There was an obvious and substantial emphasis on ‘book direct’ marketing strategies in 2016, with hoteliers looking to drive more direct business via loyalty member-only rates, special incentives, unique packages found only on the hotel website and more.
NB: This is a viewpoint by Max Starkov, president & CEO, and Mariana Safer, senior vice president of marketing, at HeBS Digital.
In 2017, lowering distribution costs (the only cost driver hotels have control over), will be the only way to improve top line revenue and the bottom line. In most of the major markets, increasing ADRs, improving occupancy and RevPAR will not be easy.
But with the right focus and appropriate investments in digital technology and marketing initiatives, hoteliers can generate more direct bookings and decrease their dependency on the OTAs.
Here's the first five digital, technology and marketing resolutions all hotels should consider this year.
1 "Knowing that 2017 will be the year of smart data marketing, I will balance the use of CRM data with intent data (in-market) to engage, retain and acquire both past and future guests."
Every hotelier has access to more data than they realise, and they can use this data to build a digital marketing plan that reaches the right people, at the right time, on the right device, to win the booking.
This data is either in the form of CRM data - data about past guests - or intent data - data that tells us what people are planning a trip to a specific destination, and when.
On any given night, with an average of 15-25% of guests at a typical independent hotel being repeat guests, using CRM data is only part of the equation. Focusing on reaching guests who have not stayed at your property before but are actively planning a trip to your property’s destination will result in a much higher percentage of direct bookings.
Balancing the use of both sets of data – CRM data and intent data - in your digital marketing initiatives to engage past and future guests is called ‘smart data marketing.’
Watch this video, which brings smart data marketing to life:
Start by using CRM data, website analytics and marketing insights to create the targeting and customer segment objectives of your multichannel campaigns and marketing strategy.
Through this data you can extrapolate and build customer personas, which will allow you to understand your target segments’ motivations, online behaviours and passion points. Your “best guest” shouldn’t just be defined by past guest demographics, but by travel consumers who are in-market and willing to consider and book your property today. Intent data enables marketing campaigns to target and convert travellers who are in-market and have exhibited purchase intent.
Next, utilise in-market targeting throughout your marketing initiatives, including SEM, the Google Display Network, YouTube TrueView campaigns, travel ad networks that have access to first-party travel planning data, and programmatic advertising.
When possible integrate dynamic rate marketing to display the best available rates in your marketing messages for the travel consumer’s exact dates of stay, which will increase conversions and bookings.
Lastly, learn from your campaign results and continuously optimize your marketing messages, targeting, etc.
CRM data and intent data are integral pieces of any hotelier’s marketing strategy. If your strategy isn’t utilising real-time “in-market” targeting that reaches potential guests – travellers who have expressed intent to travel now or in the near future to your destination, you are missing the opportunity to expand and “replenish” your existing customer base on an ongoing basis.
Read more in our article, “Smart Data Marketing in Hospitality: The Secret to Maximizing Direct Bookings.”
2. "This year I will put implementing a “Direct is Always Better” strategy and lowering distribution costs at the forefront of my digital technology and marketing plan."
With supply predicted to exceed demand in many global markets in 2017, ‘book direct’ strategies are more important than ever. With flat or even negative occupancy growth, the only way to increase revenues is to shift from more expensive distribution channels, such as the OTAs, to cheaper distribution channels such as direct bookings.
The average direct distribution cost on a hotel website booking is 4%-4.5%, including ongoing website technology upgrades and content optimization, dynamic content personalisation, reservation abandonment programs, hosting, SEO, paid search, online media and retargeting, first-party and real-time data marketing, email marketing, social media engagements, consulting, etc.
Compare this to the hefty OTA commissions of 18%-25% for independent hotels, smaller and midsize hotel brands.
Except for distribution costs, hoteliers have very little leverage over the main cost drivers in hotel operations: labor costs, debt services, franchise fees, utilities and real estate taxes. Distribution costs, however, have been rising steadily over the last 5 years due to OTAs increasing market share by over 40% vs hotel direct bookings.
Many hoteliers, due to inertia or lack of understanding how the complex world of online distribution and marketing works, lack the strategy and drive to really focus efforts and resources on generating direct bookings. Most hotel properties do not designate clear responsibilities or an action plan on how they are going to achieve this, and they continue to operate at the status quo.
Hoteliers must focus on and invest smartly in their direct booking strategy, and shift share from the OTAs to the direct channel. How should they do this?
● Adopt a top-down ‘direct is always better’ strategy: include direct booking share benchmarks and objectives, employee responsibilities, performance compensation tie-ins and bonuses, guest “book direct” value adds, and more. This strategy may necessitate a big cultural shift on property but is well worth the effort.
