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The latest eTRAK Full Year 2009 report on hotel bookings by channel yet again confirms that today, the online channel is the only growth channel in hospitality. In the difficult economic environment, when travel supply outweighed travel demand by far, Internet bookings for the top 30 hotel brands increased by a remarkable 6.6% in 2009 vs. 2008 (eTRAK). This increase in Internet bookings comes at the expense of the GDS and Voice Channels, both of which have been declining for many years now. The growth of the Internet channel for the top 30 hotel brands is not an isolated phenomenon. HeBS reported steady increases in direct online channel bookings across its hotel client portfolio, even in a difficult year like 2009. In dire economic times like these, characterized by sharp declines in travel demand, a comprehensive ROI-centric Internet marketing strategy can help hoteliers continue to generate much needed incremental revenues and out-smart their competition. Here are some of HeBS’ findings based on the latest eTRAK benchmark report, surveys and industry data from PhoCusWright, ARC and our own research. GDS Channel Is in Steady Decline: -Back in 2006, GDS CRS reservations constituted 31.3% of total CRS bookings for the top 30 brands. GDS share has decreased by 24.6% from 2006 to 2009, when it was reported at the 23.6% level. -Travel Agency Share from Total Travel Market in the U.S. dropped from 41% in 2006 to 33% in 2009 (PhoCusWright). -U.S. Travel Agency Locations decreased by 7% in 2009 vs. 2008. The number of locations has been decreasing at an average rate of 4% every year since 2001, and the number of travel agencies has declined from as high as 35,000 in 1995 to less than 16,450 in September 2009 (ARC, HeBS). The Voice Channel Contribution Is Decreasing: - Voice channel hotel bookings via the CRS of the top 30 hotel brands declined by 2.9% in 2009 vs. 2008, and now constitute 22.2% of total CRS booking in 2009 (eTRAK). - - The Shift from Offline to Online Channel is Permanent: - - - Direct vs. Indirect Online Channel: Dynamics Follow the Economy: Typical of economic times such as the present, the hotel industry (similar to post 9/11) has again “succumbed to the devil” in the face of the major OTAs. Since mid-2008 travel supply has outweighed demand and hoteliers have been more susceptible to panic, resulting in deep discounting and embracing of the OTAs. The result is that we have witnessed a significant shift from the direct online to the indirect online channel in 2009: - - Here is a summary of eTRAK’s most recent reports on hotel bookings by channel: The Bottom Line: Focus on the Direct Online Channel Hoteliers need a robust Direct Online Channel Strategy, accompanied by adequate marketing funds to be able to take advantage of the steady growth in the Internet channel and shift from offline to online bookings in hospitality due to declining GDS and voice channels. Hoteliers must carefully employ ROI-centric initiatives, including website redesign, website optimization and SEO, paid search, email marketing, online display advertising and proven social media initiatives.

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