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Hospitality Leadership Through Learning
Faculty & Research

The Billboard Effect: Online Travel Agent Impact on Non-OTA Reservation Volume

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Vol 9 No 16
By: Chris Anderson Ph.D.

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Executive Summary:

Hotels that are listed on third-party distributors’ websites, commonly known as online travel agents (OTA), gain a reservation benefit in addition to direct sales. That benefit, often called the billboard effect, involves a boost in reservations through the hotel’s own distribution channels (including its website), due to the hotel’s being listed on the OTA website. This report provides a quantitative assessment of the incremental reservations through non-OTA distribution channels received as a result of being listed on an OTA site. To quantify the billboard effect, this pseudo experiment examined the effects for certain properties operated by JHM Hotels that are listed on Expedia.com. The study found that when the hotels were listed on Expedia, they saw an increase in reservations from their own distribution channels (that is, not through Expedia). The theory behind this phenomenon is that the would-be guest gains information about the hotel from its OTA listing, but then books the room through a channel controlled by the hotel or its chain family. The study estimates the incremental reservations from listing on Expedia (not including the reservations actually made at Expedia) at 7.5 to 26 percent for the four properties in this study.

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About Chris Anderson Ph.D.

Chris Anderson is an assistant professor at the Cornell School of Hotel Administration. 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 hotels, airlines, rental car and tour companies as well as numerous consumer packaged good 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 Hotel School he teaches courses in revenue management and service operations management.

For more information visit http://www.hotelschool.cornell.edu/research/facultybios/faculty.html?id=180