NEW YORK Who would have thought that misspelling the word "Radisson" in a Web search could cost the chain thousands of dollars each month? Not parent company Carlson Hotels Worldwide, Minneapolis, Minnesota, until it hired an outside firm to locate the company's online "vulnerability points." What the firm uncovered were 11,000 misspelled searches per month resulting in online users being directed to a third-party URL rather than to Radisson's branded Web site. Further investigation showed Carlson that only 10% of its Web traffic comes through its own URL(s).
This discovery supports new findings by Forrester Research, which reports that seven in 10 people who book a hotel room online use a search engine to find that hotel, and only 40% to 45% of users type in a brand name when doing a search. In Carlson's case, the problem was that it did not "own" the misspellings of Radisson, or various other incarnations of the hotel brand's official name. Therefore, such a seemingly minor misstep was costing the company thousands of dollars as users were directed to other sites with Radisson inventory.
Radisson's example should be a wake-up call to everyone in the hotel industry. While inventory control and pricing issues have been top of mind, as the Internet game evolves hoteliers need to concentrate on online marketing initiatives beyond the branded Web site.
"Search engine marketing is not a choice, it's a necessity," says Henry Harteveldt, vice president, travel research tot Forrester, in addressing the audience at the second annual Hospitality Sales & Marketing Association International's (HSMAI) Hotel Internet Marketing Strategy Conference held in New York in April.
While operators still believe the best defense against the third-party intermediaries is a strong offense, as stated at the conference by Gino Giovannelli, vice president, e-business solutions, relationship management and development for Carlson, that doesn't mean hotel companies can afford to ignore their most obvious vulnerabilities. The intermediaries spend millions in buying key words; hoteliers need to become better competitors. Giovannelli says Carlson has become much savvier about the key words it buys and uses the outside firm's expertise to help the company choose its battles. "You can't play this battle part time, but you don't have time to chase all the issues," Giovannelli says. "You can only respond to what's presented to you. You have to save your gun powder for your offense."
Conference panelists agree that in today's world, part of that offense has to be aligning with the intermediaries. An often-used phrase at the conference was "relationship building," wherein both sides join forces with mutually agreed upon rules. Leading the charge on this initiative is InterContinental Hotels Group (IHG). London, which in the days just prior to the HSMAI conference announced it is adopting a new standard for its entire worldwide portfolio--which comprises more than 3,500 hotels--for the selling and reselling of online room inventory. Simply put, the company is threatening to remove its hotel rooms from Web sites that do not meet IHG's new set of standards. Among the new rules: The intermediary must allow the owner/franchisee to set the room rate; it must allow hotel managers to adjust room allocations in real-time; it must make an effort to eliminate "deceptive" marketing practices: it must include full disclosure of taxes and fees: and it must modernize the booking process. In addition, reduced commissions are being contemplated.
"We will only work with people who address these issues," says Tom Seddon. IHG senior vice president, brand performance. "We may lose some revenue at first, but believe the short-term risk is worth bearing for the long-term goals." At press time, online travel sites had a May 20 deadline to meet such standards and be designated a "certified distributor." While Seddon said IHG was in talks with several of the intermediaries, which of them will emerge as IHG's partners under this arrangement had yet to be revealed.
Although this is a bold power move on the hotel giant's part, in reality, it is more of a symbolic statement than a major threat as only about 2% of IHG's online revenue comes through the intermediary sites. As stated in a recent Bear, Stearns & Co. report: "In our opinion, the initiatives do not reflect revolutionary ideas. rather the implementation of solid business practices that up until now no hotel company was bold enough to initiate."
The ramifications also will he greater if the rest of the industry follows IHG's lead, which they did after 1HG announced its online lowest-price guarantee. Most attendees believe a similar outcome will happen here. "I think these are issues that need to be dealt with," says Tom Corcoran, president and CEO Fel-Cor Lodging Trust. "The third parties have to operate in a bandwidth that is fair."
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