The Internet: Can it Really Level The Playing Field For Hotels?

Like it or not, the Internet has provided the infrastructure underpinning the massive explosion in tourism which has touched all parts of the travel business. This has had implications from the vast state airlines to the smallest b&b and local tourist attractions who have to cater for a new mix of clientele. This clientele consists of guests who now have the financial resources to enjoy more than one break every year, as well as the overseas visitor who is attracted to the UK by bargain flights. Additionally, they also understand how to use the Internet to search for and book cheap flights and accommodation in their chosen destination.

But, as a b&b owner, do you think like your potential guests? Do you know how they go about arranging short breaks and holidays? And, did you know that it has now been estimated that for the first time in decades, more people are arranging their own independent trips rather than using package tours (Mintel 2004)?

The rise of the budget airlines such as Easyjet, Ryanair, and the many other newcomers to the budget airline industry best exemplify this changing scenario. Ryanair for instance, flies 161 routes and takes most of its bookings via the Internet where it offers its cheapest fares. This means that the traveller becomes their own travel agent and inputs their own travel arrangements and booking data into the system. When combined with the elimination of commission fees payable to travel agents, a process known as disintermediation occurs. It is disintermediation which terrifies travel agents!

Ryanair is a superb example of an organisation which has exploited the Internet to come from nowhere to being the largest capitalised airline in Europe. They were quick to see the potential of the Internet as a distribution channel and, as a result, the Internet is now their main sales channel. What are the lessons to be learned here by hotels and b&b’s? Foremost is that size doesn’t matter online. Ryanair proved that. More importantly for hotels, Ryanair and their like helped to create a new market which encouraged and demonstrated that travel could be done cheaply and efficiently. But how can the independent hotelier and b&b owner learn from this?

The large hotel chains have, like the budget airlines, implemented online booking and have offered some good rates. But they have been both confused and, caused confusion to their customers. Their confusion stems from multiple channels such as their own web site, central reservations, travel agents, and the plethora of third party sites such as hotels.com, Expedia, Lastminute.com etc. Behind many of these lies the Global Distribution Systems (GDS) ironically introduced by the airlines in the sixties. The chains need to ask themselves which is their preferred distribution channel and where do customers get the best deal? The customer is confused because he finds the hotel he wants but is offered so many different rates by the various channels. This presents the perfect opportunity for the independents.

In order to level the playing field with the large chains, the independent hotel needs to embrace the Internet and understand that guests want to make their travel arrangements on the web. To do this, the hotel needs a good web site that reflects their property. It is not enough however just to have the web site – it needs to be promoted and advertised to encourage visitors. Once you have your potential guest online you need to be able to sell to him – in the same way that you may purchase books, CDs, and even your grocery shopping! The hotel needs to take the booking there and then, and, upsell other items such as an evening meal, tickets to local attractions etc. And of course by doing it online you can even sell whilst you sleep!

The question is of course, can a small guesthouse with only five letting rooms afford such a facility? Until recently, the answer would have been no. Or, it may have been that you could use a third party system which charged commission, the more you sold, the more you paid! Programmes such as EUBookings have changed this. This programme allows hotels to pay a small annual fee of £99 & VAT (plus £90 & VAT implementation) for which they can add their availability and rates. The system is totally adaptable so if you insist on guests staying two nights if they stay on Saturday night, it handles it; or, if you have a minimum stay of seven nights it handles it. EUBookings will fulfil the needs of the small hotelier at a price which is affordable.

It is clear that small hotels and b&b’s have been slower to tap the vast potential of the Internet. This potential has been demonstrated by the budget airlines positively. The larger hotel chains have not been as successful and have their own issues which have created difficulties in their online activities. The independent hotel and b&b does now have a fantastic opportunity to compete on an equal footing with these larger businesses and should aim to take more than their fair share of this emerging travel market.