<FONT COLOR="#FF0033"><B>IAMAI Online Travel: Knocking on the hotel’s door </B></FONT>

Just what is the potential of hotels on the Internet? Are they the next big thing? Online industry professionals weigh in

The panel discussion on ‘Hospitality and Business Travel – Online Strategy’ at the ‘Online Travel: Are You Hooked’ seminar organised by IAMAI and agencyfaqs! was inevitably dominated by hotels. Moderator Ashwin Damera, CEO of Travelguru.com, underlined the truth about online hotel bookings in India – for every 100 tickets sold online, only five hotel bookings are made.

He attributed this to the poor customer service offered by travel agents in hotel services, the lack of a proper rating system and the fact that hotels are just not connected to the Internet.

<FONT COLOR="#FF0033"><B>IAMAI Online Travel: Knocking on the hotel’s door </B></FONT>

Ashwin Damera

But all that is about to change. Damera admitted that his website brings in two and a half times more business from hotels than it did a year back.

Himanshu Singh, managing director of Travelocity India, said that travel accommodation would be a $6 billion industry in 2007, of which only $1.8 billion would be contributed by hotel chains. The potential, he said, lies in motels, hostels, camp sites and other accommodation. Even then, 66 per cent of bookings are done at the hotel’s reservation office. “A higher level of automation is required at hotels to get them online,” added Singh.

Himanshu Singh

The hotels had their say, too. John Kuruvilla, executive vice-president, marketing, Oberoi Hotels and Resorts, said that hotels needed to recreate their experiences online. “The biggest mistake is to treat the web as a medium. Use it a market mining tool,” he said. Rahul Pandit, vice-president, operations and people, The Lemon Tree Hotel Co., said that 15 per cent of Lemon Tree’s bookings come from the web. And, he expects this figure to reach 50 per cent by 2011.

Ram Badrinathan, senior analyst at research firm PhoCusWright Inc., shed some practical light on the proceedings. “The success of online travel is not just about the Internet or real-time connectivity,” he declared. Citing the example of Chinese travel company, Ctrip.com, he demonstrated how it turned all business models upside down. The company, which sold $1.3 billion worth of hotel rooms in 2006, does 70 per cent of its customer initiation through call centres. Only 5 per cent of the transactions are fulfilled online. The value, concluded Badrinathan, lies in independent hotels, not chains.

Singh of Travelocity agreed, saying that having hotel inventory from 200 or 300 cities in India is not enough, given the size of the Indian market. Badrinathan added that a “long tail” existed in the hotel industry, “driven by the complexity of the Indian landscape”.

Touching briefly on corporate travel, Badrinathan said that factors such as central access to content, simplified pricing, e-ticketing, comfort with use of credit cards and labour costs will determine the growth in this segment. Seemingly, the online travel industry is still figuring out how to lure the plethora of small hotels that dot India on to their sites. After all, this segment is going to give them their much-needed margins.

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