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The Power of Internet Distribution Systems (IDS)
    Results of an Online Survey on Hotel Distribution in Germany, Austria and
                               Switzerland for 2011
                             Roland Schegg & Michael Fux
                           roland.schegg@hevs.ch / michael.fux@hevs.ch


    Institute of Tourism, University of Applied Sciences of Western Switzerland Valais
                                     Sierre, March 2012




1
Table of Contents


    • Executive Summary
    • Background of the Study
    • Booking Channels
    • IDS (Internet Distribution Systems)
    • Costs of Distribution
    • Selection Criteria for IDS
    • New Forms of Distribution
    • Channel Manager




2
Glossary of the Used Terms and Abbreviations
     CRS     Central Reservation System
    D-A-CH   Germany, Austria and Switzerland
     DMO     Destination Management Organisation
     DMS     Destination Management Systems such as TOMAS or Deskline from Feratel
     GDS     Global Distribution Systems (e.g. Amadeus or Sabre)
       hs    hotelleriesuisse (Swiss Hotel Association)
     HRS     Hotel Reservation Service (http://www.hrs.de/)
      IDS    Internet Distribution System (online booking platforms)
      IHA    German Hotel Association
       LT    Supplier
     LTO     Local Tourism Organisation
     NTO     National Tourism Organisation
     OTA     Online Travel Agency
     ÖHV     Austrian Hotel Association
     PMS     Property Management System (hotel software, Front Office System)
     RTO     Regional Tourism Organisation (e.g. Valais Tourism)
     SEM     Search Engine Marketing (e.g. Google Adwords)
     SEO     Search Engine Optimisation
     STC     Switzerland Travel Centre (national booking system in Switzerland)


3
Executive Summary : Direct Distribution still Important

• Direct bookings (telephone, fax, walk-ins, e-mail, Web form) without
  intermediaries are still the dominant channels for the hotels in Germany, Austria
  and Switzerland, even though their proportion in the distribution mix is steadily
  decreasing since a couple of years.
    – In 2011, 67% of the bookings in Switzerland, 68% in Germany and 71% in Austria
      were generated via direct sales channels.



• Traditional booking channels as telephone, letter or fax, as well as sales
  through tourism partners (travel agencies, tourism boards) are declining. The
  losses through these channels have been more than 30% over the last 10 years.




4
Executive Summary: Growing Shares of Electronic Distribution Channels

• Overall more than one out of four bookings is generated through online
  channels. Internet Distribution Systems (IDS/OTA) are clearly dominant (D-A-
  CH: 18.9%, D: 20.8%, A: 12.6%, CH: 16.4%) in this context.


• The proportion of real-time bookings on the own website of the hotel only
  reaches 5.5% (individual hotels in Germany: 4.9%, hotel chains in Germany: up
  to 8.2%).




5
Executive Summary : The Power of Internet Distribution Systems (I)
• One out of four enterprises in our study generates more than 30% of all sales
  through IDS. 18% of the hotels show a proportion of IDS in the distribution mix
  between 20 and 30% which underlines the importance of these portals as well as
  the dependence of many hotels on these players.
• According to our extrapolations, online booking channels (GDS, IDS/OTA, real-
  time booking on hotel website, CRS) generated a turnover of 7.6 Billion Euros in
  the three countries.
• The total amount of commissions paid to intermediaries by the hotels totals
  almost 1.3 Billion Euros. Just under 800 Million Euros were spent for
  commission to the online channels.
• With estimated 594 Million Euros, most of the commission payments have
  gone to IDS such as HRS, hotel.de or booking.com.




6
Executive Summary : The Power of Internet Distribution Systems (II)

• Booking.com, Hotel Reservation Service (HRS) and hotel.de are the most
  frequently used IDS in Germany, Austria and Switzerland.
• Booking.com with 43% in Austria and 53% in Switzerland is the dominant
  platform in these countries.
• In Germany, HRS with a market share of 34.4% is the clear leader. If you add
  the booking shares of hotel.de (15.8.5%) and Tiscover (0.4%) to it, HRS reaches
  50.6% of the bookings realized through online booking channels in Germany,
  followed by booking.com with 28.5%.
• Expedia is another significant player, especially for business hotels, for 4-5 star
  hotels and for hotel chains.




7
Executive Summary: Distribution Trends

• One out of five hotels use deal offers such as DailyDeal or Groupon today,
  amongst them especially big hotels, 5 star hotels and hotel chains.
• About 30% of the questioned hoteliers use a channel manager in order to
  update the availabilities in the multiple distribution channels. However, more than
  60% of the enterprises still update rates and availabilities manually in the
  different channels. The remaining hotels use their hotel software respectively
  reservation systems or cooperate with agencies.
• Just under one third of the enterprises make use mobile forms of distribution,
  more frequently in the form of a website adapted to mobile internet, rather than a
  specific app.
• The hotels investing in these new possibilities of distribution are especially 4-5
  star hotels, hotel chains and big hotels.




8
Table of Contents


    • Executive Summary
    • Background of the Study
    • Booking Channels
    • IDS (Internet Distribution Systems)
    • Costs of the Distribution
    • Selection Criteria for IDS
    • New Forms of Distribution
    • Channel Manager




9
Background of the Study
 • To get an insight into the distribution trends in the hospitality sector on an
   European level, the German Hotel Association (IHA), the Austrian Hotel
   Association (ÖHV) and the Swiss Hotel Association (hotelleriesuisse) in
   collaboration with the Institute of Tourism of the University of Applied
   Sciences Western Switzerland Valais (HES-SO Valais) in Sierre have teamed
   up to conduct a common survey.
 • The online survey for the reference year 2011 was conducted between December
   2011 and January 2012, terminated on 18 January. Because of the importance of
   the hotel chains in Germany a separate survey was conducted (responses of 28
   chains involving more than 400 hotels).
 • The present results are based on the responses of 1406 hotels in Germany,
   Austria and Switzerland (D-A-CH), which corresponds to a response rate of about
   10% (9.7% in Austria, 10% in Switzerland and 12.8% in Germany).




10
Survey Details
             Switzerland   Austria   Germany                                     Total
Response     201           119       -   686 individual hotels                    1406
survey                               -   28 hotel chains with at least 400 hotels

                                     -> that means responses from a minimum
                                     of 1086 hotels
Population   2035          1216      About 8.500 hotels participating in the
                                     German Hotel Classification and IHA
                                     members
Response rate 10%          9.7%      12.8%




11
Table of Contents


 • Executive Summary
 • Background of the Study
 • Booking Channels
 • IDS (Internet Distribution Systems)
 • Costs of the Distribution
 • Selection Criteria for IDS
 • New Forms of Distribution
 • Channel Manager




12
Booking Channels (D-A-CH)

                                           0.0%            5.0%          10.0%   15.0%   20.0%     25.0%    30.0%

                               Telephone                                                            24.1%

                                   E-mail                                                  19.7%

       Internet distribution systems (IDS)                                               18.9%

           Booking form on hotel website                                 8.4%

                                 Walk-ins                         5.7%

      Real-time booking on hotel website                         5.5%

         Tour operators / travel agencies                       4.9%

                             Letters / fax                  4.3%

Local and regional tourism organizations                 2.7%

       Global distribution systems (GDS)            1.6%

          Event & conference organizers            1.5%

                          Other channels           1.1%

      Hotel chains & affiliations with CRS        0.9%

          National tourism organizations          0.6%

 13                         Social media      0.2%
Aggregated Booking Channels (D-A-CH)


             10.2%
                                           Traditional distribution
                                           (telephone, fax, letters, walk-ins,
                                           others)

                               34.7%
                                           Electronic requests (e-mail,
                                           booking form own website)

     27.0%
                                           Real-time online booking (GDS,
                                           IDS, booking engine on hotel
                                           website, hotel chains with CRS,
                                           social media)
                                           Tourism partners (tour
                                           operators, DMO national-local,
                                           conference/event organizers,
                                           others)
                     28.0%


14
Direct versus Indirect Booking (D-A-CH)




     31.8%

                               Direct distribution (hotel-
                               customer)

                               Indirect distribution (hotel-
                               intermediary-customer)


               68.2%




15
Booking Types in 2011 (D-A-CH)


 Personal (walk-ins, others, subdivided)                                     6.3%
 Written (fax, letters, e-mails, booking form on website)                    32.4%
 By phone (telephone, Call Centre)                                           24.1%
 Electronic (IDS, real-time bookings on website, GDS, CRS, social media)     27.1%
 Tourism partners (tour operators, travel agencies, tourism organisations,
 conference & event organizers, others subdivided)                           10.3%




16
Profiling of Booking Channels by Enterprise Characteristics (1)
• The traditional direct distribution channels (telephone, letter, etc.) are
  considerably less important in hotel chains and in the classical leisure hotels than
  in small, urban hotels which address business travellers.
• Real-time bookings on the own hotel website are noticeably more frequent in
  urban hotels and hotel chains than in other hotel types.
• Online sales (IDS/OTA, GDS) are clearly more important in urban and in business
  hotels than in leisure hotels. It is interesting to observe, that for big 4-5 stars hotels
  the IDS/OTA have comparably low market shares, simultaneously the bookings
  generated through GDS are above-average though.




