Evolving consumer engagement trends and interaction with online resources during the travel path to purchase continues to impact how consumers shop for and book their trips. Despite the consistent usage of OTAs and other online travel resources throughout the purchase path, changes in the online travel market are causing hotels to take a closer look at the impact on bookings from listing their properties with OTAs. One outcome of being listed on an OTA is additional bookings on the brand’s own website, a phenomenon known as Òthe billboard effectÓ.
This effect was first uncovered by Dr Chris Anderson at Cornell University School of Hotel Administration in 2009, when Dr Anderson studied the effects of hotels listing on OTAs. Many visitors to OTAs researched a variety of hotels on the OTAs’ websites before visiting the hotel’s own website and booking direct. The phenomenon reflects the role OTAs can play as a digital Ôbillboard’ for hotels.
A further 2011 study from Cornell confirmed that 75% of consumers who made direct reservations with a hotel had visited an OTA website before booking directly with the hotel’s website[1]. However, as consumer behaviour patterns in travel evolve and change rapidly, there has been some doubt in the travel space about whether the billboard effect is still alive and contributing to hoteliers’ direct bookings. After all, in a dynamic market constantly being transformed by technological advances, it’s fair to question whether previous market factors are still influencing demand.
Despite this scepticism, earlier this year, a new report titled: ÔThe Billboard Effect: Still alive and well‘ from Cornell University found that the billboard effect still occurs, although it has dropped slightly in recent years. The 2017 study indicated that over 30% of direct bookers started their research process at an OTA and that almost two-thirds of all direct bookers visited an OTA at some stage in their travel research[2]. Contrary to reports of the billboard effect’s demise, the percentage of consumers who booked directly with a hotel after visiting an OTA remains strong, at about 65%.
The sheer magnitude of travel choices available through OTAs, search engines, airline sites, travel review sites and hotel websites can be overwhelming for today’s travellers. A 2017 study from Expedia Media Solutions: Multi-national travel trends report revealed that, when it comes to booking trips, OTAs were by far the most popular platform, with nearly one in two Australian respondents indicating they booked their last trip with an OTA4.
The value of OTAs should not be underestimated. They continue to drive incremental demand for hotels, bringing them younger, brand agnostic, international travellers, who would not necessarily come their way otherwise.
Today, there are still frequent debates about whether OTAs are a friend or foe to hoteliers. If OTAs did not exist, could hoteliers capture the same demand that OTAs bring to them? Or do OTAs like Expedia, help generate new demand that they would otherwise not have tapped into on their own?
Either way, in this digital age, the challenge for the travel industry is to ensure we all adapt. By taking a diversified distribution approach and keeping an eye on changing consumer behaviour, hotels will have a more realistic chance of filling their rooms as well as ensuring a healthy bottom line and keeping their guests satisfied.
[1] Anderson, C. K. (2011) ÔSearch, OTAs and Online Booking: An Expanded Analysis of the Billboard Effect’, Link
[2] Anderson, C. K. & Han, S. (2017) ÔThe Billboard Effect: Still Alive and Well’, Link
4 Expedia Media Solutions: Multi-national travel trends report, Link
About Alejandro Moxey
Alejandro is Expedia‘s Market Management Director for Australia, holding responsibility for the account management of key global and regional hotel chains. He has over ten years’ experience with Expedia. Most recently, Alejandro joined Australia from his previous role as Director, Market Management, Hawaii. Alejandro previously held roles with Expedia around the world, including South America and the Caribbean. During his time in South America, Alejandro was responsible for overseeing Expedia’s market management throughout the entire continent.
Aside from his work with Expedia, Alejandro also held the title of the Senior eCommerce Manager for Marriott International. He managed Marriott International’s e-commerce initiatives for hotels and resorts in Hawaii, including online sales and marketing, website development, partner marketing and online merchandising for multiple brands.
