The Smart Hotelier’s 2016 Top Ten Digital Marketing Resolutions
January 5, 2016 9:12am
By Max Starkov and Mariana Safer
On paper, 2015 was a great year for the hospitality industry. We saw general increases in all key growth metrics, and we expect continued growth in 2016. Next year, occupancy is expected to increase .1% to 65.8%, ADR by 6.1% to US $128.04, and RevPAR by 6.1% to US $84.19. Demand is expected to grow 2.3%, and supply by 2.2% (PWC May 2015).
Yet this was also a year of conflicting results. If the industry saw this type of growth, why did hoteliers lose so much market share to the OTAs? How did we let the OTAs dominate hotel bookings in 2015? For major hotel brands, pre-recession (2007), 85% of all online bookings came via brand.com (i.e. direct) vs. 15% through the OTA channel (85:15 brand.com to OTA). In 2015 this ratio was closer to 60:40 brand.com to OTA, a substantial shift in favor of the OTAs. As for independents, this ratio is as low as 25:75 direct hotel website to OTAs.
Hoteliers have the power to increase their direct online revenues and decrease their customer acquisition costs. All it takes is a renewed commitment to the direct online channel, an understanding that OTA commissions are not just the ‘cost of doing business,’ and an investment in the right mix of digital technology and marketing initiatives. To help put you on the path to direct online revenue success this year, we present the Smart Hotelier’s Top Ten Digital Marketing Resolutions for the sixteenth year in a row.
1. I understand that 2016 will be the year of Digital Marketing Technology, and that investing in the right technology mix is essential to improving engagement and conversions on my website.
If a picture is worth a thousand words, the technology behind it can be worth millions. A hotel website’s success should be judged on more than just a pretty design. The technology behind it is what will make all the difference between a website that is the main revenue driver for your property and a website that functions more like an online brochure.
Start with asking yourself, what kind of power do I have over my own website? Do I have complete control over all content – visual, textual and promotional – and can I manage all of this on the three screens (desktop, mobile and tablet websites)? Can I personalize content for my key customer segments? When someone abandons my website, am I able to potentially recover that abandoned booking?
Technology that enables these types of initiatives is now available to any hotel – branded or independent – at affordable price points. There is no longer a barrier to entry to hide behind. Make sure to invest in the following technology in 2016:
Choosing separate technology vendors that do not understand the hospitality space or utilizing several different platforms to achieve the above is not sustainable. Keep in mind that technology should be purchased from a partner with proven hospitality digital marketing expertise.
2. I will not be intimidated by the OTAs and know that I can outsmart and outspend any OTA, achieve more online exposure and do a better job engaging my key target markets online.
While it was a great year for the hospitality industry, instead of seeing a rise in direct online bookings we saw the OTA’s increase their market share. Why? Even in these booming times for the hospitality industry, there is somewhat of a defeatist mentality and acceptance of the status quo. We often hear from hoteliers that they feel powerless and too under-funded to “fight the fight” against the OTAs.
While the mega OTAs have deep pockets and spend billions on digital marketing efforts, the mega OTAs’ advertising spend, on average, is less than $300/property per month with less than 300 visitors per contracted hotel/month. Compare this to the average full-service independent or boutique hotel’s advertising spend of $7,500 -$10,000 per month and property website traffic of 10,000 plus visitors per month.
Yes, the “mega OTAs” have deep pockets and spend billions on digital marketing efforts. Yet any independent hotel, resort and casino can outsmart and outspend any OTA, achieve more online exposure and do a better job engaging its key target markets online. Hoteliers know their property, their customers, and their destination better than any OTA and should “own” their destination.
Hoteliers – with the recession long gone it’s time to take back your direct bookings. We have been enjoying a steady growth in occupancy, ADRs and RevPARs for the past four years. Generating direct bookings and stealing share back from the OTAs must be the top priority in 2016.
You will reap great revenue rewards this year if you: 1) set a top-down strategy of generating more bookings from the property website (see resolution #3) 2) spend the optimum amount in digital marketing and technology for your property and 3) set up a strong merchandising strategy to promote the value of your hotel product versus selling strictly on rate.
3. I will adopt a “Direct is Better” top-down strategy on property with the primary goal of generating a higher percentage of direct online bookings.
Hoteliers are often consumed with the guest experience and focus on creating repeat guests.
Investing in the necessary digital technology and marketing mix needed to initially retain the guest via the property website takes a backseat. Without a ‘Direct is Better’ strategy, even guests who are loyal to the property may still repeatedly book through an OTA, costing the hotel valuable revenue with every booking.
Who on property “owns” the website? Whose salaries and bonuses are determined by the website’s revenue and ROI? When the market share needle moves from OTAs to direct online bookings, who wins? Most hotel companies do not have clear responsibilities or incentives assigned to direct online channel production, resulting in a very muddled picture of channel contribution, ADRs and Cost-of-Sale (COS).
