Each month roughly 22 million US consumers shop for hotel rooms online at hotel supplier sites or online travel agencies – with notable peaks and troughs in the summer and winter months respectively. In Q1 2009, hotel shopper volumes surged to an all-time high 24.5 million monthly shoppers, outpacing the seasonally-strong third quarters in 2008 and 2007.

In the fourth quarter of 2008, amidst a challenging economic environment, consumer interest in hotels slowed even after accounting for seasonality. While the previous three quarters in 2008 experienced 4% growth from a year ago on average, online hotel shopping activity in the fourth quarter was virtually unchanged from Q4 2007 levels. In Q1 2009 however, aggregate hotel shopping bounced back, growing a healthy 13% from the previous year, the best growth performance in recent history.

While current economic forces have undoubtedly played a role in shaping consumer behavior offline and online, consumer interest in hotels online has continued to grow. During each quarter in 2008 and in the first quarter of 2009, online hotel shopper volumes were up from the same period a year ago. Though this study does not take into account the discounted rates and deals that hotel marketers may be using in order to stimulate demand, it is nonetheless significant in that it shows continued and resilient consumer interest in hotels. If travel sellers put together the right combination of price and product, consumer demand will be there to snap it up.

Social networks have been quite successful in capturing the attention of consumers online. As the level of interaction consumers have with this group of sites continues to grow, the opportunity for travel marketers to leverage these sites to drive brand awareness grows as well. Moreover, social networks are becoming increasingly well-positioned to drive traffic to brands in the online travel industry. From February 2008 to February 2009, the number of total monthly visits to social networking sites jumped 60%; just over 2.5 billion visits were made to social networking sites in February 2009.

As the volume of visits to social networks grows, it is not surprising that many online travel sites are experiencing increased traffic coming from this segment. We find first that the share of referrals from social networks to hotel websites is growing rapidly (up 151% since February 2008). Indeed, a similar trend (with respect to social networks’ share of referrals) exists for many other segments within and outside of the online travel industry. The more interesting finding is that the conversion rate of the referrals from social networks to hotel websites exhibits a similar growth trend, growing 98% year over year. Taken together, these findings indicate that social networks are increasingly a source of in-market traffic for hoteliers.

To be sure, as the role of social networks as a traffic source for the online travel industry continues to rise, the opportunity for savvy marketers to tap into the potential of these sites to generate incremental business value also grows. Competitive digital intelligence is a great tool for travel marketers in this respect and can be used to analyze which social networks resonate with a particular brand and to assess the conversion performance of social network referrals at competing brands to discover unexploited opportunities. It can also be used to investigate brand shopper engagement with various social networking features to ascertain which features and functionalities would align with a brand’s own social media implementations.

Last June, in our interview with analytics evangelist Avinash Kaushik, he touched upon a point that is dear to our hearts – “segmentation is key to truly finding any insights from… web data.” Indeed, marketers can use segmentation to better understand their consumer base, identify valuable customer groups and develop strategies to proactively target these groups individually.

As the web has become more social, the importance of behavioral segmentation has increased. Still, demographic segmentation can often yield powerful insights. Take as an example, the online travel industry. Many consumers shop for flights and hotels in tandem and one might expect similar age profiles for airline and hotel websites. Excepting for a slight skew toward older consumers among airline websites, this is in fact what we find.

However, these groups convert, or complete online transactions, at different rates. By normalizing the conversion rate of each age segment against the average conversion rate of hotel and air websites in general, we discover how these age groups perform relative to the performance of the average site visitor.

Read as: In January 2009, hotel shoppers in age segment 18-34 were
9% less likely to convert than the average hotel website shopper.

Key Findings:

• On the one hand, airline websites, in aggregate, display relatively homogeneous conversion performance. That is, no group significantly over- or under-performs against average airline shoppers.
• On the other hand, hotel websites display marked differences among age groups – hotel shoppers between ages 18-34 convert at significantly lower rates and hotel shoppers over 55 convert at significantly higher rates than average hotel shoppers.

While airline and hotel websites have a similar mix of shoppers by age bracket, demographic segmentation leads us very clearly to the discovery that the two categories have striking differences in their conversion performance by age. In fact, we find that older consumers are hotel websites’ best customer group. This insight would lead savvy hotel marketers to craft marketing campaigns that drive more traffic specifically from qualified older consumers. (One tool that can be used to this end is Compete’s Behavior Match product suite).

In the final analysis, while demographic segmentation should not be discounted, it is worthwhile to note here that behavioral segmentation (i.e. segmenting users based on traffic sources, level of engagement with a website, search keyword types, etc.) frequently leads to more immediately actionable, higher ROI findings. Nevertheless, all marketers would benefit from the insights generated by not only tracking segmented performance at the market level, but also by benchmarking this group-by-group performance against competitors at the brand-level. For more information, see Compete’s webinar on Segment-Driven Marketing.

