The Hotel School. Cornell. SC Johnson College of Business. CENTER FOR HOSPITALITY RESEARCH The Billboard Effect: Still Alive and Well By Chris K. Anderson and Saram Han EXECUTIVE SUMMARY As a follow-ups aon follow-up two earlier on studies,two earlier this studies, report thisconfirms report the confirms so-called the so-calledbillboard billboar effect ond effect demand that occurson demand when that online occurs travel when agents online (OTAs) travel agents include (OT a As)particular include hotel a particular in their hotel listings. Evenin though their listings. many guests Even though book directly many guests with thebook hotel directly brand, with this the study’s hotel brand, findings this are similar to study’sthose of findings earlier arstudiese similar which to those showed of earlier that beingstudies listed which on showed an OTA that site being listed increasedon an OTA reservations site increased through reservations the hotel through brand’s the hotel site. brand’sThe findings site. The in thefindings report in presented the report presentedA here underscored consumers’ reliance on websites when researching and booking their here underscored consumers’ reliance on websites when researching and booking their rooms,rooms, although non-dirnon-directect channels channels still still have have some some influence influence in lodging in lodging pur purchasechase decisions. In decisions.determining In whichdetermining web-based which marketing web-based efforts marketing produce effortsthe best produce results, hotelthe best operators results, should hotel operatorsmake sure shouldtheir online make pr sureesence their is easy online to find,presence is attractive, is easy and to find,stands is upattractive, to the competition. and stands T upo tobetter the competition.understand changes To better in consumerunderstand online changes behavior in consumer this report online revisits behavior aspects ofthis the report billboar d effect through use of publicly available data sources. Contrary to research suggesting that the revisits aspects of the billboard effect through use of publicly available data sources. billboard effect is dead, this study’s results show that reports of its demise may have been Contrary to research suggesting that the billboard effect is dead, this study’s results show exaggerated. that reports of its demise may have been exaggerated. Cornell Hospitality Report • April 2017 • www.chr.cornell.edu • Vol. 17, No. 11 1 ABOUT THE AUTHORS Chris K. Anderson, Ph.D., is an associate professor at the Cornell School of Hotel Administration in the Cornell SC Johnson College of Business. Prior to his appointment in 2006, he was on faculty at the Ivey School of Business in London, Ontario Canada. His main research focus is on revenue management and service pricing. He actively works with industry, across numerous industry types, in the application and development of RM, having worked with a variety of hotels, airlines, rental car and tour companies as well as numerous consumer packaged goods and financial services firms. Anderson’s research has been funded by numerous governmental agencies and industrial partners and he serves on the editorial board of the Journal of Revenue and Pricing Management and is the regional editor for the International Journal of Revenue Management. At the School of Hotel Administration, he teaches courses in revenue management and service operations management. He earned his B.S. and Msc degrees from the University of Guelph, and his MBA and Ph.D. degrees from the University of Western Ontario, Ivey School of Business. Saram Han is a Ph.D. student in Marketing at the Cornell School of Hotel Administration in the Cornell SC Johnson College of Business.His research Interests include data science, natural language processing for OTAs review, service operation, service marketing, and survey methodology. He earned a Bachelor of Business Administration, Tourism Management, from Kyung-Hee University, Seoul, Korea, and an MS degree from the Michigan Program in Survey Methodology, University of Michigan. 2 The Center for Hospitality Research • Cornell University CORNELL HOSPITALITY REPORT The Billboard Effect: Still Alive and Well By Chris K. Anderson and Saram Han Changes in the online travel market are causing hotels to rethink their relationships with online travel agencies (OTAs) and to take a closer look at the impact on bookings from hanges in the online travel market are causing hotels to rethink their listing their properties with OTAs. One outcome of being listed on an OTA is additional relationships with online travel agencies (OTAs) and to take a closer look at the bookings on the brand’s own website, a phenomenon that co-author Chris Anderson impact on bookings from listing their properties with OTAs. One outcome of labeled the billboard effect. In a 2009 study, Anderson presented an experiment in which a being listed on an OTA is additional bookings on the brand’s own website, a group of hotels was listed and then removed from Expedia. com in alternate weeks. This phenomenon that co-author Chris Anderson labeled the billboard effect. In a 2009 study, Anderson testpresented found anthat, experiment compared in towhich being a grhidden,oup of beinghotels listedwas listed on the and site then increased removed reservationsfrom Expedia. 