News for the Hospitality Executive
How are hoteliers budgeting for their Internet marketing this year? Are they focusing on Web 2.0/Social Media initiatives in this recession? What percentage of business should be coming from your website?
In the 3rd 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’ 2009 Internet marketing priorities and strategies in order to compare with the responses received last year, and to provide the industry with insights on how internet marketing strategies for the hospitality industry are developing.
Who Participated in this Survey?
survey experienced global participation, with almost half of
full spectrum of hospitality and travel verticals are represented in
survey, including boutique hotels, upscale hotels, budget, mid-scale
franchised properties, major brands, real estate groups, resorts, hotel
management companies, casinos, and more. Most participants were
hoteliers from independent
properties; however there was a heavy influence this year of
brand hoteliers. Main Findings from the
Main Findings from the
Where is Hotel Business coming from?
For the past three years, Benchmark Survey respondents have said that most of their business comes from the direct online channel, which is supported by industry data. In 2009, more than 55% of all travel bookings and up to 40% of all hotel bookings in North America will be generated from the Internet (eMarketer, HeBS), which represents a double-digit growth over 2008. At least another third of hotel bookings will be directly influenced by online research, but booked offline. Over 65% of online hotel bookings will come from the direct online channel (76% for the major hotel brands).
However, 2009 survey results also show that bookings made via Online Travel Agencies (OTAs) have increased for hoteliers – from 19% in 08 to 21% in 09. This is in large part due to the dire economic situation many hoteliers are going through. Hoteliers seem to be worried about lower occupancy rates and are providing more and more inventory to the OTAs. What hoteliers are not realizing however is that the OTAs are also affected by the overall decline in travel demand (Expedia reported 7% decline in revenue in Q4 2008) and can help only so much. Therefore the only real growth channel in 2009-2010 is the direct online channel which allows savvy hoteliers to outsmart the competition and gain market share.
Budgeting for Hotel Internet Marketing in a Recession
Compared to last year’s survey, we noticed an increase in hoteliers saying that they have overall budget constraints. Hoteliers are less concerned with what peers are doing now then they were last year (24% in 2006 up to 27% in 2007, and back down to 18% in 2008), and much more concerned with the economy. We saw the same decrease with concerns over industry averages for budget planning (from approx. 40% over the last two years, to 30%). However, despite the economy, most hoteliers are increasing their Internet marketing budgets in 09:
When asked approximately what percentage of your overall marketing budget was devoted to Internet marketing activities in the past year, most respondents were in the 11-20% and 21-49% range. More people are devoting a larger portion of their overall budget to Internet than they had been in 06 and 07. Year after year we are seeing a shift from lower categories of percentages to higher percentages of money spent on the Internet, although hoteliers are still using traditional media. In this year’s survey results, people that were throwing their entire budget towards the Internet (76-100%), have scaled back as hoteliers discover a better balance between traditional and Internet marketing budgeting.
Once the budget is set, what are hoteliers spending their Internet marketing dollars on? From the table below, you can see that they are indeed spending their money on those formats they believe achieve the highest ROIs. Website design, website optimization, paid search and email marketing consume fairly high percentages of the budget (Table C), and this correlates with those activities hoteliers see as producing the highest returns (Table D).
What are the Internet marketing formats hoteliers believe generate the highest ROIs?
In the 2007 and 2008 results, website design, website optimization and search engine optimization ranked as the highest revenue generators. For 2009 we saw a decrease in the percentage of people who ranked website design as one of the highest revenue generators.
This thinking is in line with current budget restraints due to the recession. Website optimizations are much more affordable than website redesigns, and often pay for themselves within 3-4 months (as do website redesigns). Unless the website is over 2-3 years old, hotel optimizations can help hoteliers take advantage of the much cheaper organic search related visitors to the hotel website.
results make a lot of sense however, in the case of the increase of
hoteliers who thought Paid
Search Marketing produces the highest ROI. We saw the use of paid
decrease from 07-08, and then saw over a 40% increase in the 09 survey
This is most likely because more and more hoteliers
that Paid Search
works. According to
eMarketer, these survey results
are on track for search engine marketing across all industries (not
Brand Standards & Regulations on Hoteliers are Easing Up
For the past two years in the HeBS Benchmark Survey, franchised hotels have responded that they feel there are some major restrictions on their online marketing efforts. However, this percentage has been decreasing year over year:
Here are some of this year’s responses:
Hoteliers and Social Media?
Hoteliers and Social Media?
The survey results show that hoteliers really are “Getting Back to the Basics” in this tough economy – read HeBS’ article on the subject. While there were some interesting results, such as an increase in hoteliers planning on advertising on social media sites, hoteliers are shifting budgets from offline to online, focusing on Internet marketing initiatives that have been proven, are becoming savvier at monitoring their hotel reviews on their own, and in general are embracing the Internet as their most cost-effective, revenue generating tool.
industry forecasts indicate that
in 2009-2010 the travel industry in
In other words, this year the Online Travel Channel will be the only growth channel in hospitality and, as the survey shows, many hoteliers clearly understand that. Here at HeBS, we firmly believe that a comprehensive, ROI-centric Internet marketing strategy is one of the perfect “survival tools” for hoteliers in the current economic environment. The direct online channel can help smart hoteliers generate incremental revenues, improve marketing ROIs, attract more affluent travelers and out-smart the competition. For the past 14 years, our experience shows that Internet-savvy hoteliers with robust Direct Online Channel strategies are the winners in economic downturns like this one.
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) is the industry's leading Internet marketing services and strategy consulting firm for the hospitality and travel verticals. As a full-service Internet marketing and strategic consultation services firm, HeBS has pioneered many of the "best practices" in hotel Internet marketing and direct online distribution. HeBS specializes in helping hoteliers boost their hotel Internet marketing presence, establish interactive relationships with their customers, and significantly increase direct online bookings and ROIs.
client portfolio of over 500 top
tier major hotel brands, luxury hotel and resort brands, golf and spa
hotel management companies, franchisees and independents, meeting and
conference venues and CVBs has sought and successfully taken advantage
hotel and travel Internet marketing expertise. Contact HeBS consultants
|Also See:||Hotelier's 2009 Top Ten Internet Marketing Resolutions / Max Starkov & Jason Price / January 2009|
|Hotelier’s 2008 Top Ten Internet Marketing Resolutions / Max Starkov and Jason Price / December 2007|
|Hotelier’s 2007 Top Ten Internet Marketing Resolutions / Max Starkov and Jason Price / January 2007|
|Hotelier’s 2006 Top Ten Internet Marketing Resolutions / Max Starkov and Jason Price / January 2006|
|Hotelier’s 2005 Top Ten Internet Strategy Resolutions / Max Starkov and Jason Price / January 2005|
|Hotelier’s 2004 Top Ten Internet Strategy Resolutions / Max Starkov & Jason Price / January 2004|
|Hotelier’s 2003 Top Ten Internet Resolutions / Max Starkov and Jason Price / January 2003|