2004 the Year of Direct Online Distribution

Feature by Max Starkov and Jason Price Now is the time to fight back with a smart Direct-to-Consumer Internet Strategy This past year hoteliers have come to understand the pitfalls of overexposure on the intermediary channel, especially at the expense of one’s own direct online distribution strategy. There is a new realization among hoteliers that direct online distribution cuts costs, preserves brand and price integrity, attracts affluent customers and lessens the dependency on online discounters. Much was learned this past year and now its time to put some of these lessons into action. This article provides several action steps that in aggregate define one’s Direct Online Distribution strategy. Defining Direct Online Distribution in Hospitality Build a robust direct-to-consumer distribution strategy This year over 16% of all revenues in hospitality will be generated from the Internet (14% in 2003). Two years from now the Internet will contribute over 24% of all hotel bookings (CSFB). Forecasters predict that in 2005 Internet hotel bookings will surpass GDS bookings. An estimated 53%-54% of all Internet bookings in hospitality will be direct to consumer (i.e. via hotel-owned websites). Some pro-active hoteliers and several major brands (Marriott, Hilton, etc) already boast a Direct vs. Indirect online revenue ratio as high as 75:25. Some hoteliers already generate total revenues above 30% from the Internet and more than half of this distribution directly to consumers. So what is a Direct Online Distribution Strategy? Also called “Direct Sphere of Web Distribution Influence”, direct online distribution includes Internet distribution channels, business models, eMarketing programs, and Internet brand and exposure building techniques that all share the same collective goal – to draw in the Internet user to end up transacting on the hotel website. It is all about benefiting from the Internet as the greatest direct-to-consumer distribution channel and positioning your hotel at all possible “touch points” of interaction with the potential online customer. Here are some of the direct channels, models, programs and techniques that share the same commonality where the Internet user transacts directly on the hotel website: website optimization, search engine strategy, destination web strategy, email marketing, PPC marketing, link popularity, trust building techniques, eMarketing programs, etc. The direct-to-consumer distribution model should become the foundation, the centerpiece of any hotel company’s online distribution strategy. Why? First of all, the Internet is the ultimate “Direct Distribution Medium”. Second, in the offline world hoteliers are one of the best direct marketers and enjoy more direct sales (75%) than intermediary sales (25%). From wildly successful Dell and Amazon to supermarket upstart Fresh Direct, selling online directly to consumers is more than achievable. Some pro-active hoteliers and several major brands (Marriott, Hilton, etc) already boast a Direct vs. Indirect online revenue ratio as high as 3:1. Why is direct distribution important? It is the least expensive distribution channel and provides the hotel with long-term competitive advantages, and lessens dependence on intermediaries, discounters or traditional channels that we believe will be less relevant over time. Direct online distribution is not just a theoretical, “ideal scenario” approach. Many surveys show that online customers prefer dealing directly with travel suppliers, including hotels, when purchasing travel online. Recently, Forrester Research found that 69% of US leisure travelers prefer to buy online directly from a supplier while just 27% prefer to buy from intermediaries. This is yet another confirmation that hoteliers should focus more than ever on their direct-to-consumer online distribution and should work hard on regaining control of the Web from the online discounters and intermediaries. There is another reason why hoteliers should boost their own Internet presence. As a result of aggressive email marketing and Web-only promotions over the past several years, leisure and business travelers alike now firmly believe that all best travel deals are to be found not through a travel agent, or calling a toll-free number, but on the Web. Will online travelers find these travel deals on your hotel website or on the intermediary sites? With this encouragement, make 2004 the Year of Direct Online Distribution. To read the rest of this features click here About Hospitality eBusiness Strategies Hospitality eBusiness Strategies, Inc. (HeBS) www.hospitalityebusiness.com advises companies in the hospitality and travel verticals on their Internet Distribution and eMarketing strategies. HeBS specializes in helping hoteliers build their direct-to-consumer online distribution and eMarketing strategies and regain control of their online brand and price integrity from the online intermediaries. A diverse client portfolio of over 140 top tier major hotel brands, multinational hospitality corporations, hotel management and representation companies, independent, and privately owned properties, has sought and successfully taken advantage of their eBusiness expertise.