European Hotel Online Distribution: Part One and Two

Part One: European Hotel Web sites
All hotels—from large hotel chains to small individual properties—have one thing in common: Their brand Web site is normally their lowest-cost distribution channel. Low cost isn’t the only benefit of this channel; brand Web sites also foster consumer confidence(e.g., through best-price guarantees) and build loyalty via customer retention programs.

But improved technology and the experience of users mean that hotel Web sites must now live up to higher standards. New development techniques—such as Ajax, which supports interactive animation—have emerged and are changing the game, in addition to easily implemented Web applications, and more sophisticated search engines and travel Web sites such as Expedia and Kayak.com.

Part Two: Managing European Hotel Online Intermediaries
Hotel chains and individual hotels alike cannot neglect the importance of online intermediaries, an essential component to maximizing revenue and market share. Online intermediaries contribute heavily to the development of the total European online travel market, accounting for about one third of Europe’s total online gross bookings and almost 45% of 2008’s market growth. Online travel agencies (OTAs) specializing in hotel distribution have pulled ahead of the pack and remain the growth leaders among European OTAs.

Despite the continued increase in supplier direct Web site bookings, collaborations with online intermediaries are – and will remain – essential for a hotel’s competitive online performance. The most fundamental benefit of collaborating with online travel agencies is undoubtedly incremental hotel sales, but OTAs also provide improved global reach to a huge traveler audience, supported by refined usability and advanced functionality, as well as sophisticated technological features ranging from videos to avatars. The “billboard effect,” when consumers shop on OTAs but book on hotel Web sites, should be considered an additional benefit for hoteliers.

This is the second part of a two-part report and focuses on providing hoteliers with more insight on how to reap the benefits of partnerships with online travel agencies. The analysis illustrates that an optimal intermediary distribution strategy requires a profitable business model (OTA channels for targeted consumer groups) and efficient technologies and connectivity.

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