Both questions now find their way into much social discourse because of the

explosive growth in the use of “social media,” driven by what appears to be an

almost insatiable desire to “stay connected.” But how have these new forms of

staying connected influenced consumer choice when it comes to evaluating and

purchasing travel services? The results may surprise you.

 

As revealed in the most recent travelhorizonsTM survey, almost 6 out of 10 (59%)

of active travelers have visited a social networking site. Their most popular activities

on these sites include uploading photos/videos (49%) and rating products or services

(46%). Roughly one-quarter have visited a chat room and/or posted content to a blog.

Nearly half (46%) check their sites at least once a day.

 

Facebook enjoys the highest incidence of visitation (almost half of active travelers

have visited, and fully one-third have posted a personal page), while roughly

one-quarter of active travelers have visited MySpace. Both percentages are up

significantly from just one year ago. And when it comes to searching social sites

for content, the incidence of visiting YouTube eclipses that of TripAdvisor by a

wide margin.

 

But, to what extent does the content found on these sites influence consumer

choice when it comes to the evaluation and selection of travel service suppliers?

Right now, not much, because site visitation for travel planning purposes remains

quite low. By way of illustration, only 1 in 10 facebook users seeks advice about

either destinations or travel service suppliers, and just 1 in 20 has joined a

community of users who share common travel interests:

That’s today, however. How quickly this may change is a matter of considerable

speculation given the remarkable rate of penetration these sites have achieved in

such a short period of time. Yet, for now, consumers continue to seek and respond

to information about travel services and suppliers from more established offline

and online media sources.

Last year, Jackie Siddall described in a blog post how a message she received on Twitter prompted her to buy a folding kayak for around $1,900. The vessel was one of about just 600 sold in 2009 by Folbot Inc., a small retailer in Charleston, S.C. "You can't buy that exposure," says the firm's co-owner, David AvRutick, who claims the incident speaks to the value of using social media for marketing.

 

But Mr. AvRutick's experience may be the exception, rather than the norm. In its short lifetime, social media—services like Facebook and Twitter—have become popular marketing tools for small firms due to the low cost and easy-to-use format. Some entrepreneurs say they're highly effective, but new evidence suggests otherwise.
"The hype right now exceeds the reality," says Larry Chiagouris, professor of marketing at Pace University's Lubin School of Business.

 

Last year, social-media adoption by businesses with fewer than 100 employees doubled to 24% from 12%, says a survey released in January of 2,000 U.S. entrepreneurs from the University of Maryland's Smith School of Business and Network Solutions LLC, a Web-services provider in Herndon, Va.

 

Meanwhile, a separate survey of 500 U.S. small-business owners from the same sponsors found that just 22% made a profit last year from promoting their firms on social media, while 53% said they broke even. What's more, 19% said they actually lost money due to their social-media initiatives.
"It could harm you if you end up inadvertently saying something stupid, offensive or even grammatically incorrect," says Mr. Chiagouris.

 

A business owner's time and energy spent on social-media marketing—Folbot's Mr. AvRutick says he dedicates about an hour a day—could also go to waste. Fifty percent of the latter survey's respondents say it requires more effort than expected.

 

To gain positive results, entrepreneurs need to regularly interact with consumers through these sites and not simply create static profiles, says Jacob Morgan, co-owner of Chess Media Group Corp., a consulting firm in San Francisco that specializes in social media. Some small businesses opt to hire outside firms to handle their social-media marketing or advise them on the best ways to use it, but such services can cost hundreds of dollars a month.

 

For Chris Lindland, owner of Cordarounds.com, an online clothing retailer in San Francisco, converting consumers into customers using social media has required a "patient investment."  "My business has been visited millions of times, but I haven't made millions of sales," says Mr. Lindland, whose four-person staff spends up to 90 minutes a day managing Cordarounds's accounts on Twitter and Facebook. "People have told me they finally got around to buying from my business after reading about it on social media two years ago."

 

Some entrepreneurs say they've found early indicators that their social-media efforts are paying off.  "The people coming from social media have been buying," says Stephen Bailey, who oversees social-media and other marketing initiatives for John Fluevog Boots & Shoes Ltd., a footwear and accessories retailer in Vancouver with about 100 employees.

