DISSERTATION FINAL

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Table of Contents
1. INTRODUCTION .............................................................................................................3
1.1. Background of the study.............................................................................................3
1.2. Hypothesis..................................................................................................................4
1.3. Aim.............................................................................................................................4
1.4. Objectives...................................................................................................................5
1.5. Structure of the dissertation........................................................................................6
1.6. Summary.....................................................................................................................7
2. LITERATURE REVIEW ..................................................................................................8
2.1. Introduction................................................................................................................8
2.2. Comparison of traditional and online sales................................................................8
2.2.1. The individual businessman segment.................................................................9
2.2.2. The business group segment's sales channels...................................................10
2.2.3. Individual travellers' sales channels..................................................................10
2.2.4. Sales channels of leisure group travellers.........................................................11
2.3. Sales and sales tools in the hotel industry and their development............................12
2.4. Distribution channels...............................................................................................16
2.4.1. Types of distribution channels..........................................................................17
2.4.2. Participants of the distribution channels...........................................................18
2.5. Development of distribution and the appearance of e-reservations..........................19
2.5.1. Early stages.......................................................................................................19
2.5.2. Internet Distribution System.............................................................................20
2.5.3. Online Travel Agents........................................................................................21
2.5.4. Latest tendencies...............................................................................................23
2.5.5. Social Media.....................................................................................................24
2.5.6. Consumer Generated Media ............................................................................25
2.5.7. Meta Search Engines.........................................................................................25
2.6. Travel, booking and research behaviour among Hungarian travellers.....................26
2.6.1. Travel behaviour...............................................................................................26
2.6.2. Booking behaviour............................................................................................27
2.6.3. Research behaviour...........................................................................................29
2.7. Summary...................................................................................................................30
3. METHODOLOGY...........................................................................................................32
3.1. Introduction..............................................................................................................32
3.2. Secondary Research..................................................................................................32
3.3. Primary Research......................................................................................................33
3.4. Data Analysis Methods.............................................................................................34
3.5. Summary...................................................................................................................34
4. EVALUATION OF RESULTS.........................................................................................35
4.1. Introduction..............................................................................................................35
4.2. Interviews with intermediaries.................................................................................36
4.2.1. Mr. Mate Hegedus, Revenue Specialist of Expedia Lodging Partner Services 36
4.2.2. Mr. Zoltan Katona, Marketing coordinator of Wellnessakcio.hu......................40
4.2.3. Comparison of the interviews with intermediaries...........................................43
4.3. Interview with a hotel representative........................................................................45
4.3.1. Mr. Zoltan Katona, Marketing consultant of Aquatherm Hotel Zalakaros.......45
4.3.2. Conclusion of the interview with Aquatherm Hotel Zalakaros........................48
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4.4. Booking.com – Facts and business concept.............................................................49
4.5. Representation of Priceline's Annual Report 2011...................................................51
4.5. Conclusion of the analysis of results........................................................................53
4.6. Summary...................................................................................................................53
5. CONCLUSION ...............................................................................................................55
5.1. Introduction..............................................................................................................55
5.2. Conclusion of analysed results.................................................................................55
5.3. Recommendation......................................................................................................58
5.4. Reflection and evaluation of research methodology................................................59
5.5. Suggestions for further research...............................................................................59
5.6. Summary...................................................................................................................60
FINAL WORD ACCOUNT REPORT.................................................................................61
APPENDICES......................................................................................................................62
1. Interview questions – intermediaries...........................................................................62
2. Interview questions – hotels........................................................................................63
REFERENCES.....................................................................................................................64
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1. INTRODUCTION
1.1. Background of the study
The reason of the dissertation's topic is that the author is enthusiastic toward the Sales and
Reservations department of the hotels. As tourism industry is one of the leading industries
in the world we have to monitor the new means and tools in order to be more and more
profitable and also competitive, evaluate the efficiency of these new tools and make a
decision on the number and the type of methods we want to launch. There is a lot of
impacts which can easily change this industry, such as economic, political, and cultural
effects. Today's most popular way of promoting hotels and offering services and products
is e-reservations.
There are more and more websites offering online sales methods for hotels and in the last
few years Hungarian hotels joined e-reservations, realising it is a quick and beneficial way
to launch new packages, sell hotel rooms in low seasons and persuade new customer
segments.
The author used to work for a company which dealt with online marketing and online sales
services. As a Sales Assistant the author had daily contact with Sales and Marketing
representatives of Hungarian hotels located mainly in the countryside and she negotiated
with hotels regarding to the elements and the price of the packages as well as the length the
vouchers were going to be available as the site itself operated as a flash sale site. Later the
author worked at the world famous Broadmoor hotel as a Reservation Sales Agent, which
led into a deeper vocation and let her experience the process of creating packages and set
the right price of them while shadowing the hotel's Revenue Manager and had a more pure
view on selling packages to guests.
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1.2. Hypothesis
The author's hypothesis is a temporary statement or in other words the writer's personal
thoughts about the potential results of the research. Throughout the dissertation several
observations need to be completed, then evaluated and the results of these can support or
reject the statement.
The hypothesis is that hotels that joined e-reservation systems provided by
intermediaries have financial benefits since the affiliation compared to the era of
operating with only traditional sales tools.
In the past few years various e-reservation systems appeared on the Hungarian market and
the researcher believes that in order to remain competitive in this industry it is essential to
cooperate with these intermediaries.
1.3. Aim
The aim of the study is to prove that e-reservation systems provides a beneficial sales
channel to hotels and is essential to remain competitive, hence whether the above
mentioned hypothesis is true.
Nevertheless the thesis statement is accepted or rejected, the observation itself may be still
beneficial for those hotels who have not joined to these organisations yet. It may provide
an economic comparison for them including the advantages and disadvantages of the
potential affiliation.
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1.4. Objectives
The objectives of the study shows the steps how the researcher studied the topic and
provides a brief overview about the dissertation and as a result it helps the reader to
understand it better.
 Objective one: To compare online and traditional sales.
 Objective two: To analyse the development of e-reservation tools.
 Objective three: To evaluate of the awareness of e-reservation tools and hotels'
willingness to use them.
 Objective four: To analyse the influencing factors of the decision-making process.
How many and what type of reservation system do hotels join and why. /Preference
list./
 Objective five: Final analysis of introducing the benefits and advantages on the
market of hotels joined to e-reservation systems.
Through the dissertation the author would like to give an overview about the appearance of
e-reservations as a new and growing trend in the tourism industry and prove that it is
economically beneficial.
While reading the dissertation the reader will see different point of views as interviews are
made from both of the sides – firms offering online sales services and hotels which affiliate
with them.
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1.5. Structure of the dissertation
In this section the author provides a brief overview of the dissertation and the way it will
be built up.
The very first chapter of the study is the introduction which consists of the background of
the study explaining the purposes and the motivation which led to chose the current topic
and title. It also contains the hypothesis which will be accepted or rejected as well as the
aim and the objectives.
The second chapter is the so called literature review which consisted of several views
selected from books, articles, written by economists, researchers and university professors.
The writer determined the basic concepts of tourism, the participants focusing on clarifying
the importance of their activities, the various distribution channels, introduce their
development, compare traditional and online sales methods and finally represent the new
tendency, the appearance of e-reservations. All in all it will give a brief overview about
sales and reservation tools in tourism and hopefully help the reader to understand it better
from economic point of view.
The third chapter is the methodology which introduces and explains the different data
collecting methods the author adopted while processing the research. It contains secondary
data collection tools for the second chapter, namely the literature review and primary
research methods for the fourth chapter, the evaluation of results of the primary research
instrument, the interviews.
The above mentioned fourth chapter focuses on the evaluation of results of the interviews
made by a representative of a domestic hotel and experts of online intermediary sites too,
thus it examines the primary data collection method and evaluates the collected sources.
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The very last chapter called the conclusion will summarise the above mentioned objectives
and draw conclusion of the researched literature and the results of the primary instrument,
the interviews. It will also either accept or reject the hypothesis composed by the author.
1.6. Summary
The purpose of this chapter was to introduce the topic and show the structure of the study
that the author followed throughout the study. The researcher believes the dissertation's
topic is very up to date and relevant evaluating one of the latest trends on the Hungarian
tourism market which could help hoteliers to make their decision on potentials
cooperations.
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2. LITERATURE REVIEW
2.1. Introduction
In this chapter the researcher gives a brief introduction to tourism itself, an overview of
traditional sales tools in hotels, the process and the steps of their development and finally
introduce the newest trend, the intermediaries providing e-reservation services. It helps the
reader to understand the importance of being up to date and being aware of the latest trends
in order to be and remain successful in the hotel business. It will also help to be able to
differentiate the various types of sales methods.
According to the World Tourism organisation we can define the industry as „Tourism
comprises the activities of persons travelling to and staying in places outside their usual
environment for not more than one consecutive year for leisure, business or other
purposes.” (WTO, 1993)
Tourism is a dynamic industry in today's economy and its main goal is to follow and satisfy
its customers needs and wants. Since this economy changes fast it is essential to monitor
the newest trends and launch them if necessary.
2.2. Comparison of traditional and online sales
In this sub-chapter the author introduces and discusses objective one and compares
traditional and online sales.
Each segments of the hotels' clientele has its own sales channels and they determine each
other. There are four main segments, which are represented in the illustration below.
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Illustration 1: Sales channels, Source: Author's editing based on Dr. Juhasz Laszlo PhD:
Piaci-gazdálkodás tevékenységei
2.2.1. The individual businessman segment
The best-known categories for the individual businessman segment are the individual
business travellers and the individual corporate business travellers. For these subgroups we
differentiate two sales channels, namely electronic partners; business partners and
corporations. Business partners and corporations can also be segments of business -,
conference -, and city hotels as well. As it is included in the contract, the employees of the
companies are accommodated in the contracted hotel, they are able to pay discounted rates,
but paying commission is rare. The most significant corporations enjoy special proceedings
and they are called 'key account', hence the representative of the sales department is called
a Key Account Manager. The non-professional internet suppliers also provide distribution
opportunities, they ensure the appearance and availability of the website on the world wide
web and their services are affordable to every hotel, even for smaller ones too. In case of
reservations of the individual non-corporate businessman segment on professional internet
reservation companies, there is usually a contracted commission. This section is not typical
in wellness, sport and leisure hotels outside of Budapest due to the characteristics of their
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location as generally they are situated in natural environment in the countryside. OTAs
(Online Travel Agency)1 are usually used by individual tourists, especially tourist arriving
for city breaks and with sightseeing purposes. All in all, the most typical hotels providing
accommodation for the individual businessman segment are boutique -, business - and
apartment hotels.
