Étiquette : Internet reservations

Catégories
Distribution networks Products and activities

The challenges of the online tours and activities market

reservation_activites_en_ligne

Nowadays, tourists reserve flights and hotel rooms online without a second thought. However, a trip involves much more than these two elements, as it also includes everything you do once you reach your destination. The market for tours and activities is huge: according to studies cited by business intelligence platform Skift, overall spending on such activities reaches somewhere between US$100 and $200 billion. In terms of online penetration, however, the share of tours and activities booked online is much smaller than that of hotels and flights.

The primary reasons behind this low online sales volume are the following:

  • The huge tours and activities market is fragmented.
  • Few tours and activities providers have adopted technology.
  • Major players in the distribution network have, until now, paid little attention to the sector.

Changing times

Things are starting to change. TripAdvisor bought Viator—the largest player in this market—in 2014, Kayak and Expedia now offer online reservations for tours and activities, and Airbnb is getting into the act by offering the option of purchasing activities provided by individuals. Booking is also starting to offer the service. At the same time, sites that encourage tours and activities businesses to upload their inventory and the use of geolocation enable travellers to find nearby activities without a middleman. Startups are appearing; numerous sites and applications offer to digitally connect consumers and suppliers of activities. In addition, some tour operators are now promoting their products to both tourists and locals. In other words, a small revolution is brewing. However, the realities facing most of these stakeholders bring their own set of challenges.

reservation_activites_en_ligne_airbnb

Source: Airbnb

For more information, see Activités touristiques : la distribution en ligne s’organise.

Challenge #1: A collection of heterogeneous sectors

Tours and activities do not make up a distinct industry sector. In fact, this umbrella term covers a number of different sectors. The table below summarizes this complex market.

board_activities_booked_online

Source: PhoCusWright, 2016

All the businesses supplying the activities in the preceding table have very different cultures and modes of operation. On many Websites, these sectors are randomly thrown together in a section called « Things to do. » The tours and activities market is very fragmented; TripAdvisor alone lists over 650,000 attractions and experiences.

Flights, hotel rooms and car rentals are presented in such a way that consumers can make comparisons and select products to suit their needs. This is not the case for tours and activities, as each individual product has its own special features.

Challenge #2: The disconnect between online presence and traveller behaviour

There is a very « long tail » of small suppliers: the sector has a few major companies and thousands of little ones. There is a world of difference between an amusement park and an agri-tourism business. The majority of suppliers generate modest revenues and therefore cannot afford to devote major sums to online marketing and merchandising. According to a PhoCusWright study, 82% of all reservations are made offline (by phone, email, fax). For its part, Skift estimates that four out of ten tour operators do not sell their products online and many do not even have a Website. In addition to being heterogeneous, the tours and activities sector does not have an extensive online presence, making it difficult for consumers to make comparisons and then select options.

The fact that few businesses offering tours and activities have adopted new technology poses a real challenge, given that consumers increasingly rely on mobile devices to find activities when travelling. In fact, many travellers look for things to do in the surrounding area and seek information about the day’s events (see our articles on planning and reservation behaviours). While they do some general research on tours and activities before travelling, they do not make specific plans. Decisions and purchases are primarily made at the destination, which is why it is important to have an online presence, be listed on popular sites and, ideally, offer the option of quick and simple reservations. According to Philippe Fabry, writing on the etourisme.info blog, activity organizers must start making it easy for clients to reserve tours and activities while they are travelling.

An opportunity for destination management organizations

Before it’s too late and major players take over the market, as they have for hotel bookings, destination management organizations still have an opportunity to care out a place for themselves in the online tours and activities market. This could be a profitable sphere of activity and some organizations are giving it a try. For example, the Lyon Tourist Office and Convention Bureau has added a module to its Website that enables both tourists and residents to reserve city tours and activities (explore Lyon by boat, on foot, in a double-decker bus or on a Segway) and excursions to the Beaujolais region.

reservation_visites_guidees_en_ligne_lyon

Source: Lyon Tourism and Conventions

In many cases, the process must begin by offering training to tourism businesses and providing support to help them make their products available online. Destinations that already pool tourist information about service providers are ahead of the curve.

