Maximizing online bookings through a multi-channel-strategy

Abstract

Purpose Hotel managers are being challenged by the increasing multitude of distribution and sales channels. Online travel agencies (OTAs) in particular generate a great deal of uncertainty: Which are the best ones? Which ones offer the best conditions? How many channels are optimal for my hotel? How can I evaluate costs versus benefits? These and other questions concerning the optimal online distribution channel strategy have produced different reactions in practice. The aim of this paper is to challenge the need for an over-optimization of channel strategy by proposing that the consumer, at the end, deals with a network of information presented on one networked environment, including the Web. Hence, the network effect of the numerous online platforms is what drives consumer choice and, finally, bookings. Design/methodology/approach A series of multiple regressions with representative samples of hotels in Switzerland from the years 2009, 2010, 2011 and 2012 was performed to estimate the importance of the number of platforms against other independent variables. Additionally, further multiple regressions with samples from the years 2011 and 2012 using the most important platforms (first-tier channels) shows again that the number of platforms is more important. Findings The analyses show that the estimated number of online bookings by the respondents in the hotels is a result of the number of channels, not the type of channel. This is particularly true for non-categorized establishments and one- and two-star hotels. The analyses do not confirm the billboard effect, according to which particular platforms (first-tier channels) increase the probability of bookings. Thus, the survival strategy is to maximize share of shelf and to build on interdependencies and network effects. Research limitations/implications The study looks only at online bookings. Additional research into the connection between online and offline channels, particularly from the viewpoint of the consumer, will provide further insights. The study looks at the booking volume per channel, not the monetary sales volume or the profit. A study that quantifies not only the volume of bookings but also the total profit or the contribution to profit per channel could quantify the benefits of the multi-channel strategy. Originality/value The multiple online channel strategy seems to be the more effective approach to maximizing bookings online, regardless of the platforms chosen. Results of the study challenge the current opinion among practitioners that the multitude of distribution channels forces them to choose among single online channels and, therefore, drives the search for criteria to assess these channels or even to disregard them. The consistent results across 2009-2012 show that even in the turbulent phase of the advent of OTAs in the travel industry, hotels can adopt a winning strategy. Finally, the results suggest that the intermediation of online distribution of hotel beds has approached the condition of perfect competition, causing the OTA business model to be cannibalized.

Online branding: Development of hotel branding through interactivity theory

“…Almost every lodging firm now have online presence by locating their room inventory and hotel services for travelers to access through their commercial websites (Wen, 2012) or third party websites. Because of the development of the Internet as a marketing channel, the hotel sector has intended to maintain the same pace of technology adoption as consumers (Beritelli & Schegg, 2016). The Internet as a channel for the circulation of hotel services has altered the context of transaction and product selection for travelers as well as the lodging sector (Toh, DeKay, & Raven, 2011).…”

Internetization of selling hotel rooms in metropolitan area of Łódź (Poland)

“…Direct online bookings should be understood as real-time bookings via the hotels' own websites. On the other hand, indirect online distribution channels include online travel agents (merchant, agency and opaque model), destination management organisations (local, regional and national), and global distribution systems (Beritelli, Schegg, 2016;Lee et al, 2013). Moreover, the assumption has been made that bookings made through reservation systems provided by hotel chains under franchise agreements should also be investigated as direct sales.…”

“…Thus, a lot of small and medium-sized hotel enterprises have started losing control over online distribution. Today, internetization, seen as a significant effect of globalization, has become challenging for investigated enterprises (Beritelli, Schegg, 2016).…”

“…Multi-channel strategies might allow them to maximize hotels' revenues. Additionally, cooperation with online travel agents has a significant advertising aspect, as hotels' offers are displayed on intermediaries' websites (Beritelli, Schegg, 2016).…”

Comparative evaluation study of the websites of China-based and international luxury hotels

“…However, hoteliers have to face the challenge of controlling the multitude of distribution and sales channels (Dev & O'Connor, 2015). Direct channels (e.g., hotel website) provide hoteliers a direct control over lowering transaction costs compared with other indirect channels (e.g., OTAs) (Beritelli & Schegg, 2016).…”