2.2.2. The business group segment's sales channels
This segment covers all the conventions, the personnel of MICE2 and air carriers. Since
corporations and air carriers from the individual businessman segment usually organise
conventions, partner parties, trainings, meetings, exhibitions or conferences, hence they are
potential convention segments as well. Another possible sales channel is the so called
professional Congress Organiser, as they deal with cultural or sport conventions, banquets
and festivals. Since these events require personal supervision, electronic systems are not
able to spread in this industry.
2.2.3. Individual travellers' sales channels
Individual leisure travellers are usually couples and families and the mostly utilised sales
channels are travel intermediary agencies, tour operators, internet suppliers, online internet
reservation companies, speciality channels and additional reservation systems. Travel
intermediary agencies are the most famous classical channels, especially in case of
individual leisure travellers. On the Hungarian market, 70% of the room reservations are
individual bookings and out of these reservations 30% is electronic, hence 21% of all
reservations are made electronically. Half of the non individual reservations (15%) are
booked through domestic travel agencies, the other half is booked through international
ones. These agencies can be tour operators, travel related intermediaries, domestic,
international or multinational. Moreover, they can be inbound, outbound or domestic
operation agencies, however in the point of view of hotels outbound travel firms are not
potential partners. For their services, the contracted commission is usually 8-15% and their
1 A travel agency offering a web-based booking engine, specializing in online shopping and reservations as
well as featuring reviews from consumers.
2 MICE is an acronym or the Meetings, Incentives, Conventions and Exhibitions tourism segment.
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tools for keeping contact can include emails or online inquiries. Tour operators have just as
significant role as travel agencies, however since they are bigger companies they are
stronger on the market, hence they can be potential key accounts for hotels. The quota of
their utilisation is relatively small especially in prior and after high seasons. The role of
non professional internet suppliers is dominant. With the help of their services such as
ensuring distribution, designing and developing websites and displaying them on the right
spots are essential for hotels to reach the before mentioned 70% individual reservations.
The importance of online internet reservation companies are getting more and more
determining year by year, however these services always require commissions.
2.2.4. Sales channels of leisure group travellers
Travel related intermediaries are not as significant in this segment as in case of individual
travellers simply due to the fact that it is rare that tour operators retail programs and
packages for group travellers, however tour operators have the biggest market share in case
of groups. Hungarian hotels usually cooperate with foreign or inbound travel agencies,
since domestic group travel active only among students and pensioners. Based on previous
years' experiences there is an increase in individual reservations through electronic tools,
however the number of inquiries through the phone are not decreasing. Due to distribution
on the world wide web email inquiries are becoming stronger and stronger. Family and
individual hotels' main and relevant sales tool is the so called word-of-mouth and return
guests are the main sales generator for them.
Generally one of the benefits of traditional sales tools is the personalised service sales
representatives are able to communicate and provide to potential partners, by which the
relationship is not commercialised but tailor-made, which mostly results in a trusted,
intimate business cooperation. A disadvantage must to be mentioned is the cost of
traditional sales, which is proven higher than in case of working with online sales methods
as hoteliers need to hire staff for making cold calls, handling inquiries and customer
support. Gathering feedback on the performances of the staff is limited compared to the
usage of online sales tools.
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In terms of human resources, online sales strategies and tools are more cost effective, as
hoteliers need to employ less staff to handle the tasks of the sales department, hence they
can save on wages as well as phone calls as well. Online sales tools also let managers
measure the effectiveness of their performances as they are able to measure their web
traffic, the content and pages internet users read or click on and many more, hence the
feedback of the impression is guaranteed. Since online tools let hoteliers keep their
business open 24 hours a day, it is a very convenient feature of online selling both for the
supplier and the customer.
„The e-tourism concept includes all business functions (i. e., e-commerce, e-marketing, efinance and e-accounting, eHRM, e-procurement, eR&D, e-production) as well as estrategy, e-planning and e-management for all sectors of the tourism industry, including
tourism, travel transport, leisure, hospitality, principals, intermediaries and public sector
organisations.” (Buhalis, 2011)
Based on tourism expert Buhalis's statement the author would like to emphasise that in
today's tourism and hospitality industry functions of the different departments and staff
members are in very close connection and most of the time, especially in case of smaller
businesses they can cover each other's tasks and responsibilities.
As a result of the examination of the findings, the author definitely believes that usage of
the mixture of traditional and online sales tools are the key to operate a well-run hotel in
today's economy due to the simple fact that clients and customers differ as well as their
behaviour and customs.
2.3. Sales and sales tools in the hotel industry and their development
The author of the dissertation would like to state that based on her own experience – while
doing the research and searching for literature in the topic –, tourism and hotel
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management industry today hardly differentiate sales, sales tools, distribution and
reservations due to the presence of online tools that frequently enable hoteliers to reach
each of the above mentioned activities' goals with one common step.
The main aim of sales in all industry is to generate revenue. Sales departments have a great
impact on increasing sales volume and are in close connection with the marketing
department. The main goal of this sub-chapter is to make the reader familiar with the
meaning and the concept of sales and the various sales tools.
Sales is usually defined as exchanging goods and services for a specific amount of money
or products with an equivalent value. When talking about sales in hospitality, everyone
should take into consideration that tourism products are intangible and perishable, hence
products in the hospitality greatly differ from products in other industries, however every
organisation has to consider the company's goal and objectives it wants to achieve by sales
tools as well as the available budget for it.
In tourism, we can divide sales for at least two different parts: one is sales toward
customers and sales toward clients. The methods of sales may vary according to the target
audience, that is why sales representatives of the hotel industry should be well experienced
and professional in this field.
Personal sales call is the one of the most utilised sales tools firms try to contact potential
clients with and Heavenly Planet Earth defined as “The personal sales call is often the most
effective means of customer contact, especially when directed at volume movers of the
leisure, business and meetings market. A personal sales call is used to build rapport with
clients or potential clients and sell them the property's products and services.” (Heavenly
Planet Earth, 2008)
The most commonly used sales method among personal sales tools is the so called cold
call or with other words prospect call. The purpose of the cold call is to attract potential
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clients, providing information about the benefits of the cooperation and briefly introduce
the framework of the affiliation. Once a potential client is interested in a more detailed
negotiation, an appointment can be made with the caller. The author would like to note that
in today's hospitality cold calling is usually processed between the supplier and a potential
business client, nowadays attempting social customers with this tool is relatively rare.
Appointment calls are one step ahead after making cold calls. An appointment call is made
between the sales representative of the caller company and the decision-maker of the called
firm or organisation. Generally an appointment call is just like a face-to-face interaction,
and all the details and necessary information are discussed at this time.
Trade shows are another effective means of sales and promotion. Appearing on trade shows
can gather information on competitors' activities, can maintain the relationship with
existing clients and attract potential commercial customers, however measuring the costreturn effectiveness of the participation is questionable.
Site inspections and familiarisation trips are used less frequently, however it is the one
which probably have the biggest impact before decision-making. Site inspections usually
include a guided tour around the property led by the sales manager of the company
consisting of lunch to discuss the details about the possible contract or cooperation, or
presentation about the same topic, while familiarisation trips include accommodation as
well to let the potential client experience the products and services the hotel offers.
In our days most salesmen use the tools of the world wide web and make presentations to
potential partners online or through a conference video call. The advantages utilising these
methods is that they can reach several potential clients at the same time, that is why it is
definitely time and cost effective, however it may be impersonal and the hotel may lose
business according to this atmosphere, hence the usage of the previously mentioned
traditional sales tools are absolutely necessary.
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Sales toward individual customers are quite different. Hotels usually try to generate sales
by special offers and promotions and in today's industry they use e-mail as a tool for mass
promotion. This is typical for guests previously staying at the hotel as reservations agents
send confirmation emails to them upon finishing the reservation. Another option to gather
potential guests' email addresses is the subscription surface on the hotel's website, where
customers are able to provide their contact information to receive newsletters or special
offers. Several firms use printed sales promotions as a tool to generate sales. Advertisement
and promotions in magazines and newspapers published in the area of their target market
may increase sales as well. Using the media to inform customers is a great tool, however
only a small portion of today's hoteliers can afford it. Providing information on special
offers and deals through local radio stations or TV channels can affect the volume of
inquiries and sales.
In the 21st century the number one tool for hoteliers to generate sales is their own company
website as well as utilising third parties such as online travel agencies and travel retailers.
First of all a hotel's website should be informative in a logical order, should be interactive
to help potential customers experience the atmosphere of the property and the services too,
ought to be professional in terms of style and colours.
“Ho (1997) analysed particularly websites from the aspect of content. He used a
framework to evaluate websites from a value added customer’s perspective. He was the
first to identify three purposes in a commercial website: provision of information,
promotion of product and services and processing of business transaction.” (cited in
Zafiropoulos, 2010)
The author absolutely agrees on Ho's statement as these purposes keep the mission simple
and focused. Provision of information is particularly significant as it may include basic
information about the company let it be a hotel or travel agency, such as address, phone
number, email address, opening hours. It usually consists of any policies that may apply,
such as cancellation, or payment conditions, taxes and additional fees. Promotion of
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products and services are probably the most important factor when launching a company
website, however providing information and promotion of products may cover each other.
Thinking about a hotel's website as looking at one of its suites, it promotes the product the
property has and also gives details about the size, the atmosphere, the colours and the
design of the suite. Processing of business transaction let hoteliers to utilise their own
website generate revenue by installing an online reservation surface which customers can
easily use to process their booking and payment. All in all the researcher believes a welldeveloped, professional website can influence the decision-making process of the
customers as it creates an image and a feeling in potential guests even before they visit the
property. In terms of travel agency websites it defines the expertise of the agency in
customers' minds and influence their buying willingness. A commercial website should be
definitely easy to use, informative and communicate the company's mission statement3 and
USP (Unique Selling Proposition)4.
Another tool to attract customers and generate sales is the usage of online travel agencies,
which will be detailed more precisely later in this chapter.
2.4. Distribution channels
Travel products, packages are not always sold by the producer of the items, but by
intermediaries who act a significant role in the distribution system and are links between
the suppliers and the consumers. They help to reach customers due to the geographic and
time differences and mediate between the supply and demand side of the economy. Since
travel products are intangible, travellers buy only an expectation at the time of the purchase
and products can not be presented to the customers hence travel related businesses sell only
information.
