For those of you who have already attended one of HiRUM’s Google Hotel Finder Seminars, you will be familiar with HiRUM Executive Sylvia Johnston’s perspective on the future of Online Bookings and Online Travel Agents (OTA’s). You may recall Sylvia citing Wotif as an example, and highlighting their declining profits, their increasing marketing and wages costs, the decline in the value of accommodation transactions, changes in buyer behaviour in the online travel marketplace and Wotif’s ongoing need to increase commission structures to counter these changes in the market. In HiRUM’s view, Google Hotel Finder will serve to cement changes in online travel buying behaviour and drive more bookings direct to the accommodation providers’ website. So, what will this mean for the OTA’s?
Compare Wotif’s standpoint in 2011, when then Chairman Dick McIlwain suggested that their market leading position was impregnable. Despite a 3.8% profit fall in the 2010-2011 financial year, McIwain saw no threat from booking.com, agoda and expedia, and reduced his marketing spend against the competition. Life was good in Wotif’s world, with an endless supply of cheese….
In the first half of 2013, they achieved record revenue due to growth in their flight sector, and an increase in commissions charged – good for Wotif, but not-so-good for the accommodation provider’s bottom line.
By contrast, in the second half of last year, somebody moved their cheese…….Despite the great results of the first half of the year, their profits slumped by 18%. They were superseded by booking.com as Australia’s largest and fastest growing online travel agent, ranked #4 compared with Wotif at #8 (Australia’s Top 100 Travel Websites). (http://www.traveltrends.biz/ttn555-australias-hottest-100-travel-websites-booking-com-surges-ahead-of-wotif-and-webjet-in-shock-result/)
In light of this, they have increased their marketing budget from $4.5 million to $13.8 million. They have invested in technological changes to the site, altering the look and feel and adding new features after 14 years of it remaining relatively stagnant. They are improving the mobile friendliness of their site and will increase its suitability across all platforms and all sized screens. http://www.traveltrends.biz/ttn555-change-after-14-years-to-wotifs-home-page-look-and-feel/ They are hoping to find new cheese…..
What has happened here, however, is that costs have continued to grow faster than revenue for Wotif’s business model. Wages, marketing and development costs continue to increase, and whilst revenue actually rose by 3.5% propelled by the increase in commission and their “flight” arm, this was not enough. The total transaction value of their core business, accommodation, declined by 6%. Read more ……. http://www.traveltrends.biz/ttn555-wotif-profit-down-18-as-room-nights-fall-costs-grow/ To counter this growth in costs, as we see it, they will have no choice but to continue to increase commissions.
And what of the future? In our view, Google Hotel Finder will provide an opportunity for accommodation providers to be “seen” in google searches for accommodation, something they have not been able to achieve without the help of OTA’s for some time. As an accommodation provider, it is certainly in your best interests to take advantage of this opportunity, and gain some freedom from the OTA’s increasing commissions. If the booking public has the option to book direct to your property’s website, and you are able to offer an attractive deal for them to do so, then recent changes in booking behaviour indicate that this is what the discerning consumer will choose to do.
At HiRUM, we are already abreast of these market changes and are ensuring that our hospitality software clients are kept up to date with all the latest industry developments, so that you can take every opportunity to get ahead of the competition. We help you to anticipate change, and get ready for the cheese to move.
We are partnering with Google, to ensure that our clients have the opportunity to use Google Hotel Finder to their best advantage, and be at the forefront of this changing market. If you are interested in finding out more about Google Hotel Finder and how it can help your business, don’t hesitate to contact Hilary at email@example.com
If you haven’t already done so, read Who Moved My Cheese?, by Dr Spencer Johnson, a great short book about change and change management from the perspective of two little mice, and two little “mini-men”, who live in a maze, feeding on what (they think) is an endless supply of cheeese. It reaches some valuable conclusions and strategies around change:
Get Ready For The Cheese To Move
Smell The Cheese Often So You Know When It Is Getting Old
Adapt To Change Quickly
The Quicker You Let Go Of Old Cheese, The Sooner You Can Enjoy New Cheese
Move With The Cheese
Savor The Adventure And Enjoy The Taste Of New Cheese!
Be Ready To Change Quickly And Enjoy It Again
They Keep Moving The Cheese.
By Sally Baumber
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