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The “billboard effect” of online travel agents

When a hotel is listed on Expedia.com or Travelocity.com, it receives reservations not only through that channel, but it also gains reservations through other channels, such as its own web site or tel

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When a hotel is listed on Expedia.com or Travelocity.com, it receives reservations not only through that channel, but it also gains reservations through other channels, such as its own web site or telephone reservations. According to a hotel Internet marketing study by Cornell assistant professor Chris K. Anderson, this “billboard effect” increases both reservation levels and average daily rate. He calculates the value of the billboard effect in a new report from Cornell’s Center for Hospitality Research, “The Billboard Effect: Online Travel Agent Impact on Non-OTA Reservation Volume.” This travel research is available at no charge at http://www.hotelschool.cornell.edu/research/chr/pubs/reports/2009.html.

“The online travel agents (OTA) argue that they give hotels visibility in addition to channeling reservations to them,” Anderson explained. “I wanted my travel research to test the value of that visibility. For the four hotels I tested, the increase in total reservations ranged from 7.5 to 26 percent, not including those received from the OTA. This study adds another perspective to the relationship between OTAs and hotel chains, especially given the current disagreement between Choice Hotels and Expedia.”

Expedia.com and JHM Hotels cooperated in this hotel Internet marketing experiment by sharing data and allowing an unusual listing pattern for the four hotels. Each was listed for a period of time on Expedia, and then each hotel was removed totally from the site. Those hotels recorded excess bookings through other channels when they were listed on the Expedia site — indicating that they had gained visibility even if guests eventually booked through another channel. Average daily rates for the test hotels in the travel research were slightly higher during the times that the hotels were listed on Expedia.

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