There are numerous ways to define what exactly a distribution channel is. According to
Mill and Morrison “the tourism channel of distribution is an operating structure, system or
3 A summary of the aims and values of a company, organization, or individual.
4 A statement that showcases how you stand out from your competitors. A critical component to a
successful marketing strategy.
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linkages of various combinations of travel organisation, through which a producer of travel
products describes, sells and confirms travel arrangement to the buyer.” (Mill and
Morrison, 1985). Another definition states that “a distribution channel is any organised and
serviced system, created or utilised to provide convenient points of sale and/or access to
consumers, away from the location of production and consumption, and paid for out of
marketing budgets.” (Middleton, 1994) The author believes that Mill and
Morrison's thoughts are more precise to describe a distribution system as it
clearly stated the two end of the channel, namely the supplier and the
customer.
Probably the most understandable definition origins from Ms. Eva Garan,
lecturer of Budapest Business School, who said: „The products reaches the
consumer through distribution. With other words the consumer and the destination can
meet only if there is a well-established distribution system. The distribution in tourism
differs of the distribution of other industries, just because of the special characteristics of
the products distributed. In tourism the travel sales distribution is the process of producing,
marketing, selling and delivering travel related services from travel suppliers to
consumers.” (Garan, 2009)
2.4.1. Types of distribution channels
We sort distribution channels into two groups. In the first we differentiate direct and
indirect distribution, while in the second group we distinguish traditional or online
distribution. Despite this fact the groups can overlap each other meaning a direct or
indirect classification can still be traditional or online.
Direct sorting means a one player distribution where the producer and the customer are in
direct contact. It can save time for both players and the supplier has personal control over
sales, however it can cause high sales costs and there is a risk of losing customers.
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Indirect classification consists of two or more players, usually intermediaries who can be
tour operators and travel agencies. It can save expenses as only a few staff is needed for the
supplier and they can get professional assistance by the intermediaries, but they have no or
few control over sales and a certain amount of commission must be paid.
2.4.2. Participants of the distribution channels
The most common intermediaries are tour operators and travel agencies or electronic
partners. Tour operators purchase various elements of accommodation, transportation and
additional services, combine them into packages, stores these and later sells them directly
or indirectly to customers on an inclusive price. They usually buy in bulk, which is a huge
risk as tourism products are perishable and sales can be influenced by political affairs,
financial recessions and natural disasters, however in the same time it contributes to gain
buying power, since they buy well in advance and pays well in advance too, hence they are
able to negotiate for discounts from the suppliers. Travel agencies sells suppliers' or tour
operators' products directly to the public at the agreed price for which they get a certain
commission. They never change the elements of the package. The main difference between
tour operators and travel agencies is that while tour operators purchase the services in
advance before any sale, travel agencies do not buy anything until the customer pays for
the desired product.
“In the tourism, the position of the distribution sector is much stronger: trade
intermediaries (travel agents and tour operators of course, but also charter brokers,
reservation systems and other travel distribution specialists) have a far greater power to
influence and to direct demand than their counterparts in other industries do. Since they do,
in fact, control demand, they also have increased bargaining power in their relations with
suppliers of tourist services and are in a position to influence their pricing, their product
policies and their promotional activities.” (WTO, 1975).
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Tour operators can be differentiated by the market they serve and the services they offer.
They can be inbound, outbound, domestic or specialty tour operators, airline
wholesalers/consolidators or can differ even by the destination, the transportation or the
type of customer they specialised in. The World Tourism Organisation describes tour
operators as “a business that combines two or more travel services (e.g., transport,
accommodation, meals, entertainment, sightseeing) and sells them through travel agencies
or directly to final consumers as a single product (called a package tour) for a global price.
The components of a package tour might be pre-established, or can result from an "a la
carte" procedure, where the visitor decides the combination of services he/she wishes to
acquire.” (OECD, 2011)
Travel agents play a significant role in the distribution since they are the ones who provide
a convenient location for customers to „meet” the product, acting as sale representatives.
As the researcher mentioned before, travel agents do not change the elements of the travel
product and do not pay in advance, only upon the payment of the consumer, hence agents
do not have product investment risk. The official definition by WTO states that a travel
agency is „an intermediary that provides a variety of services associated with travelling
such as transport (including car rentals), accommodation and package tours on a fee or
contract basis.” (OECD, 2011)
2.5. Development of distribution and the appearance of e-reservations
In this sub-chapter the author introduces objective two and analyse the development of ereservation tools.
2.5.1. Early stages
The first Airline Reservation System (ARM)5 launched dates back to the 1950's when
American Airlines installed its automated reservation system. Following the booming
demand for airline tickets it was hardly possible to control sales and reservations manually,
5 An automated system for taking airline reservations.
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as it used to be before. The Semi-Automatic Business Research Environment (SABRE)
became the largest data processing system in the world by 1964. Other airlines followed
American Airlines' idea and launched their own systems which we call Central
Reservations Systems (CRS). In the late 1970's United Airlines allowed travel agents to
use their own system and to book flight tickets with exclusivity. At the same time British
Airways installed Travicom, which was used by hundreds of travel agents in the UK, and
later on merged to the newly developed Galileo system. In the 1990's Amadeus, Worldspan
and Galileo International appeared on the market.
These CRSs later became GDSs (Global Distribution Systems)6, which is defined by the
business dictionary as a worldwide computerised reservation network used as a single
point of access for reserving airline, seats, hotel rooms, rental cars, and other travel related
items by travel agents, online reservation sites, and large corporations. Due to the fact that
GDS could be only used by agencies which had an agreement with the International Air
Transport Association (IATA) it still did not reform the reservation system of hotels.
2.5.2. Internet Distribution System
With the spread of the Internet, GDSs turned into IDSs (Internet Distribution System),
which “...offers technology that allows customers to build complete trips that combine
flights, hotels and other lodging, transportation and destination activities. Travellers have
the ability to research, plan and book their travel needs from a broad selection of partners.”
(Hospitality Performance Group, 2012)
Some of the advantages of cooperating with and IDS as a hotel are: the property is visible
to everyone at anytime and anywhere 24/7, which is a continuous marketing as well as
provides the opportunity to generate bookings no matter the opening hours of the
reservations department.
6 An automated reservation system used by travel agents to synchronize reservations for air travel, car
rental, and lodging. First Hungarian representative was Ms. Eva Garan, lecturer of Budapest Business
School.
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Budapest Business School's lecturer, Denes Csehy defined IDS as “the group of online
reservation systems and travel portals that utilise the Internet to connect travel-related
businesses such as hotels with those individuals and companies seeking to buy from them.”
(Csehy, 2012)
The author thinks that both of the definitions touch important aspects of the function of
IDSs, however both miss some too. The researcher believes that probably the most
appropriate definition would sound like the combination of the two. For example: IDS is
the group of online reservation systems that allows customers to build trips including
flights, hotels and additional travel-related services for purchase and let them research,
plan and book these from a wide variety of partners while providing assistance to travel
companies to maximise their sales and revenue.
However as Internet developed, large hotel chains realised and took advantage of the
bigger independence of this development and created relationship with their customers
directly on their company website, which also helped to avoid high fees paid to GDS. In
the same time online agencies took a significant role in the distribution system like
Expedia or Travelocity offering a great variety of travel products such as accommodation,
car rental, travel insurance and airplane ticket reservation.
2.5.3. Online Travel Agents
Today's most spreading trend in the tourism industry is the appearance of e-reservation
tools, such as Online Travel Agents (OTAs). OTAs are a form of distribution, where an
independent third party connects numerous suppliers and customers through a website.
Their existence is growing in numbers and results as a very easy tool to use for consumers,
as they provide information and purchase choices on their sites making the information
gathering and reservation process more time efficient substituting the traditional methods
22
of sales (visiting or calling travel agents or other type or retailers).
Numerous studies show the decline in the number of traditional reservations – through the
phone or GDS travel agents, while reservations made through the internet and the mobile
web is getting more popular among customers. Fair share of OTAs is increasing year by
year, while direct online channel bookings are decreasing. Appearance of flash sales sites
are playing another important role in today's hotel business, however they are not as
frequently used by hoteliers than OTAs, due to the high rate of discount hotels have to
provide to customers on these web surfaces and the negative impact on the average daily
rate.
The main issue hoteliers have to face when using online intermediaries' services is the
competition against themselves. As third party reservation services are getting more and
more aggressive on pricing, hoteliers have to compete their prices displayed on their own
distribution channels against their prices on these online reservations systems. Third
parties' main aim is to generate the most sales possible, hence they request suppliers to
reduce their prices on their sites and offer deeply discounted rates to customers. Should
sales managers agree on that or should they reject it? What if they can not sell the rooms
on the rates they promote through their own distribution channels? What if they sell rooms
through OTAs on a discounted rate but they could sell them at their higher rates too? There
are the most basic questions hoteliers often come up with, especially in peak season. Sales
representatives should consider the effects on ADR, RevPar, occupancy, rate parity and
cost-effectiveness before contracting any of these intermediaries.
Randy Smith, co-founder of STR (Smith Travel Research) says: “One path is to cut rates
below those of competitors in an attempt to stimulate demand, on the classic economic
assumption that demand is elastic and price reductions increase demand. Even if demand
doesn’t actually increase overall in response to rate reductions, a hotel can at least steal
market share from competitors by cutting rates below those of competitors. The other
course is to resist discounting and maintain price integrity. In this approach, the manager is
counting on the hotel’s value proposition which promotes targeted prices to targeted
23
customers under the idea that revenue will hold up, even if occupancy doesn’t.” (cited in
Withiam, 2011)
Based on the datas of U.S. hotels provided by STR, Cornell professor Cathy Enz found that
hotels which lowered their prices and placed their rates below their competitors' had
relatively higher occupancy results while hotel which maintained their ADR had a lower
occupancy and since lower ADR means lower RevPar, Enz concludes that hotels generate
higher revenue by pricing above their competitor set and maintaining rate integrity.
(Withiam, 2011)
2.5.4. Latest tendencies
Another trend spreading today is the usage of smart phones. How can it affect the
hospitality business? Hotel chains which have properties all around the world may have the
budget to create their own mobile applications with booking platform, but most of the
smaller or individually owned properties do not. As today's society is familiar and
comfortable using the Internet and smart phones as well as their applications, more and
more of hotels' bookings are processed online. Typically reservations which are made
through mobile applications are same-day reservations or booked just a few days in
advance.
