News for the Hospitality Executive
Mastering Internet Marketing in 2008: The 2nd Benchmark
Hotel Internet Marketing Budget Planning and Best Practices
|By the HeBS Team, February 28, 2008
In the increasingly dynamic online travel industry, hoteliers are challenged with keeping up with changes while also keeping an eye on the fundamentals. What are hoteliers doing to reach their customers on the web? Why are they spending their budget on some Internet marketing practices over others? Where is the most business coming from on the Internet – the hotel’s own website or third party intermediaries? In the recent 2nd Benchmark Survey on Hotel Internet Marketing Budget Planning and Best Practices in Hospitality, HeBS set out to answer these questions and identify trends in online marketing in hospitality. The purpose of the survey was to assess hoteliers’ 2008 Internet marketing priorities and strategies in order to compare the responses with the results received last year, and to provide the industry with insights into how internet marketing strategies for the hospitality industry are evolving.
For the second year in a row, Hospitality eBusiness Strategies (HeBS) in New York City presents the results of the 2008 Benchmark Survey on Hotel Internet Marketing Budget Planning and Best Practices in Hospitality.
Who Participated in this Survey?
The survey experienced global participation, with hospitality executives including general managers, sales and marketing directors, e-commerce managers, revenue managers, and other industry professionals. The full spectrum of hospitality and travel verticals participated, including boutique hotels, upscale hotels, budget, mid-scale and luxury franchised properties, major brands, real estate groups, resorts, hotel management companies, casinos, and more.
Main Findings from the 2nd Benchmark Survey
The survey results clearly show hoteliers understand the hotel Internet marketing strategy and respectively, should take a holistic view of the hotel online environment and adopt a comprehensive, long-term strategic approach to grow the online channel. No longer viewed as a source for only incremental sales, the website is a major revenue driver and requires an online marketing budget to support the activity.
Today’s hotel marketing budget tends to include specific line items addressing direct web marketing. These are treated as "fundamental" and include website re-designs, organic search optimizations, search marketing, email marketing, strategic linking, online advertising and public relations, and new media formats such as Web 2.0 which includes social media, CGM, and blogs.
Here are some main findings from the survey:
In 2007 over 35 % of hotel bookings were generated via the Internet. Approximately 62% of those (21.7% from total bookings) were done via hotel branded websites (i.e. Direct Online Channel). For the first time in 2007 the major hotel brand website bookings surpassed the brand GDS bookings (33.7% vs. 33.5%) (eTRACK).
What is the situation in the industry as a whole? As mentioned earlier, for the first time the Benchmark Survey respondents stated that in 2007, the direct website bookings exceeded the indirect (third-party online intermediary) bookings 23.5% vs. 20.4%. This result is on par with the industry and underlines the importance of the direct channel in the overall Internet strategy.
Evolution of the Hotel Internet Marketing Budget
How much are hoteliers budgeting for their Internet marketing activities? How does this compare to the past two years? We found several trends in budget allocation and the use of various Internet marketing formats.
In 2007, a bigger percentage of hoteliers had a bigger marketing spend: 61% of respondents are spending over $50,000/year on Internet marketing vs. 49.6% in 2006.
The following table shows how Internet marketing budgets have increased since 2006:
Are Hoteliers Increasing their Internet Marketing Spend in 2008?
Will hoteliers increase their budgets in 2008? According to Table C, yes, most of them will: over 62% of respondents plan to increase their Internet marketing budgets in 2008 by more than 10%.
Here is a summary of findings concerning 2008 Internet marketing budget trends:
Most Popular Internet Marketing Formats
Which Internet marketing formats are the most popular? What are the latest trends in budget allocations for these formats?