The online sale of tours and activities is still a largely untapped market. However, its potential is so great that it will be developed, one way or another.

Image on first page: Pexels.com

 

Catégories
Accommodation etourism and technology Marketing @en

The Troubling Trend of Increasing ‘Web Marketing Ineptitude’ in Hospitality… by Max Starkov

The Québec Tourism Intelligence Network is pleased to present some highly relevant thoughts about online marketing of hotels, written by special collaborator M. Starkov, consultant in Hospitality eBusiness Strategies.

Throughout our nearly 15 years of hotel Internet marketing experience, we have been consistently concerned about the increasing level of disparity between savvy Internet/Mobile marketers in hospitality and travel, and the Internet/Mobile Marketing-inept players in the industry.With the advent of social media in recent years, Web 2.0 technologies and the mobile Web, this disparity has accelerated dramatically.

On one side there are the extremely Web-savvy:

  • Online travel agencies like Expedia, Travelocity, etc.
  • Most major hotel brands’ e-commerce departments
  • Airlines
  • Some e-commerce departments at smaller and mid-size hotel and resort chains
  • Some very bright individuals at the marketing departments of full service hotels, resorts and casinos

On the other side there is everybody else, which unfortunately means the majority of hospitality executives and sales and marketing professionals.
HeBS defines “Web Marketing Ineptitude” as the lack of hands-on experience in Internet marketing and all of its formats: website re-designs, SEO optimizations, search marketing, email marketing, strategic linking, banner advertising and online sponsorships, social media and Web 2.0 and more recently, mobile marketing. In addition, this ineptitude also indicates a lack of understanding of best practices and latest trends in the direct online channel.

In the 1990s, it was “normal” that only a few hospitality and travel marketers were proficient in the online channel.  Less than 3% of travel reservations in the U.S. were booked online back in 1999. In the 2000s (in 2001, online travel bookings reached 5.4% of all travel reservations in the U.S.), hospitality marketers and the major hotel brands began to pay closer attention to the Internet channel. In the years that followed, Internet travel adoption increased dramatically and in 2009 alone over 55% of all travel reservations in the U.S. will be online (45% of all hotel reservations) to the tune of a staggering $116.1 billion (eMarketer).

Yet, to our dismay, over the past 15 years the level of Internet marketing expertise in the hospitality industry has not kept up with this remarkable growth. On the contrary, we are witnessing whole new generations of hospitality executives and marketing professionals who are unfamiliar with Internet marketing in general as well as best practices and trends in the direct online channel.

This problem has been exacerbated by a) the social media and Web 2.0 phenomena, and b) mobile marketing. Both of these new marketing and distribution channels introduced an entirely new level of complexity and skill set requirements, as well as new best practices and trends.

  • Social Media have changed how customers plan and purchase travel, how customers access information, and how customers perceive the credibility of information. How can hoteliers create/monitor/take advantage of the social media “chatter” around the hotel, target receptive audiences, and ultimately stimulate hotel website visits, interactions and bookings? What type of Web 2.0 and interactive features and functionality do you need on the hotel website?
  • Mobile Web is expected to surpass the traditional Web within the next five years. The promise of “immediate, anywhere and anytime” Internet access, instant information and transaction capabilities, location-based services and personalization are some of the key factors for the “explosion” of the mobile Web. Hotel guests–past, current and potential–are increasingly becoming mobile-ready and hoteliers have to respond adequately to this growing demand for mobile services. This is the reason why hoteliers and travel marketers need to have robust mobile Web initiatives in place, including mobile brand websites, mobile apps, m-CRM and mobile marketing.

Why Is There a Growing Web Marketing Ineptitude in the Industry?

There are many reasons for this “Web Marketing Ineptitude” among the ranks, but here are some of the most important:

Franchised Properties:

  • Many major brands control all Internet marketing initiatives at the corporate level, including property-level initiatives, thus depriving staff at the property from any meaningful experience in Internet marketing.
  • We have seen a trend among small/mid-size chains to establish small but vital e‑commerce departments. In many cases, these companies outsource whatever online marketing they do to outside vendors. Here again, when outsourcing, they make a crucial mistake by not demanding professional development to be part of the Internet marketing vendor’s responsibilities. This results in Internet marketing expertise not being disseminated to the properties in the process.

