggests that even if they drive revenue, it doesn’t look like it’s profitable. With regards to customers going to Facebook to purchase hotel rooms – there is little evidence to suggest that is a meaningful trend. That said, there are a plethora of new opportunities available in the online space that must be evaluated and tested. To succeed, you can’t watch and learn – you must do and learn.