The benchmark survey shows several trends in how budget allocations and the usage of various Internet marketing formats are changing over the previous years (2008 vs. 2007 vs. 2006), which is indicative of where the future focus is going to be:
Internet Marketing ROIs
In 2008, what are the Internet marketing formats hoteliers believe generate the highest ROIs? In the past, paid search and SEO were usually named the top drivers for increased revenues online. The 2007 and 2008 benchmark surveys show that hoteliers have matured and now understand that long-term, strategic objectives and formats such as website re-designs and optimizations, email marketing and strategic linking produce higher ROIs than "quick fix" solutions alone, such as SEO and PPC.
Are hoteliers spending their money on what they believe will achieve the highest ROIs? According to Table E, yes, they are. The highest percentage hoteliers are spending their budget on is website re-design/design, because they believe it will achieve the highest ROIs. This was followed by website optimization, email marketing, and search optimization-organic search.
The Effect of Brand Standards & Regulations on Hoteliers
In last year’s survey, one of the main findings was that franchised hotels seemed to rely more heavily on the chain websites. This year however, we see that not only are hoteliers starting to take more control, but they are voicing their frustrations—a result of increased knowledge of the importance of direct online distribution and website revenues.
We asked hoteliers, "if you are franchised or managed by an outside major chain or brand, do you find there to be any major restrictions in online marketing conduct due to brand standards and regulations?" Everyone who responded to this question said yes, they did find major restrictions.
Here are some of the responses:
As mentioned earlier, for a third year in a row there was an increase
in marketing spend on new media formats such as Web 2.0 and Social
Media. These marketing formats gained much attention in the industry last
year and continue to be a hot topic. We asked hoteliers what type of web
2.0 initiatives they were planning for 2008:
Survey respondents also had their own responses to this question:
The Internet has become the largest and most important marketing and distribution channel in hospitality. As hoteliers learn more and more about Internet marketing, they are realizing that there are many missed opportunities and that the Direct Online Channel website is their most cost-effective revenue generating channel. The fundamentals of an Internet marketing strategy - a hotel website that follows best practices, search engine marketing – both paid and organic and email marketing, continue to receive the highest budget allocations. In 2008 several marketing formats are expected to receive increases: email marketing, website optimizations, paid search, local search, meta search. Web 2.0 and Social Media initiatives have become a hot topic in the industry and hoteliers are eager to explore these new media formats.
Another interesting result of the survey is that for the first time, the industry reported that online business is coming from their own website more than third parties. This shows that hoteliers are embracing direct online distribution. We expect this to become the norm over the years as hoteliers continue to increase their knowledge of Internet marketing and the benefits of making their customers their own from the first point of contact.
As you prepare for a record breaking year in website revenues, seek advice from an experienced and ROI-centric Internet marketing hospitality consultancy to help you adopt industry’s best practices, implement latest trends, and utilize the Direct Online Channel to its fullest potential.
About the Authors:
The HeBS team for this project consisted of Max Starkov, Jason Price, Mariana Mechoso and Evan Rosenblum.
Hospitality eBusiness Strategies, Inc. (HeBS) www.hospitalityebusiness.com is the industry's leading Internet marketing services and strategy consulting firm for the hospitality and travel verticals. As a full-service Internet marketing firm, HeBS has pioneered many of the "best practices" in hotel Internet marketing and direct online distribution, and specializes in helping hoteliers boost their hotel Internet marketing presence, establish interactive relationships with their customers, and significantly increase direct online bookings and ROIs.
A diverse client portfolio of over 450 top tier major hotel brands, luxury resorts, real estate management companies, multinational hospitality corporations, hotel management and representation companies, franchisees and independents, spa resorts, casinos and have sought and successfully taken advantage of HeBS' hotel and travel Internet marketing expertise. Contact HeBS consultants at (212)752-8186 or email@example.com.
|Also See:||Hotelier’s 2008 Top Ten Internet Marketing Resolutions / Max Starkov and Jason Price / December 2007|
|A Hotelier's Guide to Budget Planning in '08; Best Practices in Developing the 2008 Hotel Internet Marketing Budget / October 2007|