The Negative Effects of Hotel Websites to the Company Itself 21th century. We live in a world where internet has become one of the most important resources in the world. Internet basically has everything we need, from news, information of companies, or even e-shops. Hotel industry too has improved and uses internet as one of its tools for giving information about the hotel, allowing customers who want to book a reservation to be able to check if the hotel meets their expectation. Most of the famous hotel companies have their own websites that picture how the hotel looks like.
Owning websites gives many benefits to hotels, yet it has negative impact that is not to be taken lightly. Maintenance issues, promotion cost, and changes in room rate pricing are the effects that hotel managers might consider before developing a website for their hotels. In fact, many hotels could not handle the negative impact of having a website that they do not use it until now. Before owning a website, one should consider everything that might be needed and could be a cost. Even buying or renting a server for the website cost money.
Operating the server system, renting web designers’ service to design the hotel website, installing the revenue system, are examples of one-time costs that will be needed in order to own a website. Managing the website, do check-ups on the server system, updating the revenue system, are the examples of potential costs that need to be paid from time to time. These could potentially charge hotels a huge amount of money. Web designers could charge their customers up to $15,000 for a website made from scratch, while a personal computer that can act as a server could cost up to $2,000.
The amount of money required might not be a problem for big hotel companies such as Four Seasons and Marriott, but for medium-scale to economical hotels, it is huge. Some incidents might happen that would be an additional expense, for example when the server is infected by virus, or when the computer system breaks. That is why owning a website could be a nuisance for anyone, including hotel companies. After having a website up and running, hotel managers should consider the promotion cost. People will not know if the hotel has a website without ccidentally looking at the hotel’s advertisement and travel agencies that the hotel cooperates with would not promote the website as it could make their customer make a reservation by themselves instead of renting travel agencies’ service. Hotels can make advertisements either locally (by renting physical advertisement spot) or globally (by asking and paying other website owners to put the hotel’s advertisement in the website). Advertising on magazines or newspapers could cost approximately $2,000-$3,000 a month, while digital advertisements could cost approximately $500.
Those expenses might be more costly the more famous the magazine/newspaper or the website is, up to $50,000 each month. With advertising being that costly, hotel companies have to consider and prospect their sales and revenue before and after advertising before the hotel’s revenue statement becomes a loss. The last but possibly is the most dangerous impact on owning a website, is room rate changes. After owning and having a website up and running, a hotel cannot help but to reduce their room rate price. The sole reason of this is competition. Hotel consumers, before making a reservation, tend to compare prices between hotels of similar level.
They tend to book a room in a hotel that is cheaper, regardless of the difference in service that might be offered. If a hotel has a website, the manager must compare his/her hotel’s room rate with other hotels at the same level and running business near his/her hotel. The hotel might have to reduce their room rate just to be competitive, and doing it certainly gives a huge negative impact on the revenue. The occupancy rate might increase, but it does not mean a fortune if the average revenue becomes lower. As high revenue is every businessman’s aiming for, having lower occupancy rate would be better if the revenue gained is higher.
So, before running a website, a hotel manager should recalculate the room rate in order to gain more occupancy and more revenue. Nevertheless, it takes a lot of time and money to run a website. New hotel companies should consider the negative effects before developing a website for their hotels as the managing cost, promoting the website, and changing the room rate might charge more than the revenue gained. Nonetheless, with effective management and efficient cost control, running a website could drastically increase one hotel’s occupancy rate and revenue.
Work Cited Gilbert, David C. , Dominic W. Beveridge, and Liz Lee-Kelley. “Electronic Distribution of Hotel Rooms– An Exploratory Study of the European Hotel Industry. ” Journal of Hospitality & Leisure Marketing 12. 3 (2005): 45-61. Academic Search Premier. EBSCO. Web. 5 Apr. 2011. O’Connor, Peter and Jamie Murphy. “A Review of Research on Information Technology in the Hospitality Industry. ” citeseerx. ist. psu. edu/viewdoc/download? doi=10. 1. 1. 131. 2556. N. p. , n. d. , Web. 05/04/2011.