Independent Hotels and Resorts:

  • The biggest concentration of Internet marketing knowledge is at this level.
  • Many big full-service hotels and resorts have some form of in-house Internet expertise. However, due to staff turnover and constantly decreasing budgets, these properties tend to have a very spotty Internet expertise retention rate.
  • Smaller hotels and resorts are most vulnerable due to limited budgets and difficulties with hiring and retaining employees with expert knowledge.

Destination Marketing Organizations (DMOs) and Convention and Visitor Bureaus (CVBs):

  • These organizations boast some of the brightest Internet marketing stars and some of the most inept marketers.
  • In many cases among DMOs and CVBs, ignoring Internet marketing best practices is not even a matter of budget size, but a result of inertia and commitment to traditional advertising formats.
  • The government or quasi -government nature of CVBs and tourism offices does not help with the hiring and retention of Internet expertise.

So What Is the Verdict?

HeBS believes there are different levels of Web Marketing Ineptitude in the industry regarding three important marketing media: Traditional Web, Social Media/Web 2.0 and Mobile Web. Here are our estimates of the ineptitude rates in each of these media:

Internet Marketing/Traditional Web

  • Nearly 15 years of existence of the traditional Web
  • Internet Marketing Ineptitude rate in hospitality:  65%

Web 2.0/Social Media Marketing

  • Nearly 5 years of existence of social media
  • Web 2.0/Social Media Marketing Ineptitude rate in hospitality:  90%

Mobile Marketing/Mobile Web

  • Nearly 10 years of existence of Mobile Web but in reality, the Mobile Web in the U.S. exploded with the introduction of the first iPhone in June 2007.
  • Mobile Marketing Ineptitude rate in hospitality:  97%

Conclusion

Hoteliers should strive to gain a crystal-clear understanding of what the best practices and latest trends are in hospitality Internet marketing: what works, what doesn’t, and why. Hoteliers should recognize that they do not have all the answers in-house and that there are thought leaders and other proven industry experts who can help them and their property stay competitive in these economic times, preserve and increase market share, and generate the highest website revenues and ROIs.

Hoteliers should take a hard look at how Best Industry Practices are being utilized by their corporate offices or major brands, as well as by the hotel’s Internet marketing vendors. Almost 15 years after the first online hotel booking, best practices have been established in practically every aspect of hotel Internet marketing. Hoteliers should not allow their Internet marketing vendors to “learn the business on the hotel’s dime.”

The prospect of professional development should become the main criterion when choosing an Internet marketing vendor.  Hoteliers should hire experts who are able and willing to teach the hotel and staff best practices and keep the hotel appraised of the latest direct online channel trends.

Hoteliers should work only with Internet marketing experts who can help them acquire new core competencies and adopt best industry practices in the direct online channel. 

They should provide crucial professional development as well as guide the hotel’s direct Internet marketing strategies, online brand building strategies, e-CRM, website re-design and SEO optimization, search and email marketing, social media and mobile marketing initiatives.

Catégories
etourism and technology Management Marketing @en

Web marketing for SMEs

You may think it’s impossible to increase your company’s Internet effectiveness with a marketing budget of only $3,000, but a variety of low‑cost strategies exist, whether you need to enhance your Web presence or conduct an email campaign. According to Merrill Lynch, over 39% of all travel‑related transactions will be conducted online by 2007. Many hotels already book over half their rooms online. For other businesses, embracing the World Wide Web is more difficult and takes longer to produce results.

Start with a Website

The first basic principle is that no business is ever too small for a website. Many web design tools do not even require specialized computer knowledge. This accessibility is just one reason that the number of online blogs has mushroomed in the last year (over 100 million).

However, the best solution is to call on the services of a web design firm, who will be able to produce professionally looking content that delivers the desired result. By the way, not all site design techniques are created equal. It is crucial that the selected supplier be well-versed in tourism marketing. On average, a small inn would need to set aside a budget of $2,000 to $4,000 for the design and creation of a website.

