Online travel sites are still important for hotel operators

April 14, 2017

By Chris K. Anderson and Saram Han

Christopher Anderson, director of the Center for Hospitality Research and associate professor of services operations management at the Cornell School of Hotel Administration

Changes in the online travel market have caused hotels to re-examine their relationships with online travel agencies (OTAs), and the impact on bookings from listing their properties with these sites.

A primary reason for these changes is consolidation and innovation among online travel firms that offer direct booking, and an upsurge in hotel-OTA interactions, with several large hotel brands launching direct reservation campaigns.

However, one thing that has not changed is what we call the “billboard effect,” which results from hotels being listed on OTA sites. Our new study shows that, while consumers are increasingly booking rooms directly with the hotel brand, being listed on an OTA site still has the potential for impacting reservations on the brand’s own website. Co-author Chris K. Anderson has labeled this phenomenon the “billboard effect” because it affects online purchasing behavior. In updating this research, we find that recent reports of the demise of the billboard effect may have been exaggerated.

The findings in this study, titled “The Billboard Effect: Still Alive and Well,” underscore consumers’ reliance on hotel websites when researching and booking their rooms, but also show that non-direct channels still influence lodging purchase decisions.

Our study is available from the Center for Hospitality Research at the School of Hotel Administration in the Cornell SC Johnson College of Business.

It is increasingly difficult for hoteliers to determine which sales and marketing efforts lead to demand, and how these efforts interact, our study shows. The average hotel shopper conducts a lot of research online before purchasing a reservation—making 25 visits to travel-related sites. And while the influence of non-direct channels on decisions to make a reservation may be low, we find that there is still a billboard effect on customers as they visit one or more of these non-direct sites prior to booking.

To better understand changes in consumer online behavior, our new research revisits impacts of the billboard effect through the use of available data resources. We use a randomly selected sample of more that 50,000 individuals from a panel of some 2 million online consumers maintained by comScore, which tracks all of the sample member’s 2015 online behavior. In conducting this research we focused on 13,000 travel-related reservations, including airline, rental car, and hotels.

The primary implication for hotel operators is that in determining which web-based marketing efforts produce the best results, they must ensure that their online presence is easy to find, is attractive, and stands up to the competition. For individual hotels that want to solve the attribution puzzle, we also suggest that they conduct experiments in which they stop certain actions—such as preferred placement with OTAs or sponsored search at Google—for short periods of time and compare sales results before, during, and after.

Christopher Anderson is an associate professor and academic director of the Center for Hospitality Research (CHR) at the School of Hotel Administration (SHA) in the Cornell SC Johnson College of Business. Saram Han is a PhD student in marketing at SHA.

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