Agents for change

by Bob Gledhill , Friday 28th September 2001 15:04

Online booking through a hotel Web site is commonplace for chain hotels, albeit expensive to set up, but for independent hotels the route to e-booking is through an outside booking agency. Bob Gledhill explains how and why.

There is no official register of hotel Web sites in the UK, so it is impossible for anyone to know just how many there are. In the same way, it is impossible to put a figure on the overall room revenue generated by the Internet for UK hotels or to pin down how effective it is as a room marketing tool.

Chain hotels with sophisticated call-logging and reservation systems know how much online booking they get. Global predictions put online booking at £10b in revenue by 2004, but such figures mean little to a family-run independent hotel in the shires, uncertain whether the development cost of a Web site will bring in a real bottom-line return or if it is really just an expensive toy.

One reason for the lack of accountability is that many independent hotels set up their Web site without a well-considered e-business strategy - most are designed for lookers, not bookers.

A Web site may contain pictures and details of a hotel, but potential customers viewing online are forced to revert to old technology - the telephone - to make a booking. Online booking facilities are seen as the preserve of those who can afford it.

The problem for independent hotels is the cost of setting up and maintaining an online booking facility. Developing an individual click-and-book system with secure online payment systems can amount to hundreds of thousands of pounds. The online booking facility set up jointly by Accor and Hilton last year, for instance, cost £12m.

This is why independent hoteliers have no option but to link to a host agency that will handle online booking for a fee per booking.

With online booking now fully established among chain hotels, e-booking agencies have turned their attention to independent hotels, acting both as an online hotel guide and an e-booking agency. Independent hotel Web sites need no longer drift alone in cyberspace, but be part of a recognised hotel search site.

Knockomie hotel in Forres, near Inverness, is a typical privately owned country house hotel, which benefits by marketing itself globally and nationally using the Internet. Director Gavin Ellis is a recent convert to linking into a host online booking site.

"I didn't give developing our own online booking facility a second thought - the cost and technology implications are horrendous," says Ellis. "Besides, if somebody has already done it, why try to re-invent the wheel?"

Ellis has signed up All-Hotels, the Edinburgh-based booking agency that specialises in independent hotels, to sell his bedrooms. Since its launch in 1997, All-Hotels has become one of Europe's biggest online agencies, with sales of nearly £1.5m from 80,000 hotel nights (average room yield £62.50).

All-Hotels chief executive Jane Karowski points to research from Andersen Consulting, which says that by 2004, 15% of all hotel rooms globally will be booked online.

"Independent hotels have got to develop an Internet strategy if they are going to stay competitive," she says, "and that must mean an online booking facility."

All-Hotels' charges are fairly typical of host online booking agencies. There is a £650 one-off charge for the software, then a transactional fee of £3.50, irrespective of the value or duration of the booking.

Jill Chalmers, chief sales officer for All-Hotels, says the link into its booking service is seamless and invisible. "It's a button on the screen and to the person looking on the screen there is no indication that they have moved from the hotel Web site to ours. We can customise the screen to match the design theme of the hotel Web site."

Despite online payment being common in other sectors, Chalmers says there is still some resistance to it in the independent hotel sector. "People say they are doing OK and haven't got time for this Internet thing and that the Internet bubble has burst," she says. "But online booking is still inflating and no one is predicting any downturn."

Another UK-based e-booking agency specialising in independent hotels is Active Hotels, launched in Cambridge 18 months ago and now with 1,500 hotels signed up, 1,200 of which use the service to sell rooms.

Active Hotels' charges include a joining fee of £270, which covers loading the hotel Web site into the system, software and training for the hotel. There is a monthly service charge of £30, which covers the day-to-day administration of the system and transactional commission charges. For the most comprehensive e-booking and marketing package, this is 15% of the published room rate on the Web site.

Gabriel Court hotel is a 19-bedroom independent hotel near Totnes, Devon, and it joined the Active Hotels marketing and e-booking scheme earlier this year after the agency approached hotel owner Michael Beacom. Before that, the hotel had relied on its Web site visitors ringing up or e-mailing.

Beacom says the number of bookings through Active Hotels is a steady flow rather than a flood, but that without a lot of availability of rooms in the past few months it has been difficult to properly evaluate the service. Unlike All-Hotels' approach, however, there is no button to link the online booking option to the Gabriel Court Web site.

Despite a modest start to online booking, Beacom is certain independent hotels must embrace it. "It's noticeable that young people are booking more and more online," he says.

He also asserts that any growth in booking through the Internet will be at the expense of traditional holiday guides and guide books. "People are not going to pay for a guide book when they can get something better for free," adds Beacom.

Back at the Knockomie hotel, however, Ellis has a warning about relying too heavily on new technology. "It's a mistake some of the chains make. There are still people who want to speak to someone when they make a booking. That gives you the chance to begin the relationship by making the guest feel welcome even before they have arrived. Booking a hotel room must never become a totally sterile experience."

Strongest link

Partnering is an old science to international chain hotels, but it is now being grasped by the independent sector as well. It involves offering links to complementary and non-competitive Web sites. Typical links that can enhance the value of a hotel Web site to the on-screen viewer are ones that draw attention to local visitor attractions, car hire companies, tourist information services, and rail and air travel information.

Sometimes partnering deals are established to be of mutual benefit to the businesses taking part, but often they are fee or transaction commission-based.

The advice on partnering links from Gavin Ellis, director of the Knockomie hotel near Inverness, particularly where there is a cost implication, is to buy software from the Web site designer that audits partnering traffic.

"You have got to monitor your site ruthlessly, on at least a monthly basis, and see which link is directing traffic to you. It takes time, but it is essential.

"Every Johnny with a computer thinks they can do a hotel travel site. It's like the hotel guide game - you must know what you are paying for and whether it is value for money."

www links

www.knockomie.co.uk
www.all-hotels.com
www.activehotels.com
www.gabrielcourthotel.co.uk


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