● Cost of direct online channel distribution should be treated in exactly the same manner as OTA commissions i.e. as a cost of goods sold (COGS) and deducted from the gross room revenue before sales, general and administrative expenses are calculated. Recognizing direct online distribution costs as COGS will unleash the property’s ability to adequately fund the direct online channel efforts, boost bookings via the property website and drastically decrease OTA dependency. Lowering overall distribution costs will allow the property to fund renovations and product/services improvements, invest in human resources, and add a hefty chunk to the bottom line.
● Invest in the right tools to increase direct website bookings. These include:
- Reservation abandonment applications: with the average travel consumer going through 19 different touchpoints before making a booking, it is not surprising that 98% of visitors do not book when first visiting a hotel website. Reservation abandonment emailers and lightboxes that display “come back” or “book direct” messages entice users to complete the booking.
- Smart personalization: delivering real-time, relevant content leads to higher conversions as consumers have pertinent information placed right in front of them while they browse your website and look to make a purchase.
- Smart data marketing: (see #1 above) by utilizing both “owned data” (otherwise known as CRM data, which includes past guest data, website analytical data, etc) and layering intent data, hoteliers can effectively reach in-market users during the travel planning process.
- ‘Instant Rewards’ programs: especially for hotel brands that do not have an established loyalty program, this type of program allows website visitors to unlock real-time exclusive rates and promotions on the hotel website.
- A/B testing: testing variations of different elements of the website helps improve user experience, page performance, and most importantly, drive more conversions.
Hoteliers should also adopt an effective merchandising strategy to sell on value and not just on rate.
Another option is to start thinking about hiring a “distribution optimization manager” - a new on-property role which should be rewarded on the blended cost of distribution (OTA vs. direct) and incentivized to lower distribution costs YoY.
Read more in “Hotel Distribution Cost: The Only Cost Driver That Can Save Your Property’s Bottom Line in 2017”
3. "I understand that investing in digital technology & marketing provides me with a concrete roadmap to jumpstart my property’s direct bookings, and I will structure my 2017 digital technology and marketing budget in a way that generates the highest returns possible."
Hoteliers in general are notorious for under-investing in digital technology and marketing and being over-dependent on the OTAs. Here at HeBS Digital we have had many cases with our hotel clients when a multi-channel campaign or a digital marketing initiative is performing exceptionally well, with ROIs of 1500% - 2500% and up (which equals to a distribution cost of 4%-6.6%), and yet the property cannot allocate more funds to the campaigns and marketing initiatives due to budget limitations (in spite of the fact that they need the business badly).
It is extremely ironic that the most cost-effective bookings – from the direct online channel - are severely restricted by the property’s sales and marketing budget, while the most expensive bookings – from the OTAs with cost of distribution of 18% - 25% and higher, are not restricted and can grow exponentially.
This resolution makes it into the “Top Ten Resolutions List” every year because the hotelier’s digital technology and marketing budget provides the foundation necessary for a property to succeed in driving increased revenues year-over-year. If generating direct website bookings are not prioritized or budgeted properly for, the performance of the property as a whole is at risk.
Prioritise generating direct website bookings, budget the right amount (most hoteliers should spend a minimum of 4-6% of their total room revenue on advertising/marketing efforts, of which at least 75% should be spent on digital marketing), and keep the digital marketing budget fluid and dynamic to accommodate changes in business-needs and new opportunities that become available.
We recommend organizing your overall budget into these three categories:
- Year-round direct response marketing: this section of the budget is comprised of evergreen, high revenue-generating initiatives that increase direct room bookings such as SEM, SEO, GDN (Google Display Network), smart data marketing, including programmatic and dynamic rate marketing initiatives, email marketing, online media and retargetting, and website conversion enhancements such as Reservation Abandonment Applications and personalisation on the hotel website.
- Seasonal and targetted multichannel marketing campaigns: with one cohesive theme, these campaigns are focused on seasonal and occupancy needs, filling rooms around when the property needs it most, as well as special events/holidays, and reaching key customer segments such as leisure travelers, family travelers, business travelers, meeting, wedding and event planners, etc.
- Technology assets, strategy and operations: this part of the budget is the backbone of any hotelier’s digital technology and digital marketing strategy; without properly investing in these line items, any marketing initiative launched will not succeed. This includes website revenue optimization consulting, a responsive website, content management system technology, analytics, and cloud hosting/CDN.
Here is a snapshot of the recommended 2017 digital technology and marketing budget:
Read more in "The Smart Hoteliers Guide to 2017 Digital Marketing Budgets".
4. "Mobile-first will be a common 2017 theme throughout my digital technology and marketing investments as I know travel consumers are turning to their mobile device more and more to plan their hotel stays."
