Hilton Group Plc, owner of the Hilton hotel chain outside the US, expects online sales to rise to 20 percent of revenue by 2007 from the present 3 percent as it steals customers from Internet travel agencies.
The London-based company is spending ?8 million (US$13.2 million) on creating eight new local Web sites to let customers in countries such as Germany and Japan to book rooms in their own language, said Tim Davis, a Hilton vice president.
Hilton, which posted a 25 percent decline in pretax profit in the first four months of this year, is investing in Web sites to tap demand from consumers who are increasingly using the Internet, rather than travel agencies, to book flights and hotel rooms.
Hilton wants to draw customers Expedia Inc and Lastminute.com Plc.
"Today, online third-party distributors have roughly half of all bookings made online," Davis, Hilton's senior vice president for e-commerce, said in an interview. "Researchers are predicting that in five years, there will be a 1 percent shift in favor of hotel brand Web sites." Hilton, which operates hotels in 78 countries, now shares an Internet site with Hilton Hotels Corp, the owner of US hotels such as the Waldorf-Astoria in New York.
The Web site generated about US$1 billion in revenue last year, Davis said.
While Beverly Hills, California-based Hilton Hotels also books rooms through Internet travel agencies such as Expedia, Hilton Group sells less than 1 percent of its rooms via such Web sites.
Hilton sells rooms using reservation systems such as WorldRes.com Inc and Dallas-based TravelWeb LLC, which was formed last year by Hilton Hotels, Hyatt Corp, Marriott International Inc, the former Six Continents Plc, Starwood Hotels & Resorts Worldwide Inc and Pegasus Solutions Inc to streamline the booking process for online travel sites.
Consumers are searching the Internet for the cheapest hotel prices as demand for travel remains subdued in the wake of the US-led war in Iraq, the outbreak of the so-called SARS virus in Asia and Canada, and sluggish economic growth.
Expedia, the world's biggest Internet travel agency, said last month that first-quarter earnings jumped more than fourfold. Chief executive officer Erik Blachford predicted earlier this month that online bookings will continue to climb as consumers compare prices on the Internet.
"Clearly third-party distributors have their place and they won't disappear," Davis said. "But if the best prices are to be had on our own Web site, then that's an attraction for customers."