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Emerging channels spark fear of rising costs
December 17 2012

Much about how Google, Facebook, Apple and Amazon will operate is unknown, so hoteliers speaking prior to HSMAI’s inaugural Chief Digital Officer Executive Roundtable tended to fear the worst.

Highlights
  • “Google, Apple and Facebook—and anyone else who has a presence on the Internet—is going to be getting into travel in a big way,” said Cindy Estis Green of Kalibri Labs.
  • “I am surprised that Google and Facebook and Apple haven’t played yet,” said Shafiq Khan of Marriott International.
  • “To me, crossing the line would be taking ownership of the customer experience completely,” said Gareth Gaston of Wyndham Hotel Group.
     
By Jason Q. Freed
Contributing Editor, Tech Impact Report

Editor’s note: HotelNewsNow.com was invited to Washington, D.C., to conduct a private roundtable prior to HSMAI’s inaugural Chief Digital Officer Executive Roundtable. Present were six digital marketing thought leaders—four brand representatives and two consultants. During the 45-minute discussion, top executives shared their best practices, challenges and perceived opportunities in the digital marketing space.

WASHINGTON, D.C.—With travel being such a big market on the Web, it’s no wonder large Internet businesses are slowly but surely creeping into the hotel research and bookings game. Google, for instance, has dipped its toes in the water and is changing the way hoteliers look at demand generators. With Facebook, Amazon and Apple perhaps not far behind, hoteliers realize the potential to partner with these organizations but fear the escalating costs involved.

So far, much about how some of these large-scale emerging demand drivers will operate is unknown, so hoteliers—particularly brands watching out for their own channel—tend to fear the worst.

 

“Google, Apple and Facebook—and anyone else who has a presence on the Internet—is going to be getting into travel in a big way. They’ll do it in different ways, but everyone is trying to build a search engine now. ….

“At one time, everyone came in through Google. That will be very much diversified now because people are going to be coming in through many social sites, they’ll be coming in through the consumer review sites, there’ll be points of entry in many other places. And it’s always the hotel brand trying to get those travelers to come over to their website, ultimately directly. There will be lots of stops along the way. Google will just be one more vying for the rights to direct that traffic.

“And I have to point out one really, really crucial factor and that’s no matter how anybody decides to play with those guys: You can’t have metasearch without rates and inventory. And, therefore, we still control rates and inventory, or hopefully we do. And the way we, from a hotelier’s point of view, control that inventory will determine how we operate going forward.”

 

“Google will always be there. Apple is increasingly becoming a big player in that regard as well. As hotel companies and travel companies as we have discussions with Google, as we have discussions with Facebook, as we have discussions with Apple, as we have discussions with other players down the road, it’s going to be taking a more nuanced approach to say, ‘Here are the areas where we need concessions and here are the areas where we are able to make concessions to come up with a working partnership.’ Because fundamentally, Google with the scale they have, Facebook with the scale that they are likely to have, Apple with the scale that they are likely to have, we are going to have to play with them.”

 

“I am surprised that Google and Facebook and Apple haven’t played yet. I think that is the single biggest challenge for marketers in this industry. I do think we need to recognize that as an industry.”

 

“I think the biggest challenge I have with our hotels is that many of our hoteliers feel Google is a public service to our customers, and we all know it’s not. And obviously it’s a business, and it’s an effectively run business. I think through some of the changes—and we were talking about the change in algorithm—can change everything you’re doing, even at the local level with Google Places and all of a sudden your call center numbers are going through the roof because the phone number is wrong.

“And Hotel Finder and (Hotel Price Ads) are a huge impact for our brand because it really brought home the challenges we have with rate parity. We don’t have a brand dealing with certain (online travel agencies) and our hotels are not prohibited from having extranets with OTAs. So when you start looking and seeing at how effectively we are undercutting the brand without understanding what they’re doing. It’s changing, and I think we need to be aware and we need to be thinking ahead to not allow these things to blind side us.”

 

“All arrows of the Internet are pointing at the hotel world. And so I think the two considerations that companies like Google and TripAdvisor have is how much margin can I take out of there in order for me to elevate my quarterly results.

“And then the second thing which I am always looking at, especially because we have a very close relationship with TripAdvisor, to me, crossing the line would be taking ownership of the customer experience completely. If they were to become an OTA, you would have to look at them entirely differently.

“Now, thankfully, both of them are saying, ‘We’re lead generators.’ But both of them continue to encroach on that experience a little further every time. And so along that continuum, the hope is they don’t cross that line because that does change the dynamic of the relationship entirely. And I think it would potentially be detrimental to them as well.”

 

“You have to work with these folks in some capacity, right? You can decide to what level you want to. But what we as hoteliers can’t really do, besides from the experience on site and on property, is control that consumer behavior.

“So I need to be on pretty much every shelf that I can conceivably be on as long as I get the right terms so I can reach those consumers that I may not be able to. I have a healthy marketing budget, but it’s never enough. I am one of those who can attest to never having enough money to spend. But I certainly can’t compete with those folks who have hundreds of millions of dollars and are spending it to acquire those customers. So if I don’t get on some of those shelves, I’m doing my hotels a disservice by not using and not being able to be on those sites.”

 

 

 

 

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