17
Profiling of Booking Channels by Enterprise Characteristics (2)

• Above-average sales through travel agencies and tour operators are realized by
  hotel chains in holiday resorts. In this context, big 4 star hotels (> 50 rooms) play
  an important role.
• Local and regional tourism organizations are clearly more important for hotels
  positioned in the leisure segment than for other types of enterprises such as big 4-
  5 star hotels or hotel chains.


 In business hotels traditional booking channels such as telephone and letter/fax
  on the one hand and online channels such as IDS/OTA or GDS on the other hand
  are comparably more important than in other types of enterprises.
 In leisure hotels requests via electronic channels such as e-mail and website
  form as well as bookings through tourism partners (travel agencies/tour operators
  and tourism organizations) are clearly more used than in other types of
  enterprises.

 18
Germany




19
Booking Channels of the Hotels in Germany 2011
                                                                   Share of total Bookings
                                                       0.0%          5.0%          10.0%    15.0%        20.0%        25.0%        30.0%

                                            Telephone                                                                      25.0%

                    Internet distribution systems (IDS)                                                      19.5%

                                                E-mail                                                17.1%

                        Booking form on hotel website                       6.2%

                   Real-time booking on hotel website                       5.9%

                       Tour operators / travel agencies                     5.9%

                                              Walk-ins                   5.3%

                                           Letters / fax               4.9%

                    Global distribution systems (GDS)             2.7%

Local and regional tourism organizations / associations         2.3%

                       Conference & event organizers           1.9%

                   Hotel chains & affiliations with CRS        1.8%

                            Other distribution channels       0.9%

                        National tourism organizations     0.5%

                                          Social media     0.2%
                                                                             The values for Germany represent weighted means between the
 20                                                                          values of the individual and the chain hotels.
Booking Types for the Hotels in Germany 2011


 Personal (walk-ins, others subdivided)                                                               5.7%
 Written (fax, letters, e-mails, booking form on website)                                            28.2%
 By phone (telephone, Call Centre)                                                                   25.0%
 Electronic (IDS, real-time bookings on website, GDS, CRS, social media)                             30.1%
 Tourism partners (tour operators, travel agencies, tourism organizations,
 conference & event organizers, others subdivided)                                                   11.0%




                                                        The values for Germany represent weighted means between the
21                                                      values of the individual and the chain hotels.
Booking Types for the Hotels in Germany 2011

                                                            0.0%   5.0%     10.0%    15.0%     20.0%     25.0%    30.0%     35.0%



                     Personal (walk-ins, others subdivided)           5.8%




     Written (fax, letters, e-mails, booking form on website)                                                       28.2%




                          By phone (telephone, call centre)                                                   25.0%




      Electronic (IDS, real-time bookings on website, GDS,
                                                                                                                       30.1%
                        CRS, social media)



Tourism partners (tour operators, travel agencies, tourism
  organizations, conference & event organizers, others                             11.0%
                       subdivided)
                                                                          The values for Germany represent weighted means between the
22                                                                        values of the individual and the chain hotels.
Subdivision of electronic Bookings in Germany 2011
                                                       Share of total Bookings


 Internet distribution systems (IDS)                                                 19.5%
 Real-time bookings on own website                                                    5.9%
 Global distribution systems (GDS)                                                    2.7%
 Hotel chains and affiliations with CRS                                               1.8%
 Social media                                                                         0.2%
 Share of total bookings                                                             30.1%




                                              The values for Germany represent weighted means between the
23                                            values of the individual and the chain hotels.
Austria




24
Booking Channels in Austria 2011
                                                       0.0%          5.0%      10.0%       15.0%     20.0%   25.0%   30.0%

                                                E-mail                                                               27.6%

                                            Telephone                                          15.3%

                        Booking form on hotel website                                        14.2%

                    Internet distribution systems (IDS)                                    12.6%

                       Tour operators / travel agencies                             9.6%

                   Real-time booking on hotel website                        6.6%

                                              Walk-ins                4.0%

                                           Letters / fax          3.1%

Local and regional tourism organizations / associations         2.3%

                        Event & conference organizers         1.5%

                    Global distribution systems (GDS)         1.2%

                            Other distribution channels       1.0%

                 Hotel chains and affiliations with CRS    0.6%

                                          Social media     0.4%

                        National tourism organizations     0.2%
25
Booking Types for the Hotels in Austria 2011


 Personal (walk-ins, others subdivided)                                      4.5%
 Written (fax, letters, e-mails, booking form on website)                    44.9%
 By phone (telephone, Call Centre)                                           15.3%
 Electronic (IDS, real-time bookings on website, GDS, CRS, social media)     21.4%
 Tourism partners (tour operators, travel agencies, tourism organizations,
 conference & event organizers, others subdivided)                           14.1%




26
Booking Types for the Hotels in Austria 2011

                                                            0.0%    10.0%    20.0%       30.0%   40.0%    50.0%



                     Personal (walk-ins, others subdivided)        4.5%




     Written (fax, letters, e-mails, booking form on website)                                            44.9%




                          By phone (telephone, call centre)                  15.3%




      Electronic (IDS, real-time bookings on website, GDS,
                                                                                     21.4%
                        CRS, social media)



       Tourism partners (tour operators, travel agencies,
     tourism organizations, conference & event organizers,                  14.1%
                       others subdivided)


27
Switzerland




28
Booking Channels in Switzerland 2011
                                                        0.0%            5.0%          10.0%   15.0%       20.0%       25.0%

                                                  E-mail                                                              23.4%

                                             Telephone                                                        20.6%

                     Internet distribution systems (IDS)                                              16.4%

                          Booking form on hotel website                            7.5%

                Real-time booking on own hotel website                         6.3%

                                               Walk-ins                        5.9%

                        Tour operators / travel agencies                    4.7%

                                            Letters / fax              3.1%

 Local and regional tourism organizations / associations               3.1%

                         Conference & event organizers               2.2%

                      Global distribution systems (GDS)              2.1%

                          National tourism organizations         1.8%

Hotel chains & affiliations with CRS (e.g. Accor, Maritim,…     1.5%

                             Other distribution channels        1.4%

                                           Social media       0.1%
  29
Booking Types for Hotels in Switzerland 2011


 Personal (walk-ins, others subdivided)                                      6.6%
 Written (fax, letters, e-mails, booking form on website)                    34.0%
 By phone (telephone, Call Centre)                                           20.6%
 Electronic (IDS, real-time bookings on website, GDS, CRS, social media)     26.4%
 Tourism partners (tour operators, travel agencies, tourism organizations,
 conference & event organizers, others subdivided)                           12.5%




30
Booking Types for the Hotels in Switzerland 2011

                                                            0.0%   10.0%           20.0%       30.0%      40.0%



                     Personal (walk-ins, others subdivided)        6.6%




     Written (fax, letters, e-mails, booking form on website)                                          34.0%




                          By phone (telephone, call centre)                            20.6%




Electronic (IDS, real-time bookings on website, GDS, CRS,
                                                                                               26.4%
                        social media)



 Tourism partners (tour operators, travel agencies, tourism
   organizations, conference & event organizers, others                    12.5%
                        subdivided)

31
Evolution of Booking Channels in Swiss Hotels 2002-2011
                                                           0.0%             10.0%       20.0%           30.0%     40.0%           50.0%

