By Meng-Mei Maggie Chen
In response to existential threats posed by disruptors like Airbnb and Google, luxury hotels continue to grow digitally through reinforced loyalty programs, digital visibility and content production efforts and differentiating technologies on their online or on-property experiences.
According to New York-based consulting firm Gartner L2, Four Seasons, Hilton, The Ritz-Carlton and Fairmont account for some of the smartest hospitality groups online. The firm released its annual report – The Hospitality Digital IQ Index – ranking the digital competency of 75 of the biggest hospitality players. We rounded-up three key takeaways from the study.
A strong brand creates a market! Gartner L2 stated that Airbnb beats all indexed brands and most OTA sites in terms of raw traffic – with over 40 million monthly visitors, that's more than Marriott.com and Hilton.com combined – and in-app store performance ranks fourth in the Travel category, trailing only Uber, Lyft, and Yelp.
Disruptors like Airbnb and Google are further redefining the hospitality ecosystem
Airbnb‘s strong brand awareness attracts travelers, and the amount of travelers attracts Airbnb hosts. This is nothing new. In the era before OTAs, some hotel brands were able to create their own markets based on the number of properties, or outstanding services (such as Four Seasons). Then came the Internet and the emergence of the ever-growing OTAs: as the amount of hotel brands continued to grow, they could already barely compete with online travel and booking players – which ultimately became top of mind for consumers. And now, it looks like Airbnb and Google may replace OTAs in travelers’ mind. It took over a decade for hoteliers to recognize that OTAs are here to stay: not only do they need to fit into a redefined ecosystem, but they also need to leverage OTAs to reach new customers. Now that generations of new customers – i.e. Millennials and upcoming Gen Z consumers – may have their first travel experiences via the lenses of the ever-ubiquitous Google Hotels or Airbnb properties, how will this influence their perception about hotels?
In response to these existential threats, big hoteliers continue to grow through consolidation, reinforcing their loyalty programs, competing with online players on their digital visibility and content production efforts or investing in differentiating technologies on their online or on-property experiences.
The need to leverage loyalty programs effectively for luxury hotels The number of loyalty program members is critical for hotel investors. The bigger, the better. Case in point: adoption of such programs by hospitality players has continually been on the rise over the past decade. The L2 study reveals that the loyalty efforts of the top five hospitality enterprises grew from 30% to 47% within a year.
Adoption by hospitality businesses is only one part of the game here though, as there is a growing gap in value expected by consumers and what's being actually offered to them. Most loyalty program members do not join such programs because of their behavioral or attitudinal loyalty, but simply to collect points and reap the rewards. On the other hand, over the years, airlines and hotel companies have devalued loyalty program points by raising the thresholds to exchange awards. Given the rising costs of customer acquisition through traditional online advertising, hotels brands ought to really evaluate the return on investment of attracting new consumers into a loyalty loop that might just miss the mark on actually retaining consumers. By making loyalty offers truly meaningful and ensuring loyalty points are actually valued by brands, travelers will be more likely to forgo category search and jump straight to the brand.com.
Top digital players have clearly doubled-down on their retention efforts. Example: Le Club by Accor Hotels where members have the opportunity to share their interests and hobbies in arts and culture, lifestyle, and even sports. Powered by preference data, Accor aims at refining the experience for their members. Multi-brand loyalty programs are also arising – such as the merge of Marriott Rewards and Starwood Preferred Guest – or independent luxury hotels stepping up their game – such as Hyatt Hotels Corporation announcing a new loyalty alliance with London-based Small Luxury Hotels of the World (SLH), a collection of more than 500 independent luxury hotels from around the world.
The battle of the top of the funnel
My major concern is always about the top of the funnel, as in how do hospitality businesses generate new leads? Gartner L2 maps out key digital tactics along the customer journey and identified category search, Google Hotels, and web advertising as three key top-of-the-funnel tactics.
Yet, what happens before travelers conduct category search? Could hoteliers reach customers before that step in their journey? I see three ways here to capitalize on consumer intent before performing online search: web advertising, working with airlines to reach potential customers and, last but not least, content marketing.
Tess Mattisson – Director of Marketing for the European Division of Choice Hotels International – strongly believes in the "brands as publishers" model, not because they have large piles of money to throw around, but “because they’ve realized they need to invest in media and content – hence become publishers in their own right,- if they’re going to successfully sell their products further down the road.” Proud hoteliers who perceive themselves as local ambassadors could create content to promote their destinations making potential travelers aware of a specific hotel through destination content first, who would then proceed to booking. Instead of focusing on bidding on the right keywords, develop content based on these keywords, and help potential customers imagine and plan their upcoming trip.
When developing hotel content, keep in mind the following. First, Google has the most comprehensive database of destinations and travelers behaviors (watch Google Destinations and Google Trips videos if you have doubts). Second, Facebook notifies users about upcoming events their friends are interested in. When developing local content, hoteliers should aim to tap into customer data that Google and Facebook don’t have access to – bringing us back to owned data from loyalty programs and consolidated across all owned channels. Merely putting information as a destination guide is not enough anymore: hoteliers should produce always-on content that is not only highly relevant, but grounded in the specificities of a local destination, and in-the-end create links to position their properties as to add value to traveler experiences.
The Hospitality Digital IQ Index examined 75 brands and scored them based on the following factors: Discovery (e.g. search, Google hotels), Path to Purchase (e.g. booking engine and mobile site), Content (e.g. website content and social media) and Retention (e.g. loyalty program, email marketing). After scoring, the brands are grouped into one of five digital competency categories: Genius (140 + points), Gifted (110-139), Average (109-90), Challenged (89-70) and Feeble (<70).