A number of local sites have reaped big rewards by selling hotel rooms, competing directly with their own affiliate partners like hotels.com, as well as the Convention and Visitors Bureaus (see also "NewOrleans.com converts to tourism-based model").
There are opportunities for more local media sites to leverage their brands in the travel space, especially given a key advantage: Unique local content that builds search engine rankings.
LMI has interviewed a number of sites with travel products business models to put together this summary, as well as key vendors interested in partnering with media companies.
1.Think in terms of two markets and strategies: Outbound and inbound travel.
The outbound market takes advantage of your loyal audience from direct traffic online travel guides with booking engines can include the most popular destinations. For example, Tennessee residents might be heading towards the coast; San Francisco residents to Wine Country. A booking engine can also be posted on any kind of travel article.
The inbound market – that is inbound visitors – is primarily an SEO strategy. That means creating content about the city specifically intended for "fly-bys" who find the site via search. Most travelers will enter the city’s name as a key word, hence a key advantage of owning the city.com name. However, unique, optimized travel content is also critical.
Adding "nearby destinations" or day-trips to the travel guide can supply both inbound and outbound travelers.
2. Create a travel destination area or page, and landing pages for key hotels in your area.
These two basic pieces – a travel destination page and landing pages for hotels – are the core content for SEO. Look for additional dynamic content such as “what’s happening this weekend,” as well as reviews of restaurants, tours, hikes and attractions. Keep in mind that visitors want local content, and locals want the visitor content.
"Things to do while in (name of city)" linked to other content helps travelers and content that changes helps SEO. Conversely, locals may want ways to book, say, a romantic bed and breakfast, golf, tours or tickets to other major local events directly.
The travel channel can be as simple putting "hotels" or "travel" in the navigation bar, and linking to a technology partner. But keep in mind that everything unique and local will help you compete.
3.Place the booking engine at the top of travel pages.
Because of the way the eye reads the page, top left is a common placement that yields the highest conversions. We've noticed that sites like Neworleans.com keep the booking engine on a variety of content pages, so it is there when the visitor is ready to make the decision.
4. Reduce or eliminate ads on pages where transactions are sold.
Ads do compete with bookings – the visitor should be led to focus on the action and a variety of calls-to-action on the page reduces check-outs – however there are still some hybrid strategies. If it is a hybrid model - ie ads and booking engines, link ads to the page with the booking engine, not the hotel web site, avoid advertising agreements that don’t allow bookings, and, of course, ban Google AdSense ads, especially those that compete for bookings.
Another model that does not require selling ads is to charge for advertorial profiles, on a fixed fee basis. For example, if there is a golf guide, the full profile with a call tracking number can sell for $300 to $800 a month. This has been used successfully by a number of sites, with only slight differences that indicate the profiles are paid.
5.Take full advantage of your unique brand as a competitive edge.
Keep in mind that people are used to booking travel online, and your new competitors area the national travel portals.
“If you have unique and current content, you can compete,” says Rick Schneider, director of sales for Priceline's Partner Network. The content strategy can include dining, tours, theater and events. Certificate stores are an easy way to sell tours and attractions like golf, without needing to integrate with the partnering site (see Nashville.com).
Add areas unique to your brand, or your market, such as “This weekend,” “Beachside," or little known hotels or BnB's.
“You are not going to have a Gnome or William Shatner,” Schneider says. "But they also don’t have “valuable timely, local content.” Keep in mind that the unique local feel of your travel channel depends in part on the partner. Priceline's is white label and flexible - you can segment and choose hotels that fit your brand. If you "build your own" or partner with a company like Rezez (see below) the brand can be even more localized.
6. There are three basic business models; pick the one most appropriate to the organization and market.
Ocean City needs more effort and control over it's travel business than, say Albany, New York. And different organizations have differing depths of programing, service and sales capabilities. Here are three basic business models:
a. Become a travel agency and lease a booking engine. This model, adopted partially by OceanCity.com, and NewOrleans.com, involves hiring sales people to sign-up hotels directly, collect the money from the hotel, become responsible for customer service issues, and for keeping rates and hotel information current. The advantage is a greater degree of control over the content, and a higher percentage of the sale. On the other hand, much of that can eaten up by the staffing required. This model works best for sites with a deep tourism market and inhouse capacities.
NewOrleans.com was built on Vegas.com’s platform, which also has a call center. But beyond that all the hotels are set up and managed locally. Oceancity.com’s built its own booking engine, Rezez.com is now available on an affiliate basis and used currently by Scottsdale.com. According to Bogdan Nastea, Lead Developer of Rezez, the control is a competitive factor.
“We are trying to compete with Travelocity and Priceline for search, so we don’t want to display the same content. On our site you can update the hotel descriptions, and create an account for the hotel owner to log-in and update their own information."
Customers are also sent a link to post reviews, and the site is filled with very specific, unique reviews.
"Your own unique reviews are very important for ranking. We can add custom photos for each room type.” As a results these sites have a very local feel.
b. Partner with an affiliate such as Hotels.com, expedia or Priceline.com.