Traditional distribution (telephone, fax, letters, walk-ins)
                                                                                                          29.6%

                                                     E-mail
                                                                                                23.4%

                       Internet distribution systems (IDS)
                                                                                       16.4%

     Booking form & real-time booking on hotel website
                                                                                    13.8%

                                   Tourism organizations                                                           2002 (n=202)
                                                                         4.9%

                        Tour operators & travel agencies                                                           2005 (n=94)
                                                                         4.7%
                                                                                                                   2006 (n=100)
                          Conference & event organizers
                                                                   2.2%                                            2008 (n=184)
                       Global distribution systems (GDS)
                                                                  2.1%                                             2009 (n=198)

                                   Hotel chains with CRS
                                                                                                                   2010 (n=211)
                                                                  1.5%

                                           Other channels                                                          2011 (n=196)
                                                                  1.4%

                                             Social media
     32                                                        0.1%
Evolution of Booking Channels in Swiss Hotels 2006-2011
                                                           0.0%       5.0%       10.0%   15.0%    20.0%   25.0%    30.0%    35.0%   40.0%

Traditional distribution (telephone, fax, letters, walk-ins)
                                                                                                                     29.6%

                                                     E-mail
                                                                                                           23.4%

                      Internet Distribution Systems (IDS)
                                                                                                 16.4%

                        Reservation form (Website hotel)
                                                                                7.5%

                       Real-time booking (Website hotel)                                                                   2006 (n=100)
                                                                             6.3%

                                   Tourism organisations
                                                                          4.9%                                             2008 (n=184)
                         Tour operators / travel agencies
                                                                         4.7%
                                                                                                                           2009 (n=198)
                          Event & conference organizers
                                                                   2.2%

                       Global distribution systems (GDS)                                                                   2010 (n=211)
                                                                   2.1%

                                   Hotel chains with CRS                                                                   2011 (n=196)
                                                                  1.5%

                                           Other channels
                                                                  1.4%

   33
                                             Social media
                                                               0.1%
Distribution Trends in the Swiss Hospitality Sector 2002-2011
                                                                    0%   5%   10% 15% 20% 25% 30% 35% 40% 45% 50%



     Traditional distribution (telephone, fax, letters, walk-ins,
                                others)




                    Electronic request (e-mail, booking form)




                                                                                                       2002 (n=202)
     Online booking (GDS, IDS/OTA, direct booking on hotel
          website, hotel chains with CRS, social media)                                                2005 (n=94)
                                                                                                       2006 (n=100)
                                                                                                       2008 (n=184)
                                                                                                       2009 (n=198)
Tourism partners (tour operators, DMO national-local, event
             & conference organizers, others)                                                          2010 (n=211)
                                                                                                       2011 (n=196)
34
Distribution Trends in the Swiss Hospitality Sector 2002-2011

     2011 (n=196)


     2010 (n=211)


     2009 (n=198)


     2008 (n=184)


     2006 (n=100)


      2005 (n=94)


     2002 (n=202)

                    0%   10%   20%     30%       40%        50%       60%       70%        80%   90%   100%


                                     Direct distribution (hotel-customer)

                                     Indirect distribution (hotel-intermediary-customer)
35
Synthesis D-A-CH




36
Synthesis D-A-CH: Booking Channels

                                             Telephone

                     Internet distribution systems (IDS)

                                                 E-mail

                          Booking form on own website

               Real-time booking on own hotel website

                        Tour operators / travel agencies

                                               Walk-ins                                                      Switzerland
                                            Letters /fax                                                     Austria

                     Global distribution systems (GDS)                                                       Germany

 Local and regional tourism organizations / associations

                         Event & conference organizers

                  Hotel chains and affiliations with CRS

                             Other distribution channels

                         National tourism organizations

                                           Social media

37                                                     0.0%        5.0%        10.0%        15.0%   20.0%   25.0%      30.0%


                                      The values for Germany represent weighted means between the
                                      values of the individual and the chain hotels.
Synthesis D-A-CH: Types of Booking

                                                           0.0%   10.0%         20.0%          30.0%          40.0%          50.0%



                    Personal (walk-ins, others subdivided)




    Written (fax, letters, e-mails, booking form on website)




                         By phone (telephone, call centre)

                                                                                                                   Germany

                                                                                                                   Austria
Electronic (IDS, real-time bookings on website, GDS, CRS,
                        social media)
                                                                                                                   Switzerland



 Tourism partners (tour operators, travel agencies, tourism
   organizations, conference & event organizers, others
                        subdivided)

                                                                          The values for Germany represent weighted means between the
  38                                                                      values of the individual and the chain hotels.
Observations on Booking Channels D-A-CH (1)
• Direct booking channels (telephone, fax, walk-ins, e-mail, form or booking
  engine on own website) are still the dominant sales tools for the hotels (67.7%) in
  Germany, Austria and Switzerland (D-A-CH), although their proportion in the
  distribution mix has been steadily decreasing in the last years. 10 years ago their
  proportion was about three quarters of all bookings.
• The trends towards online booking channels is unbroken. The channel with the
  highest growth rates are the Internet Distribution Systems (IDS) which could
  multiply their market share within the last 5 years.
• On average 18.9% of the bookings in the D-A-CH region are realized through
  IDS. The proportion in Germany (19.5%) exceeds those of Switzerland (16.4%)
  and Austria (12.6%).
• About one quarter of all enterprises generate more than 30% of all sales
  through IDS whereas 18% of the hotels get between 20 and 30% of the bookings
  through this channel.



39
Observations booking Channels D-A-CH (2)

• The market share of the tourism organizations has been stagnant resp. slightly
  declining over the last years and is currently fluctuating at 3.3% of all bookings. In
  Switzerland the market share of the DMO is clearly higher with an average of
  4.9%, but the overall trend is also negative (in 2006 for example 6.5% of all
  bookings in Swiss hotels were realized through DMO).




40
Table of Contents


 • Executive Summary
 • Background of the Study
 • Booking Channels
 • IDS (Internet Distribution Systems)
 • Costs of the Distribution
 • Selection Criteria for IDS
 • New Forms of Distribution
 • Channel Manager




41
D-A-CH: Market Shares of Internet Distribution Systems (OTA)
                                                                       0%             10%          20%   30%         40%

                                                      Booking.com                                              35%

                                                               HRS                                       28%

                                                           Hotel.de                          13%

                                                    other platforms                         12%

                                                           Expedia               3%

                                                            Venere           2%

                                                           Tiscover         1%

                                                        Hotels.com          1%

                                                           Bergfex          1%

 Unister (ab-in-den-urlaub.de, hotelreservierung.de, reise.de, etc.)        1%

                                        GHIX (Global Hotel Index)           1%

                                                              eBay          1%

                                                    lastminute.com          1%

                                                          eBookers          1%

                                                           Hotel.ch     0%
42
Comparison of the Market Shares of Internet Distribution Systems (OTA)
                                                           by Countries

                      Hotel.ch

               lastminute.com
                                                                                                 Switzerland
                    eBookers

                         eBay                                                                    Austria
                       Unister

     GHIX (Global Hotel Index)        3%                                                         Germany

                   Hotels.com

                      Bergfex                 8%

                     Tiscover                   9%

                       Venere

                      Expedia           5%
                                       4%
               other platforms

                     Hotel.de          4%
                                         6%
                                                           16%
                         HRS                    9%
                                                  11%
                                                                                          34%
                 Booking.com                                                                                           52%
                                                                                                        43%
                                                                                29%
                             0.0%            10.0%           20.0%            30.0%             40.0%          50.0%         60.0%
43


                                 The values for Germany represent weighted means between the
                                 values of the individual and the chain hotels.
Comparison of the Market Shares of Internet Distribution Systems in
                                                           Germany 2011

                      0.0%          5.0%      10.0%       15.0%       20.0%        25.0%   30.0%      35.0%     40.0%

                  HRS                                                                                   34.4%

              Hotel.de                                            15.8%

              Tiscover    0.4%

         Booking.com                                                                       28.5%