Without such a strategy, a hotel will end up under-staffed and under-budgeted. The hospitality industry is one of the most over-worked on the planet, and many GMs and DOSMs are pulled in so many directions. This leaves them with little bandwidth and few resources to devote to their website and as a result, direct online bookings suffer.
Embrace a “Direct is Better” top-down strategy on-property. When the primary goal of generating as many bookings as possible via the direct online channel – the most profitable channel – is set, the team knows exactly what they need to do to seize market share from the OTAs.
A comprehensive “Direct is Better” strategy should include:
4. With the majority of bookings happening online, I will structure my hotel digital technology and marketing budget wisely.
With the vast majority of travel consumers, corporate group planners and SMERF group organizers researching and booking online, hoteliers cannot afford to underspend in digital marketing.
To experience direct online booking success and lessen dependence on the OTAs, hoteliers must invest in the correct digital technology and marketing techniques to engage users and drive bookings throughout the entire path to purchase.
Read: The Smart Hotelier’s Guide to 2016 Digital Marketing Budget Planning as a guideline on how to structure your budget to achieve the right mix of ROI-generating initiatives.
5. I will adopt an effective merchandising strategy to “sell on value” vs. “sell on rate.”
The commoditization of the hotel product, in which hotels are forced to compete with the OTAs strictly based on rate, leaves the hotel little opportunity to communicate the value of the hotel product to potential guests.
To combat commoditization and “sell on value” as opposed to “sell on rate,” hoteliers need an effective website merchandising strategy. There are many opportunities to communicate the hotel product and value proposition through the direct online channel – the hotel website.
A strong merchandising strategy showcases the unique features of the property (hotel services, meeting and event space, the latest promotions and special offers, local attractions, and more) rather than focus on rate alone.
Enhance your website merchandising strategy by:
Implementing a strong website merchandising strategy will generate group leads and RFPs, promote the hotel’s services (dining, spa, etc.), and ultimately maximize room bookings and revenue on the property website.
6. I will not treat all website visitors equally and will employ dynamic content personalization to better target and engage website visitors and maximize conversions and revenue.
Today’s travel consumer is becoming less and less forgiving when a website’s content does not quickly and directly speak to their needs and interests. Companies that fail to personalize the experience based on the wealth of data they have at their disposal – the location of the website visitor, whether they have been to the website before, and even why they are traveling (for leisure, on business, etc.), will fall further and further behind the competition.
Hoteliers have a distinct hidden competitive advantage over the OTAs: they know their property, their hotel product, their customers, and their destination better than any OTA. Hoteliers should be using their “real-time data” to personalize content and promotions based on people’s interest, demographics, how they are navigating through the website, past booking history, and more. Clients that have implemented Dynamic Content Personalization in 2015 have seen their website conversions more than double for those audiences.
7. I know that multichannel and omni-channel marketing campaigns are essential to reaching consumers in the “micro-moment,” across devices and all touch points.
The travel consumer journey takes about 17 days and the average visitor goes through eight research sessions, 18 site visits, and six clicks before making a booking (Google). Engaging customers at all touch points is critical to maximizing online revenue.
The foundation for building effective multi-channel campaigns is finding the best marketing initiatives based on the customer segment being targeted, and reaching that target segment at every touch point of their online travel planning process is essential to driving high online revenues.
The strategy for any multichannel campaign should begin with analyzing the current business needs of the property. The next step is to determine the customer segments that should be targeted, followed by a marketing plan detailing which initiatives should be launched to reach these segments. A typical multichannel marketing campaign plan outline might look like this:
Customer segments to target:
Campaign theme development:
Campaign initiatives to launch:
Case Study: Red Lion Hotels “Capture Your Summer Moment” Multichannel Campaign
Recognizing that multichannel marketing is essential to reaching consumers along their travel planning and purchasing journey, Red Lion Hotels and HeBS Digital partnered in launching the “Capture Your Summer Moment” multichannel campaign with the primary focus of driving direct online channel revenues in the last quarter of the year. With this campaign, the brand wanted to focus on targeting the family leisure segment and those searching to travel to the Red Lion Hotels’ destinations.
An Interactive Marketing Application served as the central hub of the promotion. The highly visual fully responsive application featured a film reel that travel consumers could spin to unlock the offer, large rich imagery, social and viral sharing features, email sign up, a Red Lion Hotels destination map, Hello Rewards loyalty information, and more.
The campaign promoted one cohesive message through various channels, including SEM, the Google Display Network, Online media and retargeting on top travel networks, PR, email marketing, blog posts, and social media marketing. The campaign received over 50,000 unique visitors and a 2,100% ROI. Just half way through (30 days) into the campaign, Red Lion Hotels Corporation more than surpassed the past year’s multichannel campaign’s goals and revenue production.
