Traditionally the online hotel conversion process or funnel has been viewed as consisting of at least 5 basic steps:

1. A consumer visits a hotel website homepage
2. A hotel search is performed
3. A room is selected
4. Personal and credit card information is entered
5. The booking process is completed and a confirmation is viewed

In addition to these steps, under the traditional conversion funnel, consumers may choose to click through and view a hotel property page after performing a search and before selecting a room. Lately however, the structure of the hotel supplier conversion funnel has changed due to consumers’ increasing use of search engines to shop for products online, including hotel rooms. Compete finds that the total volume of search queries has steadily increased over time, led by Google.

Moreover, the percentage of referrals to the aggregate hotel supplier segment coming from Google has steadily increased since January 2007.

Aided by the work of search engine optimization and marketing specialists, hotel shoppers who input certain brand and location keywords into Google and other search engines often land on hotel property pages. These consumers bypass the top of the traditional hotel conversion funnel (the homepage and search results pages) and the marketing, loyalty, “brand experience” and core value messaging that occurs therein. Moreover, these shoppers interact first with hotel property pages that are often not optimized to serve as the brand’s point of introduction to the user.

As one measure of the prevalence of this behavior, Compete examined the percentage of Google-referred unique visitor traffic to hotel property pages at 6 hotel supplier sites since January 2007. It is first apparent that there is a relatively steep upwards trend through the 20 month period for most sites tracked. In August 2008, among these sites, 27% of hotel property page traffic came immediately from Google on average, up from 18% in January 2007. In addition, during this same time period, hotel property page traffic among these sites is up 28%. Thus, not only is the percentage of Google (and other search) referred unique visitor traffic to hotel property pages increasing but the number of unique visitors viewing hotel property pages is increasing as well.

As this trend continues to spread, the role of hotel property pages becomes an increasingly important one. Consumers reaching these pages from search are likely using branded or location-specific keywords and thus are more engaged than casual hotel shoppers. Consequently, hotel marketers would do well to focus on these consumers’ experiences and regard property pages as pivotal landing pages that contribute significantly to a brand’s online strategy.

Under the model of the traditional conversion funnel, interaction with property pages is optional (at some websites) and accordingly analysis of these pages is secondary. However as the search-influenced model becomes more common, applying detailed landing page optimization techniques to hotel property pages is vital to the conversion funnel’s success.

The major online travel agencies are in constant competition to be the top performer in the search game, but not all searches are created equal. Many marketers are only interested in attracting specific desirable customer segments that will be most likely to engage with their product.

One of these segments is high-income women travelers between the ages of 35 and 44, which Hotwire has been increasingly successful in attracting search-driven hotel bookings from. While Expedia and Priceline have remained steady in this segment, Hotels.com has lost some ground. A year ago Hotwire had captured only an average of 10% of the search-driven hotel bookings of this demographic, but the past few months have seen the brand rise to up to a 30% share in May 2008.

Women’s OTA hotel conversions deriving from a search engine as a whole are the result of organic clicks 68% of the time and sponsored clicks for the remaining 32%. The only competitor to rely more heavily upon paid than natural was Hotels.com at 54%.

This specific demographic is just one example of how quickly market share shifts can take place. As online marketers pursue specific consumer segments – either demographic, affinity/lifestyle, or other groups – understanding the search behavior of each can give them a distinct edge. And in such a competitive landscape that relies so heavily on search, a lot can be gained from such an advantage.

It’s hard to think of an online consumer offering that doesn’t rely heavily on search, and travel is no exception. With economic factors making consumers more price-conscious than ever, travelers are looking for good deals more and more, making search an integral traffic driver for Online Travel Agencies (OTAs).

Expedia is the class of the industry when it comes to search though, with a 26% share. This means that they receive traffic from just over one out of every four clicks (both paid and natural) to a major OTA from search, followed by rivals Travelocity and Orbitz. Priceline has moved into the fourth position by growing its share by nearly 5%, replacing Cheaptickets, which has fallen by almost the same percentage.

Taking a deeper look at paid search traffic specifically, we see that 36% of all search traffic to OTAs comes through sponsored links. Hotels.com leads the way with an average of 44% of search referrals coming from paid search. Expedia is in the advantageous position of being on the lower end of paid search percentage ((34%), despite having such a large search share.

