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AdSense and Affiliates
I believe affiliates will disappear in the hotel sector
cornwall




msg:1348506
 4:06 pm on Jul 28, 2003 (gmt 0)

I was asked in one of the forums to explain why I believed that affiliate sites would wither away in the hotel sector, with the advent of AdSense. Thought I would start a new thread, as it is a subject in itself.

My argument goes like this

1. Affiliate sites are deeply unpopular among hotels. And hotels would welcome their demise, particularly if there is something better available, like targeted adverts.

2. One reason affiliates are unpopular with hotels is that affiliates are generally offering rooms at substantially below rack rates. Not good from the hotels point of view, particularly if they can sell the rooms at a higher price...AdSense

3. The second reason affiliates are unpopular with hotels is that a hotel has to give up control of some of its rooms to the affiliate, so that online booking via the affiliate can be achieved. The more affiliates a hotel works with the more rooms it looses control of. Reception staff have to spend time controlling availability outside their own hotel.

4. An example of a major hotel group taking control back of its own destiny is Holiday Inn
Holiday Inn now give a guarantee "Every hotel reservation booked through an Intercontinental Hotels Group web site is guaranteed to have the lowest rate publicly available on the Internet" and if you can find a lower rate " Intercontinental Hotels Group will honor that rate for the nights for which the lower rate was found, plus give you an additional 10% discount off that rate"
And Holiday Inn are using target ads. A pan US site of mine is showing Holiday Inn GoogleAds for towns and cities across America.

5. And small hotels never found affiliate sites worked, as any one small hotel got so few reservations that it was hardly worth giving up rooms to the affiliate system. Those small hotels have the option now of targeted advertising.

6. The stand taken by Holiday Inn is being closely watched by the hotel trade. Whether, when the chips are down, hotels can avoid bucket shops remains to be seen. But if Holiday Inn can make AdSense work, then one can expect other chains moving into AdSense. If they do, they will need to offer the sort of guarantee on lowest price that Holiday Inn give, in order to stop the punters going off and booking via a cheaper affiliate site.

To me it all spells the end of affiliate sites in the hotel industry!

 

europeforvisitors




msg:1348507
 4:20 pm on Jul 28, 2003 (gmt 0)

5. And small hotels never found affiliate sites worked, as any one small hotel got so few reservations that it was hardly worth giving up rooms to the affiliate system.

I think that really depends on the hotel, the locality, and the affiliate program. I send a lot of bookings to certain hotels through my affiliate partners. If anything, the problem is often the opposite of the one you cite: The hotels can't or won't provide enough rooms through the affiliate program to meet the demand.

To me it all spells the end of affiliate sites in the hotel industry!

It's more likely to spell the end of ersatz independent booking sites that some of the chains have collectively introduced in hopes of getting control back from third-party reservations sites.

AdSense certainly is a great opportunity for hotel chains and independent hoteliers--or at least for the chains and hotels that know how to leverage the targeted direct-response advertising power of the Internet.

BTW, I think we're going to see a lot of today's affiliate-site owners create "AdSense sites" with boilerplate content and the aggressive SEO tactics that have created so many problems for the search engines. Now, in addition to fighting spam on its SERPs, Google will need to fight spam on its own AdSense network.

whats up skip




msg:1348508
 9:48 am on Jul 29, 2003 (gmt 0)

If a hotel felt the affiliate program they were involved in was so bad or that they could sell the rooms at a higher price then they would cease using the affiliate program or doing deals with travel agents and airlines.

Affiliates are simply another outlet for the sale of room bookings.

