Impact of Online Travel Agents on the Hotel Loyalty Program - 4675 Words

Impact of Online Travel Agents on the Hotel Loyalty Program (Dissertation Sample) Content: Impact of Online Travel Agents on the Hotel Loyalty ProgramName of StudentInstitutional AffiliationImpact of Online Travel Agents on the Hotel Loyalty ProgramChapter One: IntroductionBackground InformationCourtesy of the sensational global shift from traditional to modern use of Information and communication technologies (ICTs) in the last one decade, the hotel industry now makes most of its transactions through the internet. Online channels, including; Online Travel Agencies (OTAs), Global Distribution Systems (GDS) and Hotel Websites are receiving rapid continued growth in popularity as hotel booking channels among individual business and leisure travelers from all corners of the world. As early as the year 2004, online hotel bookings acquired the second position as the largest online traded item, slightly behind air travel tickets, CITATION Inv14 \l 1033 (Inversini Masiero, 2014).Particularly, online travel agencies have been observed to experience the highest popularity among the three online booking channels. A recent report indicates that the OTA channel received the largest increase in hotel bookings, with a 9.2% increase in the first quarter of the year 2014 as compared to the last quarter of the year 2013, CITATION DeV14 \l 1033 (DeVoren Susman, 2014). During the same period, hotel bookings made through hotel websites and global distribution systems increased by only 6.1% and 2.9% respectively as compared to bookings that were made through the same channels in the last quarter of the year 2013, CITATION DeV14 \l 1033 (DeVoren Susman, 2014). During the exact period, booking made through Hotel Directs (calls direct to the hotels and walk-in customers) and CRO channels decreased by 0.4% and 0.9% respectively, CITATION Dan14 \t \l 1033 (DeVoren McGrann, 2014).According to a report by Tapscott, (2014s), OTAs experienced the highest growth in average daily rates (ADR), with an increase of 7.9% in the first quarter of the year 2014 as compared to the last quarter of the year 2013. During the same period, other channels, including; Hotel directs, GDS, CRO and hotel websites experienced increases amounting to 3.0%, 3.3%, 1.7% and 2.7% respectively, CITATION DTa14 \l 1033 (Tapscott, 2014). These indicate very low rates of increase in ADR for the four channels as compared to the increase that was experienced by the OTA channel.Now by looking at a single destination, a recent report indicates that around 64% of travelers who visited Las Vegas in the year 2013 used online channels to make hotel reservations, an increase from 49% in the year 2009, CITATION Ric14 \l 1033 (Velotta, 2014). According to the same report, although most visitors went through hotel channel managers to make hotel reservations in the year 2013, the percentage of visitors who went through OTAs was the highest as compared to the same percentage in the preceding years. This percentage is expected to increase by the end of the year 2014, CITAT ION Dan14 \t \l 1033 (DeVoren McGrann, 2014).The continuing rapid increase in the share of travelers who make hotel reservations through OTAs builds curiosity as to whether OTAs have better loyalty programs than independent hotels. A research by Continenza, (2014), investigated this where it was found that hotels treat those who book rooms directly through the channel managers as loyal members and thus offers them first dibs on room assignments. This lot of customers, therefore, gets the best rooms, which have better views and quieter locations. On the other hand, hotels treat visitors who make reservations through third parties as non-loyal and thus offers them run off rooms which may not be strategically well located. In this regard, it may be said that hotel loyalty programs gives better incentives than OTAs loyalty program. In another artle though, Chan and Guillet, (2011), favors OTAs programs over hotel programs based on the fact that OTAs offers a variety of rooms from dif ferent hotels as compared to hotel websites which offers just the brand of rooms that they own. In this regard, a customer may have better chances of getting satisfactory accommodation if he/she goes through an OTA than when he/she goes through a channel manager.Statement of the ProblemAlthough hotels own loyalty programs that they use in attracting customers, Online Travel Agents in the current decade attract a very huge number of travelers who make hotel reservations on their websites. This situation is creating two major problems; one for the travelers and one for the hoteliers. Looking at the customersà ¢Ã¢â€š ¬ side, OTAs may act as a medium of exploiting them in terms of prices and quality of products and services. Although one may argue that competition between different OTA websites can limit the exploitation, another person may