HeBS digital Blog

The following article is Max Starkov’s latest contribution to EyeforTravel’s website.

Recently we had a professional chat with Ritesh Gupta, a technology writer for EyeforTravel, about the recent news that Orbitz served pricier hotels to users searching from Macs. Ritesh is the resident Travel Journalist at EyeforTravel, and can be reached at riteshgupta@eyefortravel.com.

Ritesh Gupta [EyeforTravel]:  What do you make of the whole issue that is being highlighted here?

Max Starkov: Selling the right rooms to the right customer at the right time for the right price is the very definition of revenue management in hospitality. Therefore, I do not see anything out of line in Orbitz targeting a customer segment that is perceived as more upscale (e.g. Mac users) with more upscale hotel properties.

The only thing I do not understand is why Orbitz would brag about it. To achieve some cheap publicity? To show the rest of the world how smart its marketing plan is? Orbitz has achieved exactly the opposite.

RG:   As per the information available, Mac users spend 30 percent more a night on hotels. Given this pricier demographic, Orbitz started to filter Mac users to different, pricier options than PC users. How would you assess this practice from distribution perspective?

MS: I do not see Orbitz’ practice as any different from what the rest of the industry has been doing for many years now. This is simply targeting by certain customer demographic traits.

As an example, European airlines or travel suppliers publish ads in Wine Enthusiast Magazine with the presumption that if the magazine’s subscribers like wine, they are more “worldly” and have the means and desire to travel abroad. Another example: only high-end, luxury travel suppliers and intermediaries advertise in Departures magazine, the American Express magazine for platinum and gold card members.

In other words, these advertisers are targeting customers from varying demographic groups with different offerings and price levels. This is exactly what Orbitz is doing by targeting Mac users (whom they perceive as more upscale) with higher-end hotels.

RG:   Is this practice of offering a set of users more expensive hotels unfair? Or is it justified since users can sort by price too?

MS: Unfair to whom? Mac users are not quoted higher prices for the same hotels; they are simply offered higher-end hotels in the results pages, while still having access to all of the cheaper hotels as well. This is the same as arguing the unfairness of not seeing articles or ads about Motel 6 in Travel + Leisure magazine.

RG:  To what extent is displaying different options to different sets of users happening in the online travel business?

MS: Many hotel brands, airlines and major OTAs are already customizing search/availability/price results based on the user’s preferences or their IP address and GPS location. For example, the location-aware mobile websites HeBS Digital develops for its clients already serve different sets of content based on the GPS coordinates of the mobile user. Why not provide a different set of pricing options tomorrow?

With the proliferation of electronic distribution channels in travel and hospitality, I see a wealth of opportunities for travel marketers in this respect. Why not target iPad users with a suite special vs. a room special tomorrow?

RG:  How would you see the picture – are OTAs getting smarter in the manner in which they serve offers to their customers or are they capitalizing on their spending power?

MS: This has nothing to do with OTAs or travel suppliers such as hotels, airlines or car rental companies. This has everything to do with smart and not-so-smart digital marketers. There are very smart travel suppliers that are targeting the right customer at the right time for the right price. The same applies to some OTAs. It’s a very competitive market out there and only the smartest digital marketers will survive.

One thing though – smart marketers typically do not brag about the marketing techniques they are using. Have you heard Amazon.com bragging about using collaborative filtering?

RG:  How do you assess the sophistication level of personalized recommendations that are based on the profile of a segment, their search and usage pattern of the site etc.?

MS: As I mentioned, Amazon.com has been using collaborative filtering for many years to personalize shopping recommendations, based not only on your past purchase history, but also on similarities in purchasing behavior among groups of like-minded consumers. If Customer A likes Product 1 and Product 2, then Customer B, who likes Product 1, may also like Product 2, and so on.

In the travel industry, such personalized recommendations are primarily focused on loyalty program members, and with a different rate of success, on the general user population. All of the major travel suppliers and OTAs have extensive web analytics departments tracking and analyzing user experience and purchasing behavior, and constantly optimizing the user experience and conversions on the site. Some suppliers and OTAs have achieved a level of sophistication that dwarfs Orbitz’ device-centric technique.

RG:  Lastly, how do you think data analytics is going to drive such initiatives in the future – be it for personalized recommendations or offering a set of users more expensive hotels as per their purchasing pattern?

MS: I believe we are only scratching the surface here. Utilizing state-of-the-art web analytics tools, many travel marketers are already far more advanced than this Mac story from Orbitz. Using multi-variance testing tools, e.g., Adobe Omniture Test & Target, today’s travel marketers can quickly analyze different nuances in user behavior and adjust product descriptions and pricing to achieve higher conversions and better user experience on the site. We at HeBS Digital are already experimenting with serving different sets of rich media and user experiences for iPad users with the new retina display. Why not serve various product lines and pricing in the future?

About the Author and HeBS Digital

Max Starkov is President & CEO of HeBS Digital, the hospitality industry’s leading full-service digital marketing and direct online channel strategy firm based in New York City (www.HeBSdigital.com).

HeBS Digital has pioneered many of the best practices in hotel Internet marketing, social and mobile marketing, and direct online channel distribution. The firm has won over 200 prestigious industry awards for its digital marketing and website design services, including numerous Adrian Awards, Davey Awards, W3 Awards, WebAwards, Magellan Awards, Summit International Awards, Interactive Media Awards, IAC Awards, etc.

A diverse client portfolio of top-tier major hotel brands, luxury and boutique hotel brands, resorts and casinos, hotel management companies, franchisees and independents, and CVBs are benefiting from HeBS Digital’s direct online channel strategy and digital marketing expertise. Contact HeBS Digital’s consultants at (212) 752-8186 or success@hebsdigital.com.