Online hotel reservation market in China

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Status quo

The size of China online hotel reservation market in the first quarter of 2010 has expanded to 1.19 billion RMB ($ 119 million). The data from iResearch also shows that it has increased by 49.3% year on year.
There are mainly two types of companies playing in the market.
One is hotels themselves. They build their own online room booking website.
The other type is professional online reservation website; they publish the information of hotels that cooperate with them. Their income comes from the commission from hotels. Among these companies, C-trip is the dominator with 55.6% of the total market share. Following are Yi’long and Mang’guo who take 9.8% and 6.0% of the market respectively.

The pros and cons of online hotel reservation market

Since over 90% of the online hotel reservation market is dominated by professional online reservation website like C-trip. So many companies, especially those new comers would like to cooperate with them.
The greatest strength of cooperation with professional online reservation website is they can reach more people. Those website already have a big database of customers and a lot of visitors every day. So, it can help hotels to increase their popularity quite fast and easily and this is especially suitable for new players in this market because it can offer them a stable publicity.
However, professional online reservation website has also its own problems:

1. Multi-media display

Those professional online reservation websites can only offer a fixed template with limited multi-media marketing tools. For example, on the website of Ctrip, most hotels have no more than 10 pictures and there tourists cannot find videos. On the other hand, hotels can put all kinds of multi-media as many as they want on their own website to show to the customers.

2. Lack of initiative

Most hotels have to sign contract with those website. And many factors from price to customers are out of their control.

3. Low customer stickiness

Customers from professional online reservation websites are usually loyal to those reservation website instead of hotels.

From decision to feedback

Zhnag’yi, vice-president from China biggest online travel website Qu’nar, explains that process of Chinese customers making decisions can be divided into four steps:

1. Think

When a Chinese tourist gets an idea of travel, he will start looking for information, especially from internet.

2. Evaluate

He will compare several website and travel notes or comments from other tourists.

3. Purchase

Then he will select his favorite one and buy it.

4. Feedback

After he finishes the trip, he will put his experience, feeling on SNS and other websites.

Among these four steps, the first step is very difficult for hotels to influence. It is easily influenced by Chinese tourists’ work, family.
After that, hotels should try their best to attract customers.

Evaluation

Over 50% of the tourists will compare the information from 2 websites, 18% of them compare information from 3 websites, and 9% of the tourists would even check 4 websites. At first, according to the introduction from Mr. Zhang, they are very sensitive to price. However, the winners are usually those hotels offer discount instead of those offering lowest price. For example, they will take price and other factors such as special service, location, coupon together into consideration.


Then, those hotels with more pictures and videos in their introductions can attract more customers.
At last, comments make the difference. As McKensey reports, only less than 10% customers will check on official websites. So what influences them is the comment other people put. If there’s no comment or negative comment without explanation from the hotel, the hotel will be probably out.

Purchase

What’s need to be noticed is that now in China, customers, especially those young people would like to purchase via new channels such as online order, call order, groupon.

Feedback

This is the most important part for the branding of the hotel. As mentioned before, comments from other people can greatly influence the decision of a tourist. However, 85% hotels have taken no action to control their online reputation and only 4% of all the hotels have reacted to those negative comments. (source: qunar)

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