BERLIN—Representatives from the hotel industry, an online travel agency and Google sat together to discuss the rapidly evolving hotel room distribution landscape during a panel last week at the International Hotel Investment Forum.
All agreed consumers are changing the way they book hotel rooms and that, as an increasing number of travelers move their searches online, the three parties are focused on getting larger pieces of the pie.
“We are not naïve enough to think that people will only come to a direct site,” said Chuck Sullivan, senior VP of global online services for Hilton Worldwide. “We know that consumers are going be looking around. Consumers are not monogamous today; they tend to sleep around a little bit.”
Dave Pavelko worked in the hotel industry overseeing distribution for major brands before becoming head of Google Travel. He said the distribution landscape has been changing since the turn of the century, but today it is headed to the next level.
“I feel like this time it’s going to go a little deeper,” he said. “There’s obviously a cost element to it, but there’s also a control element to it as it relates to the customer and the ability to communicate with that customer directly. A lot of the public stuff is really around price and cost, but in the end—with that being equal and the different groups able to come to terms on what those deals are—it also comes back to customer control and the ability to communicate with that customer and have that ongoing relationship with that customer.”
Changing consumer behavior
Each of the panelists discussed their strategy to get travelers to view rates and availability on their site. For Hilton Worldwide, the ultimate goal is to get the traveler to book. Expedia would be happy if the traveler booked, but also is comfortable sending the traveler to the brand’s website, said Cyril Ranque, senior VP of lodging for Expedia. For Google, the goal for now is to offer the consumer the most information possible and send them to one of its advertising partners to book.
Hilton’s Sullivan offered three reasons why travelers should use a brand’s proprietary website. First, convenience: “By having 10 brands and a broad portfolio, we know at Hilton Worldwide that if somebody comes to our site they can find just about any hotel they’re looking for,” he said. Second, Sullivan said travelers will always get the best price at Hilton.com. And third, Sullivan said Hilton.com has a hotel in nearly every location.
Ranque said hoteliers should partner with Expedia not only because they will help fill their hotels, but because “we actually bring direct customers also to the hotel’s website,” he said.
Google’s new initiative, dubbed Hotel Price Ads, is currently centered on consumer behavior, Pavelko said: “We look at it more as what consumer behavior is driving and where those consumers are. Wherever the consumer is spending time, we want to make sure we’re helping answer those questions.”
Panelists agreed mobile is the future of hotel distribution and offered data to back it up.
Sullivan said the number of Hilton hotel rooms booked on a mobile device has jumped from 5,000 to 150,000. “It’s gone from being interesting to being really interesting to being measured to now it truly is a channel for us,” he said.
Ranque said three years ago mobile was a great information channel, but not a transaction channel. The iPhone platform, he said, changed that. “The forecasts are now showing that mobile will overtake PC very, very fast,” he said. “Roughly 5% of bookings in North America on hotels.com come from a mobile device. So it’s becoming a significant channel.”
Google will play a big part in mobile distribution. “Our click-to-call product has seen a lot of success on the hotel side,” Pavelko said. “The consumers decide how they want to book; we’re just making it easier for them to decide how they want to make that transaction.”
Ranque said Expedia is working hard to remove any friction that exists with hotel partners and improve its relationship with consumers.
“We want to remove all the reasons consumers would not want to search for travel and book travel on Expedia and all the reasons why suppliers wouldn’t prefer to distribute their hotels with us,” he said. “It’s a lot of work to get to that point, but this is the philosophy: to have a frictionless marketplace where suppliers can have access to our global demand and consumers find the best product at the best price.”
Google’s pricing and availability business model, still in its infancy, will evolve. “Confidentially, we have certain agreements in place with current partners that are providing us with pricing and availability. What that eventually morphs into will probably change over time,” Pavelko said.
“We have no intention of getting into the transaction game,” he assured. “Our role is to prequalify the consumer, give them what they’re looking for and then send them over to our advertising partners.”