August 2012 – By John Hach, Travelclick
As new online hotel marketing opportunities emerge, it is imperative that hoteliers not only stay abreast of best practices, but also avoid common mistakes. Outlined below are five common mistakes and five great opportunities that hoteliers can use to develop strategies that will maximize conversions and achieve greater long-term profitability.
1. Thinking marketing is always an expense.
Viewing marketing solely as a cost, is an expensive mistake. This is especially true when hoteliers fail to consider comparative cost measurements to other online channels. For example, when it comes to costs such as third party distribution services like flash sales, it’s important to always factor in the total expense of these services and the value of the reservations they drive.
For decades prior to the arrival of the Internet, the travel industry maintained a standard third party distribution cost model of compensating travel agents with a 10 percent commission. Today, third party distribution costs can range from under 10 percent to as much as 50 percent. When analyzing reservations as a return on investment, hoteliers need to take into account how much equivalent commission it took to book the room and understand the actual net income.
“Flipping” distribution expenses into return on investment calculations helps hoteliers understand the sometimes hidden cost of third party distribution. It’s important to avoid mistakenly viewing third party distribution services as income without taking into account the total expense of the reservation. For example, a flash sale site at 50 percent commission equates to a 2-to-1 ROI. When looking at this figure in terms of advertising, hoteliers would consider a 2-to-1 return too low. In actuality, this level of return has a greater potential to drive long-term guest loyalty, which equates to property direct bookings that have the opportunity to generate higher returns over time.
Most third party distribution services involve a hotel receiving income for a transaction, as opposed to the typical marketing expenses where a hotel pays to acquire reservations through advertising. “Flipping” third party distribution costs into ROI calculations provide savvy hoteliers the opportunity to quickly and easily compare and contrast the real cost of guest acquisition. When driving your marketing efforts and analyzing your expenses, key considerations should not only include looking at your net income in comparison to your costs, but also include seeing your expenses as a way to build customer loyalty. Taking into consideration short-term marketing expenses as a way to foster a strong following amongst your guests, rather than ‘renting’ guests through third party distribution services is a key driver in achieving long-term profitability.
2. Treating mobile like every other online channel.
The rapid evolution of the mobile channel requires unique expertise and dedicated management. Mobile websites require distinct user interfaces that are optimized for the hand and not the mouse. Advance reservation patterns on mobile devices are different than traditional online channels and require dedicated revenue management oversight.
Conversion studies show each additional click or second of response time on a mobile device can decrease conversion up to 50 percent. Combine this information with current statistics showing over 1 in 5 travel reservations start on a mobile device, and there is no doubt of the need to allocate dedicated resources and funding to mobile. In addition to distinct user interface design for smart phones and tablets, there are other imperatives for mobile; such as tracking, revenue management and device specific navigation. Each of these imperatives creates opportunities for competitive advantage or channel loss.
Start your mobile strategy with specific measurements for mobile traffic, abandonment, conversion and advance reservation time. Be sure to study and benchmark competitive properties with similar characteristics. Choose a supplier with dedicated expertise in mobile hospitality ecommerce solutions. Doing so creates one of the best opportunities for short term payoff in 2013 and beyond.
3. Managing call center operations as a necessary expense.
Do you agree with the mobile channel opportunity? Do you want to create additional competitive advantage?
If you answered yes to both questions then get ready to create a business case to invest in your call center. Doing so will enable you to leapfrog your competitors. Why? The answer is really quite simple.
Call centers continually drive some of the highest average daily rates to hotels. Additionally, up-sell opportunities are common within the call channel environment, which have the potential to deliver premium on property revenue, and a truly unique guest experience. Managing call center operations solely as an expense is nearsighted and greatly reduces the required investments in staff training, call responsiveness and other proven call center best practices that drive premium direct incremental revenue to your property.
Most importantly, we’ve entered into a sustained period of servicing consumers who are device agnostic, always on and demand instantaneous access to your hotel. Within a second they want questions answered with an intelligent and engaging conversation. One minute they’re on a desktop and the next second they’re on a mobile device. Capturing a prospective guest’s intent when they want to book a hotel room, especially a large room or suite, is well worth a call center investment. The payoff is high revenue bookings captured through quality guest dialogue with your well-trained and motivated reservation team of subject matter experts.
4. Approaching social media in a silo.
Social media requires broader marketing practices inclusive of search engine optimization, reputation management, customer satisfaction and operational fulfillment.
If you only take away one best practice from this article, please make it that your social media investment is adequately funded in 2013 and beyond. This emerging best practice ties social media commentary into guest reputation management.
What exactly does this mean? For starters, it means taking a closer look at your guest satisfaction comments. What are previous guests saying in their post-stay comments that are similar to your online user reviews? These commonalities are extremely important in leveraging resources to improve your hotel’s guest experience. Most consumers realize online commentary can be unfairly biased and extremely harsh. Over reacting to one-off social commentary isn’t a response; it’s a knee jerk reaction. Take time to correlate all guest commentary, with consideration to weigh feedback from your high value frequent guests. Doing so enables hoteliers to focus and prioritize resources on their most pressing and important guest experience enhancements.
5. “Last Click” return on investment measurement.
Today’s consumer is always connected, and always online. Narrowly focused hoteliers spend too much time scrutinizing ROI calculations without taking into consideration broader methods of customer acquisition. More than ever, hoteliers need to take a 360 degree approach, and embrace holistic marketing best practices.
The end game is to allocate sustainable marketing budgets that aggressively communicate a hotel’s value proposition throughout all major online channels. This is accomplished in conjunction with taking occasional risk and investing “beyond the immediate ROI” to create better awareness for your hotel within both consumer and travel agency channels. As stated earlier, even relatively low ROI advertising campaigns have value when they change client or travel agent long-term behavior.
How do hoteliers know when their marketing programs improve profitability and are considered best-in-class? The answer is by creating honest benchmarks that are regularly reviewed with key staff and suppliers. It’s not about one advertising campaign, or one guest’s comments. Rather, it’s about developing a comprehensive set of measurements that ultimately demonstrate improvements both in profitability and guest satisfaction.
Increasing property direct bookings and driving premium average daily rates are long-term strategies. Creating and sustaining these advantages involves dedicating internal resources and selecting external partners who are aligned with how to avoid making common mistakes and are focused on creating a meaningful competitive advantage.
John Hach has more than thirty years of travel industry ecommerce experience and manages TravelClick’s Global Distribution Systems travel agent media products. TravelClick (www.TravelClick.com) is the leading provider of revenue generating solutions for hoteliers across the globe. TravelClick offers hotels world-class reservation solutions, business intelligence products and comprehensive media and marketing solutions to help hotels grow their business.
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