 

As evidence, Mr. Bailey points to a 40% increase in online sales in 2009—the first full year the company engaged consistently in social-media marketing—compared with 2008 when it was just getting started. He says he can draw a correlation between those figures and social media by looking at traffic to the company's Web site from Twitter using Hootsuite, a free Twitter-management service from Invoke Media Inc. Other free services that track Web traffic from social-media sites include Google Analytics, CoTweet and Lodgy.

 

"The second we started using social media, it became one of the biggest drivers of traffic outside of search engines," says Mr. Bailey, adding that his research shows these visitors spend as much time on Fluevog.com as those who come from other online destinations. The company doesn't invest in paid advertising on social media,

he adds.

 

Other business owners are soliciting customer feedback and monitoring what's being said about their firms to determine the impact of sites like Facebook and Twitter on consumers' buying decisions.

 

Mr. AvRutick says he regularly searches Twitter for tweets that mention kayaking and then sends messages to the people who wrote them. He connected with Ms. Siddall, the blogger who credited Twitter for exposing her to Folbot, after she posted a tweet that mentioned she wanted a kayak.

Ms. Siddall, a 37-year-old senior designer for Idea Couture Inc., a creative-marketing agency in Toronto, says she was unaware that folding kayaks even existed until she heard from Mr. AvRutick. She spent the next few months researching different brands, which included perusing a networking forum on Folbot's Web site about kayaking.

 

Ms. Siddall says she later asked Mr. AvRutick via Twitter if he would send her some photos of her folding kayak being made, and he provided about 20. After it arrived, she says she decided to write a blog post about the whole experience. "I didn't find the same level of information or communication online from the other brands," she says

 

Needleman, Sarah E. 2010. Entrepreneurs Mixed on Social Media .

Wall Street Journal, March 16, Section B

 

The swine who run online travel agencies are once again trying to screw the hotel industry.

 

Under the innocuous title of The Internet Travel Tax Fairness Act, the OTAs are quietly attempting to slip a bill through Congress that would transfer a portion of their tax liability to the nation’s hoteliers.

 

“It’s completely outrageous,” says Marlene Colucci, executive vice president, public policy, for the American Hotel & Lodging Association. “If you look at the fine print of this bill, it’s providing tax relief for online travel agencies at the expense of hoteliers.”

The proposed legislation boldly calls for a federally mandated exemption for OTAs on the taxes they should pay to local jurisdictions on the spread between wholesale hotel room prices (what they pay to the hotels) and the retail prices paid by consumers. Should this legislation become law, local tax officials would undoubtedly turn to hotels to make up the shortfall in tax revenues. (Another, even more egregious version of the bill would exempt OTAs from paying any state and local room taxes.) And to add insult to injury, Colucci says another provision of the legislation would prevent hotel companies from setting up their own online travel agencies in order to gain the same tax advantages the OTAs would have.

 

If the situation is a little fuzzy for you, here is an example of how the system currently works: A hotel wholesales a guestroom to an OTA for $160 a night. The OTA sells it to a consumer for $220, $200 for the room and $20 for a 10-percent local occupancy tax. But instead of remitting $20 to the local taxing organization, the OTA only pays $16, basing the tax on the wholesale price of the room. The proposed legislation would prevent taxing jurisdictions from attempting to collect the extra $4 from the OTA. In that case, all know cash-strapped cities, counties and states will go after the hotels for the difference.

 

“This is not an issue for Congress, but one for states and localities to decide,”

says Colucci. “It’s a question of tax fairness: Your tax liability shouldn’t suddenly

become mine.”

 

The hotel lobby headed by Colucci is working feverishly to shine light on this issue, which the OTA lobbyists hope gets tacked onto some other bill and passes before legislators understand the issues involved. If the proposal can’t be squelched immediately, Colucci at least wants Congressional hearings on the bill.

In the meantime, she and other industry advocates are asking hoteliers to buttonhole members of Congress to voice their opinions on the issue. A phone call or personal visit is best, but if that’s not possible a letter will do. The AH&LA crafted a sample letter members of the hotel industry can use to communicate their views.

Please take action today.

Or go to American Hotel Lodging Association Website for additional information.