Search engine optimization

If a site is well designed, it will be easily found by search engines. However, there are many strategies for increasing site traffic. The technique of search engine optimization can be very effective, but it may be too expensive for organizations with limited budgets.

Another, less expensive, way to increase visibility is to get other sites to include links to yours. Link popularity is an important criterion used by search engines like Google and Yahoo when ranking sites in search results. Incoming links to a site are interpreted as a « vote of confidence » by search engines and are considered in placement rankings. In a Google search using the same terms, this can make the difference between appearing on page 1 or page 10. Regardless of the strategy used, time is also an important factor. Often, the longer a site has been online, the more success it enjoys with search engines.

Develop networking opportunities

One does not need an enormous marketing budget to build online business connections, simply some time. Here are some strategies for increasing the number of sites with links to yours:

  • Explore and identify the main points of contact with potential customers. Place a link to your organization on sites containing some tourism-related content such as your local business development centre, a directory of small hotels and inns, a tourist attraction in your region, a snowmobile club, your regional tourism association, etc.
  • Create links on sites frequented by potential customers, even if they are not exactly travel-related (e.g., a bird club, wedding planner, chamber of commerce, etc.).
  • Target only high-quality sites relevant to both your product and your clientele.
  • Ensure your website address is clearly visible in all your communication tools, especially your email signature.

One way to assess the performance of your referencing strategy and the true contribution of your business partners, in terms of incoming links, is through tracking tools such as Alexa. This site instantly supplies very pertinent data on any website, completely free of charge. As an example, we used Alexa to analyze the site for Auberge des Falaises in Charlevoix (Illustration 1). Although not an exact science, Alexa produces statistics like traffic generated, number of pages visited, percentage increase in the past three months, etc. If a site generates enough traffic, one can also get graphs illustrating the breakdown of visitors and visits during a specified time period.

Illustration 1

Alexa1

The Related Links section in particular contains highly relevant information to help you better understand the influence of other sites in relation to your organization. Alexa draws up a list of the sites that send visitors to your site (Illustration 2). This data enables you to quickly see which sites send the most visitors and their traffic ranking, whether you are familiar with these sites or unaware of their existence.

Illustration 2

Alexa2

Finally, it is interesting to find out where else your visitors browse. If you have a lot of traffic but very few transactions, this information will give you a better idea of where your lost customers are going. You will also find out more about your potential customers’ interests. In our example, the most popular site among browsers of the Auberge des Falaises site was that of the Corporation du parc régional du mont Grand-Fonds (Illustration 3).

Illustration 3

Alexa3

Convert visitors into customers

The ultimate goal of attracting a visitor to one’s site is obviously to encourage this potential customer to make a reservation. However, according to search engine statistics, only 3.7% of visits to hotel websites translate into a sale. What usually makes the difference is the site’s professional appearance and usability.

The firm eMarketer has published a ranking of the best online marketing tactics, as well as the worst performing, according to a survey of tech-savvy online advertisers (Figure 1). Paid search ads and house email lists are the two methods that received the highest ranking. On the other hand, sending emails using rented lists was relatively ineffective.

Figure 1

CP_2007-02_marketing_web_grphq1

Email segmentation

If you operate a small business, segmenting your email lists may be an effective marketing strategy. Purchasing email lists from specialized distributors may well be beyond your means and this strategy offers mixed results at best, so the ideal solution is to build your own email list.

Segmenting your list means grouping current and potential customers together by what they have in common: interests, purchasing behaviour, demographics, etc. Compiling this data enables you to more effectively target your efforts, adapt your message and obtain a better response rate than you would with blanket email marketing initiatives. On average, specialized firms that conduct such email campaigns charge anywhere from $15 to $150 per month, depending on the size of your list.

Regardless of the company’s size, a well-segmented house email list can encourage customer loyalty and increase sales, convey information relevant to the needs of potential customers, and create a high-quality channel of communication with customers.

There are many tools and strategies available to business owners; one has only to adopt them and use them effectively. We live in an era when the role of technology is to further the development of small business, not hinder it. With a minimum of investment, some good advice, several hours of research, a little curiosity and a dash of resourcefulness, you will be well positioned to market your business like the big players.