Take our web site for example; it would be very expensive for each hotel to set up a Japanese language booking system when they only have English language speaking staff. It would then be even more expensive for them to advertise in Japanese. By using an affiliate system they gain access to a market (via our Japanese language site) they would not have reached otherwise. In return for promoting their business we receive a commission.

highman




msg:1348509
 9:57 am on Jul 29, 2003 (gmt 0)

Why only hotels, the argument applies to all sectors of affiliate does it not?
And it relies on a majority of people looking at adsense / adwords adverts rather than the direct serps / page call to action text

I wouldnt worry to much

chiyo




msg:1348510
 10:12 am on Jul 29, 2003 (gmt 0)

One advantage for the affiliates is that they offer more control for those site-owners who want more control over their advertisers than Adsense can offer, or who already have certain advertisers and the lack of control causes a problem.

Many site owners also like the flexibility in formats and snazzy looking graphics that affiliates offer. For certain types of sites, especially selling/commercial/storefront types, affiliate sales may be a much better option than Adsense, so i expect ot s much the death of hotel affiliates but a realigning of their offerings.

The growth of PPC, the over-prepondance of affiliate farm sites, and the higher cost of SEO these days has already become a major threat to many affiliates including those in the hospitality industry. Adsense and Content Match will just make that threat more obvious.

Visit Thailand




msg:1348511
 10:47 am on Jul 29, 2003 (gmt 0)

Your example cornwall of Holiday Inn or let's just say IHG (InterContinental Hotel Group) is a good one but needs clarification many hotel companies are cramping down on wholesalers selling virgin (non packaged) hotel rates on the net.

This was affecting their corporate business.

For this reason many hotel companies have started offering sites identical rates. This means that a partner site (one that is officially allowed to sell the property) with an IHG hotel can have the same rate but not lower.

The problem though of wholesalers selling virgin rates has diminished a little but still exists and is the biggest problem for hotel companies.

IHG are also one of the fastest brands to utilise technology in their favour.

danny




msg:1348512
 1:29 pm on Jul 29, 2003 (gmt 0)

I was trying to book a motel recently and the web site told me there were no rooms available on a particular night - but of course ringing the motel directly revealed that there were. I think that was my first experience with affiliate booking (I'm usually more of a tent/youth hostel person).

But this seems like an insane way of doing things to me. Each hotel should have one web site through which online bookings are done - though it might of course outsource the operation of that site (and the SEO :-). Affiliate programs can then work through a commission on leads or bookings - and can happily coexist with direct sales.

europeforvisitors




msg:1348513
 1:56 pm on Jul 29, 2003 (gmt 0)

Each hotel should have one web site through which online bookings are done

That's easier said than done. Hotel rooms are like airline seats: Some are sold at full fare, but others are sold at a discount because the product is perishable and it's better to move unsold inventory cheaply (through a consolidator, if necessary) than to let it go empty. That's why chains and larger hotels use "yield management" software, which lets them project demand and and adjust their rates (and, to some extent, their sales outlets) accordingly.

dillonstars




msg:1348514
 3:15 pm on Jul 29, 2003 (gmt 0)

That's easier said than done.

absolutely, but the changing habits of consumers might help this along a bit.... with the major players offering a lowest price guarantee IMO people will start to change their preconceptions that affiliate sites are cheaper.

[hospitalitynet.org ]

Here's a great article on the nature of hotel room distribution. It suggests that consumers prefer to book on the hotel's own site if they can.

I believe also that with a bit more education amongst hoteliers about how to sell online themselves, they can beat a lot of affiliates at their own game. I operate in the south of Spain and independant hotels are terrible at doing any kind of direct distribution. Only the big players offer a lowest price guarantee (a sure fire way to beat the affiliates).

I have a really mixed view on this. I have a hotel background and would love hotels to get off their backsides and kick the affiliates in to touch, but now I run a hotel booking site and hope they do not realise what they have to do to put me out of business...

one last thought.. cornwall wrote

2. One reason affiliates are unpopular with hotels is that affiliates are generally offering rooms at substantially below rack rates. Not good from the hotels point of view, particularly if they can sell the rooms at a higher price

I agree with europeforvisitors that sometimes hotel rooms do need to be sold cheaply in order that they dont sit empty. I think on the whole hoteliers don't object to this, what they do object to is handing out 10-30% in commission payments.