              Expedia                4.1%

               Venere        1.4%

           Hotels.com          2.1%

               Unister       1.2%

        lastminute.com       1.1%                                                                       HRS
                                                                                              50.6%     Hotel.de
                 eBay     0.5%                                                                          Tiscover
                                                                                              28.5%     Booking.com
             eBookers     0.5%                                                                          Expedia
                                                                                               7.7%     Venere
        other platforms                           9.9%                                                  Hotels.com
44


                                 The values for Germany represent weighted means between
                                 the values of the individual and the chain hotels.
Comparison of the Market Shares of Internet Distribution Systems in
                                                                Austria 2011

                             0.0%          5.0%       10.0%      15.0%    20.0%   25.0%   30.0%   35.0%    40.0%   45.0%

                         HRS                                  11.2%

                     Hotel.de                  5.6%

                     Tiscover                          9.1%

                 Booking.com                                                                                       42.6%

                      Expedia              3.5%

                       Venere           3.1%

                   Hotels.com       0.8%

                      Bergfex                     7.9%

                       Unister   0.6%                                                                       HRS
                                                                                                   25.9%    Hotel.de
                         eBay       1.1%                                                                    Tiscover
                                                                                                   42.6%    Booking.com
     GHIX (Global Hotel Index)   0.6%                                                                       Expedia
                                                                                                    7.4%    Venere
               other platforms                                    13.9%                                     Hotels.com
45
Comparison of the Market Shares of Internet Distribution Systems in
                                                           Switzerland 2011
                             0.0%              10.0%     20.0%     30.0%   40.0%    50.0%           60.0%

                         HRS                      9.4%

                     Hotel.de           3.9%

                     Tiscover    0.4%

                 Booking.com                                                                52.3%

                      Expedia              4.9%

                       Venere        2.5%

                   Hotels.com       1.1%

                      Bergfex       1.3%

     GHIX (Global Hotel Index)        3.3%                                                  HRS
                                                                                   13.7%    Hotel.de
                    eBookers        1.3%                                                    Tiscover
                                                                                   52.3%    Booking.com
                      Hotel.ch   0.7%                                                       Expedia
                                                                                   8.5%     Venere
               other platforms                             19.0%
                                                                                            Hotels.com
46
Observations on Internet Distribution Systems (IDS)
• Booking.com , HRS and hotel.de are the most frequently used IDS in Germany,
  Austria and Switzerland.
• Booking.com is dominant in Austria with 43% as well as in Switzerland with 53%.
• In Germany, HRS with a market share of 34.4% is the clear leader. If you add the
  booking shares of hotel.de (15.8.5%) and Tiscover (0.4%) to it, HRS reaches 50.6%
  of the bookings realized through online booking platforms in Germany, followed by
  booking.com with 28.5%.
• Expedia is a further important player, especially for business hotels, for 4-5 star
  hotels and for hotel chains.
• The market share of booking.com is bigger in the leisure hotels (44%) than in the
  business hotels (28%), whereas for HRS it is quite the contrary (business hotels:
  37% and leisure hotels: 18%)




 47
Table of Contents


 • Executive Summary
 • Background of the Study
 • Booking Channels
 • IDS (Internet Distribution Systems)
 • Costs of the Distribution
 • Selection Criteria for IDS
 • New Forms of Distribution
 • Channel Manager




48
Estimations of Revenues and Commission Costs

• The estimations on the following slides are based on different hypotheses:
     • The calculations use the lodging revenues of the hospitality sector as well as on the
       hypothesis that the booking turnover can be distributed proportionally to the market
       shares of the survey channels.
     • The transposition of the figures of the sample to the hospitality sector is only valid to a
       certain extent.
     • A full cost calculation should also take into consideration the fixed costs of particular
       channels (staff), in addition to clearing costs or the costs of the PMS interface.



 The presented data/estimations show therefore only an order of magnitude!




49
D-A-CH: Estimation of Revenues and Commission Costs by
                                                  Distribution Channel

• In 2011 online booking channels (GDS, IDS, real-time booking on hotel website)
  generated a turnover of 7.6 billion Euros in the hospitality sector of the three
  countries.

• The total amount of commissions paid to intermediaries by the hotels is almost
  1.3 billion euros, thereof just under 800 million Euros for online booking
  channels.
•
• The online travel agencies (OTAs) with estimated 594 million Euros seem to
  profit most.




50
Germany: Estimation of Revenues and Commission
                                                      Costs per Channel

• In 2011 online booking channels (GDS, IDS, real-time booking on hotel website)
  generated a turnover of more than 5 billion Euros in the German hospitality
  sector.

• The total amount of commissions paid to intermediaries by the hotels is more
  than 900 million Euros, thereof 575 million Euros for online booking channels.

• The online travel agencies (OTAs) with estimated 421 million Euros seem to
  profit most.




51
Austria: Estimation of Revenues and Commission Costs
                                                           per Channel

• In 2011 online booking channels (GDS, IDS, real-time bookings on hotel website)
  in the Austrian hospitality sector generated a turnover of just under 1.3 billion
  Euros.

• The total amount of commissions paid to intermediaries by the hotels is about
  251 million Euros, thereof 134 million Euros for online booking channels.

• The online travel agencies (OTAs) with estimated 101 million Euros seem to
  profit most.




52
Switzerland: Estimation of Revenues and Commission
                                                       Costs per Channel

• In 2011 online booking channels (GDS, IDS, real-time bookings on hotel website)
  in the Swiss hospitality sector generated a turnover of more than one billion
  Swiss francs (1’061 millions).

• The total amount of commissions paid to intermediaries by the hotels is almost
  178 million Swiss francs, thereof just under 110 million Swiss francs for online
  booking channels.

• The online travel agencies (OTAs) with estimated 85 million Swiss francs seem
  to profit most.




53
Table of Contents


 • Executive Summary
 • Background of the Study
 • Booking Channels
 • IDS (Internet Distribution Systems)
 • Costs of the Distribution
 • Selection Criteria for IDS
 • New Forms of Distribution
 • Channel Manager




54
What are your Selection Criteria for Online Travel Agencies
                                      (OTA) resp. Internet Distribution Systems (IDS)?

  Relevance of IDS as sales channel (booking
                   volume)

      Marketing power of IDS / market presence

        Relevance of IDS for targeted customer
                      segments
                                                                                         not important at all
             Costs (charges and commissions)

   hotel presentation and information (pictures,                                         not important
               vidéos, texts, maps)
       Data administration / user-friendliness of
                       extranet                                                          neutral

              Booking technology and features

  Additional benefit for the guest (e.g. traveller                                       important
                     reviews)

 Administrative aspects (e.g. p. ex. accounting)                                         very important

 User support (e.g. hotline, statistical analysis,
                     etc.)

Automatic exchange of data with hotel software

                         Other selection criteria

 55                                                  0%   20%   40%   60%   80%   100%
Selection Criteria for Internet Distribution Systems (IDS)

• The main criteria for choosing an adequate Internet distribution system are its
  sales strength, that means the hotels are looking for players with high booking
  volumes, strong marketing activities and which are popular for the customers in
  the target markets (important to very important for 90%).


• The costs are also relevant (important to very important for about 80%), but not
  decisive for the decision-making process.


• Other relevant criteria are connected to the data administration and the
  possibilities of presentation of the hotel, as well as to the quality of the booking
  technology of the IDS.




56
Table of Contents


 • Executive Summary
 • Background of the Study
 • Booking Channels
 • IDS (Internet Distribution Systems)
 • Costs of the Distribution
 • Selection Criteria for IDS
 • New Forms of Distribution
 • Channel Manager




57
Use of new Distribution Forms: Deal Offers

                                      Do you use deal offers of online portals (e.g.
                                      Groupon, DailyDeal, etc.)?
         18%




                                                     No   Yes



                           82%




     The experiences of current users of deal offers mostly proved to be positive. For hotels
     not using such offers currently respectively having used them in the past their
58
     experiences rather proved to be negative.
New Forms of Distribution: Important Providers of Deal Offers
                                                                     Anz
                                                                                       10,1%
HRS "Hot Deal"                                                        104
                                                                                4,0%
booking.com                                                            41
                                                                                2,4%
Groupon                                                                25
                                                                               1,8%
Hotel.de                                                               19
                                                                               1,5%
HolidayCheck                                                           15
                                                                               0,9%
Dein Deal                                                                  9
                                                                               0,5%
DailyDeal                                                                  5
                                                                               0,4%
Venere                                                                     4   0,3%
eboutic.ch                                                                 3   0,3%
Expedia                                                                    3


All in all 37 different providers of deal offers were mentioned. The corresponding
offers of the leading internet distribution systems such as HRS and booking.com are
mostly used.




