Lodging Magazine

Home Sweet Home
Getting Your Internet Shoppers to Buy Directly on Your Homepage
(Part II of Two-Part Series)

January, 2003

By Robyn Taylor Parets

The number of online hotel bookings continues to rise. In fact, hotel reservations booked on the Internet were expected to reach $3.8 billion by the end of 2002, according to Forrester Research. With the growing amount of travelers turning to the Internet, hotels are doing their best to drive these shoppers directly to their branded Web sites. This way they can capture more bookings and augment revenues. Of course, hotels don’t want to eliminate third-party shopping sites like Expedia or Travelocity because scores of travelers use these sites to reserve room nights. But, if guests book this way, the online travel company links to the GDS system, which connects to the hotel’s central reservations system to book the room nights. The online booking company gets a cut of the pie, the GDS gets a percentage fee, and so does the central reservation system. For a $300 two-night booking through Expedia, for example, the hotel will likely pay out 12% or more of that cost to the third parties involved in the reservation. If that reservation, however, was booked via the hotel’s own Web site, the property retains the entire fee, says Fred Malek, CEO of Thayer Interactive Group, an Internet marketing firm which helps hotels maximize online revenues.

“Obviously, you don’t want to cut the GDS out, but the more people book on your hotel Web site, the more incremental revenue you get,” says Malek. One way to prompt travelers to book rooms on a hotel site versus via an Internet wholesaler or travel portal (which often sell distressed room nights at rock-bottom prices), is to offer the best prices, according to hotel consultant Renie Cavallari. “Many hotels have allowed the Internet to take control of their hotel pricing strategies and it must be the other way around for them to succeed,” says Cavallari. To this end, several hotel companies, including Starwood Hotels & Resorts (www.starwood.com), Ian Schrager Hotels (www.IanSchragerHotels.com), and Homestead Studio Suites (www.homesteadhotels.com) recently launched online programs vowing to beat any other published rates on the Internet. If a traveler books a stay at Homestead, for example, and finds a lower rate for the same night elsewhere on the Web, the company will discount the competing rate by ten percent.

“Our ‘Lowest Internet Price Guarantee’ says travelers can trust the rates on our branded site without hesitation or shopping around,” says Homestead CEO Gary DeLapp, in a news announcement.

Likewise, Starwood also pledges that if travelers find lower rates for Starwood hotels in the US or Canada through any online distributor, Starwood will offer an additional ten percent off that rate. “In the past, Starwood’s Web sites have not always had rates that consumers could trust. Travelers could, on occasion, find lower rates available through other channels. Starwood's ‘Best Rates Guarantee’ will ensure integrity on Starwood’s branded Web sites and provide our guests assurances that the rates they find on our Web sites are the best published rates available anywhere,” says Starwood’s COO Robert Cotter.

Ian Schrager Hotels, which launched its Web site in August, worked with TabletBookings to create a customized reservation area of the site. Visitors find the lowest Web-only rates on the site and those who register can also be notified via e-mail of exclusive Web offers and packages.

Offering the lowest rates is certainly a great way to hook travelers, but hotels also need to make their booking capabilities easy to use and highly functional. That’s why many hotels have teamed up with seasoned reservation companies -- like Pegasus Solutions, HubX, and SynXis -- to make the booking process seamless.

Pegasus Solutions’ NetBooker online booking engine, for example, is used by several hotel companies, including Loews Hotels, Omni Hotels, Red Roof Inns, Preferred Hotels, Microtel, Motel 6, and Best Western International.

“We offer a flexible tool,” says Kevin Short, Pegasus’ senior vp-reservation services.

Pegasus also provides NetBooker users with reports so that they can compare how many reservations were booked through their site with Pegasus’ ultra direct online distribution network. This network connects major hotel shopping sites, like Orbitz, Expedia, and Travelocity, directly into CRS’ to send rate and availability information from ultra direct hotels back to the online intermediary and the traveler.

Interactive Sites, an Internet marketing agency for hotels, is also helping hotels maximize reservations on their branded sites by teaming up with HubX, a provider of online business solutions. The two firms are marketing HubX’ real-time reservation services that can be integrated with a property’s PMS. And, E-site Marketing, a company that helps hotels leverage their online presences, is yet another company helping hotels capture more business online, as well as monitor results. E-Site recently partnered with SynXis to offer its clients the ability to track and view reservations booked on the hotel’s Web site. Hotels using the technology, for example, can track the customer from the search engine (where he initially found the hotel URL), to the hotel Web site, to the booking engine, to the actual booking. This provides hotels with valuable information about the impact of the Web site marketing program and resulting revenues, says E-site CEO Felix Laboy.