My point is, hotel affiliate sites may or may not be on the way out, but Adsense will only be one small part of why this happens.

rcjordan




msg:1348515
 3:34 pm on Jul 29, 2003 (gmt 0)

>Spain and independant hotels are terrible at doing any kind of direct distribution.

No different in the US, trust me. Also, beyond hotels they wouldn't know a keyword if it bit 'em -adsense or straight seo.

I travel quite a bit and do have a fair understanding of how this all works. I don't care if I've squeezed every last dollar out of the booking, I just want to be confident that I'm close to the best price. I'll switch-hit between the chain and the aff site in a heartbeat, usually preferring the affiliate hotel roster because it's giving me an array of prices in the area. I find this choice becomes a matter of convenience for the me, and convenience sells.

<added>
BTW, I'm running adsense on my travel sites and bookings are holding steady or slightly up.

cornwall




msg:1348516
 5:02 pm on Jul 29, 2003 (gmt 0)

>>beyond "hotels" they wouldn't know a keyword if it bit 'em - adsense or straight seo.

Does have a certain ring of truth to it ;)

A doctored link to an article on the link on the (now) IHG stance for anyone wanting more background. Note from the date that it hasn't been around long.

http*://www.hotel-online.com/News/PR2002_2nd/May02_SixContRates.html

cornwall




msg:1348517
 5:05 pm on Jul 29, 2003 (gmt 0)

BTW, I'm running adsense on my travel sites and bookings are holding steady or slightly up.

Missed that little nugget first time round!

By this do you mean sites that you have both affiliate and AdSense tags on the same pages?

Backing the horse both ways.

HardeepSingh




msg:1348518
 5:23 pm on Jul 29, 2003 (gmt 0)

Hotels have grown to rely on sites like Hotels.com (travelnow.com), Expedia and other wholesale distributors. More and more hotels, especially since September 11th have joined these programs. The hotels do not like the fact they're selling to these sites at deeply discounted rates, but when their competition is doing it, they have to as well.

I run about 20 affiliate hotel sites. My income is in the $2000 - $2500/month range. Most of my sites target niche small towns where there are not many affiliate sites. I have only added Adsense to those sites which target bigger cities, where the higher degree of competition amongst the hotels has driven up the price per click on Google.

I have seen a slight drop in bookings on those sites with Adsense, however with the revenue i've been receiving from Google at 40cents a click and 8% CTR its been more than made up for.

Affiliate programs for the hotel industry will not end. If anything the increased competition with Intercontinental's strategy might mean travelnow.com could consider paying more than 5% on net rate bookings in order to attract more affiliates. There are already other sites paying in the 10% range for net rate bookings.

Another thing to consider is many of the advertisers on Google Adwords are affiliate sites themselves. Adsense just further promotes these affiliate programs.

rcjordan




msg:1348519
 5:23 pm on Jul 29, 2003 (gmt 0)

>By this do you mean sites that you have both affiliate and AdSense tags on the same pages?

Yep. Using the highly maligned 468x60 top banner, too. (There is no such thing as banner-blindness --ask my banker. But that's another topic already covered here.)

>both ways

Three ways, actually. I originally signed up for the CPM adwords deal. I still keep them in the ad-server mix, too. (Never burn a bridge with a good banner broker!)

cornwall




msg:1348520
 5:32 pm on Jul 29, 2003 (gmt 0)

Lord Shawcross made the remark many years ago (in a very different setting)

"We are the masters at the moment, and not only at the moment but for a very long time to come."

Time will tell if that is true of content providers at this time!

dillonstars




msg:1348521
 8:26 am on Jul 30, 2003 (gmt 0)

Affiliate programs for the hotel industry will not end. If anything the increased competition with Intercontinental's strategy might mean travelnow.com could consider paying more than 5% on net rate bookings in order to attract more affiliates. There are already other sites paying in the 10% range for net rate bookings.

