Employee Improvement at Hotels Com - Case Study Example

Hotels.com – the way forward Executive Summary Hotels.com is one of the largest online travel agencies offering hotel reservation across the globe. It has a strong market position and is supported by their parent company which is Expedia. For online travel agencies, it is necessary to have equally good relations with the hotels as well as the customers. Hotels.com has failed in both these areas as it has come under criticism for not maintaining its financial commitments and not having a customer-focused approach. Hotels.com has to realize that technology has changed the way people make their purchase decisions. It is no more based on comparative prices but consumers look for overall experience. Customers share views, opinions and suggestion through the social networking sites. The growth potential in the industry is tremendous despite strong competition. These challenges can be overcome by changing its strategy. Hotels.com needs to learn what the customers say about the company and its services. This information can help them in enhancing the customer experience and this information can be collected by linking to social networking sites. Table of Contents 1. Introduction 1 2. Company and Industry Overview 2 3. Logistics employed at Hotels.com 2 4. SWOT Analysis 3 5. Hotels.com vs. Travelocity 5 6. Road map 5 7. Conclusion 6 References 8 1. Introduction Globalization has made the markets turbulent while the purchasing power in the hands of the people has increased. Technology has changed the way people live, work or search for information. Internet has made information access quicker, cheaper and easier. The marketers and service providers also benefit as they are able to advertise and even sell their products and services through the internet. Internet today has become a new distribution channel while bringing the customers closer to them. The hospitality industry too has benefited immensely through the use of internet. Quality service is a major challenge in this millennium. The airlines and the hoteliers are increasingly relying on internet as a means to reach their products to the customers. At the click of the mouse, it is now possible to book an air seat or reserve a hotel room anywhere across the globe. According to an article by Bavik (2008), “internet creates a faster and better communication, which makes it easy to identify and to target a customer base”. Because of this convenient device companies should try to provide good service by the internet where people like to communicate. Hotels.com is an internet company offering 70,000 properties worldwide ranging from hotels to bed-and-breakfasts to condos to all-inclusive resorts. Hotels.com is one of the largest online travel agencies and its dominant market position increases its bargaining power (Datamonitor, 2008). It has a strong brand equity. Recognizing that the hotel experience is an important part of the trip – either for leisure or business – Hotels.com provides a broad election of hotel through unbiased hotel reviews from discerning guests that have used the property. This research focuses on their service system to gain an insight into their operations and to offer possible solutions. This has been considered necessary in view of certain complaints lodged against their services. To come up with possible solutions, it is first necessary to understand their operations and compare their operations with another similar but successful company. 2. Company and Industry Overview Hotels use computer technology and internet as a means of distribution. Hotel distribution channels have two functions – timely, accurate and high quality information distribution and convenience in terms of finding information as well as facilitating purchase and payment process (O’Connor & Frew, 2004). Hotels.com has been taking full advantage of technology as they offer global sites in different languages including Chinese, Japanese and Korean. Hotels.com is an operating company of Expedia. Inc which is a NASDAQ listed company. TripAdvisor are also its partners within the industry. With the use of technology and partners, Hotels.com is service both the consumers and the hotel industry. The hotels that are registered with Hotels.com have an established platform to offer their products and gain from the expertise and advertising that Hotels.com does on its own. In nutshell, it brings the hotels closer to the customers. Logistics employed at hotels.com Known as the online discount accommodation booker, Hotels.com entered the market sensing tremendous business opportunity as there was a growing tendency among the consumers to make their own travel arrangements through the internet (Marketing Week, 2003). Even though the internet is a means to come closer to the customers, Hotels.com did not eliminate the role of the travel agents. They allowed the agents to have a version of Hotels.com incorporated on their own website if