Lowest-Rate Guarantees, Booking Friendly,
Search Engine Friendly
on driving traffic to your website
By Felix B. Laboy, October 2004 (As reprinted from HSMAI Marketing Review)
As the economy (slowly) begins to come around and the travel industry continues its recovery, it’s time for hotels — and some hotel companies — to break the grip that third-party websites have on their inventory.
Much as some industry executives would have you believe otherwise, there are no villains in this scenario. When the bottom dropped out of the domestic travel market late in 2001, hoteliers were desperate for any means of putting heads in beds. Having now seen the error of their ways, hoteliers must maximize revenues by channeling as much traffic as possible to their own websites. A hotelier’s main focus should be to market their own websites to their fullest in order to drive as much qualified traffic to them as possible. That’s going to generate the revenue they need without leaving so many dollars on the table.
The initial — and most important step -- is to examine your website and make sure it is as “booking and user-friendly” as possible for the consumer. For one midsize company that has approximately 15 properties the reservations link on one of their resort websites had a message that said, in effect, “This process will take some time: please be patient.” Consumers aren’t patient: They are not going to wait, so this resort had effectively lost the ability to generate reservations online. Some of those potential guests might pick up the phone and call the toll-free reservations number or the property, but they’re just as likely to think, “Forget that—I’ll go someplace else.” And even if they do pick up the phone and dial your call center, it’s still going to cost you more money to take that reservation over the phone than through your website.
Have a prominent reservations option right on the homepage with a direct link to an efficient booking engine. That may sound overly simplistic, but it’s surprising how many hotels still don’t provide it. We recommend utilizing a reputable booking engine. These don’t have to be expensive: Rather than a commission, some booking engines charge a flat reservations transaction fee of $5 or $6.
Now that your site is booking friendly, you must determine if it is
search-engine friendly. Is it designed so that you can optimize your position
and ranking on the various search engines? Do you have an internet-marketing
program? How about a linkage program—creating links from other websites
that have information relevant to your potential guests?
In an effort to drive more traffic to their websites, many hotel companies and brands have implemented lowest-rate guarantees. Far from being a gimmick, this is a critical component of a strong Web sales philosophy. Once a potential guest has found your website, give them the most important reason to stay — namely, that they won’t find a better rate anywhere else. And there is little to no downside to such a strategy. Brands that have adopted lowest-price guarantees report that the “spoilage” — instances where consumers did find a lower rate and brought it to the hotel’s attention — is nominal. And the guest now has confidence that he or she will get the best deal by booking directly with the hotel or brand.
Recent studies have indicated that, by next year, the Internet will account for between 20 and 25 percent of gross hotel bookings. Yet Jet Blue reports that over 75 percent of its bookings already come via the Web. Why? Because it doesn’t encourage non-Web bookings. It doesn’t tout an 800 number, and it offers a discount for online bookings. Why can’t hotels adopt this approach? There is a model out there now that shows you can book most of your business online. Convert them from call-ins by making it as easy as possible for them to book online. Push the website option to callers on your toll-free number, reiterating that they will receive the lowest rate by booking online.
We also recommend that hotels offer a separate toll-free number for calls generated by the website. In one case, we found that more than 50 percent of their overall call volume was coming in on that dedicated line — figures that jibe with statistics indicating that 4 in 10 customers shop online, but book offline, as a result of your Web presence. In most cases, these are people who couldn’t find the answers to their questions, or who had specific requests that weren’t addressed on the website.
Talk with your reservations manager. Find out what people are asking for when they call—then prominently display that information on your website.
Perhaps the greatest frustration that hoteliers have expressed about Internet marketing centers on reporting. Until recently, there really hasn’t been a precise way to measure the hotel’s online return on investment.
There are now reports available that can break the online reservation traffic down by channel--search engine, linkage partner, URL, or undefined--then by individual search engine or partner. This type of information is helpful in determining “look to book” ratios and the most productive channels for your website. With this type of valuable information, hoteliers are able to make better informed strategic decisions as it relates to their online initiatives.