“A recent study by comScore found that over 50 percent of smartphone users (those with a
iPhone, Android, Windows or Blackberry device) had accessed travel-related sites from
their phones. Additionally, one in five smartphone users had actually used their device to
make a hotel booking or airline reservation.” (Thomson, 2012)
Suppliers which characteristically have same-day reservations (e.g. airport hotels or
roadside hotels) can raise their sales volume by using these applications. If they are not
able to afford to build it on their own, the solution might be the cooperation with third
24
parties who generally operate applications like these.
Priceline issued the results of their statistics after monitoring the booking activity through
its mobile application for two weeks in 2010. They found out that “58% of mobile deviceenabled customers were 20 miles or closer to their hotels when they booked the room and
35% actually were within 1 mile of the property” says Dennis Schaal on tnooz.com.
(Schaal, 2010)
Even though the disadvantages mentioned above, all the hotels agree with the statement
that the fastest way the achieve great marketing results for newly opened hotels is the
utilisation of these online services. Even hotels which are on the market for several years
cooperate with these third parties as they are able to attract customers who are not
necessarily in their target market.
2.5.5. Social Media
As the internet became part of our everyday life, utilising Web 2.07 has been emphasised
by corporations all around the world. (There is one thing the researcher would like to state:
Social Media is rather a customer engagement channel than a distribution channel in
hospitality.) SocialBakers.com focuses on social marketing statistics. According to their list
which shows all the pages registered to Facebook ever, the very first accommodation
provider brand is Hotel Urbano (Brazil) which stays on the 735th place behind celebrities
like Rihanna or Madonna or the movies Home Alone or Twilight. Their number of fans is
4 847 399, and the only travel organisations ranked ahead of Hotel Urbano are Disneyland
(15 165 744 fans) and Walt Disney World (11 468 499 fans). The author found the number
10 list quite interesting in the field of travel/leisure. The first 3 were mentioned above, and
the remaining 7 shows pages registered and operated by air carriers (Southwest Airlines,
KLM), online travel intermediaries (Expedia) and cruise lines (Carnival Cruise Lines). No
other hotel is on the list until the 33th place, which belongs to Best Western with its 492 258
7 The second generation of the World Wide Web, especially the movement away from static webpages to
dynamic and shareable content and social networking.
25
fans. (Social Bakers, 2012)
More and more travel related firms use social media as a tool to promote their products and
services and generate more visitors time by time and they usually announce game for
prizes too (free car rental, one night stay free of charge, etc). Most of the social media sites
they use are Facebook, Twitter, YouTube, Google+ and LinkedIn. Probably the reason
behind using these methods by companies is that they are free to use, they are a great asset
to communicate with a huge audience at one time, easy to handle and act as part of their
company website, hence provide information, promote products and services, but not able
to process bookings and payment.
2.5.6. Consumer Generated Media
Consumer Generated Media (CGM)8 has a great impact on the decision-making process
too. Review sites such as TripAdvisor provides a surface for travellers to post their
experiences and general overview about the hotels they stayed at and are able to rate their
stay giving the opportunity to others to check the posted reviews before purchasing any
service on other sites. TripAdvisor cooperate with other sites like Booking.com where
customers can actually process their booking. Based on the author's personal experience
these sites can change the buying willingness according to the positive or negative
opinions. Travellers tend to believe other travellers more than a never seen travel agent's
opinion which sometimes may sound more like a sales script rather than a genuine support.
2.5.7. Meta Search Engines
Meta search engine9 sites also has an influence on tourism and tourism sales. Probably the
best examples are Kayak or Travelocity. They operate as web surfaces which compares
deals and prices of different intermediary sites such as Expedia, Orbitz, Priceline or
Booking.com with their own and vice versa. Reservations can be processed through these
8 Posts made by consumers within online venues on products they have purchased.
9 A meta-search engine is a search tool that sends user requests to several other search engines and/or
databases and aggregates the results into a single list or displays them according to their source.
26
websites, however studies shows that customers check hotels' own website as well before
booking, not only comparing the results of these travel related search engines. That is why
the author emphasises the importance of a professional, informative and easily navigated
website.
2.6. Travel, booking and research behaviour among Hungarian travellers
The researcher would like to introduce a recent survey made by Google and published in
May 2012 examining the travel, booking and research behaviour of the Hungarian online
bookers. The survey itself was conducted in December 2011 and studied travellers'
experiences in the last 12 months. The author believed that this survey was in very close
connection with the researched topic of the dissertation and considered it essential to
include in this chapter in order to help the reader to interpret better the answers of the
interviewees in chapter four. The researcher also believes that this study proves the before
mentioned fact within this chapter, namely that online research and booking is getting more
and more popular as well as the importance of e-reservation systems and search engine
sites.
2.6.1. Travel behaviour
According to the survey, 35% of the interviewed travellers spent a longer holiday trip once
in the last 12 months (more than 5 days), while 24% of them spent on short trips once and
another 24% two times in the examined period. 40% of all the respondents were on at least
one short trip and at least one longer holiday.
Among those who went onto short trips 86% chose Hungary as a destination and 66%
traveled to Hungary from those who spent more than 5 days at other places than their
residences. The main motivation for traveling was relaxation, VFR10 and fun and
10 VFR stands for visiting friends and relatives.
27
entertainment, with the ratio of 40%, 37%, 32% respectively in case of shirt trip travellers,
while in case of holiday trips relaxation is still the number one purpose (42%), however
visiting destinations involved in the so called umbrella term “sun & beach” represented
37%, but fun and entertainment only 29%.
13% of short trippers used hotels as accommodation and 15% of the surveyed did the same
when going onto a longer holiday.
2.6.2. Booking behaviour
Table 1: Booking channels, accommodation. Edited by the author. Source: Google,
Vertical deep dive travel, Hungary (2012)
As the table shows 46% of the respondents booked accommodation online for 5 days or
less. Out of this number, 24% made reservations via the internet directly with the hotel,
while 30% called the hotel instead, hence in this case the usage of offline methods are still
ahead of online, but when customers relied on travel agencies, they rather used online
tools, however the total difference between offline and online is only 1.%
Online reservations had been made for 5 days or more represents 37%. 18% of these
bookers stated that they booked their accommodation directly with the hotel via internet,
28
while 30% of them phoned the hotel instead. Again, when dealing with travel agencies,
customers are more willing to use online methods rather than offline, but the difference is
low, only 2%.
Based on the examined figures we can clearly see that in case of short trips the ratio of
online and offline bookings are exactly the same, while when travellers book their holidays
they rather use offline tools.
Table 2: Booking channels, travel package. Edited by the author. Source: Google,
Vertical deep dive travel, Hungary (2012)
Table 2 represent the ratio of online and offline tools applied in case of booking a travel
package. In case of short trippers booking with a travel agency, 22% used the internet, 17%
called an agency and 10% visited the agency. For the same length of the trip 4% booked
via internet with a tour operator, and 21% visited it, while 6% called it.
When examining Table 2, we can see that in case of holiday trips, the elasticity of the ratios
are more or less the same. When they contacted a travel agency with the purposes to
process reservations for holidays, most of the respondents attempted a personal visit
(26%), 18% of them booked with the help of the agencies online, and only 8% processed it
via phone. Besides these, most of the customers booking a holiday trip visited a tour
29
operator with a ratio of 33%, 11% called the operator and only 3% booked online.
Based on the numbers we can state that in case of a travel package regardless the length of
the trip travellers tend to make reservations with offline tools and in this case they rather
use tour operators than travel agencies, however those who book online process their
reservations with agencies more frequently. The author's opinion about this fact is that
travellers are simply know more online travel agencies than tour operators.
Online bookers mostly use their PC and laptops at their home or workplaces to make
reservations for any kind of travel product (bus - , train - , air travel, accommodation or
travel package), however mobile/smartphone bookings are used more frequently for bus
and train tickets.
Analysis of the likelihood of online repurchase based on bookers' experiences in the last 12
months shows that 92% would likely rebook via the commercial accommodation facility
website, 85% via hotel portals and 75% via online travel agencies or portals.
2.6.3. Research behaviour
Following researches on destinations, 76% of the travellers found offers via online media
sources such as search engines and online travel agencies, 65% was informed by the so
called word-of-mouth tool including consultation with a friend or a travel agent and 42%
used offline media sources for gathering information. At the time of making the final
decisions 71% of the interviewed stated that online media sources helped them, 64% was
supported by word-of-mouth methods and 34% by offline media sources.
Both for finding offers and making the final decision on bookings, travellers used mostly
online sources and least of all offline media sources except one, namely the the travel
package. It is clearly demonstrated that those who purchased travel packages between
December 2010 and 2011 relied on the consultancy of a friend or a travel expert, e.g. a
30
travel agent.
The study also states that an average 6 websites are visited by customers prior the actual
booking regardless the length of the planned stay. The websites checked before making the
reservations were found via search engines, 67% of the respondents declared, while 26%
of them typed in the website address directly in the browser.
Upon examining and evaluating the survey of Google the author believes that travellers are
open for online travel purchases mostly in cases of booking for short time trips and
accommodations. The study clearly shows that in case of travel products customers still
trust travel agents or recommendations of their friends and families more than online
media resources in the pre-purchase process and that search engine optimisation has a huge
role in the travel industry and influences sales greatly.
This publication in May 2012 was the first survey conducted by Google regarding travel,
booking and research behaviours in Hungary. The author of this dissertation would
definitely recommend to continue the research with the same tools utilising the same
questions in order to examine the changes year to year and evaluate the effectiveness of
online booking methods used by either suppliers or intermediaries.
2.7. Summary
The review on literature research serves and an introduction of the researched topic and
provide a background information. Due to the fact that this research area is pretty relevant,
the research on literature was challenging to the author.
In this chapter the researcher represented the sales concept, the various sales tools, type
and participants of distribution channels, their development, the history of reservations
31
tools and the appearance of e-reservations as well as the latest trends.
Summarising all the books, articles, publications, surveys and studies the author read,
quoted or referred to, both traditional and online tools are significant in today's economy to
generate sales, increase occupancy and guest nights as well as promote products and
services. Based on the findings of the literature search the role of OTAs' are already
significant and will continue growing as more and more hotels are inquiring about their
services and are willing to cooperate with them because of the increased number of guest
nights and occupancy. Several surveys have tried to explore the behaviour of travellers in
terms of researching and booking which can influence the utilisation of tools and methods
hoteliers and intermediaries apply.