I dont think that the number of affiliate sites will have anything to do with how sucessful they are in the long run. The only thing that will stop people using affiliate sites to book hotels is that if hoteliers themselves rise to the challenge and force people to change their habits and book direct, by offering the best deal themselves.

Getting their deals seen is another issue, and PPC and SEO have parts to play in this for sure. Hoteliers just need to stop being technophobic and get stuck in! When this happens I think the effectiveness of affiliate sites will diminish.

dazz




msg:1348522
 8:40 am on Jul 30, 2003 (gmt 0)

Its fair enough if hotels offer the cheapest rates direct to their clients.......but how does the client know that they are the cheapest hotel in the area they want to stay!

Surely people searching for hotels in say Denver!? will want a search facility to show them the deals accross 1* to 5* properties.......they are not just going to think "OK ill book myself into the Hilton on the Hilton website as thats where im going to get the best room rate at $270"

Visit Thailand




msg:1348523
 8:49 am on Jul 30, 2003 (gmt 0)

I would like to repeat what I stated in my last post. The IHG Group are not offering the cheapest they are offering excatly the same as their official partner sites.

There is a very big difference in this and as I explained in my last post a lot of this is to do with wholesalers offering virgin rates, and a way for the hotels to control their inventory and pricing structure.

There is a very big difference.

HardeepSingh




msg:1348524
 2:20 pm on Jul 30, 2003 (gmt 0)

If you understand the way a hotel works (I managed one for 5 years). You know that a hotel has multiple distribution channels. There will be people who book directly with a hotel's phone number, through the central reservations of the chain, through the hotel specific website, through the chain website, through a travel agent going through the GDS, and through wholesalers.

Wholesalers in the hotel industry did not start with the Internet but have been operating for a long time. Actually the Hotel Reservations Network (hotels.com) has been running as a business since 1991 much before there website was online.

Hotels cannot afford to stop using the model of wholesalers as they will always have excess capacity. They would have to have the best Internet Marketers behind them to get enough traffic to their own websites for an IHG strategy to work effectively.

If you do a search on Google for "San Francisco Hotels" the page is full with affiliates who work through the wholesalers. Unless for instance the Fairmont Hotel in San Francisco could make it to the top of that list themselves, why would they give up on the business that goes through those websites?

As stated already, affiliate and the wholesalers own sites offer a shopping convenience that hotel specific websites cannot offer. You can check the pricing of multiple hotels at once, saving the customer the time of travelling from website to website to website to find the best deals.

I dont expect this model to end anytime soon. As I stated in my previous post, there are affiliate programs now offering 8.5% - 10% commissions on net rates. Making it more enticing to make more affiliate websites.

cornwall




msg:1348525
 5:01 pm on Jul 30, 2003 (gmt 0)

>>If you do a search on Google for "San Francisco Hotels" the page is full with affiliates who work through the wholesalers. Unless for instance the Fairmont Hotel in San Francisco could make it to the top of that list themselves, why would they give up on the business that goes through those websites?

My point though is that 2 of the top 3 advertisers are Crowne Plaza and Holiday Inn when you do that search.

The big hotels chains are just going to squeeze the affiliates, till they drop out from eventual lack of return

HardeepSingh




msg:1348526
 5:28 pm on Jul 30, 2003 (gmt 0)

It's true that not as many affiliate sites are the top advertisers on Google or on Overture anymore. However the search results receive a much higher click-through rate. Affiliate sites are taking huge amounts of Internet traffic, and hotels would be silly to stop using these sites for distribution.

europeforvisitors




msg:1348527
 6:44 pm on Jul 30, 2003 (gmt 0)

The big hotels chains are just going to squeeze the affiliates, till they drop out from eventual lack of return

Not all hotels belong to big chains. In Europe, especially, leisure travelers are often looking for smaller, independent hotels in the center of town--either by name or by category--and those hotels are seldom affiliated with chains. Some affiliate programs, such as Venere in Italy, represent thousands of such hotels in all price ranges.

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