59
New Forms of Distribution: Do you use mobile Distribution Channels?




     Yes, our own mobile booking app         81




                                                                                                No

          Yes, a mobile hotel website                   214
                                                                                                Yes, a mobile hotel website

                                                                                                Yes, our own mobile booking
                                                                                                app




                                  No                                                696




                                        0   100   200     300   400   500   600   700     800
60
D-A-CH: Use of new Media (ICT)*


                              Own hotel-specific app




                              Own YouTube channel




                    Website adapted for smartphones
                                                                                        Switzerland
                                                                                        Austria
                                                                                        Germany
           Real-time booking system on own website




                                  Facebook account




                                        Own website

*information and communication technology
                                                       0%   20%     40%    60%    80%             100%
61
Use of new Forms of Distribution

• New distribution forms such as the deal offers of the internet distribution systems
  are only used by a minority of the hotels (<20%). The experiences of current users
  mostly proved to be positive, whereas the non-users were considerably sceptical.
• The market leader of the deal offers are HRS and booking.com, which can be
  explained by their strong position in the online market. Further frequently
  mentioned offers are: DailyDeal, Groupon
• Just under one third of the enterprises uses mobile forms of distribution. More
  frequently they use websites, which are adapted to mobile end devices (e.g.
  iPhone), than a specific app.
• Hotels, having invested in those new possibilities of distribution, have the following
  characteristics: 4-5 star hotels, hotel chains, big hotels.




62
Table of Contents


 • Executive Summary
 • Background of the Study
 • Booking Channels
 • IDS (Internet Distribution Systems)
 • Costs of the Distribution
 • Selection Criteria for IDS
 • New Forms of Distribution
 • Channel Manager




63
D-A-CH: Channel Manager
How do you manage your rates and availabilities on the internet booking platforms?


                                                  Others




                                     Through an agency




     With the hotel software or the booking system (CRS
                          interface)




      With a software solution, simultanously for several
                platforms (Channel Manager)




          Manually on the corresponding online platform



                                                            0%   10%   20%   30%     40%   50%   60%   70%
64
Channel Manager

• Two third of the questioned hotels managed their rates and availabilities manually
  on the internet booking platform.


• There is an above-average use of channel managers in 4-5 star hotels, hotel
  chains, business hotels as well as urban hotels.




65
Contact
Roland Schegg & Michael Fux
University of Applied Sciences of Western Switzerland Valais (HES-SO Valais)
Institute of Tourism (ITO)

Professors at the Swiss School of Tourism, Sierre

TechnoPôle 3
CH-3960 Sierre
Switzerland
Tel. 0041 (0)27 606 90 04

roland.schegg@hevs.ch / michael.fux@hevs.ch
www.hevs.ch / www.etourism-monitor.ch

Bachelor of Science HES-SO in Tourism at the Swiss School of Tourism in
Sierre (http://tourismus.hevs.ch)




 66

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The Power of Online Travel Agencies (OTA): Results of an Online Survey on Hotel Distribution in Germany, Austria and Switzerland for 2011