also argue that the commission charged by OTAs above direct booking charges is a form of exploitation. OTA websites are also speculated to be a s ource of exaggerated information in terms of the quality of services offered in different hotels. However, there is also a positive view upon OTAs, that their websites are more efficient in finding the best hotel reservations for travelers than direct models.As far as the suppliers are concerned, some of the hoteliers think of the relationship between them and the OTAs as a threat to their loyalty programs while others think of OTAs as business promoters. As it has been discussed above OATs may be a route of exploitation as well as a source of false information to hotel customers. This may act as a way of reducing customersà ¢Ã¢â€š ¬ loyalty towards brands offered by certain hoteliers. There may also be another argument that OTAs may make a customer more loyal to a particular brand due to the fact that they are specialists in sales and marketing.Purpose of the StudyIn the present era, a very large percentage of long-distance travelers in developed countries make their hotel reserva tions through OTA websites, CITATION Ken14 \l 1033 (Sena, McNellis, McDade, 2014). Some of the most common intermediaries include HRS, Last-Minute, Book.com, Travelocity, Axpedia, Priceline.com, Orbitz and many more. Due to the fact that OTA websites are able to attract more travelers than Hotel websites, hoteliers are finding it essential to link themselves to the customers through these intermediaries. Hotel managers are, however, reluctant in making the decision due to the fear that OTAs may affect their loyalty programs.This study seeks to investigate the relationship between OTAs and hotels; looking more keenly at how ATOs influence hotel loyalty programs. In this regard, the study will act as a source of information for hotel managers when they are making the decision on whether to form ties with OTAs. The paper also seeks to investigate the factors that travelers should look at while choosing the websites or the loyalty program on which to make hotel reservations. The resul t of this investigation will act as a guide to travelers, thus making them capable of avoiding exploitation.The research is also aimed at adding to the already existing literature material in the field of tourism and hospitality. This will allow scholars and researchers in this field to have a wide range of materials from where to base their arguments, (Loraine et al., 2010).Research HypothesisHo1: OTAs limit the functionality of hotel loyalty programs.Ho2: For a traveler, making hotel reservations through OTAs is stressful than making reservations directly with a hotel website.Research Objectives 1 To investigate the factors that influence a traveler to choose a particular OTA website or a certain loyalty program over other OTA websites or loyalty programs for making hotel reservations. 2 To study how OTAs influence hotelsà ¢Ã¢â€š ¬ loyalty programs. 3 To examine whether OTAs are beneficial or disadvantageous to hotels in helping them to gain customersà ¢Ã¢â€š ¬ loyalty. 4 To com e up with strategies that can be applied to enhance the relationship between OTAs and hotels.Research Questions 1 What influences a traveler to choose a certain OTA website or a certain loyalty program over other OTA websites or other loyalty programs for making hotel reservations? 2 What influence does OTAs have on hotelsà ¢Ã¢â€š ¬ loyalty programs? 3 Does OTAs help or limit the functionality of Hotelsà ¢Ã¢â€š ¬ loyalty programs? 4 Which strategies that can be applied to enhance the relationship between OTAs and hotels.Chapter Two: Literature reviewOver the past one decade, technology advancement has greatly improved the success of many industries. Airline companies lead this race in embracing the technology in their sales and marketing activities. As early as 2004 the travel and tourism industries were ranked top on their use of online transactions, CITATION Inv14 \l 1033 (Inversini Masiero, 2014). Online hotel booking was ranked second in terms of revenue earned through onlin e channels, CITATION Inv14 \l 1033 (Inversini Masiero, 2014). According to Chan and Guillet, (2011), this inevitable success has been achieved courtesy of Online Travel Agents and probable the social media. Of late, OTA websites have gained a lot of popularity among travelers, thus posing a big challenge to hotel owners, CITATION Pao14 \l 1033 (Roma, Zambuto, Perrone, 2014).Although technology has offered numerous opportunities, hoteliers have been reluctant to adapt the new technology, (Buhalis, 2003). This is due to their earlier website use, which will soon be regarded as obsolete, CITATION Ken14 \l 1033 (Sena, McNellis, McDade, 2014). According to Bahalis, (2003), traditional web site use earns hoteliers very little despite having invested a lot of resources in developing the websites. A study by Schmidt et al., (2009), addresse...