L2 Think Tank has a brilliant series called DigitalIQ where they analyze the effectiveness of the digital strategies for various brands in travel, retail and other luxury categories. Their latest report is on Hotels.
While attending the recent EyeforTravel Social Media and Mobile conference I heard a lot of great stories about how different travel brands are leveraging social and mobile to enhance the experience of their guests before/during/after their stay, as well as try to improve their reputation and acquire more guests. But while it’s an element of a successful strategy it is not a silver bullet either. And that’s the basis of my article for Tnooz:
Where I thought the report reached — significantly — was when L2 intimates there is correlation between digital brilliance and financial success, represented by better stock performance and higher RevPAR. However when you look at the actual statistics the correlation is very weak. The numbers actually suggest no correlation at all while the regression line in the charts paint a very different picture. Now I get that they are in the business of selling digital marketing services, but while the charts are pretty, the data is insufficient.
Part of my thoughts on the topic is related to comments I hear regularly from travel suppliers that intermediaries don’t really provide any value and they are ‘stealing’ revenues from suppliers (e.g. Airlines, hotels, etc.). L2’s study claims that “OTAs cost hoteliers $2.5B in 2010”. I completely get that it is less expensive to book a reservation directly than to go through an intermediary, but to couch an intermediary’s role as purely destructive is insincere at best.
Whether it be the corner travel agent, an OTA or some other organization, there is value to a hotelier or an airline. They are in fact bringing a client to the table. These very same guests might not get to Hotel X or Airline Y without the agent/intermediary shepherding them to you. These guests will not magically appear at your doorstep otherwise, as much as you might like them too. Further, they are providing a level of service to the customer/guest that you are not. As such, they should be compensated for the effort they put in, not vilified.
Personally I don’t know why travel doesn’t take a more retail-oriented approach to the channel and margins. Provide a discount to the channel for their efforts so it is worthwhile for them to sell your product. If you can get more people to come to Airline.com — Mazel Tov. Keep the extra margin, you earned. it. This is one of the issues I intended to write about when I did my first “outsider’s view” piece for Tnooz (well, it turned out to be first of one). So here it is.
I would love to hear everyone’s thoughts and reactions.