9 percentC to 26 percent (above transactions that occurred at Expedia).1 That was followed by com in alternate weeks. This test found that, compared to being hidden, being listed on the site aincr 2011eased study reservations examining 9 per consumers’cent to 26 per onlinecent pre-purchase(above transactions research that occurrthat founded at aboutExpedia). 75 1 That percentwas followed of consumers by a 201 1who study made examining reservations consumers’ with a majoronline hotel pre-pur brandchase had resear visitedch that an OTAfound inabout advance 75 per ofcent booking of consumers directly who with made the brand.2 reservations In this with report a major we show hotel brandthat the had ability visited of ana second-partyOTA in advance channel of booking to influence directly anwith eventual the brand. reservation2 In this r eportmay bewe lowershow now,that the but ability the of a billboardsecond-party effect channel still occurs, to influence since anmany eventual consumers reservation visit mayan OTA be lower prior nowto booking., but the billboard effect still occurs, since many consumers visit an OTA prior to booking. 1 Anderson, CK. “The Billboard Effect: Online Travel Agent Impact on Non-OTA Reservation Volume,”Cornell Center for Hospitality Research Report, Vol. 9 No. 16. http://scholarship.sha.cornell.edu/chrpubs/2/ 2 Anderson, CK. “Search, OTAs, and Online Booking: An Expanded Analysis of the Billboard Effect,”Cornell Center for Hospitality Research Report, Vo. 11 No. 8. http://scholarship.sha.cornell.edu/chrpubs/4 Cornell Hospitality Report • April 2017 • www.chr.cornell.edu • Vol. 17, No. 11 3 EXHIBIT 1 Domain visitation (60 days prior to reservation) Booking Reservations Site Visitation Prior to Reservation Channel OTAs Hotel Sites Web Search TripAdvisor Other Meta OTA 2,776 48% 68% 39% 33% Direct 2,317 65% 66% 34% 21% Note: Sample OTAs include Expedia.com, Hotels.com, and Booking.com. Sample Hotel sites include Hilton.com, Marriott.com, and IHG.com. Searches include searches at Google, Yahoo, and Bing. Sample Meta sites include Kayak.com, Trivago. Com, and GoSeek.com. EXHIBIT 2 Average number of visits per reservation (60 days prior to reservation) Booking Reservations Site Visitation Prior to Reservation Channel OTAs Hotel Sites Web Searches TripAdvisor Other Meta OTA 2,776 8.4 3.4 4.6 2.9 2.4 Direct 2,317 7.2 6.5 5.1 4.1 2.3 A primaryA primary reason reason for this for change this change is consolidation is consolidation and reservations (including air, rental car, and hotel). A total innovationand innovation among among the online the online travel travelfirms. Expediafirms. Expedia has of 5,093 hotel reservations were made by the sample: acquiredhas acquir bothed bothTravelocity Travelocity and Orbitz, and Orbitz, while whilePriceline Priceline 54.5 percent (2,776) of these reservations were made at acquired Kayak and Expedia and also took a major equity OTAs and the remaining 2,317 (45.5 percent) were made acquired Kayak and Expedia and also took a major equity position in Trivago. Much of this merger activity has been directly at hotel websites.4 Using domain level informa- positionallowed in (fr Trivago.om a competition Much of this standpoint) merger activity by the has moves been tion for each website visited prior to the hotel reservation, allowedof Google (from and a T competitionripAdvisor standpoint)to become meta by the OT movesA sites, of as we focus on travel related behavior for 60 days prior to Googleare Kayak and and TripAdvisor Trivago, toand become their continued meta OTA evolution sites, as areto purchase. Because comScore only provides domain level Kayakbecoming and fullTrivago, fledged and theirOTAs continuedthat offer evolutionfacilitated to direct information (e.g., Hilton.com), we have information booking. There has also been an upsurge in hotel-OTA on which domains consumers visited (and how often), becoming full fledged OTAs that offer facilitated direct interactions, with several large hotel brands launching but we don’t necessarily know which pages or content booking. There has also been an upsurge in hotel-OTA direct booking campaigns. All of this activity has encour- consumers focused on.5 We do know whether they visited interactions,aged research with findings several that large imply hotel that brands the launchingbillboard effect web search related sites (Google, Yahoo, or Bing), but directis dead. booking This conclusion campaigns. stems All of fr thisom activitythe rapid has gr owth of we don’t know which keywords they searched. For web encouragedthe two major research OTAs (Expediafindings that and imply Priceline), that the which billboard now search related visits, we do know which site they went effecttake a is lar dead.ger shar Thise ofconclusion online transactions stems from (and the rapid transactions growth to after visiting the search engine.