they so desired (TTG, 2003). The agents are paid a certain percentage of commissioning. Keeping the agents is also a means to keep in contact with the customers because many customers prefer to use their regular agents for all travel bookings. Their publicity includes adverts on buses, the London Underground, radio and in the press. Hotels.com offers multiple choices to a customer after he/she has initiated a product search. Their website responds with a list of product options and it carries details such as room type, distance from the airport and the city centre, amenities in the room, differential tariff, star rating and map view. However, the site does not offer comparisons with competition prices. If a comparative study is presented, it could convince the online customers the reasons for price difference. It would also help to understand customer shopping behaviour as well as quantify price competitiveness (Rao & Smith, 2005). This could assist the company in more accurate demand forecasts and in meeting individual customer needs. SWOT Analysis Strengths Hotels.com has a dominant market position with a strong brand equity covering 400 markets throughout Asia, the Caribbean, North America, and Europe (Datamonitor). It has global websites in different languages thereby making their service offers personalized. The support from its parent company Expedia adds to its dominant position as Expedia too has a strong international presence. Since Expedia has agreements with larger chains such as Accor Hotels and InterContinental Hotels Group, customers searching the hotels.com site for hotels in Asia will have access to another 400 branded properties. This differentiates it from other online agencies. In addition, Hotels.com is featured with and directly liked to major search engines and online communities, including America Online, Lycos, Yahoo!, Excite, Infoseek, and CitySearch. Weaknesses Hotels. Com has several lawsuits pending against it. For example, in May 2007, Hotels.com was accused of discriminating against people with disabilities by refusing to guarantee reservations for wheelchair-accessible rooms (Datamonitor, 2008). This was a violation of California civil rights laws. Another lawsuit against Hotels.com and its parent Expedia is that they failed to pay Horry County, South Carolina, the hotel accommodation taxes as was mandatory as per the municipal ordinances. Such legal proceedings can adversely affect the company’s image apart from the financial losses. Opportunities Through its parent Expedia, Hotels com has signed new partnerships with regional hotel chains such as Dubai’s Jumeirah Group, a hospitality management company. Such agreements would enable hotels.com and Expedia to offer all Jumeirah hotels through all their branded points of sale globally. These strategic decisions enable the company to expand its customer base and consequently are responsible for its growth. Besides, online travel bookings are expected to grow and even today online travel accounts for about 40% of US e-commerce sales. Despite the current meltdown, hotels.com has the potential to leverage its brand name and increase its revenue and profits. Even in Europe consumers are shifting from traditional off-line channels to online bookings. European online travel spending is forecast to reach E77bn by 2011 and 33% of the consumers online spending is expected to be on leisure trips. In the Asia-Pacific market also Hotels.com has made several site launches with focus on Hong Kong, Japan and Korea in local languages. This gives impetus to its market penetration opportunities. Threats This industry is highly competitive with both established and emerging operators offering new services. The main competitors include Traveolcity.com and Lastminute.com and both these companies dominate the market. Expedia and Travelocity account for more than half of online leisure travel sales (Rao & Smith, 2005). Agencies like these sell multiple travel products and also make bundled offers to customers that require several services. The company also competes with large online portal and search companies such as AOL, Tahoo! And Google. Other competitors include online travel search sites such as SideStep.com, Mobissimo.com, FareChase.com, Kayak.com. Intense competition can reduce its market share and especially during this period of recession, the growth rate has been declining. The economic slowdown in the US can affect the demand for its products and services substantially. Hotels.com vs. Travelocity. Travelocity has been appointed as third party distributors of InterContinental Hotels Group (IHG), the world’s largest and most global hotel company, which means Traveolicty can offer more than 3,500 hotels worldwide, including InterContinental Hotels and Resorts, Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites and Candlewood Suites hotels (Breaking Travel News, 2004). Since such online travel sites are intermediaries between the customers