Armed with nothing more than a
computer, a Web site and an interactive CRM program, today�s smaller hotels
are slaying the larger giants when battling for online reservations, e-marketing
visibility and repeat bookings |
By Don Hay, October 2005
This summer I had the good fortune of sitting with some of the best
and brightest minds in hospitality technology, from the smaller hotel chains
and management companies to fellow service providers and some of the biggest
brands in the industry. What we discussed � or should I say, debated --
was the viability of communicating with guests through email and Web promotions
to drive incremental revenues. What I learned was that the �little guy�
or small hotel operator/management company is better armed today with online
Customer Relationship Management arsenals and strategies than are the �big
boys.�
The goal of any good email marketing campaign is to get guests to spend
more money at the hotel�whether it�s an incentive to up-sell services or
specials for a pending reservation or simply to entice a guest to make
a future booking. The No. 1 problem for hotels looking to do email marketing
is that most lack the ability to entice guests to provide their email address.
In the case of larger hotel chains, I learned that some are driven by corporate
CRM initiatives that target the loyalty club members only, while others
view email marketing as a privacy violation altogether, concerned that
their e-marketing pieces may be viewed as SPAM and simply opt not to market
online altogether.
What the smaller hotels have come to realize is that by partnering
with a CRM provider, they can not only capture guests� emails directly
from their property-management systems or directly from their Web sites,
but they can immediately send email confirmations to guests and up-sell
to those guests prior to arrival. The result is an increase in incremental
revenue up front and an increase in repeat business and guest loyalty on
the back end.
Therefore, email marketing is effective when put in front of the right
people at the right time.
Todd Maxwell, Director of IT at Larkspur Hospitality, said that Larkspur
is in favor of email marketing and said the company is currently looking
for a CRM partner. Larkspur Hospitality is a rapidly growing hotel company
that owns and operates more than 20 hotels comprising three brands in areas
of Northern California and the Pacific Northwest. Their largest hotel has
170 rooms. According to Market Metrix, an independent hotel industry guest
satisfaction consulting firm, Larkspur Hospitality hotels have consistently
exceeded the industry average of the top five percent of U.S. hotels for
guest satisfaction.
�We are looking for a CRM partner to help us launch our email marketing
strategy in order to enhance the relationship we have with our guests,�
Maxwell said. �We are eager to see the high conversion rates and increased
online bookings generated from these types of campaigns.�
Maxwell said he believes that privacy could be a potential issue, but
providing an opt-in or -out option shows guests that you respect their
privacy.
�At Larkspur, email addresses are requested at the time a reservation
is made,� Maxwell said. �Guests also have the opportunity to sign up on
our websites to receive email marketing promotions. Quality data capture
is key to any email marketing strategy.�
Proof is in the numbers
As a provider of e-marketing services for hotels, I can statistically
prove what Maxwell is saying, and that is: e-mail campaigns are generating
high �open� rates and �click-through� volumes for hotels. On average, 34
percent of all email blast recipients over the past six months have opened
the promotional piece sent by Digital Alchemy�s customer hotels. Up to
24 percent of those clicked through to a specific amenity or property feature
or to the hotel�s shopping page. This success rate is more than 5
times the 3 percent to 7 percent rate for similar campaigns reported by
industry benchmarks.
Most people would call a 34% success rate �unbelievable� for an email
blast program. But it�s not unexpected due to the customer-relationship
management process that begins the instant a booking is placed at the hotel.
First the guest will receive a reservation confirmation email from a hotel.
Then he or she will begin to receive subsequent emails containing pre-visit
activity suggestions with property photos and hotel messages. Finally,
a guest will receive a post-stay thank-you note with a click-through on-line
guest comment card. Therefore, a line of communication and relationship
via email between the hotel and the guest already has been established,
and the guest feels comfortable opening future messages � and actually
looks forward to them.
Eve LeGrand, vice president of operations for Luxe Worldwide Hotels
in California, said Luxe is currently testing the viability of pre- and
post-stay email marketing campaigns for its two company-owned hotels in
the Los Angeles area. Luxe, a premiere representation company of
200 independently owned and operated hotels situated in prominent international
locales in 27 countries, provides global sales, reservations, marketing
and eBusiness services. Its e-distribution and online marketing services
including: central reservations, GDS connectivity, online channel management,
Web booking engine and voice reservations.