8. I understand that the search engines are not dead and I must consider SEO and SEM as integral parts of my digital marketing strategy.
The search engines, after thousands of algorithm updates and changes in how search engine results display on the page over the last few years, continue to be the highest direct online revenue driver for hotels.
More than 41% of every online advertising dollar in the U.S. is spent on search engine marketing (eMarketer 2015), and more than 25% of direct online revenue comes as a direct result of SEM/paid search via the hotel website and voice channel for HeBS Digital clients.
As for SEO being dead? At least 30% to 35% of hotel website revenues were generated as a direct result of organic search engine referrals to the hotel website for HeBS Digital clients this year.
SEO: Your SEO strategy must include a proactive approach to content creation, marketing and optimization to succeed in the ever-evolving SEO landscape. The 2016 Checklist to Maximize Revenues from Content Marketing & SEO includes guidance on how to use analytical tools to create your content strategy, the importance of securing and optimizing local listings, why a defensive link management strategy is necessary, which technologies are necessary to make on-the-fly content and technical SEO updates, and much more.
SEM: We recommend budgeting at least 20% – 22% of the digital marketing budget to SEM / Paid Search and Google products. Increased competition from the OTAs, the need for mobile-specific ads and bid modifiers, advanced targeting methods and expanding beyond the SERP with Gmail Ads, YouTube TrueView and the GDN are just a few of the reasons this initiative requires such a large portion of the budget. Read the 2016 Checklist to Maximize Revenues from your SEM Campaigns for more tips.
Hotels that increase their paid search spend while also investing in ongoing SEO efforts see measurable benefits. In one case study, a hotel took its paid search campaigns from dormant to 40,000 impressions over the course of six months and saw its organic search traffic ride a similar trajectory. In that case, the hotel’s organic traffic grew by 116% over the course of nine months, growing organic bookings initiated by 161%.
9. I will not fall prey to the new ‘OTA-like’ type services and understand that these are not direct bookings.
TripAdvisor rolled out “Book on TripAdvisor” and Google more recently launched “Book on Google,” a commission-based option in their Hotel Ads meta search program. At up to 15% commission on bookings, both options are essentially OTA-like channels. The industry is also seeing similar moves from other, smaller meta search players like Hipmunk, Skyscanner, and others. These hefty commissions of 15%, coupled with serious CRS fees, reach typical OTA commission levels of 20%-22%. A commission of 20% means Cost of Sale (COS) of 20% or is equal to Return-on-Ad-Spend (ROAS) of 500%. Most digital marketing initiatives, when executed properly, achieve much higher ROAS and lower Cost of Sale.
It is important for hoteliers to understand these are pure OTA services where both Google and TripAdvisor are inserting themselves between the travel consumer and the hotel, are taking over the customer relationship, and get an agency commission similarly to all OTAs and traditional travel agents. These are not direct with the hotel bookings.
Instead of participating in these programs, hoteliers should focus on:
10. I will remember that choosing my digital marketing partner is one of the most important decisions I will make regarding my property website’s online revenue success.
From the latest targeting methods to utilize in paid search campaigns, to technology that enables personalizing content on the website, best practices in hotel technology and digital marketing are constantly evolving and hoteliers must be able to adapt quickly. It is not cost-effective, for most hotel companies, to try to retain all of this knowledge and expertise in-house. Hoteliers, especially independents, need to be armed with this expertise to make the right decisions on where to invest their marketing budgets to shift share from the OTAs and their comp set.
Digital marketing and technology advancements have been moving at an invigorating pace these past ten years. This trend will not only continue into 2016 but will become even more disruptive and difficult to keep up with, requiring an even greater commitment of staff and resources at the property.
Partner with a firm who has proven to be innovative, flexible and results-driven in this ever-changing environment. This type of partnership will lead your hotel to higher direct online revenue performance than ever before.
Max Starkov is President & CEO and Mariana Safer is SVP, Marketing of HeBS Digital, the industry’s leading digital technology, full-service hotel digital marketing, website design and direct online channel consulting firm based in New York City (www.hebsdigital.com).
HeBS Digital has pioneered many of the “best practices” in hotel digital marketing and website revenue optimization, as well as a range of industry-first digital technology applications. The firm has won more than 300 prestigious industry awards for its digital marketing and website design services, including numerous Adrian Awards, Davey Awards, W3 Awards, WebAwards, Magellan Awards, Summit International Awards, Interactive Media Awards, and IAC Awards.
A diverse client portfolio of top-tier major hotel brands, luxury and boutique hotel brands, resorts and casinos, hotel management companies, franchisees and independents, and CVBs are benefiting from HeBS Digital’s direct online channel strategy and digital marketing expertise. Contact HeBS Digital’s consultants at (212) 752-8186 or firstname.lastname@example.org.
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