Yet another confirmation on why the internet is the only growth channel in 2009-10.
The latest eTRAK Q1 2009 report on hotel bookings by channel confirms yet again that today the online channel is the only growth channel in hospitality.
The increase in Internet bookings comes at the expense of the GDS and Voice Channels, both of which have been in decline for many years now.
Here are some of HeBS’ findings based on the latest eTRAK benchmark report, surveys and industry data from PhoCusWright, ARC and HeBS’ own research.
GDS Channel Is in Steady Decline:
· GDS hotel bookings via the CRS of the top 30 hotel brands declined by 4.5% Q1 2009 vs. Q1 2008, and constitute 24.8% of total CRS booking in Q1 2009 (eTRAK).
· GDS reservations for the top 30 hotel brands declined by 2.3% for the full 2008 vs. 2007 (eTRAK). Back in 2006, GDS CRS reservations constituted 31.3% of total CRS bookings for the top 30 brands. GDS share has decreased to 24.8% in Q1 2009.
· Travel Agency Share from Total Travel Market in the U.S. dropped from 41% in 2006 to 33% in 2009 (PhoCusWright).
· U.S. Travel Agency Locations have been decreasing at an average rate of 4% every year and their number has declined from over 35,000 in 1995 to less than 17,500 in January 2009 (ARC, HeBS).
The Voice Channel Contribution Is Decreasing:
· Voice channel hotel bookings via the CRS of the top 30 hotel brands declined by 1.9% in Q1 2009 vs. Q1 2008, and constitute 24.1% of total CRS booking in Q1 2009 (eTRAK).
· Voice reservations declined by 2.8% for the full 2008 vs. 2007 (eTRAK).
· The Voice Channel is in decline for 6th consecutive year (HeBS). Back in 2006, the voice reservations constituted 31.3% of total CRS bookings for the top 30 brands. Voice Reservation share has decreased to 24.1% in Q1 2009.
The Shift from Offline to Online Channel is Permanent:
· 51.1% of overall CRS bookings for the top 30 hotel brands come from the online channel, which is an increase of 6.3% Q1 2009 vs. Q1 2008 (eTRAK).
· 60% of leisure and 40% of business travel will be booked online in the U.S. this year (PhoCusWright).
· 45% of hotel bookings in 2009 will be via the Internet (direct + indirect online channels) (HeBS).
Direct vs. Indirect Online Channel Dynamics Follow the Economy:
Typical of economic times such as the present, when everybody is shopping around and hoteliers are more susceptible to discounting and working with the OTAs, we are witnessing a slight shift from the direct online to the indirect online channel in Q1 2009:
· In Q1 2009, 74% of the online bookings come from the direct online channel (i.e. the major hotel brands own websites), while 26% come from the indirect online channel (the Online Travel Agencies-OTAs) (eTRAK).
· There is a slight increase of OTA contribution, compared to Q1 2008, when 76.8% of the online bookings come from the direct online channel, while 23.2% came from the OTAs.
· In 2008, as a whole the direct channel contributed to 75.2% of CRS Internet bookings vs. 76% for 2007, mainly due to a disastrous for the travel industry Q4, 2008.
Here is a summary of the eTRAK most recent reports on hotel bookings by channel:
The Bottom Line: Focus on the Direct Online Channel
The growth of the Internet channel for the top 30 hotel brands is not an isolated phenomenon. HeBS reports steady increases in direct online channel bookings across its hotel client portfolio.
Even in dire economic times like these, characterized by sharp declines in travel demand, a comprehensive ROI-centric Internet marketing strategy can help hoteliers continue to generate much needed incremental revenues and out-smart their competition.
Hoteliers need a robust Direct Online Channel Strategy, accompanied by adequate marketing funds to be able to take advantage of the steady growth in the Internet channel and shift from offline to online bookings in hospitality due to declining GDS and voice channels. Hoteliers must carefully employ ROI-centric initiatives, including website redesign, website optimization and SEO, paid search, email marketing, online display advertising and proven social media initiatives.
Even in this economy, you should not decrease or eliminate your hotel Internet marketing budget. The Internet, and especially the direct online channel, is the only growth channel for hoteliers and the only “light at the end of the tunnel” in this environment. Even in these difficult times we see “Return on ad spend” (ROAS) as high as 3500% from Internet marketing campaigns we run for our clients.
Market researchers provide various projections for the growth of the online travel channel in 2009 and 2010, from a small decline as reported by a travel research company, to growth rates as high as 10.5% in 2009 and 11% in 2010 as projected by eMarketer.
These optimistic projections are supported by the leading e-Commerce research company, which declares that overall U.S. online sales will increase by 11% in 2009 and by another 9% in 2010. HeBS believes that online travel, having always been the most dynamic and fast-growing segment of the overall online marketplace, will experience similar growth rates.
Whatever the case might be, the online travel channel, and especially the direct online channel, provides hoteliers with the only viable option for any growth during this recession.