How many times do you hear hotels complaining that selling through online travel agencies may be their most expensive channel?
A Cornell University study casts some doubt on that argument -- or at least puts it in perspective.
The study, by Chris Anderson of the Cornell's The Center for Hospitality Research, concludes that the "billboard effect" of attracting hotel website bookings because of the hotel's listing on Expedia, "leads to an effective decrease in the cost of OTA transactions."
The additional hotel website bookings that result from being displayed on OTAs convert a 30 percent commission paid to an OTA "to single digits," Anderson writes in "Search OTAs and Online Booking: An Expanded Analysis of the Billboard Effect."
Using comScore data, Cornell analyzed 1,720 reservations made on the websites of six InterContinental Hotels brands (Candlewood Suites, Crowne Plaza Hotels, Holiday Inn, Staybridge Suites, Hotel Indigo and InterContinental Hotels), and found that for each of their bookings made on Expedia, the hotel websites attracted three to nine reservations.
"Although these reservations are made through Brand.com (the individual brand's site), they are directly created or influenced by the listing at the online travel agent," the study says.
Interestingly, the more upscale brands -- InterContinental, Crowne Plaza and Hotel Indigo -- attracted fewer incremental bookings than the more moderate brands.
The study analyzed reservations in June, July and August 2008-2010, and built on an earlier Cornell study of JHM Hotels which found a similar billboard effect.
The newest study of InterContinental Hotels did not take into account consumers who may have viewed the hotel's listing on Expedia and then phoned the hotel to book. So perhaps Cornell's statistics underplay the billboard effect.
The study did find that nearly 62% of guests who booked on the hotel's website visited Expedia prior to making the reservation while 21.5% who booked the hotel on Expedia did not visit another online travel agency site.
So, given the findings, Expedia's commissions are looking a little more cost-efficient or does Cornell have it all wrong?