With the help of the chapter of the literature review, the author provided necessary
information to the reader in order to better understand the analysis of the results of the
interviews in chapter four and to get familiar with the participants and their activities and
roles of today's hospitality industry.
32
3. METHODOLOGY
3.1. Introduction
In this section the author introduces and describes the data and research collection
methods, their implementation with theoretical background. In order to accept or reject the
hypothesis a standard data collection method must be processed. The detailed research can
be found in the following chapter.
3.2. Secondary Research
The secondary research of the dissertation included the researcher's former studies,
previous working experiences and the knowledge gained during the research. The primary
tool for the secondary research was the world wide web due to the neologism of the topic
and the research itself. Since the mentioned fact the writer could hardly find hard copies of
books or articles related to the topic, hence most of the secondary research had been made
through the internet, which has a large international data collection and is easy to access.
However the above mentioned tool provided numerous sources, the credibility of the
articles could be doubted, hence the secondary research itself had been very time
consuming. Publications of experts and studies of university professors were the most
useful sources, as well as articles of professional sites of online economy newspapers. The
author former studies also helped writing the literature review chapter and she also quoted
from some of her lecturers and teachers. The previously gained knowledge of studying
Tourism, Tour Operation, Travel Agency Operations and Hotel Management supported the
researcher to understand and examine some of the articles written in a strict economists
language.
33
The researcher claims that in her researched area the secondary data collection was more
challenging than the primary data collection, however she enjoyed reading articles and
studies during the literature search and planning writing the literature review as she is
enthusiastic toward the topic.
3.3. Primary Research
The aim of the primary research is to collect first-hand information from individuals who
work in tourism and somehow are effected by the research topic. The author thought that
collecting information and datas from both sides, namely hotels and intermediaries could
lighten the research from different points of views, so the acceptance or rejection of the
hypothesis could be confirmed strongly. That is why the writer interviewed a marketing
representative of a domestic hotel as well as representatives of online travel agencies and
other intermediaries.
The researcher came up with questions before and while writing the literature review, as
articles and publications provided a framework of the searched thesis statement and the
more the writer read about the topic the more questions came up. However during the
interviews as the interviewer and the interviewee discussed the topic, they both realised
that related questions appeared in the conversation, hence the author completed the list of
the interview questions.
All interviews took approximately 60 minutes, which are considered to be deep interviews.
Some of them was made personally, some of the interviewees could be reached on the
phone only. In some cases the interviewer sent the questions ahead to the tourism experts
to provide preparation time and all of them gave permission to the researcher to record the
conversation which often helped her to evaluate the answers when her notes were
confusing.
34
3.4. Data Analysis Methods
During the research the author utilised standardised, open-ended interviews, which means
that each interviewees were asked the same questions, but there were no alternatives to
choose. Interviews were made personally and through the phone too. Each interviewee was
advised of the purpose of the research, the researched topic, the estimated time to conduct
the interview and answer the questions. The author also let them know that all the
information stated are handled with confidentiality and are recorded on tape in order to
help the author with the analysis in case of notes are confusing. The author used the
narrative and deep analysis methods to analyse the answers. Since similar questions were
asked in both cases (intermediaries and hotel representatives), a comparative analysis
method could be applied as well.
3.5. Summary
In case of any written work, secondary and primary data collections are essential.
Secondary data collection helps the researcher to observe the background of the topic and
the researched area, while primary data collection supports highlighting questions and
areas the secondary data collection could not cover. The author's opinion that interviewees
statements are their own experiences and their answer may be subjective, hence she wanted
to complete at least 3-4 interviews with both the intermediaries and hoteliers.
35
4. EVALUATION OF RESULTS
4.1. Introduction
In this chapter the author analyses the results of the interviews, the primary research. The
reader will be supported to understand both sides of this segment of the industry by
introducing and interpreting the interviews made with professional representatives of
intermediaries as well as a marketing expert of a domestic hotel. The author considered the
interviews from different points of views essential to help both the writer and the reader to
understand the researched area better.
During the interviews the interviewer got to know a few new phrase and business method
which let her comprehend the various business tools applied in the operation of online
sales and marketing as well as let her see the several circumstances such as financial and
technological.
The interviews with intermediaries included Mr. Mate Hegedus, Revenue Specialist of
Expedia Lodging Partner Services and Mr. Zoltan Katona, Marketing coordinator and cofounder of Wellnessakcio.hu. As Mr. Katona is the Marketing consultant of Aquatherm
Hotel Zalakaros, the author conducted an interview with him from a hotel point of view as
well. Besides that Booking.com rejected the proposed interview, their Director of
Corporate Communications, Ms. Anoeska vanLeeuwen provided some information to the
author via email.
All the interviewees responded accommodatingly, sharing their time and knowledge with
the interviewer. They also offered numerous materials to utilise as part of the dissertation
and volunteered to provide additional support if needed.
36
The author planned a total of 6 interviews, 3 with intermediaries and 3 with hotels'
representatives, hence she contacted companies such as Booking.com, Kuponvilag or
Bonusz Brigad, and hotels including Hotel Aurum Hajduszoboszlo, Hotel Abacus
Herceghalom and Hotel Sofitel Budapest Chain Bridge, but even though all of them
ensured the interviewer about the discussion of the interview questions and promised to
spend time on that, unfortunately none of them let the interviewer to set an appointment or
offered to answer the questions through the phone. The author had several attempts in case
of each company, but no interview could be performed, that is why she is thankful for the
time and kindness of Mr. Hegedus and Mr. Katona.
4.2. Interviews with intermediaries
4.2.1. Mr. Mate Hegedus, Revenue Specialist of Expedia Lodging Partner Services
The very first interview had been made with Mr. Hegedus, who works as a Revenue
Specialist of Expedia for 4 years. His previous positions included 5 star hotels, which let
him think not only as an intermediary but as a hotelier as well, which he declares as a great
tool to cooperate with clients in his everyday work. He stated that Expedia has
approximately 160.000 partners worldwide and 360 in Hungary. Their target is mainly
Budapest and the Lake Balaton region as their company operates as an inbound travel
retailer and 75% of their customers are leisure travellers while the remaining 25% are
corporate.
According to the feedback of their partners the year of 2007 was a great year in terms of
sales, however the financial crisis in 2008 dropped the hotel rates as the demand for
tourism decreased, hence the average daily rate drastically fell off, especially in Budapest.
He says the winners of the crisis are definitely the customers as they could reach the same
products and services at a lower rate since then. In the same time hoteliers realised that
online travel distribution was getting more and more popular among travellers due to the
37
technological development and the appearance of tablets, smart phones and mobile
applications and they could definitely sense a booming effect of demand for their services.
As a result, new positions had been declared such as e-commerce manager or online
coordinator positions in hotels.
While searching for relevant literature, the author read numerous articles and publications
stating the same about this IT revolution affecting online intermediaries and their target
market. The appearance of the above mentioned devices affect travel business greatly.
He believes the purpose of hotels joining such intermediary sites is that a very strong
marketing is reachable, which hotels themselves could not gain so easily. Based on their
latest statistics Expedia is visited by approximately 40 million unique users a month and
they spend huge amounts on search engine optimisation year by year. Namely, hoteliers
could hardly afford to build such a strong marketing and place their website visible for
customers in a search engine's search results. Hence, hoteliers can attract those travellers as
well who they normally never or hardly could due to simply the fact that those travellers
would never hear about these hotels and their services. He states that other reasons could
be the spread of internet usage as well as the easiness of utilising the admin surface of
these sites. He pointed out that Expedia offers a dynamic pricing principle, a significant
marketing and an easy sales method. The researcher agrees with him according to her
experiences gained while writing the literature research.
During the conversation he mentioned the so called billboard effect11 and a study about it.
He told the story of the professors of Cornell University, School of Hotel Administration in
New York, NY. These professors tested the effectiveness of the marketing of Expedia.com.
The study found that those hotels which were listed on Expedia, they saw an increase in
reservations from their own distribution channels. “The theory behind this phenomenon is
that the would-be guest gains information about the hotel from its OTA listing, but then
books the room through a channel controlled by the hotel or its chain family.” says
11 The increase in offline bookings a property or brand experiences when it is featured on an online booking
site.
38
Christopher Anderson, Associate Professor of Cornell University. (Anderson, 2009)
Mr. Hegedus mentioned a unique recruitment tool in order to gain more clients which they
implemented in 2008. They invited representatives of hotels to an online presentation. It
included a live meeting link and a conference call number they could dial and a brief
overview of their services and the advantages of the affiliation were presented. He
considers this method a successful tool as it is more personal than mass emails or cold
calls. They also visited hotels personally, but they found the online presentation more time
effective as they could reach numerous hotels in the same time. However he says that they
gain partners mostly by hotels' inquiries by visiting https://www.joinexpedia.com.
When the interviewer asked him about the most frequent excuses hotels have he first
mentioned a misunderstanding hotels come up with. First he pointed they do not have
commission, they call it as an Expedia discount. They use a merchant model instead of the
well prevailing agent model which is economically more beneficial for hoteliers in terms
of paying tax, hence using the merchant model the net results are more convincing,
although intermediaries utilising the merchant model will more likely require to pay a
higher commission, but they do not incidence credit card fees to hotels.
Another difficulty when attempting to sign a contract with a hotel is the usage of the so
called allotment contract12, however they consider themselves less aggressive than other
travel retailers. The basic concept behind the allotment contract is to ensure a defined
number of sold rooms for each hotel based on previous years' statistics. It is financially
essential to guarantee that expenditures on marketing of a location is not profitless.
They also frequently request hoteliers to offer a special promotion to customers as part of a
campaign, namely discounts or services free of charge which they usually gladly
participate in as they try to remain competitive, but during peak season they often refuse to
as they try to avoid providing any discount when they could sell their rooms on a much
12 It is used to designate a certain block of pre-negotiated hotel rooms which have been bought out and held
by a travel organiser with a huge buying power. In this case the number of rooms which the retailer
indicated as a minimum number of rooms to be sold through them.
39
higher rate.
He also mentioned the so called fenced-channel, which could cover a segment which books
characteristically in last minute on mobile applications, while the official web based site
focuses on customers booking ahead. It leads to another excuse hotels likely use, as they
refuse to offer lower prices on mobile applications declaring they have numerous corporate
and contracted partners and they can not offer lower rates as they are concerned they might
lose their clients in case of offering less expensive guest nights to the public than the
contracted rate with them.