and the hotels, they are expected to value and commitment to both parties equally. Travelocity shares this commitment to both parties while hotels.com has a cut-throat pricing policy. At the same time, they delay payments to the hotels for rooms reserved through its services (Hines, 2003). This has hurt the company’s standing with the hoteliers. About seven global hotel chains have expressed displeasure in working with hotels.com. Road Map/Operation The SWOT analysis suggests that it is not enough to offer travel products through the internet. With intense competition in the industry, online travel agencies must have a customer-focused approach and hence should offer recommendations to the customers to select appropriate tourism products (Hsieh & Chen, 2007). Each customer is unique and their needs have to be understood. There has to be some differentiated service which hotels.com offers. In today’s age of technology web2.0 is being used by many travel sites as well as hotels themselves. It is not enough to know the customer; it is important to understand the customer needs and wants. There is a dramatic shift in the power of opinion as customers can now read, post and use the blogs or social networking sites to exchange opinions. Their purchasing decisions are based more on what others’ express through their blogs rather than what the hotels or agents have to suggests. Hotels.com does have a review section but it should additionally use the web2.0 to tap into the social networking sites to know what the customers are saying. To gain exposure and credibility in markets that have been difficult to penetrate this is an extremely valuable way (Blizzard, 2008). Yahoo! has embraced web2.0 technology in all its areas including travel (Bray, 2006). As soon as a search query for any hotel is entered, short-cuts appear on the screen that direct the consumer to different pages where maps, user-reviews, stored trips, as well as rates are available which simplifies the travel planning and the buying process. Thus, in addition to reviews from its customers, Hotels.com should start its own blog and also extract information by linking itself to social networking sites. This would give them a true picture of where their services are lacking. Apart from customer-relationship, they also need to have better relations with the hotels they deal with. Travelocity has an edge over them in this count and hence hotels.com has to enhance its service delivery. Conclusion The hospitality industry is a service industry which has tremendous growth potential although the competition too is intense. This area was of particular interest to me because I had been reading how technology has changed the way hoteliers keep in touch with their customers. Hotel.com has been inexistence for the past 15 years earlier as partners with Travelocity and now independently with Expedia. Its growth has been overwhelming but since there have been certain areas where they have been failing in providing their services, it was interesting to study how technology could help them to overcome the problems they encounter. Hence the motivation for this study arose. Hotels.com has a dominant industry position with strong brand equity but it has threat from equally strong competitors. Growth opportunities are tremendous and hotels.com has to employ technology to enhance its services offer. They seem to be failing in their financial commitments and this could adversely impact their brand image. Hotels.com should capitalize on their current position, use technology and enhance their brand name. References Bavik, L 2008, Online Purchasing Actions of International Tourists in North Cyprus, International Business and Tourism Society, vol. 2, no. 1, p33 Blizzard, 2008, Web 2.0 and Viral Marketing, retrieved online July 21, 2009 from http://www.blizzardinternet.com/blizzard-live/ Bray, J 2006, Web 2.0 Begins to Sprout in Travel, retrieved online July 21, 2009 from http://www.hotelnewsresource.com/article21945.html Breaking Travel News, 2004, IHG Cut Expedia and Hotels.com for Travelocity, retrieved online July 21, 2009 from http://www.breakingtravelnews.com/news/article/btn20040817133846619 Datamonitor, 2008, Hotels.com - company profile. Hines, M 2003, Hotels.com checks out of Travelocity deal, retrieved online July 21, 2009 from http://news.cnet.com/Hotels.com-checks-out-of-Travelocity-deal/2100-1017_3-5070211.html Hsieh, T & Chen, Y 2007, Using the Grey Relational Theory to Explore Customer Relationship Management in Travel Websites, The Journal of Global Business Issues, vol. 3, no. 1, p95-103 Marketing Week, 2003, Hotels.com appoints former Buzz marketer ahead of 7million pounds UK launch, Marketing Week, October 16, 2003, p7 Rao, V & Smith, BC 2005, Decision support in online travel retailing, Journal of Revenue and Pricing Management, Vol. 5, no. 1, p72–80 Travel Trade Gazette, 2003, Hotels.com unveils plans for trade, Travel Trade Gazette, October 20, 2003, p4 Read More