August 22, 2012

Maximizing Your Hotel's Online Revenue

August 2012 – By John Hach, Travelclick

John HachIn a rapidly evolving market, hoteliers are constantly trying to master the art of selling the right room, at the right time, to the right customer— at the right price. Recent changes in travel shopping behavior have caused a shift in the way in hoteliers utilize specific channels to create a powerful presence online. The following questions will help you understand how to effectively manage both online and offline channels to maximize your hotel’s revenue.

1. How much of a hotel’s marketing strategy should be online? Is there a formula for properly managing channels?
Forrester Research estimates that 32% of hotels’ revenue comes through online bookings. This includes bookings – bookings on a hotel’s specific website – and those made through online travel agents (OTAs) such as Expedia and Priceline. When deciding how much of your marketing budget should be spent online, it is important to first consider the percentage of revenue you are currently receiving. For example, if 30% of your revenue is from the Internet, a good rule of thumb is that you should reinvest 30% or more of your budget online.

The great advantage about marketing online vs. traditional tactics, like print ads or radio and TV spots, is the fact that real-time analytics are readily available. For example, you can see how many people clicked to a promotion, how long they spent looking at your properties photographs, and where else they went from there. The insight this data provides can be extremely helpful in targeting and then retargeting your digital marketing efforts. Online marketing programs such as display remarketing provide rich metrics including the added value of being able to target consumers that have visited your website in the past, but not yet purchased a hotel room.

2. Where online should hoteliers distribute? What are the options, and how can they effectively allocate inventory?
There are two key things to remember when making decisions regarding where to market and distribute inventory. The most important is to make sure you know your ideal customer: who they are and where they like to book. It is crucial to not only know what channel your high value client is active on, but also to ensure that these channels have adequate inventory. If your target client is shopping on Expedia, but the room he or she wants is allocated to your 800 number, there is a serious inefficiency there that should be remedied.

The second is to make sure you are allocating inventory on a balanced mix of online channels – that includes retail, merchant and opaque. Remember, online channels can not only help you reach your ideal customer, but they often can help you target the customer you may not have direct access to.

Retail channels are those that are unrestricted, where rates are open and available to everyone. Merchant channels are those with which the hotel has a preferred distribution agreement – it is a special relationship where the OTA benefits from special rates and discounts. With an opaque channel, the customer books a hotel room, typically at a discounted rate, but doesn’t know the name of the hotel.

Once you’ve made that inventory available, don’t just stop there! To help secure bookings, look for ways to extend value above and beyond rate. Certain amenities are perennial favorites and make a big difference in conversion. Consider offering a free internet package and late check-out options.

3. How important is mobile and how can hoteliers maximize their mobile presence?
Today, one in three local searches is done via a mobile device, and mobile Internet usage is projected to outpace desktop Internet usage by 2014. Advances in mobile technology are dramatically changing the travel experience, both during the travel planning period and the in-trip experience. Consumers are increasingly using their mobile devices to research travel, book rooms, and check into a property via Facebook or FourSquare. These platforms also allow them to share their experience in real-time.

Today, nearly every hotel should have a mobile optimized site. This does not mean creating a great website and hoping it looks good on smart phone. Customers want a user experience that is conducive to mobile searching and shopping.

Once the customer has made their mobile booking, hotels can use mobile technology to directly engage with travelers during their stay by integrating location-based offers from local attractions and dining. You can also connect with clients via SMS marketing campaigns. The engagement possibilities associated with this technology are endless!

4. What role does social media have in a property’s online marketing strategy?
Travel is becoming more social. People are using technology and social networks to tap into the wisdom of friends and family. Just think, would you choose to visit a hotel that a friend likes or a random property that no one you know has ever visited? For hotels, social media provides a tremendous opportunity to listen to, respond to and engage with existing and potential customers on a personal level. Enabling your customer base to connect with your property through social media allows you to capture and build relationships, and effectively create brand ambassadors. Remember, social media isn’t just about pushing marketing content on Twitter and Facebook: it’s about reputation management and having a conversation directly with your customer, as well as tapping into larger social trends. You can monitor chatter about your hotel, your city, or events in your area and participate in – as well as capitalize on – that online community. It is important to note that this is not ‘intern stuff’ – social media is a reputation tool that should be taken very seriously by your marketing team.

5. What online marketing channels should hotels not overlook?
With all the excitement around social and mobile, it is easy to overlook some of the more established marketing channels. A balanced approach is always the best approach, and there are three main marketing tools that definitely shouldn’t fall by the wayside.

First is the all-important GDS channel. Even beyond the fact that this is traditionally the channel that consistently delivers high RevPar, GDS can aid in helping you to increase bookings for date-specific need periods. Many travelers still book through travel agents, and having a presence on the GDS can help hoteliers get their fair share of bookings on this growing channel, which generates over 50 million annual bookings and $16 billion in revenue.

Second, paid search plays a critical role in driving direct bookings to a hotel’s website. While both organic and paid search are instrumental in cementing a hotel’s online presence, the vast majority of search engines’ revenues stem from advertising. The visibility granted by catapulting your website from page two or three on Google to the very first page drives more traffic to your site, ultimately translating into more bookings.

Lastly, display remarketing is a targeted tactic that allows search engines to show your ads to users who have visited your website previously. This allows you to focus attention on people who have already expressed interest in your property, but have not booked. Remarketing means that you’ll never be out of sight or out of mind.

About the author: John Hach is Senior Vice President, Global Product Management at TravelClick.

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