NB: This is a viewpoint of Jason Price, executive vice president at HeBS Digital.
Building a direct revenue channel has become paramount to any other marketing effort. And the hotel website is a critical component to selling room nights, preserving rate, and building market share.
We’ve seen the pendulum shift to and from the bargaining power of buyer and supplier, a constant push and pull between OTAs and hotels. Scholars of Porter’s Five Forces take note.
Generation X and Millennials, the next generation of hotel owners and marketers, are digitally savvy and have begun reducing the marketing spend on print, radio, television, and even call centers, and have opted for a nearly all digital marketing strategy.
For many hoteliers, the hotel website drives as much as seventy percent of all hotel revenue. While the previous generation of hotel owners may have looked to the web as an experiment, a gimmick, or at most some incremental business, the next generation sees necessity and the future.
The patriarch of a family-owned hotel in midtown NYC shared a story about his youngest son, who, while in grade school fifteen years ago, purchased a domain name for $8.95 on GoDaddy.
Today that domain name has become a lucrative asset responsible for processing over $45 million a year in direct revenue.
(R)Evolution
But the website is only the beginning. Chris Anderson of MIT and editor of Wired Magazine wrote a 2010 article titled: The web is dead. Long live the Internet.
Anderson explains that the traditional web browsing that began in 1995 is a passive use of the web quickly being replaced with active media and push data through mobile apps and social connectivity.
Jim Lecinski of Google in his book Zero Moment of Truth describes that because of interconnectivity with the web we are all part of a conversation even when we may not be aware of it.
For example, a friend’s hotel experience shared on social media may influence your decision-making process and in turn may impact your purchasing decision, all during the normal course of checking your smartphone.
The internet has become part of our DNA and is a major economic force in the nearly $1 trillion global travel marketplace.
Travel has always been a data-driven business and online is no different. Hotel marketers increasingly rely on web analytics, web traffic and web conversion reports, and other digitally driven metrics to evaluate overall performance.
Hoteliers segment distribution into categories: web-based, call center, GDS, group business. Within the web-based category the world is divided into direct versus indirect.
Data is further segmented by desktop, mobile, and tablet and from there by customer segmentation, by geo-location, and even by time of day. The depth of intelligence is phenomenal and grows deeper as the industry evolves.
More information can be gleaned about your customers and where the revenues are to be made than ever before.
New roles
The role of revenue manager and marketing manager have blurred as both roles are responsible to maximize revenues. The industry has seen a rise in channel managers as a job class and a new breed of hotel general managers more accountable to the bottom line.
They primarily use data to drive contracts with the OTAs and to formulate a direct sell strategy. In many instances the toughest competition is not the hotel across the street but the OTAs and indirectly their own hotel on the OTAs.
Today’s hotel marketing mix looks a lot different than in the past. The cost of selling has not changed but there are new major players and market forces dictating the distribution model. Today’s hotel marketer must factor these realities into his every day practice.
Here is a cost summary:
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The direct online channel is a significant revenue source. It is the first, and for some the last, touch point ever with a potential customer.
The hotel website is a means to create new customers, convert the undecided, retain the existing, and reward the loyal. It is a tool to up sell, cross sell, and repeat sell.
The mobile website may capture short stays with an under-24-hour booking window, a tablet device may be used to accommodate the dream stage when planning on the couch, while the desktop at the office is used for various things from scouting reviews to completing the transaction.
The bottom line is exactly that: the influence of the internet directly impacts the hotel’s bottom line and nowhere is this greater than through the direct channel.
Reality
More hotel professionals understand the value of the direct channel. At the executive level management considers the online assets in their strategic acquisitions.
CFOs closely scrutinize payments to OTAs. The hotel marketer is reshuffling the marketing mix to in order to accommodate more toward the web. Overall there is an elevated level of sophistication on the questions we receive at HeBS Digital.
- How does my brand compare with the comp set online?
- Where are my greatest gaps in online marketing and distribution?
- How can a single property grow its market share online, build a loyal following, and exploit opportunities in SoLoMo?
- The opportunities abound but they also present significant, yet exciting, challenges.
So without a doubt, hotel marketing has become much more complicated now more than ever. But if you are nostalgic for those simpler times then I have to ask, where was the fun?
NB: This is a viewpoint of Jason Price, executive vice president at HeBS Digital.
NB2:Luxury hotel sale image via Shutterstock.