A hotel listing by an online travel agency, particularly Expedia, directly boosts bookings at the hotel's supplier website, according to a study by Chris Anderson, a professor at the Cornell University School of Hotel Administration.
In an experiment in which Cornell used ComScore data to track the Internet activity of consumers who made 1,720 reservations at InterContinental Hotels Group websites, Cornell found that almost 75% of consumers visited an OTA prior to making the reservation; nearly 83% performed a Web search on Google, Yahoo or Bing; and approximately two-thirds did both.
Nearly 62% of consumers visited Expedia before booking, but many of those buyers visited more than one OTA. The bad news for Travelocity, Orbitz and Priceline is that 21.5% of consumers only visited Expedia.
An analysis of the ComScore data revealed that consumers on average spent an hour at OTAs, viewing about 90 pages of content, before booking at an IHG website.
Cornell said that for each reservation at the OTA, three to nine hotel reservations at the brand's website are directly influenced by the OTA listing, a phenomenon called the "billboard effect."
"One lesson here for hotel firms is that the magnitude of the billboard effect indicates the effectiveness of OTAs in marketing to consumers and educating them on product assortment and characteristics," Anderson concluded.
Anderson reasoned that the billboard effect leads to an effective decrease in the cost of OTA transactions. Given that additional bookings result from being listed on an OTA, a 30% commission "would effectively be reduced to single digits," Anderson said.
The study was conducted during June, July and August of 2008, 2009, and 2010. Cornell said 80% of reservations were for IHG's largest brands, Holiday Inn and Holiday Inn Express.
The experiment was a follow-up to a 2008 study in which Anderson found that a hotel's website received more reservation volume when its listing was on Expedia. One independent hotel recorded a 26% increase in reservations, about six bookings per day, on its website.