E-asy money

The past decade has seen the internet take off around the world and today it is a force to be reckoned with.

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By  Lucy Taylor Published  July 10, 2008

The past decade has seen the internet take off all over the world and today it is a force to be reckoned with. Lucy Taylor takes a look at the substantial benefits e-business offers hotels and considers what the future holds for this buzzing industry.

There was a time, not so long ago, when computers were bulky things, rarely seen and even more rarely understood.

Until comparatively recently, there wasn't even such thing as the World Wide Web - it was an age devoid of email, online chat, blogs, shopping sites and online hotel reservation systems.

Internet access in the Middle East has increased from 11% to 17%.

But today, if you're not online you're out-of-touch. Internet access has spread across the globe - proving itself an ideal commercial distribution and marketing tool.

Although online business may have got off to a slower start in the Middle East than in other parts of the globe, the region is quickly catching up. Every business is eager to get involved in this online phenomenon and cash in on the advantages that e-commerce can bring - and the hotel industry is no different.

The many e-benefits

As Rotana Hotel Management Corporation e-commerce manager Pantelis Hadjiathanassiou points out, the benefits of internet business speak for themselves.

"With online marketing we are able to help revenue managers by doing tactical campaigns, since we can reach a large number of people in a short period of time that is measurable and most of the time not costly," he explains.

"Consequently, despite the fact that the concept of online commerce is new to the Middle East, it has quickly grown to become one of the major revenue generating departments within sales and marketing."

It has taken a while for the inustry to truly recognise the potential for online business, as Mövenpick Hotels and Resorts vice president distribution Heiko Siebert notes.

"In the early days the internet was often only seen as an alternative or cheaper booking channel, so the early strategies targeted moving customers from more expensive channels to the internet in order to lower transaction costs," he explains.

"But now it's more than that: proprietary websites are a major contributor to the brand and an important communication platform to the customer. So, in addition to the commercial side, the marketing and communication aspects are gaining strength. Today the hotel industry is beginning to understand and embrace this."

Mina Seyahi Complex e-commerce manager Jitendra Jain adds: "Increasingly, the internet is also being used at various stages of the product and service cycle in hotels, including managing guest feedback, advanced CRM, public relations, recruiting, supplier management, and so on.

"Not only does the web provide the lowest-cost booking channel, but it also allows for a much wider geographic reach than possible ever before."

And as Hilton Hotels vice president brand websites Geraldine Calpin notes, with the World Wide Web continually increasing its portfolio - both in terms of companies using it for business purposes and in terms of consumer usage - e-commerce has become "a critical success factor to any business today".

"From independent hotels to major chains like us, the web is now the primary marketing channel, with customers using the internet to research, view, select and book hotels," explains Calpin.

"Even in markets where booking online is not yet the cultural norm, the web plays an important part in customers' selection of where to stay, even if they then go on to booking through traditional channels."

Building the e-business

With so much scope to profit from the right sort of web marketing, what are hotel groups in the Middle East doing to maximise their e-business?

Rotana's Hadjiathanassiou says that from online bookings right through to the group's loyalty programmes, e-commerce is an intrinsic part of daily operations.

"It was as a result of the growth of this sector that I was recruited as Rotana's e-commerce manager back in November 2006, to assist in setting up a separate department in the corporate office that will eventually be rolled out across all properties," he explains. "We have been very successful in rolling out this new culture; since I joined, we have managed to double the number of our visitors to www.rotana.com, and are in the process of introducing the position of e-commerce manager to all our major destinations, including the UAE, Lebanon, Egypt, Kuwait, and Bahrain."

Similarly, although Mövenpick had a website established in the late 90s, it was primarily viewed as an additional cost effective booking channel.

However, Mövenpick's Siebert says over the past five years it has become clear that the website also provides numerous other opportunities to interact with the customer directly.

"The recent re-launch of www.moevenpick-hotels.com takes this into account. The new website is a platform where customers have greater search capabilities, can plan meetings, send e-cards, sign up for the newsletter - it is much more than just information or a booking engine," Siebert asserts.

"E-distribution channels as a total today contribute a significant share of revenues to our properties," he continues. "And in Europe, the Middle and Far East and Africa, we see no slowing down; the growth ratios are still very high."

As Mina Seyahi's Jain points out, e-commerce at a basic level, incorporating hotel websites, information, photography and online booking options, was always part of the property's marketing strategy. But over the past 18 months this base has been substantially expanded upon.

"Since January 2007 we've deployed e-commerce as a full-time role," says Jain. "Since then we've moved well beyond just offering information and reservations."

"We pioneered the first dedicated hotel blogs early last year, with www.minaeffect.com and www.resortexperiencedubai.com, and in addition to that we launched our own photo galleries, interactive resort map and even created our own dedicated YouTube video blogging channel," he continues.

"The response we've had to these developments, both externally and internally, has been very encouraging, with a year-over-year growth in online bookings."