Mr. Hegedus claimed that there are just a few factors influencing the measure of sales. As
they operate as an inbound travel retailer their customers' buying behaviour is mainly
based on the prices of air carriers and the rate of exchange, international events,
conferences, but can be influenced by the company by campaigns, promotions and
destination managements as well.
He also shared that Expedia does not require exclusivity, their partners are allowed to
represent themselves on other sites too, but they do require a competitive price and a fairplay as if hotels raise their prices on one site, customers may consider that firm an
expensive retailer and may never visit the site again.
As the interviewer inquired about the popularity factors, he stated that surveys show that
the breakfast service, internet connection, parking facility, location and guest reviews have
the biggest impact on the decision-making process. Their experience is that the most
popular hotels are the ones with 4 star rating, as after the crisis they had to offer lower
rates, hence they mostly operate with rates as 3 star hotels used to and again, the absolute
winners of the crisis are the bookers as they are able to make room reservations at a more
economical price than before. In their top 10 partners which generate the highest sales
through Expedia are mainly 4 and 5 star hotels in Budapest.
All in all Mr. Hegedus finds online travel retailing and the activity of online intermediaries
40
beneficial for hotels and he sees the future in online travel distribution. He also states that
almost every hotel is willing to and want to cooperate with at least one online travel retailer
as they consider this service an easy, affordable and efficient sales method.
4.2.2. Mr. Zoltan Katona, Marketing coordinator of Wellnessakcio.hu
The second interviewee was Mr. Zoltan Katona, who works as a Marketing coordinator of
the online intermediary site called wellnessakcio.hu and in the same time he was one of the
founders of the company. His previous experiences included the Marketing assistant
position of Aquatherm Hotel Zalakaros, where he still works as an outsourced consultant.
The firm itself had been launched 3 years ago, when 3 enthusiastic tourism expert decided
to make their own business.
Mr. Katona mentioned that they use a unique business model, as they request hotels to
offer 10% off of the package prices for their customers. He stated that there are no other
restrictions regarding the package and prices. As their company name includes they focus
on domestic wellness hotels. When the interviewer asked him to define wellness according
to their business model, he claimed that they consider every hotel a wellness hotel if it has
at least a hot tub and/or a sauna, but that is always preferable if there are additional
services such as massages or different therapies and treatments.
Back in time when they registered their firm they did not ask for any commission, there
was a one time registration fee and to appear on the web site and to offer packages were
absolutely free of charge. The author would like to note that based on the latest statistics of
the Hungarian Central Statistical Office, wellness and spa tourism is the one which had
significant increase in terms of guest nights and arrivals in 2011 compared to the year of
2010.
Mr. Katona stated that it was approximately 2 years ago when they could sense a huge
41
interest toward their services from hotels, when they participated in a survey which
evaluated and determined those intermediaries which generates the most sales to hotels,
however he did not share the name and exact time of the published survey. After the
publication of the survey they definitely felt a booming demand for their services, however
by today the number of hotels with joining purposes is steady.
He stated that the reason behind the significant number of partners is the growing
popularity of the site, the participation in surveys and studies, the increasing number of
appearances in professional online newspapers and tourism related websites and the
growing interest toward their own newsletter by customers. He claimed that they did not
make efforts and did not spend any on web page optimisation, but they focused on the so
called key words optimisation in search engines.
When the interviewer asked the interviewee about the excuses hotels use the most likely he
stated that the only one to mention is the requested discount. As the researcher previously
mentioned wellnessakcio.hu does not have any other restrictions than the 10% discount to
customers, hence there is no other thing hotels would fight for.
They operate as a site which offers hotels' own packages, there is no request to create an
exclusive package for the appearance on the site and the membership is temporary.
However there are various opportunities to suppliers to promote their products and services
such as purchasing a highlighted surface on the site. When he was asked about the most
popular times of the year hotels do want to purchase these services he stated there are
mostly holidays and weekdays, but they have some partners who request the service for the
entire year, however experienced hoteliers reject this during peak season, as sales on these
pages greatly influence their ADR.
As they focus mainly on wellness hotels, the regions which generate the most sales are
Lake Balaton, Heviz, Zalakaros, Bukkfurdo, Gyula, Gyoparosfurdo and other typical
wellness and spa locations in Hungary. He stated that the most popular destinations are the
42
ones where there are other attractions in the neighbourhood other than the hotel itself.
Cities and towns with good infrastructure, regional development and brand marketing are
always demanded and among these 4 star hotels are the most attractive to customers as
they use rates that 3 star hotels used to. He also shared with the interviewer that all
inclusive packages are getting more and more attractive to travellers.
In terms of sales Mr. Katona says that for the summer season, national holidays and long
weekends they always have significant number of reservations and believes that today in
Hungary customers purchase either well in advance or in last minute. Their own statistics
and figures proves the above mentioned fact as well as the one that travellers tend to
process their bookings on the first few weekdays and Monday is the most significant day in
generating sales. Wellnessakcio.hu offers different marketing possibilities to their clients as
they are able to purchase spots in their newsletters weekly or monthly for a given date or
holiday and hotels also can decide whether they want highlighted marketing surfaces/spots
on the site itself.
Wellnessakcio.hu does not request exclusivity, they do not restrict the number and type of
other intermediaries hotels can cooperate with, they could even use the same package on
other sites, but they are adamant about the 10% off. The interviewee stated that as long as
their partners offer this discount, they do not regulate anything in the contract.
Finally Mr. Katona talked about the advantages of their firm and other intermediaries in
general. He believes that today in Hungary each and every hotel needs to have
intermediaries and he sees the future in the online intermediary services. They consider this
phenomenon not only as a great sales method, but a marketing tool too, which is essential
today for everyone, especially freshly launched enterprises.
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4.2.3. Comparison of the interviews with intermediaries
In this sub-chapter the author introduces objective three, the evaluation of awareness of
e-reservation tools and hotels' willingness to use them.
During the interviews the author experienced professionalism and expertise from both of
the interviewees. Just like the researcher, Mr. Hegedus and Mr. Katona are passionate
about sales and e-reservations and this common attitude based the atmosphere of the
interviews.
Due to the nature of the two companies – Expedia and Wellnessakcio – most of the given
answers vary from each other, however both of the interviewers stated that the years of
2008 and 2009 were definitely the time when they could feel a booming demand towards
to their companies' services as a result of the financial crisis, which eventuated in the
tendency of searching deals and offers as well as booking online among travellers.
While Expedia focuses on search engine optimisation, Mr. Katona stated that they never
used this tool to promote their own website, but participated in surveys and studies which
were published to representatives of the industry, hence it was available to Hungarian
hoteliers and it led to inquiries from sales and marketing managers from wellness hotels.
The two did not give the same answer either when they were asked about the promotional
and sales tools they use to attract potential clients. While Wellnessakcio uses mass email
marketing and key words optimisation in search engines, Mr. Hegedus believes in online
presentations and personal selling as he considers mass email marketing ineffective and
impersonal.
Potential partners of Wellnessakcio take objection of providing 10% to online bookers,
however according to Mr. Katona this is the only excuse they usually come up with, while
Expedia experiences a few more challenges when attempting to cooperate with hoteliers.
Mr. Hegedus declares that the misconception of the agent model and the merchant model
leads to a difficulty and that the allotment contract cause some difficulties too.
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As bookers of Expedia processing reservations to Hungary are typically foreigners, the
most partner they have is from Budapest and its surroundings due to the interest in these
areas from foreign countries, while Wellnessakcio is a domestic travel retailer, hence most
of their clients are from typical wellness and spa locations such as the Lake Balaton region,
Heviz, Zalakors, Bukkfurdo. The factors that mostly determine sales volume differ as well.
In case of the domestic retailer the summer season, long weekends and national holidays
are the influencing factors, while in the point of view of foreign bookings, air fares and the
rate of currency exchange have the greatest impacts on sales.
Wellnessakcio senses an increased sales volume not only for the above mentioned
occasions, but at the beginning of the months and the weeks, for which the reason may be
as Hungarian citizens receive their salaries until the 10th of each month. When Expedia was
asked the same question, the interviewee stated that campaigns and special promotions
including a few selected hotels can influence sales even more, but there is no significant
increase on specific dates of the month or the week. Neither of the two companies ask for
exclusivity, all they ask for is fair-play, they said.
Mr. Katona shared that their most popular and wanted hotels are the ones, where a welldeveloped regional brand exists or hotels are located in famous or well-known cities and
towns, surrounded by other area attractions and these are mainly 4 star hotels. Based on
Mr. Hegedus answers, their clients in demand are mostly 4 and 5 star hotels in Budapest,
which are centre located with good accessibility and operate facilities such as fitness
centre, spa and speciality restaurants.
All in all both of the respondents believes that the future of hospitality sales and marketing
is e-commerce and e-reservations and it is essential for hotels to remain competitive as
participating hotels offer great discounts on these online sites and they may face a greater
competition if they reject the cooperation while their competitors do not. They both agreed
that without these services hotels would have a hard time selling their rooms and today it
45
may be a cliché however it is still true, that the empty room is the most expensive room in
a hotel, hence that is why hotels are willing to affiliate with them. Nevertheless they offer
great marketing opportunities hotels probably could not reach as fast and easily as through
these third parties and based on hoteliers feedback, occupancy and guest nights are
increased thanks to their services.
The author would like to emphasise that the third aim in this dissertation was to find out
whether e-reservation systems' tools are effective and whether hotels are willing to use
them. Based on the two performed interviews we can state that online reservation methods
are effective and hotels are interested in cooperating with third parties offering these tools
and more hotels are likely to use them in the future as well.
4.3. Interview with a hotel representative
4.3.1. Mr. Zoltan Katona, Marketing consultant of Aquatherm Hotel Zalakaros
In this sub-chapter objective four, the analysis of influencing factors of the decisionmaking process is introduced, and the preference list of the number and type of reservation
systems hotels join is evaluated.
Aquatherm Hotel Zalakaros is a three star hotel in Zalakaros and was opened in 2002 with
22 rooms and apartments. The interviewee used to work as a full time marketing assistant
in the hotel, however today he is an outsourced marketing consultant for the company.