With ever increasing ROI expectations being placed on travel marketers, optimizing the online channel is critical. Given that many of the OTAs are relying more heavily on paid search referrals, and the degree of volatility in this space, it would benefit the OTAs to closely monitor share of search traffic across the competitive landscape.

Compete’s Travel Search Intelligence can fill in the gaps with a web-wide view of your performance, benchmarked against rivals.

Remember Summer? Beaches, barbecues, and family vacations dot the quintessential version. This year, though, something changed and the term “staycation” entered mainstream vernacular. A staycation is loosely defined as a vacation spent at home or in one’s home state due to prohibitively high transportation costs.

To measure staycation demand in Summer ’08, Compete looked for U.S. consumers who were researching on destination and tourism websites for the same state in which they also lived. We chose to examine June, the month in which Summer travel research is most intense.

In 2008 there were 12.9 million Americans researching an in-state vacation online, up from 8.7 million in 2007. The year over year change is a significant jump and correlates with rising consumer transportation costs.

Specifically, New Jersey and New York experienced the largest volumes of 2008 staycation research, while Massachusetts and Pennsylvania represented the largest year-over-year percentage growth. Other states experiencing an increase in local travel interest are listed in the table below.

The staycation is just one example of a behavioral shift caused by a rapidly changing travel cost structure. Certain states have experienced stronger staycation interest than others, but with a 50% increase nationally and no foreseeable reprieve from high gas prices, it looks like the staycation isn’t going anywhere any time soon.

Have you ever had a relaxing getaway at the beach rained out and wished there was some sort of compensation you could get for your lack of a tan? In the absence of a long-awaited good weather guarantee from Mother Nature, Priceline has stepped up and taken the initiative. Their quirky Sunshine Guaranteed offer promises to refund vacation package purchases if an excessive amount of rainfall takes place on the trip. Innovative and strong performing promotional campaigns like this, along with a discount and price-focused product and marketing mix have helped make Priceline’s website conversion rates near the highest among online travel agencies.

Priceline’s shopper conversion rate (the percentage of those who perform a search on the site that ends up completing a booking) is 7%, nearly two percentage points higher than the OTA average of 5% (red bars). Promotional Clickers on Priceline, those who engage with some kind of promotional content while on the site, have an exceptional conversion rate of 13%, nearly twice the OTA average (blue bars).

In June, 12% of Priceline’s site traffic clicked on a promotion. While the Sunshine Guarantee promotion may attract only a niche audience (0.2% of Priceline shoppers), those who do click on this promotion are highly likely to convert – an impressive 24% of Sunshine clickers will complete a booking. Despite attracting relatively few clickers, it resonated with its audience and led to strong conversion rates, showing just how effective a smaller, targeted promotion can be.

Expedia’s recent Summer of Adventure campaign was another successful promotion, on a different scale. In contrast to Priceline’s Sunshine Guarantee, Expedia’s promotion generated huge online exposure among visitors to the Expedia website.

Compete’s data is evidence that both large campaigns like Expedia’s and more targeted offers such as Priceline’s Sunshine Guaranteed can be effective in the same market.

TripAdvisor.com, the largest travel community on the web and one of the hottest sites within the travel category, has shown impressive growth after a 2008 site redesign. Like most travel-related sites, TripAdvisor.com experienced a lull in activity in the winter months of 2007. However, since January 2008 an average of 6.6 million US unique visitors have viewed the pages of TripAdvisor. In May 2008 TripAdvisor’s US audience was 7 million unique visitors, 34% higher than the level recorded in May 2007.

Many travelers use TripAdvisor for its consumer-generated reviews in order to get an unbiased feel for a hotel or vacation spot. As such, it is important that a consistent flow of reviews are posted so that content remains relevant and up to date. Over the past year an average of 1% of visitors added a review, a significant volume for such a large site.

TripAdvisor.com is a growing site that has managed to harness the valuable opinions of its users. As online travel researchers become more and more savvy, utilizing the expertise and feedback from peers becomes more and more attractive. As such, TripAdvisor and other consumer-generated review sites are poised for continued success.