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Online hotel booking piggybacks on growth of e-ticketing: IAMAI

11-November-2005
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Online hotel booking piggybacks on growth of e-ticketing: IAMAI

It’s a perfect example of piggybacking. With more and more people opting for online ticket reservations for their travel plans, hotel industry has a world of opportunity opened up for them through possible alliance with online ticketing sites like IRCTC and MakeMyTrip.

Moreover, the online medium offers reach, cost-effective and a really targeted audience, according to Internet and Mobile Association of India (IAMAI).

IAMAI in a recent survey of online shoppers on ‘How To Sell Rooms Online’ found that 20 per cent of Internet users had made hotel reservations online; 31 per cent indicated that they were likely to do so in the near future.

Said Preeti Desai, President, IAMAI, “With leisure travel on the rise, so is the need for hotel rooms. This is increasing because companies of all sizes have realised that for no implementation charge they can begin using an online travel program that drives down the company's travel management costs and overall travel spending.”

As per IAMAI’s estimates, Rs 29 lakh worth of ‘hotel stays’ were sold online in 2004-05 and Rs 2.36 crore worth will be sold in 2005-06.

Sachin Bhatia, Co-Founder and Chief Marketing Officer, MakeMyTrip, said, “The market is certainly maturing. We at MakeMyTrip are already booking 25-30 room nights each day online within a month of launch. With 30,000 room nights being added in the next 18 months alone, there’s a lot of potential to distribute hotel inventory effectively and cheaply over the Internet.”

In the US alone, $15.5 billion of hotel sales were generated online, a fifth of all hotel sales. Even if travellers don’t book online, they do use the Internet to seek information before making travel plans. Surveys also reveal that an overwhelming number of Internet users are going online to make their travel plans.

The basic minimum that hotel owners should do is to provide information on their web sites on room availability, facilities, tariffs, local tourist attractions and the like. Suggested Hari Nair, Co Founder and CEO of the Bangalore-based Leisure & Lifestyle Information Services Pvt Ltd, “Websites must have all information needed by the customer in an easy-to-use format and display real-time room availability.”

According to the IAMAI survey, two fast-growing online shopping categories were airline bookings and railway reservations. There is an obvious synergy between these categories and hotel reservations, and advertising on airline and railway booking sites can lead to big payoffs for hoteliers.

Nair said that international travellers, who were used to Internet transactions, would probably be the first big group to drive online activity. But it’s not just the five-star hotels that can benefit from an online presence. Even budget hotels can increase their business by going online.

According to Bhatia, “Currently, three-star and resort properties are actively allocating inventory for online sales. MakeMyTrip now has over 300 participating hotels in the three-star/ resorts category online. Chains will have to follow suit.”

It makes sense for budget hotels because domestic travellers – who are increasingly booking air and railway tickets online – are expected to become the largest segment over time. “The real potential is the domestic traveller, who currently contributes 80 per cent of hotel revenues anyway, whether it’s on leisure or on work,” said Bhatia.

There’s no doubt that online advertising will help hotel owners increase occupancy rates. But the best way of increasing business is still online reservations. But Bhatia felt that offering online reservations on their own was not a viable option for non-chain hotels because of the high marketing spends involved.

“They would be better off using search (both paid and organic) and, more importantly, making their inventory available through generic travel sites,” he observed.

Nair, too, felt that tying up with inventory aggregators was a better option since hoteliers won’t have to invest too much in online advertising, since aggregators had great reach and already advertise on third-party websites.

“While there are no world-class Internet intermediaries yet in India, three or four new Internet booking engines are being developed. It’s imperative for hotels to ensure that they have real-time room inventory available on these new Internet booking engines,” he added.

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