A Second Look at Third Parties
Driving as much business as possible to a hotel or hotel group’s website is the primary objective.
But relationships with third-party websites can be great, too. Expedia has a tremendous marketing budget: it’s on TV, radio, the Web. No hotel — not even most hotel companies — has that kind of exposure, so why not take advantage of it? It’s merely another channel from which to get business. With many of the third-party sites, the relationship is as simple as manipulating your own inventory so that you’re controlling it, not them. Manage the inventory such that you get third-party business when you need it, not when you don’t.
Now that business is starting to rebound, hoteliers are getting smart and realizing that they must have rate consistency. If your rate for a given night is $250, it should be $250 across every last distribution channel. So, even if a guest is paying $250 on Expedia and you’re only making $187.50 on that reservation, at least the consumer is seeing a consistent rate—and you’re not selling against yourself.
And there’s no single “best” third-party option. If, for instance, you’re a high-end hotel that normally charges $300, you probably don’t want potential guests to see your distressed inventory selling for $200 on Expedia. That’s not good for your brand’s overall perception and consumers will think, “I’m never going to pay you $300 again.” Maybe a hotel like this ought to be on an “opaque” site like priceline.com, where consumers don’t know what hotel they’re getting until they’ve made the purchase. In that way, you’re protecting your rate integrity.
Also, step up efforts to convert guests who came to you through third-party websites. Instruct your front desk associates to screen folios at check in. If someone booked through Expedia or Travelocity, offer them an incentive—an upgrade, $25 off the rate or the equivalent in spa/restaurant coupons—to book directly with you on their next stay. You can reinforce the offer with in-room tent cards.
Regardless of how they arrived at your hotel, at the end of the day they’re your customers. You’ve got all the information—do something with it. Begin to develop customer relationship management with that guest, catering to their particular needs and preferences and focusing promotions through e-mail and E-newsletter campaigns that are most likely to generate repeat business. You want to encourage the customer to be brand loyal to the property, rather than to a third-party distributor.
In order to compete and level the playing field with third-party websites
today, hotels and hotel companies must approach distribution as a vital
component of strategic marketing and utilize multiple and aggressive online
marketing methods. Hotels that adopt and implement an online marketing
program that includes the creation, optimization and marketing of a branded
website experience increased brand awareness and loyalty, increased qualified
website traffic, higher conversion/look-to-book rates, and, ultimately,
About the author
Felix B. Laboy is president, CEO and co-founder of E-site Marketing, L.L.C. Mr. Laboy most recently served as executive vice president of the Puerto Rico Convention Bureau where he was responsible for the sales, marketing, advertising and public relations for the bureau which promotes convention and group travel to the Island. Prior to that, Mr. Laboy was director of marketing for the ANA Hotel (a Westin Hotel) in Washington D.C. and spent six years with The Ritz-Carlton Hotel Company. Mr. Laboy served the company in several posts, including director of sales for The Ritz-Carlton, Washington D.C. and director of sales and marketing for The Ritz-Carlton, Pentagon City. After graduating from the prestigious School of Hotel Administration at Cornell University, Mr. Laboy began his hospitality career in food and beverage operations at The Four Seasons Hotel, Washington D.C. He followed that with a director of sales position at The Georgetown Inn, a boutique hotel also in Washington D.C. Contact Felix Laboy at email@example.com.
E-site Marketing, L.L.C.
|Also See:||Use Look-to-Book Ratios to Monitor Online Distribution Channels and Your Competitive Set / October 2004|
|Major Hotel Chains Grew Internet Reservations by 28% in First Half of 2004 TravelCLICK Reports eTRAK Results from 30 Leading Brands / October 2004|
|Hotel Chain Best-rate Guarantees Taking Hold; Third-party Travel Sites No Longer the Place to Look for the Best Discounts / July 2004|
|Lowest Price Guarantees in Hospitality; Age Old Wisdom to Beat the Intermediaries at Their Own Game! / Max Starkov / July 2003|