Mr. Katona stated that Aquatherm Hotel has numerous travel intermediaries, but they are
planning to reduce this number especially among Hungarian partners. They created an
evaluation based on previous years' experiences and try to keep approximately the top 10
according to the sales generated as the invested time and human energy did not carry
significant results and they wish to spend these on cooperations which are beneficial for
46
their business. They are currently the clients of szallas.hu, hotelstart.hu, hotelvadasz.hu,
wellnessvadasz.hu, wellnessakcio.hu, utazok.hu, indulhatunk.hu and a few more as far as
online intermediaries. They are in business contact with the following foreign sites:
Booking.com, Venere, HRS, hotel.dr, Agoda and they have traditional travel agent partners
as well in Slovakia, The Netherlands, Russia, The Czech Republic and Poland. They
decided on these corporate partners because they considered them as the best known and
largest intermediaries on the market they want to attract.
The interviewee also mentioned that they got to know these partners by mass marketing email, cold calls or by other hotels so they could contact the sites by themselves. He said
that the year when they started the corporation with most of their partners was 2008 after
the financial crisis when they had to find additional tools and solutions to generate more
sales after a drop caused by the crisis.
Before the decision had been made, they took into consideration some facts. They checked
the design and the layout of the page, whether it is easy to use and navigate for customers,
what place they acknowledged on search engines sites such as Google, how frequently the
site is visited by travellers, and what the opinion and reputation was about the site by other
hotels. They also considered some financial issues such as the rate of the commission. The
final decision was made by the Sales Director and the General Manager.
Mr. Katona wanted the interviewer to separate two segments on the travel retailing market
when answering a question regarding the flexibility of these retailers. He differentiated the
traditional online travel retailers and the ones which operates according to a so called
coupon base or with other words, the flash sale sites. He said that intermediaries with a
classic model are flexible, moreover they do not determine the framework of the package,
they never request to reduce the price or provide services free of charge to the customers,
so basically the hotel is the only one player who determines the content and the price of the
package. However, the ones operating on a coupon base always bargain and try to decrease
the price as their number one aim is to generate as many sales in a given period of time as
possible.
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As above mentioned they have permanent appearances on traditional sites and temporary
on coupon based. They use these when they want to fill in gaps in terms of occupancy on
weekdays, holidays or at low season. At the time of these sales they are not allowed to sell
the same or very similar packages on other distribution channels, such as their own website
or other intermediary web pages. They are requested to create a special, before never used
package to the actual sale. The failure of this is strictly regulated in the contract by paying
indemnity. Hence, we can state the classic model site do not ask exclusivity, however
coupon based ones do, however for the time of the sale only.
When Mr. Katona was asked about the measurement they use to define whether a
corporation is successful, he said they usually measure it annually. They consider the
expenses in regard of their partners, the annual turnover deducted by the commission, the
number of sales generated by the partner compared to their own sales results and they
evaluate the awareness of the affiliation.
When the interviewer asked him about the ratio of traditional and online sales he claimed
this is approximately 10% and 90% respectively. When the ratio between intermediaries
and their own sales was asked, the interviewee stated 60% and 40%. Here, he emphasised
the importance of intermediaries. He believes that without intermediaries, today in
Hungary it is hardly possible to be and remain competitive, and is essential in case of new
hotels and other commercial accommodation providers. The researcher was interested if
there is any change in the ADR when using these services. He unequivocally stated that
their ADR decreased due to the discounts offered to the customers in both cases, using a
temporary appearance provider site as well as a permanent sale one. The author already
acquired some background information regarding the fluctuation of ADR in case of
reservations through a third party and while doing the research on related literature, she
read about same experiences from hoteliers.
48
He shared with the writer that they follow the offers of their competitors, but do not use
any competitor analyser company to gather information about their competitors rates,
occupancy or generated sales. However they focus on the search engine optimisation.
4.3.2. Conclusion of the interview with Aquatherm Hotel Zalakaros
As a summary of the above analysed interview the author had been advised by Mr. Katona
that they have numerous business partners including travel retailing companies, however
an idea came up recently to reduce their numbers. He stated that they decided on their
current partners as they are the largest and best-known companies in this segment of the
industry, hence their marketing is strong and their customers are usually return bookers. He
also emphasised that they try to avoid the usage of flash sale sites because of the negative
impact on ADR and the bargaining behaviour of these partners, however from time to time
they set a sale on these websites when the occupancy forecast is not convincing.
He generally stated that in his opinion there is an absolute oversupply of online retailers
and it is very time consuming to select the right partners. They consider the expenses,
commission and generated sales when comparing exsisting cooperations and the number of
visitors, the opinion of other hotels and the contract details in case of a potential one.
Since more than half of the reservations at Aquatherm Hotel Zalakaros is processed
through an online intermediary, he declares that it is an absolute must to utilise these
services, unless they would not be able to survive the competition and low seasons or
challenging periods.
Mr. Katona agreed with the author's statement that hotels that joined e-reservation systems
have financial benefits since the affiliation compared to the era of operating with
traditional sales methods and they provide a beneficial sales channel to hotels and the
utilisation of them is essential in order to remain competitive.
49
The influencing factors include the contract type, the ratio of commission, the reputation of
the intermediary among other hotels and customers, the marketing strength it has, the
flexibility, the number of visitors of the site and the place earned of the search engines of
the intermediary.
This particular hotel prefers flash sale sites least of all and focuses on setting a fair number
of partners in order to be able to concentrate on business partnerships by which they can be
successful and profitable.
4.4. Booking.com – Facts and business concept
As the author mentioned before, she contacted Booking.com and inquired about a future
interview with one of their representatives. The inquiry was rejected, however Ms.
Anoeska vanLeeuwen, Director of Corporate Communications helped the researcher and
provided some basic facts about the company via email.
Booking.com provides contracted distribution services to more than 250 000 properties and
more than 5 000 affiliate partners. The accommodations and hotels are from 178 countries
an approximate 400 000 room nights are reserved through the site daily.
The company itself was founded in 1996 in the Netherlands and later was acquired by
Priceline in 2005. According to the provided information by Ms. VanLeeuwen the site has
over 30 million unique visitors monthly and is available in 41 languages, including
Hungarian.
Booking.com has a simple business concept. It sends the reservation processed by guests to
the hotel, send a confirmation to the customer, but does not charge the guest any booking
or cancellation fees, does not add any additional fees to the room rate and does not even
50
charge the customers' credit cards upon booking, hence guest pay directly the hotel or
accommodation upon check out and following this the hotel pays a contracted commission
rate on the room price. The company does not buy and sell rooms, hence it acts only as an
online platform which let hotels and accommodation providers to set their own pricing and
upload their availability.
Ms. vanLeeuwen mentioned the so called 'best price guarantee' which she explained as the
followings: “Booking.com guarantees the best price for any type of accommodation.
Customers who find a lower rate anywhere online for the same room, with the same
booking conditions, within 24 hours of booking, should contact Booking.com with the
competing website’s details. We will verify the claim and match the price offered by the
competitor.”
The firm focuses on providing maximum flexibility, which means that customers can
usually cancel their reservation up to one day prior to the arrival date with no cancellation
penalty, however in case of highly discounted rates some cancellation fee may apply which
may involve a certain amount of deposit as non-refundable.
The author's personal opinion based on the very few information provided is that
customers may prefer the services of booking.com due to no charges applied up to 24
hours ahead of the arrival date and that hotels also must prefer cooperating with the
company as they are free to terminate their agreement with booking.com if they no longer
require further services or access to the platform.
Besides that the above mentioned facts let the researcher have a look at the company's
operation and let her have a brief overview of framework applied, she would be interested
in the answers they could have provided on the interview questions the author composed in
order to be able to compare the results with other respondents.
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4.5. Representation of Priceline's Annual Report 2011
As previously mentioned, Booking.com is owned by Priceline and it considers
Booking.com as its most significant brand. The 2011 Annual Report shows outstanding
growth in hotel room nights and rental car days with a raise of 52.6% and 45.6%
respectively, however airline tickets sold increased with only 5.7%.
Table 3: Changes in hotel room nights reserved, rental car days and airline tickets sold as of December 31,
2011 and December 31, 2010. Source: Priceline Annual Report 2011 (2012)
The reason for the growth of the number of room nights reserved might be the 65 000 new
partners Booking.com achieved in 2011. “Booking.com has added hotels over the past year
in its core European market as well as higher-growth markets such as North America
(which is a newer market for Booking.com), Asia-Pacific and South America.” - states the
annual report. (Priceline, 2012)
The purpose for the representation of the table was to indicate hotels' willingness for the
cooperation, and the number of room nights online third parties are able to generate. The
following table concentrates on advertising expenses.
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Table 4: Changes in expenses of online and offline advertising as of December 31, 2011 and December 31,
2010. Source: Priceline Annual Report 2011 (2012)
As the above table shows, there is an absolute growth in online advertising expenses, while
there is hardly any change in expenses of offline advertising. According to the report,
online advertising included “...search engine keywords purchases, referrals from metasearch and travel research websites, affiliate programs, banner and pop-up advertisements
and e-mail campaigns.” Offline advertising consisted of domestic television, print and
radio advertising. (Priceline, 2012)
The reason why the researcher found it essential to include Table 3 is to prove several parts
of the literature found and the results of the interview, where it is stated that online
intermediaries spend a fair amount of money on advertising as part of their marketing plan,
such as search engine optimisation, meta-search engines and certain campaigns, while
numerous hotels would not be able to spend enough on marketing and reach the same
results or as Mr. Katona stated before, they simply never thought about spending on these
advertisement tools.
The author included the tables and Priceline's Annual Report as she definitely wanted to
some sort of proof for the previously mentioned facts and she had access to a very few
financial data only.
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4.5. Conclusion of the analysis of results
The author believes that the written literature review and the analysis of interviews are in
close connection and one proves the other. The author confirms her statements regarding
the set objectives and was able to point out that hotels not only in Hungary but worldwide
are aware of third party services and are willing to use these e-reservation tools.
Interviewees believe that the future of the economy mainly depends on online reservations
and sales as well as skilled and professional labour. They all agreed that without online
sales and e-reservation tools it is very challenging or almost impossible to survive the
competition on the market.
The author would like to state that according to her interpretation, a very few sites use
membership fees and third parties mainly apply commissions up on the room rates, which
let hotels advertise their existence, products and services by simply cooperating with
online intermediaries and maintain their platform including occupancy and pricing,
regardless the number of reservations are processed through the site. With other words
simply signing the contract and maintaining their admin web surface hotels are able to
reach quick and easy marketing results almost free of charge as their online travel retailers
take care of the marketing and promotion for them.
4.6. Summary
The aim of this chapter was to analyse the results of the primary research instrument,
namely the interviews and accomplish the objectives set previously.