On February 27th, TripAdvisor took the wraps off of its new air Meta Search engine. It includes industry-first features such as a built-in fees estimator that other sites do not offer. What makes TripAdvisor the most formidable new competitor within Meta Search, however, is the millions of existing site users who theoretically can be nudged into adopting the product. The challenge will be convincing consumers to put down the hotel reviews for a moment and give the new flight product a try.

Compete data shows that TripAdvisor.com now attracts over 8 million U.S. visitors per month. Since most of TripAdvisor’s content is related to trip, resort, lodging, and other travel reviews, the consumers on the site are predominantly hotel shoppers. Thankfully hotel shoppers tend to also need flights and other travel products, which is where TripAdvisor has an opportunity with its air Meta Search tool. 55% of existing TripAdvisor.com users already shop for flights on other websites in the same month.

The trick for TripAdvisor will be getting its existing site users into a flight-shopping mindset. While 55% of existing site users also shop for flights elsewhere, they don’t look for both at the same time. In fact, when TripAdvisor users shop for flights, only 13% will do so on the same day as their TripAdvisor.com usage.

The market opportunity for TripAdvisor within the air category is significant – a fact that certainly was not lost on the company when it made this decision. Existing TripAdvisor users, however, are spread across thousands of different content areas on the site related to destinations, hotels, and reviews. In order to be successful, TripAdvisor must aggressively channel these consumers into the new “flights” tab, otherwise people may not find it on their own. With the right strategy to do this and grow usage of the product, TripAdvisor is poised to be a major new competitor to the current Meta Search engines.

We recently saw how effective rewards sites could be for hotels, but is it still working for the airlines, whose frequent flier programs have been rewarding repeat customers for more than two and a half decades?

These programs are still going strong - an effective airline rewards program and accompanying online rewards site can greatly diminish cross-shopping and lost-bookings. The program with the greatest online presence, Delta’s SkyMiles, attracts nearly a million unique visitors per month. Delta.com’s rewards penetration rate – the percent of site traffic clicking on rewards content is the highest among the competitive set. However, when it comes to loyalty, Northwest’s World Perks and Southwest’s Rapid Rewards are the strongest programs.

Rewards penetration rate measures how effectively a supplier site engages visitors into rewards content. Behind SkyMiles’ 20% penetration rate, NWA, Continental and US Airways drive more than 10% of their homepage traffic to rewards pages. Other competitors, Southwest, American, and United all lag the competitive average in this regard.

NWA and Southwest are the most effective at creating loyalty amongst site visitors clicking on rewards content. NWA captured 79% of the bookings of World Perks visitors in December 2008, while Southwest held 77% of the transactions of its rewards traffic. The laggard in this metric is Delta.com, losing 71% of the bookings of its rewards audience in December.

An effective frequent flier platform is imperative to an airline’s brand loyalty. Two critical success factors for programs are driving online platform usage and loyalty. Newly married competitors Delta and NWA appear to have all the right ingredients for an effective combined offering. Both sites effectively drive traffic to their respective rewards pages. Delta, however, lags behind NWA at creating loyalty amongst this audience. By folding both companies’ routes, programs, and other perks together, the combined entity has an opportunity to resonate with fliers like never before.

Judging by how often I’m asked to join a rewards program when booking any sort of trip, it’s clear that their popularity is on the rise in the travel industry. But just how effective are they?

Hotel Rewards websites, such as Marriott Rewards or IHG’s Priority Club, can attract hundreds of thousands of visitors each month. The largest hotel supplier reward site, Marriott Rewards, engages 19% of the total traffic to the overall Marriott.com website. For hotel chains, growing their rewards sites is critical to improving online channel effectiveness. Travelers who use rewards sites are on average 40% more loyal than non-users.

Most major programs have grown their online traffic in the past year, from November 2007 through November 2008. On average, each site grew by 21% over the past 13 months. The only site that did not manage a traffic increase was Choice Privileges, which declined 4% in users compared to the prior year.

Share of Wallet – the percent of hotel bookings that a given hotel brand captures among its customers or prospects – is a key gauge for measuring loyalty and rewards site performance. Marriott.com captured 68% of the bookings among members who visited Marriott Rewards in November 2008, the highest Share of Wallet among all competitors. On average, rewards sites were able to capture 50% of the bookings of their members.

With difficult market conditions surrounding the travel industry, increasing loyalty among online prospects is integral to hotel supplier’s 2009 success. With consumers more likely to cross-shop and price check than ever before, the incentives and benefits of a rewards platform will often be the deciding factor in the online travel purchase process. Rewards program managers must ensure that their online portals are best in class in order to drive the necessary usage and loyalty.