The business of booking a table – and what lessons can be learnt from the travel industry.

The importance of digital can’t be ignored. Recent Maru/edr results found that 49% of diners will go online before they visit a restaurant. With digital experiences becoming fundamental to the success of brands across industries, travel expert Gary Howes explores what online practices the hospitality industry can learn from close relatives in travel.

49% of diners go online prior to choosing a restaurant and dining out.  That was one notable statistic from a real-time survey on dining out habits Maru/edr ran prior to Valentine’s Day.  The two principle reasons were to check out menus and to book a table – and capturing those reservations is now a big business.

A quick look online shows a number of intermediaries, such as Zomato, OpenTable and thefork.com all offering potential diners the convenience of search, comparison and booking capabilities from one site.

But how big a business?

Well the potential can be highlighted by the fact that OpenTable was bought for $2.6bn in June 2014. That scale of investment raises questions as to how the industry will develop and grow to deliver a financial return?

One answer may come from understanding the development and dynamics of an industry that shares many similarities with its leisure partner, the travel industry and in particular the growth of large Online Travel Agencies (OTA’s) and Intermediaries such as Priceline (Booking.com), Expedia and TripAdvisor and their relationships with hotel partners.

49% of diners go online before a meal out. Can brands afford to ignore the digital experience anymore? Click To Tweet

Since the early 2000’s, the large OTA’s have driven an ever increasing share of revenue from hotel bookings – according to Priceline Group’s 2015 R&A 86% of their transactions were hotel sales.  The rationale is simple. The big OTA’s concentrate their efforts and investment where choice is highly fragmented and where customers demanded choice and ease of comparison – the hotel industry.

What makes the OTA and hotel partnership successful?

At the beginning of their partnership, OTA’s offered hoteliers a way to reach their customers online with a digital experience that was often superior to their own. OTA’s had invested in areas, such as SEO and SEM, and therefore offered hoteliers the opportunity to capture the online customer.

But as the OTA’s grew, hoteliers realised they had, to an extent, lost control of this sales channel and that they needed to drive a greater share of bookings direct, thus saving money on commission and reinstating direct relationships with their customer.  In short the hotels needed to improve their direct offer and a key element to this strategy was to improve their online capabilities and the customer’s digital experience.

What can the hospitality industry learn?

Which brings us back to the point that 49% of those dining out go online before they visit a restaurant.

If the relationship between restaurants and the hospitality industry is to go the same way as their travel counterparts, could we start to see “table booking” sites winning and retaining customers through superior digital capabilities, including search, mobile bookings and apps.  How likely is it that these players will replicate the travel industry model?  Well on that point it’s worth noting who paid $2.6bn for OpenTable. Priceline.

This poses some interesting questions for the hospitality industry – ‘Do online booking sites offer a value for money marketing tool that enables guests to find and book a table and driven incremental business?  ‘Could they become an expensive extra stage in the process stopping the restaurant from reaching their customers directing and driving additional costs?’

A quick look at a number of leading restaurant chains shows the sheer range and quality on offer when it comes to online experiences in hospitality. But with half of customers visiting sites before they’ve even stepped foot in a restaurant, can the industry really afford to deliver an experience that falls below expectations?

Gary Howes is a travel and hospitality market expert at Maru/edr, having worked in the travel industry for over 18 years. Connect with Gary on www.linkedin.com/in/gary-howes-3453b760  or contact him directly on gary.howes@maruedr.com

 

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