September 07, 2012

Outsourcing Travel Booking on Your Own Terms

 
With the economy (hopefully) starting to gain steam, hotels are starting to see some relief. Prices have been creeping back up over the last few years after the lows of 2008-2009. But hotel owners and managers still face the basic business dilemma – how do you get more revenue? The answer is obvious: fill more rooms! But how you fill those rooms is also important. With the availability of travel search/booking sites such as Priceline and Orbitz, hotels can better match consumers to inventory than ever before. Online audience consumer exposure is greater for each piece of inventory when travel search/booking sites are recruited to fill vacancies, but this comes at a price – affiliate sales eat into hotel profit margins since affiliates have to make money also. Hotels, for this reason, prefer that consumers book rooms directly through their site. So, how does a hotel drive more consumers to book through its own systems instead of through a site like Priceline? (If you’ve read this blog before, you should know the answer.) With APIs, of course! In all seriousness, we have to wonder how many major hotel chains have listened to this advice. While Hotwire, Expedia, Travelocity, Kayak and other booking & search sites have opened up APIs, major hotel chains by and large have not. The secret weapon in the hospitality affiliate game is distributing the search and booking functions to a syndicated network of websites. In exchange for a revenue share, sites like Expedia and Travelocity have successfully capitalized on the notion that an empty hotel room earns zero revenue, whereas a booking split with an affiliate earns significantly more revenue. Search APIs (and their access to hotel listings, etc.) can help hotels get more bookings directly through their systems. By offering a simple search API, hotels can attract developers that want to create a unique hotel search site (like Hipmunk). that then drives traffic back to hotel websites This would allow hotel chains to offer an API enabled affiliate program, as Expedia and Hotwire already do. This would entice developers by rewarding them for using the hotel’s API, and could still be cheaper than paying booking sites. But to go one step further, hotel chains should really create their own booking API. This provides an opportunity to generate revenue directly through an affiliate’s apps and sites without having to route consumers back to the hotels’ own site. This could drive all sorts of partnerships and distribution and allow for booking to go where the customers are. Imagine being able to book a hotel room directly from your credit card app using your credit card points (Citibank already does this with travel and with BestBuy). Or being able to book a hotel room on Facebook, or another social media site (Best Western actually already does with Facebook). The possibilities are pretty immense. All this could mean more exposure, more traffic and more hotels room booked, which should mean increased revenue. As more and more people book travel using mobile devices (as many as 30% of travelers have found hotel deals online), APIs will become more and more indispensible for hotels – they will allow hotels to get more people to book their rooms from any device consumers want to use. That should help hotels fill more rooms, drive more revenue and weather future economic uncertainty – what could be better?