The research experts have confirmed it: the Internet has transformed the travel industry. According to a recent Yesawich, Pepperdine, Brown & Russell survey, about 63% of leisure travelers and 69% of business travelers now use the Internet to plan some aspect of travel. Forrester Research projects that in 2004, the Internet is expected to generate nearly $53 billion in leisure travel bookings alone -- nearly 22% of the travel industry's revenues, while PriceWaterhouseCoopers expects Internet hotel bookings to double its share of total lodging demand through 2005, increasing from 13% in 2003 to 24% in 2005.

Are you getting your share? If not, be sure that your Internet marketing mix includes these elements:

• A well-designed, up-to-date website with great photos and clear calls to action, i.e., prominent placement of your toll-free number and "reserve now" buttons.
• Effective search engine optimization (SEO) for your website, so that it comes up reasonably well in the free search engine results.
• Good representation in major Internet directories, including those focused on lodgings as well as destination sites.
• Participation in pay-per-click Internet marketing, described in detail below.

What is Pay-Per-Click (PPC)?

Originated by Overture (originally GoTo), and now widely used by Google, Yahoo, and other search engines, in pay-per-click advertising, you pay only when someone clicks through to your website from another site. Advertising costs are determined by online bidding in a live auction format. You can increase or decrease your ads according to your needs and projected occupancy. With PPC advertising, results are immediate and trackable. While costs need to be monitored carefully, and bidding processes are sometimes complex, PPC is a highly effective way for lodging properties to generate reservations.

Which PPC sites are the best?

The best sites are those that deliver traffic at the least expense and greatest efficiency. If you can get 100 website visitors from Google Adwords at $.50 each, and 100 from Overture at $.42 each, and 100 from some other site for $.30 each, assuming all leads are equally qualified and program maintenance time is similar, then use the site that delivers qualified leads for the lowest total cost. Nevertheless, if your goal is to increase occupancy, you should participate in every site that delivers qualified leads at a price that falls within your budget.

Plan to spend some time studying and testing the keyword strings you want to bid on, and reading through the informational tools the PPC search engines provide. Sometimes a slight variation in the wording can save you a significant amount of money.

The newest kid on the Pay-Per-Click block is the newly launched website, Inns.com (BedandBreakfast.com's sister company), designed specifically to meet the needs of independent lodgings. No complex keywords are necessary for this lodging directory; bidding is based solely on the locations selected. Only independent properties and related lodging associations and tourist offices are allowed to bid; lodging chains and third party providers are not accepted, so individual lodgings are not competing against large chains. Similar to the sponsored results on Google, Overture, and Yahoo, you pay only when potential guests click through to your website. Unlike the general search sites, Inns.com listings feature photos, detailed descriptions, multiple links and icons, providing more qualified leads than other PPC options. In other words, the substantial amount of information displayed on Inns.com means that advertisers are less likely to waste money on travelers who click through to a website, then realize that this property is not what they wanted.

What is the difference between pay-per-click and pay-per-impression?

For pay-per-click (PPC) websites, your account is charged every time someone clicks through to your website; for pay-per-impression (PPI), your account is charged every time that page is served, whether or not the consumer clicks through to your website. The BedandBreakfast.com Featured Property Auction program is a PPI program; with bids starting at only a penny per page impression, it remains an extremely affordable marketing opportunity.

How do I place a value on my site visitors?

To determine how much you should be willing to spend for a PPC ad, place a dollar value on your website traffic, by determining what a visitor to your website is worth to your business.

• Conversion rate: To start, calculate your conversion rate. How many travelers visit your website before a booking is generated? If it takes 50 site visitors to get a booking, one divided by 50 is 2%. Next, determine how much revenue the average booking generated from your website is worth. Is the average booking from your web site one day? Two days? Three days? Is the average nightly rate for bookings from your website $100, $200, $300? Let's assume the average booking is for two nights at $200 nightly. This means the average booking represents $400 in revenue. It took 50 website visitors to generate that $400 in revenue. Divide the $400 by 50 and you'll see that each website visitor represents $8 in revenue to your property.
  
  Important note: You can decrease your acquisition costs by increasing your conversion rate. Using the example above, if you could get 2 (instead of one) of every 50 folks that visited your website to book a room, your conversion rate doubled, and your acquisition costs are cut in half.
• Marketing expenses: Next, determine the percentage of your gross revenues allocated to marketing costs; 5-7% is recommended. Newly opened properties and/or those in highly competitive markets may double or triple that number. Using the booking numbers noted above, our hypothetical property should be willing to spend anywhere from $.40 - $1.20, perhaps even up to $1.80, on a PPC basis to get folks to their site, or 5-20% of the $8 noted above.
• Customer acquisition: If you have a good rate of repeat and referral business, acquiring new customers generates additional business when they return to your property and/or refer others. In other words, if 20% of guests return or refer a friend, you are enhancing your advertising expenditures.
• Look-to-book ratio: The higher your conversion rate, the more you can afford to bid. If your conversion rate is unsatisfactory, consider these factors:
• Ad location: You may be advertising in another region, in the hopes of changing a traveler's mind (i.e. running an ad for Miami or Fort Lauderdale on a Key West page). If the bid cost is low, it's probably worth it, even if the conversion rate is below your usual average.
• Website update: If your clicks-throughs are not converting to bookings, take a hard look at your website. Are the design, photography, navigability, content, and/or ease of booking competitive? Do you offer online bookings? An availability calendar? Toll-free number? Do you respond promptly to email?

Your goal is a balanced Internet marketing plan that brings you the highest revenues from the largest percentage of website visitors. The more lookers you can convert to bookers, the higher your occupancy, and the more competitive you can be in terms of maintaining the top positions on the pay-per-click websites that bring you business.