Based on the conducted interviews the author is able to summarise the third and forth
objective. It is clearly obvious that hotels are aware of the existence and services of online
intermediaries and e-reservation tools and are also willing to use these as it is considered
essential to remain competitive in today's economy.
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The influencing factors include financial, marketing and sales aspects, hence hotels are
cooperating with affiliations which have a good reputation, serve as a good marketing tool
and the payed commission is rewarding.
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5. CONCLUSION
5.1. Introduction
In this chapter the author summarises and evaluates all the completed research,
furthermore the hypothesis of the dissertation will be either accepted or rejected, based on
the results of the analysis of the objectives set up previously.
The researcher provides a recommendation for both suppliers and hoteliers based on the
experiences she gained during the research she completed or gathering information for the
literature review. She would like to also suggest some further research in the topic based on
the results of the interviews and the opinion of her own.
5.2. Conclusion of analysed results
The dissertation's main purpose was to decide whether the author's hypothesis is correct
and with the help of the aim and objectives introduce our days' new tendency in tourism
and especially in the hospitality sector, namely the appearance of e-reservation systems by
intermediaries (travel retailers and other travel related companies). The researcher
collected the five objectives in order to briefly summarise the previous chapters and
provide a final conclusion of the research.
Objective one: To compare online and traditional sales.
The right selection of tools and methods are essential in both cases on traditional and
online sales. The various segments require different cooperations, distribution, partners and
reservation tools. As there always be segments and customers who are adamant about
utilising traditional or online tools (due to the demographic or social impacts) there is a
necessity to focus on both regardless the categorisation, the location of the hotel or the
56
number of rooms it has. All of the methods have great impacts on sale, hence the author
definitely believes in the usage of both sales types.
Objective two: To analyse the development of e-reservation tools.
The usage of e-reservation tools dates back to the era of the 1950's when the first Airline
Reservation System appeared and SABRE soon became the largest data processing system.
Later on ARS turned into CRS (Central Reservation System) which was transformed into
GDS (Global Distribution System). However tourism still uses these abbreviations and
phrases, today due to the benefits of the internet, the most commonly used expression for
electronic reservation and distribution systems is IDS (Internet Distribution System). The
most spreading trends is the utilisation of the services of OTAs (Online Travel Agency) and
flash sale sites, however OTAs are more preferred by upscale hotels due to the smaller
influence on their ADR (Average Daily Rate) and the bad reputation caused in customers'
minds in terms of quality by giving huge discounts on flash sale sites. CGM (Consumer
Generated Media) and Meta search engines are also great influencing factors in online
travel retailing as well as the mobile applications which are getting used more and more
frequently. Based on the quoted experts, professors and hoteliers the author is able to state
that e-reservation systems provided by intermediaries is a popular method used by hotels in
Hungary and around the world as well, and worth to do more research on the topic.
Objective three: To evaluate the awareness of e-reservation tools and hotels'
willingness to use them.
Based on the performed interviews the researcher found out that hotels are aware of the
existence of these online reservation methods and according to the interviews with the
representatives of the selected intermediaries hotels are willing to use them. It is confirmed
by the steady large number of inquiries intermediaries receive time by time and the
relatively large number of partners hotels cooperate with to generate sales and revenue
online. As the answers of the interviewed hotel shows, hotels are familiar with the services
57
of these third parties and there is a demand for utilising these e-reservation tools.
Objective four: To analyse the influencing factors of the decision-making process.
How many and what type of reservation systems do hotels join and why.
/Preference list/
During the interviews the author had been advised that the main influencing factors of the
decision-making process are the contract type, the ratio of commission, the reputation of
the intermediary among other hotels and customers, the marketing strength it has, the
flexibility, the number of visitors of the site and the place earned of the search engines of
the intermediary. There is no concrete preference list set by hoteliers, but they prefer flash
sales sites least of all types. The number of partners they have varies from hotel to hotel.
Objective five: Final analysis of introducing the benefits and advantages on the
market of hotels that joined e-reservation systems.
Probably the most outstanding benefit of the affiliation between hotels and intermediaries
providing e-reservation systems is the very strong and quick marketing opportunity hotels
are able to reach through their services. According to the interviews conducted new target
markets are available besides the marketing advantages. With the appearance on global
sites foreign customers can be attracted from destinations where promotion would be out
of hotels' budget and more than likely would hardly meet its goals, but since it is the
intermediary who has to deal with marketing and promotion hotels can easily take
advantage of these benefits.
Increasing sales volume in low seasons or critical periods is another advantage of the
cooperation with e-reservation system providers. Offering packages and special
promotions on a usually discounted or competitive rate can gain customers at less popular
times and generate more sales than hotels could without these services and methods.
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Customers booking on e-reservation sites are typically booking ahead. By the affiliation
with OTAs and other online intermediaries hotel can ensure reservations weeks or even
months ahead, which enables them to plan ahead.
There is another intangible but proven effect which applies when talking about ereservation systems is the so called billboard affect which was already mentioned and
explained in the literature review as well as in the analysis of results.
5.3. Recommendation
The author would recommend the dissertation to hotels that have not joined e-reservation
systems yet or have not cooperated with any online travel retailer sites yet. The research
might be also useful for newly launched hotels not only on the Hungarian market, but
anywhere in the world. The dissertation could also attract students in the Tourism and
Hospitality field, or those individuals who would like to have a better understanding in the
topic. The researcher also recommends the dissertation to intermediaries to have a closer
and deeper look at the attitude and behaviour of Hungarian hotels prior planning any sales
calls.
The author would like to provide some recommendations for hotels in order to make their
operation with intermediaries more successful and profitable
 Usage of flash sale sites should be decreased as they have a negative impact on
ADR
 Right selection of intermediaries should be conducted in order to avoid too many
business contracts and high membership fees or commissions on less successful
sales channels as well as to avoid bad reputation in customers' mind
 Creating of annual evaluation on partners' effectiveness is essential including
59
expenses, commission and annual generated sales
 Posting jobs related to this matter could be a great asset by employing experts in
travel retailing and e-sales
 Emphasising the bill-board effect is essential
5.4. Reflection and evaluation of research methodology
The author used mostly literature research while writing the dissertation and analysed the
results of the interviews. Most of the literature was found on the world wide web even
though the researcher used books and dissertations besides publications, articles and
surveys, but all of the utilised material were available online.
Generally she is satisfied with the findings of the research, however as it was mentioned
before the topic is relatively new, hence no or just a few hard copies could be found which
was relevant to the researched topic.
5.5. Suggestions for further research
The author would definitely recommend further research and investigation. She suggests to
conduct surveys on booking, research behaviour and decision-making of travellers in order
to get a better interpretation of the effectiveness of utilisation of the various methods and
tools such as intermediaries, meta search engines and search engine optimisation. In her
opinion a comparison of surveys on at least three to five consecutive years could represent
the changes in these behaviours and trends regarding them.
60
She also finds essential to survey hotels about the cooperation from a revenue and
economic point of view, which was not available for the author of the dissertation due to
company secrets and confidential information. She believes that a more precise and
informative research could be prepared with information regarding the generated sales,
revenue, profit, the fluctuation of ADR, the changes in occupancy and guest nights.
A comparative analysis of the effectiveness of flash sale sites and 'traditional' e-reservation
systems would be also supportive for hotels and other tourism representatives that might be
interested in operating such a site. As there are numerous operation ways of online
intermediaries – offering a standard discount, offering packages included in special
promotions, flash sale sites – numerous research would be optimal.
5.6. Summary
The final result of the dissertation is that the hypothesis is correct, however it could not be
proved 100% as none of the interviewees shared financial information with the interviewer,
but they made her feel with their answers that there is a financial reason for utilising these
intermediary services and they more than likely have financial benefits since the affiliation
compared to the era of operating with traditional sales methods. There is an absolute
necessity for online intermediaries and distribution channels in order to survive low
seasons or challenging periods, but again, the right selection of partners is significant
unless it is a high risk to cooperate with them, hence employing experts is essential.
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FINAL WORD ACCOUNT REPORT
Word account without the appendices and table of contents
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APPENDICES
1. Interview questions – intermediaries
1. Have you sensed a significant increase in inquiries by hotels with a purpose to
cooperate with your company? If yes, since when?
2. What do you think, why do more and more hotels join these online intermediary
sites? What is the biggest benefit in the affiliation?
3. In what way do you get in contact with your potential clients? (Cold calls, mass
email, personal visits or inquiries) In what ratio?
4. What are the most common excuses hotels use against the cooperation? (Eg.
Commission, contract details, etc.)
5. What are those factors that you can hardly agree with your clients?
6. From which region do you have to most partners (hotels)? What do you think, what
is the reason for that? (Please note the dissertation focuses on the territory of
Hungary)
7. Are there any influencing factors which affect sales? (Eg. Booking for long
weekends, holidays, etc)
8. Are there any days when sales volume is higher than on others? (Weekdays vs.
Weekends, the beginning of the month, air carriers' prices, etc)
9. Do you request any kind of exclusivity?
10. Which hotels are the most popular and why? (rating, spa facilities, location, meal
service, attractions in the area, accessibility, guest reviews, etc)
11. Based on your clients' feedback, is there any demonstrable increase in guest nights
and occupancy since the beginning of the cooperation? If not, what could be the
reason that the efficiency of the cooperation is not measurable? What is the solution
for that?
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2. Interview questions – hotels
1. How many travel related intermediaries do you have contract with? Why with
them?
2. What were the pros and cons prior to the joining? Who made the final decision?
3. Were you the one who inquired about the services of the intermediary or they
contacted you by cold call or mass email? How many request do you get monthly?
4. How flexible was the intermediary in the process of creating the package? Did it
suggest anything? If yes, what suggestions did they have?
5. Is the appearance permanent? If not, at what occasions do you use these services of
intermediaries to the most? (Last minute offer, during low season, holiday offers,
etc)
6. Prior to a presence on a flash sale site, when do you suspend sales on other
surfaces? Does the contract prohibit processing reservations through your own
distribution channels? Can you offer the same package or similar on your website?
7. Do you have any partners requesting exclusivity? (On selected dates, time periods,
etc)
8. How long did it take to prove the economic benefits of the cooperation? By which
tools could you measure it?
9. What is the ratio of traditional to online sales?
10. How did the cooperation affect ADR?
11. Do you follow your competitors' offers on the same site or another online sales
surface? Do you apply any competitor analytic companies?
12. Has it ever happened that you terminated the contract or have not renewed with
your partner? If yes, what was the reason for it?
64
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