�Maintaining the relationship with our member hotels and their customers
is our key to the success and growth of the Luxe Worldwide Hotels,� LeGrand
said. �We consider our members to be part of our family, and therefore
we do whatever possible to stay in constant contact with them, whether
it�s through our Web site, e-newsletters or phone conversations. We also
communicate regularly online to travel agents, primarily for destination
marketing. Should the email marketing program we are testing prove effective
for our two company-owned hotels, we will launch a partnership agreement
for our member hotels to take advantage of the customer direct email marketing
campaigns through Digital Alchemy � and we expect a great return from the
initiative. �
Part of the reason the online communications effort is working so well
for Luxe, LeGrand said, is because the company provides an �opt-out� option
to its members who do not want to receive marketing information and support
online. The good news, she said, is that the majority of hotels welcome
the online dialog.
Sally Kelly, senior manager at hospitality consultancy Bearing Point
in Virginia, said she agrees with Luxe and Larkspur Hospitality that an
�opt-in� option is the key to any successful email marketing campaign.
�We�ve been working with a lot of developers (who are looking towards
2007-2008 hotel openings) to assist them with their online IT strategies,�
Kelly said. �We�ve made it very clear to these developers that all the
email activity we are proposing should explicitly be �opt-in.� Hotels must
put the disclaimer out there: if you want it, you�ll get it. If you don�t
want it, let us know now. By getting customer permission to market
to them online, you are protecting them and the reputation of your hotel.�
Mark Ozawa, managing director of Accuvia Consulting in Maryland, said
that getting everyone on board to support an e-marketing initiative is
not as easy as one may think.
�For a long time in our industry there�s been a disconnect between
what the marketing folks needed and what the reservations or front-desk
staff was willing (or able) to provide,� Ozawa said. �The marketing folks�
are looking for ways to put more heads in beds through targeted promotions,
be it direct mail or online. The operational staff however has been challenged
to get this information. In some cases, systems have not had a place to
insert an e-mail address. In other cases, the operational staff has been
pushed to reduce the time it takes to process the reservation or check-in
as a way of improving the guests� perception of the service. An increased
focused on the importance of marketing, however, is changing everyone�s
thinking.�
Ozawa said the advent of the internet has increased the operational
focus and awareness of capturing email addresses to benefit everyone at
the hotel. There now are incentives in place at many hotels that encourage
the front desk to get email addresses at check-in or at the point of reservations
in order to benefit the sales and marketing side of the business, he said.
Scott Gibson, senior VP of distribution and CIO of Best Western, said
providing incentives to front desk staff to capture emails at the point-of-reservations
works very well.
"The best source of quality customer address information is the customer,"
Gibson said. "If a customer has provided it directly through your web site,
it's correct. If the customer has provided it verbally to one of your customer
contact points, it is wrong. This is pretty consistently true, because
capturing quality address information is usually secondary to what those
customer contact points are trying to accomplish. Therefore, getting permission
to market to your current or prospective guests online via your web site
is one of the best things you can do for everyone involved."
My advice to hotel operators and/or marketers is that when email addresses
are wrong, go to the reservations manager at the hotel so that he or she
can bring it to the attention of the reservations agent. These folks may
not be aware that they are typing in a �#� sign instead of a �@� sign or
entering �.con� instead of �.com� when they are taking a reservation.
Bringing it to their attention may correct a large percentage of the problem.
Think of it this way: Email addresses don�t go bad that often and can
have a three- to four-year shelf life. Loyal customers are fairly likely
to go onto a hotel�s Web site and change their email address. And, more
importantly, the next time that guest makes a reservation he or she will
update the email address, which then gets transferred to all relative databases.
The consensus among the smaller hotel operators and management companies
was this: It�s more effective to keep the guests you have than to try to
find new ones. The net effect of email marketing and CRM programs is to
position the message coming from a hotel in the guests� mind as being relevant,
interesting and worth reading. From the reports we�ve seen which show the
number of emails �opened� and the click-through volumes, email marketing
is growing exponentially at the smaller properties. This means, we are
certainly doing something right.�
Don Hay is CEO of Ft. Worth, Texas-based Digital Alchemy, a customer-relationship
management and electronic-marketing company. For more information,
call Don at (817) 249-0757 or e-mail him at [email protected].
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