Overcoming the e-challenges

Turning the spotlight on developing e-commerce in a region where online business was still a relatively new concept was arguably something of a gamble for Middle East players.

But thanks to a combination of dedicated research and careful marketing, today the region's hotels are reaping the rewards of broadening their online options.

Rotana's Hadjiathanassiou expands: "Building the culture within a company to rely more on e-commerce can sometimes be challenging, which I believe is the case throughout the Middle East."

"Luckily I work very closely with our marketing and communications department, which is always very keen on exploring the opportunities presented by e-commerce when making our promotions revenue-generating ones."

Mövenpick's Siebert adds that the key to success is being able to identify which e-business trends to adopt and which to ignore - and not to simply rush into implementing the latest fad. "The speed at which new trends come up and disappear again can be a problem, but identifying which ones will remain and how to embrace them is the real challenge," he says.

"Ten years ago video-conferencing was the trend to go for and a lot of hotels invested heavily in those facilities - it did not take off."

"For Mövenpick, our strategy is that we will be cautious and avoid being first adopters. Nevertheless we closely monitor the markets and trends."

Hilton's Calpin agrees that keeping up with trends is integral to a property's e-success. "We analyse what we are doing, what you can do, and what the market is doing on a daily basis," she says.

However in contrast to Mövenpick, Calpin believes innovation is the way to stay ahead of the competition. "Don't be afraid to try new concepts - that are the way to keep ahead in this industry," she asserts.

Mina Seyahi's Jain adds that once a property has decided upon which online schemes it wishes to implement, a further challenge is "creating awareness of these ‘new' strategies and their benefits, overcoming inertia and demonstrating success through results".

"This is crucial to gain acceptance and support," Jain explains.

So are there any broader, region-specific challenges in the online industry, or has the online boom over the past decade provided ample opportunity for any e-wrinkles to be ironed out?

Rotana's Hadjiathanassiou says that although the region is "perhaps five to six years behind in terms of e-commerce", it is catching up quickly.

"This is exactly why major online partners have now opened offices in the region, as the potential is tremendous," he points out.

Although Mövenpick's Siebert says he does not see any major obstacles to e-commerce's development in the Middle East, he notes the importance of recognising that e-distribution strategies which work in Europe or the US will not necessarily work in the MENA region.

"Strategies - and websites - need to be able to satisfy the regional cultural demands," he says. "However modern technologies are more than able to help us to do so."

Hilton's Calpin agrees that it is essential for cultural difference to be taken into account: "Language can be a barrier, as most websites are in English and cannot serve Arabic speakers; then there's the issue of low levels of credit card penetration, plus high levels of perceived risk due to limited exposure to the medium [of internet booking], which are major inhibitors."

"However these challenges occur naturally with the advent of any new form of technology," Calpin says. "They can be easily overcome with awareness, trial and education."

Speedy e-progress

Whatever the challenges, e-commerce has undoubtedly come on in leaps and bounds over the past few years, as Rotana's Hadjiathanassiou points out.

"We've seen changes to targeted online advertising rather than mass advertising, online communities generating pay per click, a greater reliance on meta search techniques to route traffic to online reservation, adaptability to the market with more websites in Arabic, and online communities and payment engines."

And that's not all; Mövenpick's Siebert continues: "There has been a shift of the channels - up until about five years ago the major e-distribution channels were the GDSs. Since mid-2006, the proprietary website is Mövenpick's strongest e-distribution channel".

According to Mina Seyahi's Jain, the main online trend has been the web's evolution from a network built on basic information and transactions to one that offers a rich and interactive user experience.

Hilton's Calpin says we are currently seeing a significant shift in how the web is perceived and utilised. "It is no longer just a research tool; it's now an intrinsic part of life," she says.

Looking into the e-future

With e-commerce playing such a central role in everyday life, it is clear that the region's hotel industry will be focusing on e-developments for a while longer.

Rotana's Hadjiathanassiou goes so far as to say e-commerce will "inevitably" replace more conventional methods of guest communication and interaction used in the region. "The internet access in the Middle East has increased from 11% to 17 %, as well as online credit card penetration; keep in mind that the people in this region have a lot of disposable income," he comments.

Mövenpick's Siebert adds: "We expect [the e-commerce market] to grow very fast - at least for travel into the region. How far we will see similar growth ratios for travel within the region depends on how the industry is able to adapt the models to regional demands".

Whatever the future holds, Mina Seyahi's Jain believes that e-commerce "has its place secured in the world of business and modern living here in the Middle East".

Keep a finger on the e-pulse

The message to the hotel industry is clear: online business has arrived and it's here to stay.

That's not a reason to give up on other channels - putting all your eggs in one basket is rarely advisable. But any hotels dragging their feet about moving into the online business age should be aware that this is the direction the region's businesses and consumers are taking, and they are doing so with gusto.

Investment in e-commerce is the way forward: hotels must e-volve or they will lose out.

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