  • 1. The Power of Internet Distribution Systems (IDS) Results of an Online Survey on Hotel Distribution in Germany, Austria and Switzerland for 2011 Roland Schegg & Michael Fux roland.schegg@hevs.ch / michael.fux@hevs.ch Institute of Tourism, University of Applied Sciences of Western Switzerland Valais Sierre, March 2012 1
  • 2. Table of Contents • Executive Summary • Background of the Study • Booking Channels • IDS (Internet Distribution Systems) • Costs of Distribution • Selection Criteria for IDS • New Forms of Distribution • Channel Manager 2
  • 3. Glossary of the Used Terms and Abbreviations CRS Central Reservation System D-A-CH Germany, Austria and Switzerland DMO Destination Management Organisation DMS Destination Management Systems such as TOMAS or Deskline from Feratel GDS Global Distribution Systems (e.g. Amadeus or Sabre) hs hotelleriesuisse (Swiss Hotel Association) HRS Hotel Reservation Service (http://www.hrs.de/) IDS Internet Distribution System (online booking platforms) IHA German Hotel Association LT Supplier LTO Local Tourism Organisation NTO National Tourism Organisation OTA Online Travel Agency ÖHV Austrian Hotel Association PMS Property Management System (hotel software, Front Office System) RTO Regional Tourism Organisation (e.g. Valais Tourism) SEM Search Engine Marketing (e.g. Google Adwords) SEO Search Engine Optimisation STC Switzerland Travel Centre (national booking system in Switzerland) 3
  • 4. Executive Summary : Direct Distribution still Important • Direct bookings (telephone, fax, walk-ins, e-mail, Web form) without intermediaries are still the dominant channels for the hotels in Germany, Austria and Switzerland, even though their proportion in the distribution mix is steadily decreasing since a couple of years. – In 2011, 67% of the bookings in Switzerland, 68% in Germany and 71% in Austria were generated via direct sales channels. • Traditional booking channels as telephone, letter or fax, as well as sales through tourism partners (travel agencies, tourism boards) are declining. The losses through these channels have been more than 30% over the last 10 years. 4
  • 5. Executive Summary: Growing Shares of Electronic Distribution Channels • Overall more than one out of four bookings is generated through online channels. Internet Distribution Systems (IDS/OTA) are clearly dominant (D-A- CH: 18.9%, D: 20.8%, A: 12.6%, CH: 16.4%) in this context. • The proportion of real-time bookings on the own website of the hotel only reaches 5.5% (individual hotels in Germany: 4.9%, hotel chains in Germany: up to 8.2%). 5
  • 6. Executive Summary : The Power of Internet Distribution Systems (I) • One out of four enterprises in our study generates more than 30% of all sales through IDS. 18% of the hotels show a proportion of IDS in the distribution mix between 20 and 30% which underlines the importance of these portals as well as the dependence of many hotels on these players. • According to our extrapolations, online booking channels (GDS, IDS/OTA, real- time booking on hotel website, CRS) generated a turnover of 7.6 Billion Euros in the three countries. • The total amount of commissions paid to intermediaries by the hotels totals almost 1.3 Billion Euros. Just under 800 Million Euros were spent for commission to the online channels. • With estimated 594 Million Euros, most of the commission payments have gone to IDS such as HRS, hotel.de or booking.com. 6
  • 7. Executive Summary : The Power of Internet Distribution Systems (II) • Booking.com, Hotel Reservation Service (HRS) and hotel.de are the most frequently used IDS in Germany, Austria and Switzerland. • Booking.com with 43% in Austria and 53% in Switzerland is the dominant platform in these countries. • In Germany, HRS with a market share of 34.4% is the clear leader. If you add the booking shares of hotel.de (15.8.5%) and Tiscover (0.4%) to it, HRS reaches 50.6% of the bookings realized through online booking channels in Germany, followed by booking.com with 28.5%. • Expedia is another significant player, especially for business hotels, for 4-5 star hotels and for hotel chains. 7
  • 8. Executive Summary: Distribution Trends • One out of five hotels use deal offers such as DailyDeal or Groupon today, amongst them especially big hotels, 5 star hotels and hotel chains. • About 30% of the questioned hoteliers use a channel manager in order to update the availabilities in the multiple distribution channels. However, more than 60% of the enterprises still update rates and availabilities manually in the different channels. The remaining hotels use their hotel software respectively reservation systems or cooperate with agencies. • Just under one third of the enterprises make use mobile forms of distribution, more frequently in the form of a website adapted to mobile internet, rather than a specific app. • The hotels investing in these new possibilities of distribution are especially 4-5 star hotels, hotel chains and big hotels. 8
  • 9. Table of Contents • Executive Summary • Background of the Study • Booking Channels • IDS (Internet Distribution Systems) • Costs of the Distribution • Selection Criteria for IDS • New Forms of Distribution • Channel Manager 9
  • 10. Background of the Study • To get an insight into the distribution trends in the hospitality sector on an European level, the German Hotel Association (IHA), the Austrian Hotel Association (ÖHV) and the Swiss Hotel Association (hotelleriesuisse) in collaboration with the Institute of Tourism of the University of Applied Sciences Western Switzerland Valais (HES-SO Valais) in Sierre have teamed up to conduct a common survey. • The online survey for the reference year 2011 was conducted between December 2011 and January 2012, terminated on 18 January. Because of the importance of the hotel chains in Germany a separate survey was conducted (responses of 28 chains involving more than 400 hotels). • The present results are based on the responses of 1406 hotels in Germany, Austria and Switzerland (D-A-CH), which corresponds to a response rate of about 10% (9.7% in Austria, 10% in Switzerland and 12.8% in Germany). 10
  • 11. Survey Details Switzerland Austria Germany Total Response 201 119 - 686 individual hotels 1406 survey - 28 hotel chains with at least 400 hotels -> that means responses from a minimum of 1086 hotels Population 2035 1216 About 8.500 hotels participating in the German Hotel Classification and IHA members Response rate 10% 9.7% 12.8% 11
  • 12. Table of Contents • Executive Summary • Background of the Study • Booking Channels • IDS (Internet Distribution Systems) • Costs of the Distribution • Selection Criteria for IDS • New Forms of Distribution • Channel Manager 12
  • 13. Booking Channels (D-A-CH) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Telephone 24.1% E-mail 19.7% Internet distribution systems (IDS) 18.9% Booking form on hotel website 8.4% Walk-ins 5.7% Real-time booking on hotel website 5.5% Tour operators / travel agencies 4.9% Letters / fax 4.3% Local and regional tourism organizations 2.7% Global distribution systems (GDS) 1.6% Event & conference organizers 1.5% Other channels 1.1% Hotel chains & affiliations with CRS 0.9% National tourism organizations 0.6% 13 Social media 0.2%
  • 14. Aggregated Booking Channels (D-A-CH) 10.2% Traditional distribution (telephone, fax, letters, walk-ins, others) 34.7% Electronic requests (e-mail, booking form own website) 27.0% Real-time online booking (GDS, IDS, booking engine on hotel website, hotel chains with CRS, social media) Tourism partners (tour operators, DMO national-local, conference/event organizers, others) 28.0% 14
  • 15. Direct versus Indirect Booking (D-A-CH) 31.8% Direct distribution (hotel- customer) Indirect distribution (hotel- intermediary-customer) 68.2% 15
  • 16. Booking Types in 2011 (D-A-CH) Personal (walk-ins, others, subdivided) 6.3% Written (fax, letters, e-mails, booking form on website) 32.4% By phone (telephone, Call Centre) 24.1% Electronic (IDS, real-time bookings on website, GDS, CRS, social media) 27.1% Tourism partners (tour operators, travel agencies, tourism organisations, conference & event organizers, others subdivided) 10.3% 16
  • 17. Profiling of Booking Channels by Enterprise Characteristics (1) • The traditional direct distribution channels (telephone, letter, etc.) are considerably less important in hotel chains and in the classical leisure hotels than in small, urban hotels which address business travellers. • Real-time bookings on the own hotel website are noticeably more frequent in urban hotels and hotel chains than in other hotel types. • Online sales (IDS/OTA, GDS) are clearly more important in urban and in business hotels than in leisure hotels. It is interesting to observe, that for big 4-5 stars hotels the IDS/OTA have comparably low market shares, simultaneously the bookings generated through GDS are above-average though. 17
  • 18. Profiling of Booking Channels by Enterprise Characteristics (2) • Above-average sales through travel agencies and tour operators are realized by hotel chains in holiday resorts. In this context, big 4 star hotels (> 50 rooms) play an important role. • Local and regional tourism organizations are clearly more important for hotels positioned in the leisure segment than for other types of enterprises such as big 4- 5 star hotels or hotel chains.  In business hotels traditional booking channels such as telephone and letter/fax on the one hand and online channels such as IDS/OTA or GDS on the other hand are comparably more important than in other types of enterprises.  In leisure hotels requests via electronic channels such as e-mail and website form as well as bookings through tourism partners (travel agencies/tour operators and tourism organizations) are clearly more used than in other types of enterprises. 18
  • 20. Booking Channels of the Hotels in Germany 2011 Share of total Bookings 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Telephone 25.0% Internet distribution systems (IDS) 19.5% E-mail 17.1% Booking form on hotel website 6.2% Real-time booking on hotel website 5.9% Tour operators / travel agencies 5.9% Walk-ins 5.3% Letters / fax 4.9% Global distribution systems (GDS) 2.7% Local and regional tourism organizations / associations 2.3% Conference & event organizers 1.9% Hotel chains & affiliations with CRS 1.8% Other distribution channels 0.9% National tourism organizations 0.5% Social media 0.2% The values for Germany represent weighted means between the 20 values of the individual and the chain hotels.
