Internet Hotel Bookings Taking Off

The Internet is the best thing to happen to the hotel industry since the toll-free phone number, according to the lodging, gaming, and leisure research group of Bear Stearns & Co. Inc.

The company predicts that by 2002, hotel bookings via the Internet will generate $3.1 billion in revenues, up from less than $100 million in 1997. Bear Stearns estimates that 22 percent of all US hotel rooms can be reserved over the Internet.

“The introduction of toll-free telephone service was the last great technology innovation to greatly affect the economics of hotel booking — and that is nothing compared to the might punch of the Internet,” said Bear Stearns senior managing director Jason Ader. “Five years ago there were very few options for Internet direct hotel booking. Today, there are a half a dozen strong players.”

Bear Stearns estimates that there were 150 million visits to sites offering hotel reservations in 1998. It expects that number to triple by 2002.

As with other types of e-commerce, the convenience of the Internet lures travelers to its sites, especially in an industry that often features marathon phone calls to make reservations.

The big losers in the game of online booking are US lodging companies, according to Bear Stearns. Their proprietary sites lag behind other sites in visitation, popularity, and success in e-branding. None of the five travel sites nominated for a Webby Award this year is a proprietary hotel site.

Bear Stearns suggests that an online auction model may be the best way for competing hotel companies to work together to book their rooms.