2.2% - a closer look into hotel conversion rates

What is the average conversion for a hotel website? 2.2%. That's according to a recent Fastbooking study. The UK firm 80 Days, in an extensive report titled "The great unanswered digital questions of hoteliers" came to a similar conclusion: 2% percent.

Both studies were conducted on hundreds of hotels, different in size, star rating, and location. Results, therefore, are pretty reliable, but this does not mean that if your hotel is performing below this percentage you are doing a mediocre job, au contraire! When it comes to hotels, in fact, there are dozens of factors and variables that can cause this number to fluctuate wildly.

No such thing as an industry average

In the article mentioned above, Jean-Louis Boss, Fastbooking chief marketing & digital services officer, writes:

“One shouldn’t be fooled into trying to meet an industry average. Instead one needs to understand the factors that make up those rates and try to improve each point”

I fully agree. Take into consideration that conversion not only has to do with the number of finalized transactions on the booking engine but with the number of website sessions as well, meaning that the more traffic your website has, the lower your conversion rate is likely to be.

The website sessions paradox

In my career, I have been a consultant for hotels with very high positions in review sites. One, in particular, ranks #1 on TripAdvisor out of 1,200 hotels in its city, and it has been there for a few years now. This fact alone positively influences its official website traffic, although this traffic does not come uniquely from users willing to book.

"With great powers come great responsibilities", said (probably) Voltaire or (less likely) Churchill (the paternity of the quote is still debated to this day).

You can imagine how many nosy users, travel bloggers or envious competitors check its website out of mere curiosity. Its results, if I look at the revenue alone, are great, but conversion stagnates at 0.10% (more than twenty times lower than the Fastbooking and the 80 Days analysis) and no matter how much I optimize its distribution mix and its advertising strategy, the number is unlikely to change.

I had the same “problem” with a hotel twenty kilometres south of Athens, Greece: it owns one of the biggest wellness centres in southern Europe, and half of the website users are locals looking for its famous thalassotherapy treatments.

Average conversion is 0.7%, but if you filter its spa page traffic out, it spikes to 1.5%. You can run an empirical experiment yourself: monitor your conversion rate the week after sending out the yearly Christmas greetings newsletter. It drops dramatically.

Is it a bad thing? Of course not, it only means that your website traffic is up. That is why I prefer to play it safe when it comes to absolutisms on the hotel conversion rate subject.

The 80/20 rule and conversion by source

Now, according to FastBooking, 20% of its hotels have a conversion rate of 5.6%, over twice the average. Again, this data is just simple indicators and should not be taken as a general rule or an industry standard, but they give a pretty interesting view of our over-fragmented industry.

The sources of traffic seem to play a major role in conversion rate: Google Hotel Ads has a remarkable 4.17% average conversion rate, more than twice Adword’s (2.05%). Not all metasearch are created equals, though, and TripAdvisor gets the bronze medal with a mere 2.34% conversion rate.

Organic search, not surprisingly, is slowly but steadily dropping: with natural SERP results pushed further and further down by paid ads and universal results, your precious SEO tactics produce only 1.55% conversion rate, less than Trivago, a channel known for its not-always-amazing ROI.

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Desktop versus mobile[/caption]

It's the end of desktop as we know it

The Fastbooking article then analyzes conversion by device. As you may already know, in late 2016, internet usage on mobile devices exceeded desktop's for the first time in the history of the web, though the conversion trend did not move at the same speed. Mobile conversion is, de facto, only 0.8%, 1/6 of desktop conversion. The lack of a centralized, user-friendly and standardized mobile payment system is one of the crucial industry knots that we are still unable to untie, and this partially explains these unencouraging results.

The Occam's Razor: location and rates

When looking at location, the study shows rather predictable results: properties in capital cities get on the podium (2.56% conversion rate), almost one point more than seasonal touristic destinations (1.78%). Similar results are provided with conversion by rate: properties with daily prices below 150€/night have a conversion of 2.74%, while more expensive properties drop down to 1.35. Equally unsurprisingly, the study points out that hotels can increase their conversion up to 67% by simply offering the best available rate on the official website.

The light at the end of the funnel

The study takes then an interesting turn when it breaks down the traveler online booking journey: 42% of users checks the hotel booking engine for availability and rates, 9% moves forward into the booking process and only 2.2% finalizes the transaction. This cast an eerie shadow over the common booking engine user experience and reinforce the need for a better and frictionless check-out experience.

UX, speed and widgets

The study ends with some general tips on how to optimize the user’s booking experience, by offering a clean and lean design, emotional impact and fast loading pages. It then highlights the increasingly relevant role that third-party widgets play in today's conversion landscape: from price comparison tools (average 30 percent of conversion increase) to review widgets (+15%) and live chats (+15%), these widgets are a strong ally in your quest for better conversion.

Conclusion

There will never be a unique answer to the one-million-dollar "what is a good conversion" question, we simply have to deal with it. Variables at play in the Hospitality industry are way too many to agree on a percentage, nevertheless, studies like the one published by Fastbooking or 80 Days are essential to (at least) understand if we are moving to the right direction.

And, by the way, some people attribute the "With great powers come great responsibilities" to SpiderMan.

I like to think they're right.