Given the rise of the Online Travel Agent (OTA) and Peer Review sites and the way in which this focuses attention on individual businesses, attractions and activities, how do destinations find a voice and presence on the web? Where does the community find a voice and opportunity to present their place?
As I went through the main entrance of a hotel in Galway last week I was struck by a pair of large and prominent labels on the side table: Booking.com 8.9 & Trip Advisor 4.8. Reviews and ratings from these OTAs matter more and more to travellers and to the industry. And in the hotel lobby was a leaflet for bone carving, and again, prominent in the top right hand corner of the leaflet was their TripAdvisor rating: 5.
The rise of the OTAs – and peer review sites, such as TripAdvisor, has been inexorable and a real game changer. TripAdvisor has sites operating in 34 countries, including China and claims more than 260 million unique monthly visitors, and over 125 million reviews and opinions covering more than 3.1 million accommodations, restaurants and attractions. Booking.com is available in more than 40 languages, and offers over 428,000 properties in 195 countries. They have 5000 affiliate partner websites and claim that they book more than 2.8 million room nights every week. Companies like Trivago then enable consumers to find the cheapest by scanning 196 booking sites – they have 45 million users per month.
The destination websites run by DMOs are under increasing pressure as consumer switch to using OTAs to book hotels, attractions and activities. In the EU DMOs are also impacted by the State Aid provisions in Article 107* of the Treaty on the Functioning of the European Union, which state: “Save as otherwise provided in this Treaty, any aid granted by a Member State or through State Resources, in any form whatsoever, which distorts, or threatens to distort competition by favouring certain undertakings or the production of certain goods, shall insofar as it affects trade between Member States, be incompatible with the internal market”
If there is any government subsidy of marketing or other promotional activities which benefit some businesses and no others it may amount to state aid and may fall foul of Article 107, which is designed to ensure a level playing field across the EU.
Marketing of destinations by DMOs has been a mainstay of their purpose and an important source of funding to maintain destination management and marketing functions.
The debate is hotting-up about the implications of the growth in OTAs for DMOs. At the International Hotels and Restaurant Association Meeting in Interlaken in early Mach there is a panel discussion titled OTAs: Challenges and Opportunities / Rivals or Partners?
At the upcoming 8th International Conference on Responsible Tourism in Destinations there is also a panel discussion on The internet and the rise of the OTAs: compete or collaborate? Justin Francis from responsibletravel.com and Nicholas Hall of the Digital Tourism Think Tank will be debating the issue in Manchester on Thursday 3rd April.
Given the rise of the OTAs and the way in which this focuses attention on individual businesses, attractions and activities, how do destinations find voice and a presence on the web? Where does the community find a voice and opportunity to present their place?
We are looking for answers – so do please add your comments below.
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*A note on Article 107
Article 107 is designed to ensure a level playing field across the EU, to prevent a subsidy race and to main competitiveness. The “state aid” provision only applies of the beneficiary of the aid is involved in economic activity, offering goods and services in a market. There are then four state aid tests:
- Is the aid from a Member State or through State resources?
- Do recipients enjoy selective economic advantage through state aid?
- Does state aid have the potential to distort competition?
- Is this likely to affect intra-community trade?
To fall foul of Article 107 the government expenditure all four tests must apply. Aid is form state resources if it comes directly from the state, through central or local government, public bodies or devolved administrations. It can extend to include aid given by DMOs to third party beneficiaries.
Both the New York City’s public/private tourism promotion company NYCGo and the San Francisco Travel Association recently announced they had reached agreements with Booking.com, an online travel agency (OTA), to have it openly provide the transactional engine on their official websites.
Read more at http://www.tnooz.com/article/evolving-role-transactional-dmo/
This is a highly interesting topic. We are currently addressing similar issues as part of a research project about the online (B2C) distribution of the product offer of the South-western Delta destination area in the Netherlands. Apart from the legal issue Harold mentioned, a question that seems relevant is whether the community needs DMOs to find voice and presence (on the web)? Do destination based actors still need DMOs to market and present them, or does the potential of the web give them increasing opportunity to create their own B2C distribution channels and collaboration structures? In a sense, web 2.0 (more particularly UGC) represents the voice of both host and guest communities in ways far more sophisticated than conventional DMOs do. It seems the role of DMOs has changed and there is a need for them to critically explore innovative ways to create value for visitors and stakeholders in the destinations they (claim to) represent. This is relevant from a destination governance perspective, as many geographical areas seem to be framed as tourism destinations by DMOs based on governance, socioeconomic development, political other supply-related rationales, and not necessarily result from bottom up or market driven processes.
Not only in tourism, if we look at our daily life we will find that we can buy from grocery to jaguar, what else do you want? And i think e-commerce, e-banking, online shopping and other services which we can avail by just a few taps over our smartphone will become necessity of near future lifestyle. Mobile is an example, when appears in market was said to be a luxury, but now is much important as any basic utility of daily life is. The time is not far when merchants will focus more on their online status rather than their physical outlet.
A very interesting discussion, thanks Harold.
Consumers trust word of mouth, personal recommendations, blogs, social media and review sites over and above the ‘official line’ from individual businesses and DMOs.
This trend is only going to continue. Consumers will continue to be heavily influenced by what they discover on the internet.
DMOs need to acknowledge that consumers will often bypass them and engage with individual business direct and via OTAs.
DMOs therefore need to ensure they are equipping businesses with the knowledge and expertise to adapt to this reality. Many tourism businesses, especially micro, small & medium sized businesses do not know how to handle review sites, social media, blogging & eMarketing.
SMEs are missing many tricks online and they need help. Whilst it’s not the entire responsibility of DMOs to ensure businesses in their region are fully equipped with the right online skills – I still think much can be done to help. Training, coaching, online resources, eLearning, mentoring should all be explored.
Hope you have a great debate at RTD8!
The internet and the rise of the OTAs: compete or collaborate? This question us being discussed in Manchester in 3rd April by
Justin Francis Chief Executive Officer, reponsibletravel.com
Nicholas Hall Digital Tourism Think Tank
http://www.crtmmu.org/rtd8/responsible-tourism-in-destinations/
Very interesting post, Harold, and certainly a topic I could write a whole post on. Oh wait, I did! (last October in Tnooz)
http://www.tnooz.com/article/evolving-role-transactional-dmo/
Cheers,
Frederic
Oh, just noticed you had reference by article in Tnooz. Thanks for that, Harold 🙂
Indeed, DMOs are struggling to find their role in the distribution landscape, and this all sends us back to the “Destination Marketing” vs “Destination Management” debate, as to the exact role the future DMO should play. No right or wrong answers here, as the equation varies according to countries and specific areas, funding and legislation, among other things.
An interesting conversation, to say the least!