  • 21. Booking Types for the Hotels in Germany 2011 Personal (walk-ins, others subdivided) 5.7% Written (fax, letters, e-mails, booking form on website) 28.2% By phone (telephone, Call Centre) 25.0% Electronic (IDS, real-time bookings on website, GDS, CRS, social media) 30.1% Tourism partners (tour operators, travel agencies, tourism organizations, conference & event organizers, others subdivided) 11.0% The values for Germany represent weighted means between the 21 values of the individual and the chain hotels.
  • 22. Booking Types for the Hotels in Germany 2011 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% Personal (walk-ins, others subdivided) 5.8% Written (fax, letters, e-mails, booking form on website) 28.2% By phone (telephone, call centre) 25.0% Electronic (IDS, real-time bookings on website, GDS, 30.1% CRS, social media) Tourism partners (tour operators, travel agencies, tourism organizations, conference & event organizers, others 11.0% subdivided) The values for Germany represent weighted means between the 22 values of the individual and the chain hotels.
  • 23. Subdivision of electronic Bookings in Germany 2011 Share of total Bookings Internet distribution systems (IDS) 19.5% Real-time bookings on own website 5.9% Global distribution systems (GDS) 2.7% Hotel chains and affiliations with CRS 1.8% Social media 0.2% Share of total bookings 30.1% The values for Germany represent weighted means between the 23 values of the individual and the chain hotels.
  • 25. Booking Channels in Austria 2011 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% E-mail 27.6% Telephone 15.3% Booking form on hotel website 14.2% Internet distribution systems (IDS) 12.6% Tour operators / travel agencies 9.6% Real-time booking on hotel website 6.6% Walk-ins 4.0% Letters / fax 3.1% Local and regional tourism organizations / associations 2.3% Event & conference organizers 1.5% Global distribution systems (GDS) 1.2% Other distribution channels 1.0% Hotel chains and affiliations with CRS 0.6% Social media 0.4% National tourism organizations 0.2% 25
  • 26. Booking Types for the Hotels in Austria 2011 Personal (walk-ins, others subdivided) 4.5% Written (fax, letters, e-mails, booking form on website) 44.9% By phone (telephone, Call Centre) 15.3% Electronic (IDS, real-time bookings on website, GDS, CRS, social media) 21.4% Tourism partners (tour operators, travel agencies, tourism organizations, conference & event organizers, others subdivided) 14.1% 26
  • 27. Booking Types for the Hotels in Austria 2011 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Personal (walk-ins, others subdivided) 4.5% Written (fax, letters, e-mails, booking form on website) 44.9% By phone (telephone, call centre) 15.3% Electronic (IDS, real-time bookings on website, GDS, 21.4% CRS, social media) Tourism partners (tour operators, travel agencies, tourism organizations, conference & event organizers, 14.1% others subdivided) 27
  • 29. Booking Channels in Switzerland 2011 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% E-mail 23.4% Telephone 20.6% Internet distribution systems (IDS) 16.4% Booking form on hotel website 7.5% Real-time booking on own hotel website 6.3% Walk-ins 5.9% Tour operators / travel agencies 4.7% Letters / fax 3.1% Local and regional tourism organizations / associations 3.1% Conference & event organizers 2.2% Global distribution systems (GDS) 2.1% National tourism organizations 1.8% Hotel chains & affiliations with CRS (e.g. Accor, Maritim,… 1.5% Other distribution channels 1.4% Social media 0.1% 29
  • 30. Booking Types for Hotels in Switzerland 2011 Personal (walk-ins, others subdivided) 6.6% Written (fax, letters, e-mails, booking form on website) 34.0% By phone (telephone, Call Centre) 20.6% Electronic (IDS, real-time bookings on website, GDS, CRS, social media) 26.4% Tourism partners (tour operators, travel agencies, tourism organizations, conference & event organizers, others subdivided) 12.5% 30
  • 31. Booking Types for the Hotels in Switzerland 2011 0.0% 10.0% 20.0% 30.0% 40.0% Personal (walk-ins, others subdivided) 6.6% Written (fax, letters, e-mails, booking form on website) 34.0% By phone (telephone, call centre) 20.6% Electronic (IDS, real-time bookings on website, GDS, CRS, 26.4% social media) Tourism partners (tour operators, travel agencies, tourism organizations, conference & event organizers, others 12.5% subdivided) 31
  • 32. Evolution of Booking Channels in Swiss Hotels 2002-2011 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Traditional distribution (telephone, fax, letters, walk-ins) 29.6% E-mail 23.4% Internet distribution systems (IDS) 16.4% Booking form & real-time booking on hotel website 13.8% Tourism organizations 2002 (n=202) 4.9% Tour operators & travel agencies 2005 (n=94) 4.7% 2006 (n=100) Conference & event organizers 2.2% 2008 (n=184) Global distribution systems (GDS) 2.1% 2009 (n=198) Hotel chains with CRS 2010 (n=211) 1.5% Other channels 2011 (n=196) 1.4% Social media 32 0.1%
  • 33. Evolution of Booking Channels in Swiss Hotels 2006-2011 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% Traditional distribution (telephone, fax, letters, walk-ins) 29.6% E-mail 23.4% Internet Distribution Systems (IDS) 16.4% Reservation form (Website hotel) 7.5% Real-time booking (Website hotel) 2006 (n=100) 6.3% Tourism organisations 4.9% 2008 (n=184) Tour operators / travel agencies 4.7% 2009 (n=198) Event & conference organizers 2.2% Global distribution systems (GDS) 2010 (n=211) 2.1% Hotel chains with CRS 2011 (n=196) 1.5% Other channels 1.4% 33 Social media 0.1%
  • 34. Distribution Trends in the Swiss Hospitality Sector 2002-2011 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Traditional distribution (telephone, fax, letters, walk-ins, others) Electronic request (e-mail, booking form) 2002 (n=202) Online booking (GDS, IDS/OTA, direct booking on hotel website, hotel chains with CRS, social media) 2005 (n=94) 2006 (n=100) 2008 (n=184) 2009 (n=198) Tourism partners (tour operators, DMO national-local, event & conference organizers, others) 2010 (n=211) 2011 (n=196) 34
  • 35. Distribution Trends in the Swiss Hospitality Sector 2002-2011 2011 (n=196) 2010 (n=211) 2009 (n=198) 2008 (n=184) 2006 (n=100) 2005 (n=94) 2002 (n=202) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Direct distribution (hotel-customer) Indirect distribution (hotel-intermediary-customer) 35
  • 37. Synthesis D-A-CH: Booking Channels Telephone Internet distribution systems (IDS) E-mail Booking form on own website Real-time booking on own hotel website Tour operators / travel agencies Walk-ins Switzerland Letters /fax Austria Global distribution systems (GDS) Germany Local and regional tourism organizations / associations Event & conference organizers Hotel chains and affiliations with CRS Other distribution channels National tourism organizations Social media 37 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% The values for Germany represent weighted means between the values of the individual and the chain hotels.
  • 38. Synthesis D-A-CH: Types of Booking 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Personal (walk-ins, others subdivided) Written (fax, letters, e-mails, booking form on website) By phone (telephone, call centre) Germany Austria Electronic (IDS, real-time bookings on website, GDS, CRS, social media) Switzerland Tourism partners (tour operators, travel agencies, tourism organizations, conference & event organizers, others subdivided) The values for Germany represent weighted means between the 38 values of the individual and the chain hotels.
  • 39. Observations on Booking Channels D-A-CH (1) • Direct booking channels (telephone, fax, walk-ins, e-mail, form or booking engine on own website) are still the dominant sales tools for the hotels (67.7%) in Germany, Austria and Switzerland (D-A-CH), although their proportion in the distribution mix has been steadily decreasing in the last years. 10 years ago their proportion was about three quarters of all bookings. • The trends towards online booking channels is unbroken. The channel with the highest growth rates are the Internet Distribution Systems (IDS) which could multiply their market share within the last 5 years. • On average 18.9% of the bookings in the D-A-CH region are realized through IDS. The proportion in Germany (19.5%) exceeds those of Switzerland (16.4%) and Austria (12.6%). • About one quarter of all enterprises generate more than 30% of all sales through IDS whereas 18% of the hotels get between 20 and 30% of the bookings through this channel. 39
  • 40. Observations booking Channels D-A-CH (2) • The market share of the tourism organizations has been stagnant resp. slightly declining over the last years and is currently fluctuating at 3.3% of all bookings. In Switzerland the market share of the DMO is clearly higher with an average of 4.9%, but the overall trend is also negative (in 2006 for example 6.5% of all bookings in Swiss hotels were realized through DMO). 40
  • 41. Table of Contents • Executive Summary • Background of the Study • Booking Channels • IDS (Internet Distribution Systems) • Costs of the Distribution • Selection Criteria for IDS • New Forms of Distribution • Channel Manager 41
  • 42. D-A-CH: Market Shares of Internet Distribution Systems (OTA) 0% 10% 20% 30% 40% Booking.com 35% HRS 28% Hotel.de 13% other platforms 12% Expedia 3% Venere 2% Tiscover 1% Hotels.com 1% Bergfex 1% Unister (ab-in-den-urlaub.de, hotelreservierung.de, reise.de, etc.) 1% GHIX (Global Hotel Index) 1% eBay 1% lastminute.com 1% eBookers 1% Hotel.ch 0% 42
  • 43. Comparison of the Market Shares of Internet Distribution Systems (OTA) by Countries Hotel.ch lastminute.com Switzerland eBookers eBay Austria Unister GHIX (Global Hotel Index) 3% Germany Hotels.com Bergfex 8% Tiscover 9% Venere Expedia 5% 4% other platforms Hotel.de 4% 6% 16% HRS 9% 11% 34% Booking.com 52% 43% 29% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 43 The values for Germany represent weighted means between the values of the individual and the chain hotels.