With over half of travel-related searches on Google now coming from mobile devices (Google), and mobile/tablet bookings increasing 70% YoY (HeBS Digital portfolio), it makes sense to embrace the mobile-first marketing approach in everything you do, from the hotel website to your marketing strategy.
According to Google Research, nine out of ten people are “cross-device” internet browsers and researchers, using multiple devices sequentially (moving from one device to another at different times). Smartphones are by far the most common starting point for sequential activity: 65% of users start their research on a smartphone and 60% continue on a desktop device.
Consumers on their mobile devices are driven by immediacy, and hoteliers need to be able to address their needs in the moment.
Properly invest in a “mobile-first” strategy:
On the hotel website:
A responsive website that offers the optimum user experience on the desktop, mobile and tablet is a must, and fast download speeds are key to not frustrating your website visitors. As a result of last year’s algorithm update from Google, if a hotel website is not easy to use on mobile, Google will penalize the site even further by ranking it lower on its mobile search pages.
It is important to carry out a website technology audit to make sure your property website’s content management system (CMS) is engineered to comply with the latest Google updates. Using industry-leading technology as the backbone of your hotel website is the best way to ensure your site stays compliant with Google’s mobile-friendliness requirements.
Similarly, an SEO technology audit is vital to ensure your website complies with Google’s mobile search requirements. Hoteliers need to consider link structure, resizing of images, reconfiguring design elements and replacing Flash with crawlable, search-friendly code.
And specifically looking at download speeds, especially on mobile devices, is recommended as it is another category which Google's mobile algorithm takes into account when ranking your page.
In digital marketing campaigns:
When you think about the process for planning travel, it’s never a one-way street. Travel consumers might start with a Google search, watch a video, go to the hotel website, check reviews, and eventually make a booking. People are going through so many different touch points, and there is no particular order. You have to be ready to stand out when someone makes their way to your website in their journey.
The foundation for building effective digital marketing campaigns is finding the best marketing initiatives based on the customer segment you are targeting, and reaching that target segment at every touch point of their online travel planning process, which often starts on the mobile device.
For SEO, consider what kind of search terms people are using ‘on the go’; in your SEM ads, create mobile ad copy with ‘last-minute’ messaging and click to call; for email marketing, make sure your email marketing pieces are fully responsive and to the point; and for online media campaigns, make sure your banners are in HTML 5 and render on mobile devices. These are the minimum requirements for making your campaigns mobile-friendly.
Remember to also consider what KPIs you are measuring to determine the success of your mobile campaigns. Your property will receive more phone calls from these mobile campaigns, and focusing on your usual direct conversions and website bookings on their own will not give you the big picture.
5. "I understand my travel consumers are going through a planning and purchasing journey spanning multiple devices and touchpoints, and will implement multichannel marketing campaigns to reach them across the various touch points of that journey."
On average, the travel consumer goes through 19 different touchpoints before making a booking. Each one of these touchpoints is an opportunity for hotels to build a brand connection, influence intent, and be there for every step of the way.
The era of launching one-off marketing initiatives is over. Focusing on paid search, but ignoring your search engine optimization strategy, or not advertising cohesive marketing messages on the Google Display Network; or focusing on CRM data but ignoring intent data (see smart data marketing above) will not effectively reach your target audiences or produce a high return on investment.
The days of partnering with several agencies or companies to run various campaigns (one vendor for SEO, another for SEM, a third for Online Media) are over. This approach is sure to cause a lack of cohesion among campaigns, sub-par results and flawed reporting.
Multichannel campaigns are one of the most effective ways to boost direct bookings, build one-to-one relationships with current and future guests, and ultimately, encourage repeat guests throughout the customer lifecycle.
To build a successful multichannel campaign you must first determine your property’s business needs and key target markets to ensure your marketing messages will resonate with your audience.
You then need to map the path to purchase, choosing initiatives that will reach your target audiences throughout their travel planning journey. This will most likely include SEM, smart data marketing, email marketing and more.
A general rule of thumb for a successful multichannel campaign marketing mix is 30-40% investment in core revenue drivers such as SEM, GDN, email, etc, 20-30% in display and social media advertising initiatives, 10% in organic campaign content, and 20-30% in campaign creative.
.Click here to read “How to Jumpstart Your Hotel’s Direct Bookings through Multichannel Campaigns.”
NB: This is a viewpoint by Max Starkov, president & CEO, and Mariana Safer, senior vice president of marketing, at HeBS Digital.
The second part of the article, with five more resolutions for hoteliers, will be posted on Tnooz next week. It originally appeared on the HeBS Digital blog and is republished here with permission.
NB2: Image by Kentoh/BigStock.com.