Hotels lose US$2.2b annually to online ‘brandjacking’

WORLDWIDE Hotels lose an estimated US$2.2 billion each year from online “brandjacking,” in which competing distribution channels siphon would-be direct bookings via search engine marketing techniques, according to a new study.

The report from MarkMonitor, a firm specializing in online brand protection, says hotel websites lose out on some 580 million visits each year that are instead diverted to OTA sites.

The study examines five undisclosed global hotel brands, representing a cross-section of sectors, by scanning e-commerce sites, consumer marketplaces and email campaigns promoting the hotel brands. The study also examines more than 1.3 million search ads triggered by nearly 4,000 keyword combinations containing those brands and estimated the traffic stream that was generated to develop the estimates.

The study identifies more than 1,750 OTAs that purchased keywords using one or more of the five monitored brand names. That investment in search engine marketing resulted in traffic being diverted to competitive properties, costing the hotel industry an estimated US$1.9 billion in lost revenue and US$270 million in unnecessary commission payments.

The leisure travel industry spends US$1.8 billion annually in online advertising, with 46% allocated to search advertising, according to the Internet Advertising Bureau. In 2010, Forrester Research estimated that 40% of all travel bookings were made online, with another quarter of total bookings influenced by online research.

Cybersquatting also remains an issue for the hotel industry. Cybersquatting involves registering domain names containing brands that are not owned by the domain registrant. The study identifies more than 2,100 cybersquatted domains using the five brands surveyed. These cybersquatted domains generate more than 57 million visits per year that could otherwise be visiting the hotel’s official sites. The majority of these domains are monetized by pay-per-click schemes offering no content other than a collection of links.

The complete MarkMonitor report can be downloaded for free here.