  • 44. Comparison of the Market Shares of Internet Distribution Systems in Germany 2011 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% HRS 34.4% Hotel.de 15.8% Tiscover 0.4% Booking.com 28.5% Expedia 4.1% Venere 1.4% Hotels.com 2.1% Unister 1.2% lastminute.com 1.1% HRS 50.6% Hotel.de eBay 0.5% Tiscover 28.5% Booking.com eBookers 0.5% Expedia 7.7% Venere other platforms 9.9% Hotels.com 44 The values for Germany represent weighted means between the values of the individual and the chain hotels.
  • 45. Comparison of the Market Shares of Internet Distribution Systems in Austria 2011 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% HRS 11.2% Hotel.de 5.6% Tiscover 9.1% Booking.com 42.6% Expedia 3.5% Venere 3.1% Hotels.com 0.8% Bergfex 7.9% Unister 0.6% HRS 25.9% Hotel.de eBay 1.1% Tiscover 42.6% Booking.com GHIX (Global Hotel Index) 0.6% Expedia 7.4% Venere other platforms 13.9% Hotels.com 45
  • 46. Comparison of the Market Shares of Internet Distribution Systems in Switzerland 2011 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% HRS 9.4% Hotel.de 3.9% Tiscover 0.4% Booking.com 52.3% Expedia 4.9% Venere 2.5% Hotels.com 1.1% Bergfex 1.3% GHIX (Global Hotel Index) 3.3% HRS 13.7% Hotel.de eBookers 1.3% Tiscover 52.3% Booking.com Hotel.ch 0.7% Expedia 8.5% Venere other platforms 19.0% Hotels.com 46
  • 47. Observations on Internet Distribution Systems (IDS) • Booking.com , HRS and hotel.de are the most frequently used IDS in Germany, Austria and Switzerland. • Booking.com is dominant in Austria with 43% as well as in Switzerland with 53%. • In Germany, HRS with a market share of 34.4% is the clear leader. If you add the booking shares of hotel.de (15.8.5%) and Tiscover (0.4%) to it, HRS reaches 50.6% of the bookings realized through online booking platforms in Germany, followed by booking.com with 28.5%. • Expedia is a further important player, especially for business hotels, for 4-5 star hotels and for hotel chains. • The market share of booking.com is bigger in the leisure hotels (44%) than in the business hotels (28%), whereas for HRS it is quite the contrary (business hotels: 37% and leisure hotels: 18%) 47
  • 48. Table of Contents • Executive Summary • Background of the Study • Booking Channels • IDS (Internet Distribution Systems) • Costs of the Distribution • Selection Criteria for IDS • New Forms of Distribution • Channel Manager 48
  • 49. Estimations of Revenues and Commission Costs • The estimations on the following slides are based on different hypotheses: • The calculations use the lodging revenues of the hospitality sector as well as on the hypothesis that the booking turnover can be distributed proportionally to the market shares of the survey channels. • The transposition of the figures of the sample to the hospitality sector is only valid to a certain extent. • A full cost calculation should also take into consideration the fixed costs of particular channels (staff), in addition to clearing costs or the costs of the PMS interface.  The presented data/estimations show therefore only an order of magnitude! 49
  • 50. D-A-CH: Estimation of Revenues and Commission Costs by Distribution Channel • In 2011 online booking channels (GDS, IDS, real-time booking on hotel website) generated a turnover of 7.6 billion Euros in the hospitality sector of the three countries. • The total amount of commissions paid to intermediaries by the hotels is almost 1.3 billion euros, thereof just under 800 million Euros for online booking channels. • • The online travel agencies (OTAs) with estimated 594 million Euros seem to profit most. 50
  • 51. Germany: Estimation of Revenues and Commission Costs per Channel • In 2011 online booking channels (GDS, IDS, real-time booking on hotel website) generated a turnover of more than 5 billion Euros in the German hospitality sector. • The total amount of commissions paid to intermediaries by the hotels is more than 900 million Euros, thereof 575 million Euros for online booking channels. • The online travel agencies (OTAs) with estimated 421 million Euros seem to profit most. 51
  • 52. Austria: Estimation of Revenues and Commission Costs per Channel • In 2011 online booking channels (GDS, IDS, real-time bookings on hotel website) in the Austrian hospitality sector generated a turnover of just under 1.3 billion Euros. • The total amount of commissions paid to intermediaries by the hotels is about 251 million Euros, thereof 134 million Euros for online booking channels. • The online travel agencies (OTAs) with estimated 101 million Euros seem to profit most. 52
  • 53. Switzerland: Estimation of Revenues and Commission Costs per Channel • In 2011 online booking channels (GDS, IDS, real-time bookings on hotel website) in the Swiss hospitality sector generated a turnover of more than one billion Swiss francs (1’061 millions). • The total amount of commissions paid to intermediaries by the hotels is almost 178 million Swiss francs, thereof just under 110 million Swiss francs for online booking channels. • The online travel agencies (OTAs) with estimated 85 million Swiss francs seem to profit most. 53
  • 54. Table of Contents • Executive Summary • Background of the Study • Booking Channels • IDS (Internet Distribution Systems) • Costs of the Distribution • Selection Criteria for IDS • New Forms of Distribution • Channel Manager 54
  • 55. What are your Selection Criteria for Online Travel Agencies (OTA) resp. Internet Distribution Systems (IDS)? Relevance of IDS as sales channel (booking volume) Marketing power of IDS / market presence Relevance of IDS for targeted customer segments not important at all Costs (charges and commissions) hotel presentation and information (pictures, not important vidéos, texts, maps) Data administration / user-friendliness of extranet neutral Booking technology and features Additional benefit for the guest (e.g. traveller important reviews) Administrative aspects (e.g. p. ex. accounting) very important User support (e.g. hotline, statistical analysis, etc.) Automatic exchange of data with hotel software Other selection criteria 55 0% 20% 40% 60% 80% 100%
  • 56. Selection Criteria for Internet Distribution Systems (IDS) • The main criteria for choosing an adequate Internet distribution system are its sales strength, that means the hotels are looking for players with high booking volumes, strong marketing activities and which are popular for the customers in the target markets (important to very important for 90%). • The costs are also relevant (important to very important for about 80%), but not decisive for the decision-making process. • Other relevant criteria are connected to the data administration and the possibilities of presentation of the hotel, as well as to the quality of the booking technology of the IDS. 56
  • 57. Table of Contents • Executive Summary • Background of the Study • Booking Channels • IDS (Internet Distribution Systems) • Costs of the Distribution • Selection Criteria for IDS • New Forms of Distribution • Channel Manager 57
  • 58. Use of new Distribution Forms: Deal Offers Do you use deal offers of online portals (e.g. Groupon, DailyDeal, etc.)? 18% No Yes 82% The experiences of current users of deal offers mostly proved to be positive. For hotels not using such offers currently respectively having used them in the past their 58 experiences rather proved to be negative.
  • 59. New Forms of Distribution: Important Providers of Deal Offers Anz 10,1% HRS "Hot Deal" 104 4,0% booking.com 41 2,4% Groupon 25 1,8% Hotel.de 19 1,5% HolidayCheck 15 0,9% Dein Deal 9 0,5% DailyDeal 5 0,4% Venere 4 0,3% eboutic.ch 3 0,3% Expedia 3 All in all 37 different providers of deal offers were mentioned. The corresponding offers of the leading internet distribution systems such as HRS and booking.com are mostly used. 59
  • 60. New Forms of Distribution: Do you use mobile Distribution Channels? Yes, our own mobile booking app 81 No Yes, a mobile hotel website 214 Yes, a mobile hotel website Yes, our own mobile booking app No 696 0 100 200 300 400 500 600 700 800 60
  • 61. D-A-CH: Use of new Media (ICT)* Own hotel-specific app Own YouTube channel Website adapted for smartphones Switzerland Austria Germany Real-time booking system on own website Facebook account Own website *information and communication technology 0% 20% 40% 60% 80% 100% 61
  • 62. Use of new Forms of Distribution • New distribution forms such as the deal offers of the internet distribution systems are only used by a minority of the hotels (<20%). The experiences of current users mostly proved to be positive, whereas the non-users were considerably sceptical. • The market leader of the deal offers are HRS and booking.com, which can be explained by their strong position in the online market. Further frequently mentioned offers are: DailyDeal, Groupon • Just under one third of the enterprises uses mobile forms of distribution. More frequently they use websites, which are adapted to mobile end devices (e.g. iPhone), than a specific app. • Hotels, having invested in those new possibilities of distribution, have the following characteristics: 4-5 star hotels, hotel chains, big hotels. 62
  • 63. Table of Contents • Executive Summary • Background of the Study • Booking Channels • IDS (Internet Distribution Systems) • Costs of the Distribution • Selection Criteria for IDS • New Forms of Distribution • Channel Manager 63
  • 64. D-A-CH: Channel Manager How do you manage your rates and availabilities on the internet booking platforms? Others Through an agency With the hotel software or the booking system (CRS interface) With a software solution, simultanously for several platforms (Channel Manager) Manually on the corresponding online platform 0% 10% 20% 30% 40% 50% 60% 70% 64
  • 65. Channel Manager • Two third of the questioned hotels managed their rates and availabilities manually on the internet booking platform. • There is an above-average use of channel managers in 4-5 star hotels, hotel chains, business hotels as well as urban hotels. 65
  • 66. Contact Roland Schegg & Michael Fux University of Applied Sciences of Western Switzerland Valais (HES-SO Valais) Institute of Tourism (ITO) Professors at the Swiss School of Tourism, Sierre TechnoPôle 3 CH-3960 Sierre Switzerland Tel. 0041 (0)27 606 90 04 roland.schegg@hevs.ch / michael.fux@hevs.ch www.hevs.ch / www.etourism-monitor.ch Bachelor of Science HES-SO in Tourism at the Swiss School of Tourism in Sierre (http://tourismus.hevs.ch) 66