Sources:
– eMarketer. « What Works, and What Doesn’t, in Online Marketing, » February 7, 2007.
– Goodman, Gail. « Email Segmentation for Small Businesses, » iMedia Connection, August 30, 2006.
– Husin, Linda. « Booking Is the Keyword, » ehotelier, November 29, 2006.
– Salerno, Neil. « So, You Have a New or Improved Hotel Web Site – Now What – How to Promote Your Web Site, » HotelOnline, November 2006.
– Salerno, Neil. « Production Benchmarks for Your Hotel’s Web Site, » HotelOnline, August 2006.
– Max Starkov and Jason Price. « Strategic Linking in Hospitality: Build a Robust Link Popularity, » HotelOnline, September 2006.

Catégories
etourism and technology Management

Price customization: bold… or deceptive?

Is it farfetched to believe that an online shopper’s browsing history could affect a travel site’s search results? It most certainly is not. Although the internet gives consumers a powerful tool for easy price comparisons, the downside is that it also enables retailers to collect detailed information about online shoppers’ spending habits. Thanks to the internet, businesses can now use a myriad of new approaches to efficiently adjust their pricing to increase profit margins.

Warning, you’re being tracked!

Thanks to browser technology, businesses now have the ability to store profiles of their customers’ buying habits, preferences, financial resources, and so on. Some companies judiciously use this type of strategic information to adjust their pricing according to a user’s profile.

According to Charles Leocha, a journalist for MSNBC.com, online travel agencies like Expedia use sophisticated software and browser cookies to analyze customers’ previous transactions. This means a consumer’s search results can vary according to the profile recorded. For example, if a particular consumer is shown more higher-priced fares – or fewer discounted fares – it could be because the system has identified him or her as a « good customer » who is more likely to purchase higher-priced items. In fact, this is a subtle way of preventing certain types of consumers from purchasing lower-priced items. It’s a little like banning well-heeled shoppers from dollar stores!

A concrete example

Although this type of marketing practice may seem like a paranoid example of Big Brother at work, it is nonetheless closer to the truth than to fiction. Online travel agencies may insist that such biases don’t exist, but our experience shows otherwise.

To test the truth of this hypothesis, we conducted a test with members of the Tourism Intelligence Network team. We ran a simple search on the Canadian Expedia site for a plane ticket from Montreal’s Dorval Airport to Paris’ Charles de Gaulle Airport, departing January 8, 2006, and returning a week later on the 15. However, our three searches, conducted simultaneously on three different workstations, produced three different results (see illustrations).

Profile 1

In the case of Profile 1, the lowest price offered was $800 for a connecting flight or one with 2 stops or more, with no direct flight option. As for Profile 2, the lowest price displayed was once again $800, but this time, we were offered a non-stop flight for $978. Finally, Profile 3 was offered a flight for the somewhat surprising price of $699, in other words, $101 less than the other two! And yet, it was the very same US Airways itinerary, with exactly the same departure times.

Profile 2

 

Profile 3

Read the fine print

Expedia’s policy with regard to using information collected from customers is as follows:

«Expedia.com collects certain technical information from your computer each time you request a page during a visit to Expedia.com. This information is collected from your computer’s Web browser to enhance your experience on our site…»

Few consumers are aware that retailers are able to manipulate online shoppers’ personal information to conduct what some experts call « psychological marketing. » The Annenberg Center at the University of Pennsylvania examined this phenomenon in a study entitled Open for Exploitation, released in June 2005.

The study’s results demonstrated the naiveté of US online consumers, 68% of whom believe price comparison sites like Expedia and Orbitz are required by law to display the lowest available price. Furthermore, 87% of the people surveyed said they strongly object to online retailers offering different prices for the same product, depending on the information gathered on customers’ shopping habits.

Somewhat questionable, but still legal. Use with care.

Price customization is therefore a very real practice and, contrary to popular opinion, it is entirely legal. As long as discrimination is not based on factors like race, religion, nationality or gender, there is no problem. Such approaches have been around for a long time, like discounts for students and seniors, for example.

