0:00
[MUSIC]
The first of these is undoubtedly reach.
By working with the right OTA, or
more probably the right portfolio of OTAs, a hotel can make itself available for
sale in markets that it could only dream of addressing on its own.
Here I'm not simply referring to just being listed on websites and
different geographical parts of the world.
But also being placed in front of supplementary market segments, and being
displayed on developing media channels such as mobile and interactive television.
All opportunities for exposure and sales that would be very difficult for
the hotel to address independently.
For example, an independent hotel here in France would realistically,
typically find it very difficult to sell itself in different foreign markets.
Perhaps it could justify the resources needed to develop a web presence in
English And maybe one other European language.
But without a significant marketing budget and
with limited market knowledge and marketing expertise,
in the online environment it would effectively have very low visibility and
thus would not be very likely to be booked by many foreign visitors.
By working with the appropriate OTA, this hotel would immediately be listed and
available for sale on that company's multiple web presences all over the world,
with its content translated into each customer's native language, and
localized to the market norms, and with traffic being driven by substantial
marketing budgets and expertise of the OTA.
1:40
Using the right portfolio of partners,
thus allows the hotel to massively increase the number and
diversity of geographical markets from which it realistically can get bookings.
Helping to boost occupancy.
Here for example, this chart from Expedia clearly shows the diversity of markets
that you could potentially address simply by being listed on their system.
However, it's not just all about geography.
Most OTAs also target multiple specific B to C markets with specialized products.
So for example, many have corporate booking websites
specifically targeting the business customer.
Or allow their users to dynamically package air and
hotel together to create their own customized packages.
Simply by being listed on the OTA.
Hotels can get themselves into these consideration sets.
Positioning themselves in front of customers that will be difficult or
impossible for them to access otherwise.
And thus potentially generating even more bookings.
Lastly, since most have origins as tech companies, the majority of
OTAs are at the cutting edge of consumer adoption of developing technologies.
The explosion in the sales of hotels rooms through mobile devices that we're seeing
at the moment is a great example of an area
that most hotels would be unlikely to be able profit from independently.
Even though they could theoretically develop and promote their own mobile app,
the customer acquisition cost challenge that we discussed earlier with high
development cost divided by a small but growing number of mobile reservations,
makes pursuing this opportunity infeasible for most properties or
small chains in the short run.
However, to cash in on the growing trend,
they can ensure that they're listed on the right OTAs.
Allowing themselves to get reservations from those that are booking through
mobile channels without any of the upfront or ongoing costs.
It's important to note that this reach benefit is as important for
hotel chains as it is for independents, although chains typically have more
technical and marketing resources as well as hopefully more budget.
Than independence.
Their pockets are not bottomless, thus we are seeing an increasing number of chains
strategically partnering with selective OTAs to attack particular markets.
Where booking volumes are initially at least forecast to be low.
Many are choosing to work with the dominant OTA, rather than translate and
localize content for themselves.
In effect, swapping an upfront capitol cost for
a commission-based transaction fee.
A typical example is Marriott, which uses Booking.com as a partner to power it's
websites in the Italian, Russian, Arabic, and Brazilian Portuguese languages.
In this way, it can attack and receive bookings from these high potential, but
as yet, low performing markets, with minimum cost, and little risk.
While at the same time, profiting from the technology, and
the marketing expertise of their OTA partner.
Peter O'ConnorProfessor of information systems, Director of the MBA in Hospitality Management
Nicolas GrafProfesseur