LMI members have recommended both Rezez and priceline.com. Of the big three, Priceline stands out for a number of reasons, starting with their guarantee of payment from the hotel (except for cancellations) whether or not the hotel has paid are paid, white label and flexibility. Also their starting percentage is twice as high as the other two options, so unless your company has mulitple markets and the ability to negotiate a better deal this may be the best paying of the three.
The affliate model requires no sales people, or need to keep hotel data current. Typically the affliates preload hotels, probide customer support, booking widgets. A much smaller staff can focus on selling local, and creating SEO for search engine rankings.
c. Create direct links to hotels, and use their booking engine. In this case, sales people are still required, the model can work on either a pay per click and or per booking basis, however, and some collections to ensure payment from hotels is necessary. This model has the disadvantage that the customer who has clicked through is lost – that is there is no data, loyalty or repeat business. Another disadvantage is that if a pay-per-booking model is used, it's very difficult to check who paid and hotels have been known to slow-pay. The only real advantage is that a booking engine is not required and eliminating the affiliate third party increases the take - if you can collect it.
7. Choosing an affiliate partner
Besides looking at the three models mentioned above, there are a variety of factors that go into the business model for different affiliate partnerships.
*Percentage of the bill kept by the media partner. Hotels.com and Expedia.com pay in the 4 to 6% of the room charge - unless the media partner is high volume or able to negotiate a better deal. Priceline starts at 11% and goes up to 14%.
The average room price in the U. S. is $100, and the average stay is two days. So a vender who pays 4 to 6% of the charge will offer you $8 to $12 on average per booking, while a higher paying vendor such as Priceline.com starts at 11% to 14%, or $24 to $30; a big difference.
Rezez, a hybrid model, allows direct sales to hotels as well as hotels infilled via a third party, so the rates are different. Schneider says OceanCity.com negotiates their split with direct hotels on a case-by-case basis, and that the commission can go has high as 25%, while hotels “preloaded” on an existing contract are lower, and the average take is about 10%.
Check also if the percentage changes if the booking is taken online or by phone - Priceline's fees are the same, which could be another advantage.
*Percentage of “opaque booking fees.” This is a nifty little name for the somewhat arbitrary taxes and fees summariy added to bookings at check out. Some affiliate partners keep these fees; priceline splits them 50/50 with partners.
*Ancillary purchases. Affliates also offer purchases of rental cars, tours insurance and hotel/flight packages. Priceline, for example, splits its commission on car rentals 50/50 and offers a 4 to 6% of package buys.
*The ability to white label and customize. While all affiliates will populate your site with hotels, some sites allow the ability to segment; for example, in the case of alternative weeklies, for example, only boutique, local owned hotels. When white labeling, keep the powered by brand of a national partner, and the reassurance that brings to travel customers.
*Customer service. Who will handle calls from customers? Priceline claims it is the only affiliate to offer both live chat and live call back support.
9. Build your model on realistic conversion rates
NewOrleans.com offered some expertise based on their experience: Lower conversion are on tourism sites as opposed to business travel, in which the visitor is under the gun to make a decision. Conversions from traffic to the travel pages with a booking engines ranges from .25 on the low side, .5 to .75 about average, and 1. Or higher is very good. Keep in mind these are a more targeted group since they are specifically searching for travel.
Cancellations also factor in. Payment for travel bookings is usually upfront, in return for a discount. Priceline.com also offering payment at check-out option via Bookings.com, however 60% of all reservations choose the discount and pre-booking option.
Prepaid rooms have a cancellation rate of about 8%, the rate is 18 to 20% for rooms paid at check-out.
10. Look at "what else" visitors will buy on your site
Many city.com sites are setting up a variety of transactions that visitors can make before they get to town - or later via their cell phones. This category includes tours, dining, golf, and any kind of attraction from museums to hockey tickets. The easiest way to set up these sales is as a certificate store; Nashville.com is a good model. Ideally, these sales will be integrated with the hotel in the same "shopping cart." NewOrleans.com, for example, suggests that selling "tickets" to restaurants could work for people preplanning trips during sold-out weekends like MardiGras.
Not every market is a travel market, however, for those that are, this is a revenue source that is often overlooked because it seems more complicated than it is. Use this guide and rely on your vendors, who are partners and therefore have incentive to provide guidance on how these models work in practice.
Reservations platforms recommended by LMI members:
Priceline, Rick Schneider, VP of Sales at the Priceline Partner Network, email@example.com, 423-344-3573
Other resources include ARez, which supplies a booking engine; hotels.com, expedia.com and travelocity.com which all have affiliate programs.
The author, Alisa Cromer is publisher of a variety of online media, including LocalMediaInsider and MediaExecsTech, developed while on a fellowship with the Reynolds Journalism Institute and which has evolved into a leading marketing company for media technology start-ups. In 2017 she founded Worldstir.com, an online magazine, to showcases perspectives from around the world on new topic each month, translated from and to the top five languages in the world.