This type of strategy is a legitimate business tool because it follows the trend of yield management and companies must satisfy the needs of shareholders. Although businesses that offer a flat price at all times may satisfy their clientele, they will definitely deprive themselves of a higher profit potential.

There’s nothing new about dynamic pricing. The major difference stems from the fact that the internet offers businesses a number of new ways to efficiently adjust their pricing. Since consumers are still not very aware of the incidence of price customization, businesses employing this strategy must be very careful not to cause dissatisfaction and erode customer loyalty.

The internet unquestionably offers businesses an opportunity to acquire highly relevant and strategic information about their customers and thereby target different market segments with different prices for the same product. Technical tools enable retailers to study not only the purchasing behaviour of online shoppers, but also their non-purchasing behaviour, in other words, their information searches.

In today’s context where the internet plays an increasingly important distribution role in relation to global distribution systems (GDS), more and more travel agencies are going online to find prices. This raises another question: what happens when travel agents consult the internet on behalf of their clientele? Could such agents be penalized due to their frequent use of sites that employ dynamic pricing?

Tourism-based businesses with the technological ability to do so must ask themselves a key question: is it profitable to take advantage of our clientele’s electronic profiles to implement dynamic pricing?

A double-edged sword

Retailers trying to determine their web strategies in relation to dynamic pricing must define these strategies with great care. For example, is it better to offer lower prices to customers who visit the site frequently, but rarely buy, or to those who are loyal and rarely shop elsewhere? It is a difficult question because, in fact, a business could decide to offer higher prices to loyal return customers, gambling that their loyalty will blind them somewhat and make them unlikely to shop elsewhere. Or the same business could just as easily adopt the opposite strategy, in other words, reward loyal customers by offering them the lowest prices possible.

The stakes are high because bad decisions could cause a business to lose many customers. On the other hand, automatically rejecting any type of dynamic pricing is also a way to miss out on some lucrative profits that would be difficult to make in other ways. To make an informed choice, retailers must look at all the parameters that could help guide them. In particular, they should not only consider the frequency of a customer’s site visits, but also the time of year, the type of products purchased, the profit margin on previous transactions, etc.

Possible backlash

Since the practice of dynamic pricing is in its infancy, businesses can still take advantage of the fact most consumers know nothing about it. However, in the longer term, organizations that rely too heavily on this approach could well pay the price.

One possible risk is an increase in the number of intermediaries created to fight back against businesses « guilty »of too much greed. Although the goal of such initiatives would be to denounce abusive practices, they could also, for example, rank travel websites according to their level of « honesty » and try to protect customers – or even steer them away – from businesses seen as too manipulative.

Although it is difficult to accurately assess the extent to which dynamic pricing is used in Quebec, we can safely assume that few organizations have adopted it as yet. Although companies are technically capable of amassing a ton of information about their online customers, very few do so in order to analyze it, while others simply do not have the resources needed to efficiently collect this type of information.

Managers will definitely have to weigh the pros and cons before blindly adopting dynamic pricing. However, there is an amazing wealth of strategic information that can be gleaned by analyzing online clicking behaviour. Without going so far as to customize pricing, businesses could benefit – at the very least – from learning more about their site visitors, whether they buy anything or not.

Sources:
– Elliott, Christopher. « A Low-Fare Browser? », National Geographic Traveler, July-August 2005.
– Feldman, Lauren, Joseph Turow and Kimberly Meltzer. « Open to Exploitation: American Shoppers Online and Offline », Annenberg Public Policy Center of the University of Pennsylvania, June 2005.
– Knowledge@Wharton. « What Consumers – and Retailers Should Know about Dynamic Pricing », Hotel News Resource [www.hotelnewsresource.com], December 2, 2005.
– Kontzer, Tony. « Online Shoppers Growing Wary Of Sharing Data », InformationWeek, August 15, 2005.
– Ramasastry, Anita. « Web Sites Change Prices Based on Customers’ Habits », CNN [www.cnn.com], June 24, 2005.
– Ramasastry, Anita. « Websites That Charge Different Customers Different Prices: Is Their ‘Price Customization’ Illegal? Should It Be? », FinLaw, June 20, 2005.