• No online threat

The last major hotel recession in 2001 led to hotel companies facing a huge threat from online intermediaries. These intermediaries were able to effectively aggregate demand and extract extraordinary commissions from hoteliers in the process.

This time around the threat from such intermediaries is much diminished. And new web models are emerging that offer hoteliers a route to customers without huge commissions.

The latest is a service launching next month called findsyou.com. This claims to be "designed to overthrow the current monopoly of the market by agents and middle men and make buying and selling travel accommodation far easier and more cost effective".

It is an online notice board model where consumers post their requirements and are then matched to relevant suppliers. The supplier and consumer, once matched, are allowed to strike their own transaction with no commission payments.

CEO Guy Walker reckons his service will prove attractive to hoteliers due to the absence of commission payments. In addition, the charge to take part will be low – around £10 per month for the largest property.

"The cost is designed to be meaningless to hotels in terms of their overall budget," said Walker.

The success of the service will depend on the traction it finds with consumers. Rather than direct advertising, the company is relying on word-of-mouth and partnering.

It is an approach that it has tried in the couple of sectors where it already has a presence. For residential property and cars it has partnered with nethouseprices.com and whatcar.com respectively.

The service will allow hoteliers to discount anonymously as all that is listed is the demand information from consumers. And suppliers are under no obligation to contact consumers – they are sent the leads that the site considers a match and after then it is up to them how they proceed

The appeal to consumers is that they can save time and effort in stating their requirements and have suppliers come to them rather than view a wide range of offers, most of which are unsuitable, in different channels.

It is this focus on the demand side which makes findsyou unique. Online intermediaries traditionally focus on the supply side in that they offer customers the products. With the new approach, customers are specifying their needs and having offers made to them.

How well it works depends on how easy it will be for customers to alter their behaviour. Going online or looking in brochures is instinctive and it will not be easy to shake-off.

But there is clearly a niche and Walker is not expecting to create the furore that the online intermediaries generated in the last recession. "I don't expect our service to disrupt the market. I don't want it to," he said.

A similar theme of delivering the consumer a greater reach at less effort and expense is behind develhotel.com. The consumer here though is the hotel developer who is seeking the services of specialists to help complete the project.

And unlike with findsyou.com, develhotel.com is charging both the developer and the service providers to list. But it does share the claim that it reduces time and expense for its users.

 

HA Perspective: There has been a lot of twittering about how web 2.0 will shake up the market. And while social networking has and will have a significant impact, it has been overhyped.

Some services, such as guest review site Tripadvisor, owned by the parent of Expedia and Hotels.com, already carry a lot of weight in the market. Other developments, such as Twitter, might well prove a flash-in-the-pan.

Online market places that put buyers and sellers directly in touch without trying to gouge out huge commissions seem a sensible prospect.

In the first great web revolution, some major hotel groups invested significantly in online marketplaces which were flops. Zoho, for example, was a technology platform backed by Starwood in 2000, and Marriott and Hyatt (later joined by others including InterContinental and Fairmont) teamed-up in the same year to roll-out an online procurement network called Avendra which they had hoped to build into an industry-wide portal.

Zoho no longer exists in its original form and Avendra fell well short of its hype of becoming a global market place. Avendra also landed Marriott with a bunch of lawsuits from angry owners peeved at Marriott for not passing on the discounts.

This time around the ambitions of the online entrepreneurs are much more muted. They see their role as supplemental to, rather than as a replacement for, existing business models.

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