Hotel Industry Blog

Friday, April 17, 2009

What hotels should and should not be doing in the current downturn

In this economic climate, it is even more important to know exactly where your marketing money is being spent, what return on investment you are getting, and how you can maximise it.

What is clear is that the medium that is most easily analysed and maximised in terms of return on spend is the internet, specifically direct selling on the internet. Moving budgets now from offline to online is not only smart in terms of watching budgets, but it affords an opportunity to tap previously untried markets, lower costs per acquired booking, and even generate income growth through promotion of a mix of offerings.

The good news is that bookings online are continuing to grow. Bookassist figures across all our markets have shown a growth in the number of bookings year on year. Many current studies are continuing to show a growth in direct online bookings at the hotel website, at the expense of offline and indirect channel bookings. This is probably because the economic climate is causing people to look around more: the simplest way to look around is online, not offline, and the best chance a customer perceives of getting value is directly at the hotel. So hotels need to tap into this marketplace.

Here are some pointers.

1. Don’t cut your marketing budget. You need it now more than ever. But redirect your marketing spend to online now.
2. Get rid of your hunches, suppositions, feelings. You need facts. Don’t make sudden changes, for example switching suppliers because of a perceived better deal or trying completely new advertising approaches. Sudden changes are the result of panic - you need to hold your nerve until you have the facts. You may well lose the position you have in such a switch, rather than building on your position. Perception needs to be replaced by fact leading to informed rather than rash decisions.
3. Concentrate on direct booking. Be careful how you are using third party intermediary sites. They can commoditise your hotel in simple lists based on price, start rating etc which eliminates your unique qualities. They may be sending you lots of business, but these online customers can be yours directly if you adopt a proper direct booking online strategy as outlined below. The margins of third party intermediaries compared to direct booking on your own website means that you are losing 20% to 30% revenue per booking for each booking received from them. This makes no sense in today’s climate and some of that business can certainly be diverted directly to you with proper planning. And above all, ensure that the rate on your own website is always the best rate. Otherwise, you might as well close down your website.
4. Analyse. Analyse. Analyse. Ensure that services such as Google Analytics work for you by tracking all website usage. Have a clear picture of usage patterns on your website before you rush into changes. Use Google Analytics to analyse your online user base, in terms of their origin for example. It may surprise you and alter your strategy. Use a booking system that can integrate directly with Google Analytics Ecommerce, like the Bookassist Booking Engine. With Bookassist’s Ecommerce integration, every single booking is transferred to Google Analytics and linked to the customer’s path through the website and through the booking process. Any single booking can be directly linked to a specific cent spent on a specific pay per click campaign or email marketing campaign. This is very powerful data and shows instantly where your money is being spent most effectively in terms of return on investment measured in actual booking value. It eliminates the hunch and shows you the bare facts. Google Analytics for web usage is great, but it lacks the real meat: full Ecommerce integration goes way beyond web usage and is critical for optimising ROI.

Bookassist’s ECommerce integration with Google Analytics gives valuable strategic information and allows for fine-tuning of online advertising spend resulting in much higher conversion rates, 5.24% in this example from a Dublin hotel.

5. Act on information you glean from Google Analytics and Ecommerce integration. The conversion figures for lookers to bookers are your key indicator. All the visitors in the world are useless to you if they are not converting. Using Ecommerce integration you also get a much deeper insight into conversion in your target segments. For example, with a recent Dublin-based hotel of ours, visitor numbers alone in Google Analytics showed that the vast majority of the website visitors were UK based, with other countries being far down the list. The traditionalist would therefore target the marketing budget at the UK. But the Ecommerce integration showed us that conversion rates for German visitors to the website were a factor of 4 higher than the UK visitors. So targeting spend at the German market and using German language package descriptions in the booking engine resulted in higher bookings online. It was a safer bet. Only Ecommerce integration can give you this kind of analysis. Using this type of analysis has allowed Bookassist marketing teams to drive conversions on pay per click adverts to over 4% in many cases, a massive increase over industry norms.
6. Analyse your web presence holistically. Remember there are two users of your website, firstly the search engines who will analyse and position it based on its content, and secondly the customer who will use it. The customer won’t come if the search engine hasn’t been targeted. So be smart, you have two jobs to do. Invest your budget into ensuring that your website is optimised for search engines AND ensure it is easy to navigate and booking-friendly for customers and never loses an opportunity to convert. Do not waste your budget on rushing to build a new site just to give yourself a fresh look - remember, you see your website every day and customers see it once or twice a year, so fresh is relative. Be sensible about your spend, target improvements for measurable return on investment reasons, not aesthetics.
7. Structure your online pay per click advertising campaigns so that they promote key attractors and differentiators for your property. Advertise your name as a keyword so that customers who search for your name will get your advert. Advertise your location as a keyword, but be as specific as possible to avoid catch all phrases that are expensive like “Ireland”, “Dublin”. Promote unique qualities in your Adwords text. Alter them frequently and track their conversion to tweak their effectiveness.
8. Combat competition online. Search for your hotel name and see who is using your name to capture your customers. If third parties are using your name to capture search results position, then tell them not to. If competitors are using your name to leapfrog above you in search results, then trademark your name and take action to stop it. Adopting this approach will ensure that people searching for your name, those who are already your customers, will see your website first and
9. Use email marketing effectively. It takes time to build a proper (legal) opt-in email and phone list of customers, but the best way to do it is not to abuse the channel - always give something genuinely special and new in an email blast and use a booking service such as Bookassist’s which allows you to embed links in emails that bring people directly to the booking page for that special, not just to the website or to the general booking page. Use Twitter services to remind users of new offers via mobile phone. Think strategically - for example, advertise offers for this coming weekend so that a sense of urgency is created for the customer who feel they must act now or miss their chance. “Offer ends at midnight, unique offer available for this weekend only!”. Sounds familiar? Airlines have been doing this with a lot of success for some time now.
10. Listen to your online customers and correct issues quickly. Remember that over 80% of travel planning is now done online. Even if people are not booking, they are looking. This colours their future choices. Make sure that you are on top of social media sites such as TripAdvisor and others - be registered with them and monitor your property. Make use of your own customer comments on your website, for example availing of Bookassist’s automatic review system where customers who have booked online and stayed at your hotel are given a follow-up opportunity to submit their views. Above all, always respond to online reviews, whether positive or negative, so that potential customers see that you care. We all know that correcting a fault graciously often engenders more loyalty and satisfaction in a customer.

Be aware that the habits that customers are now learning could well become the norm for the future. Why? Because the approach is yielding value for the customer. Shopping around online, doing research online, making price comparisons online, reading reviews, going directly to source to book. These are all things that may have been enhanced by economic necessity, but are likely to stay as the norm as we exit recession.

Hotels that have tackled this climate constructively and strategically will likely emerge stronger and will be well positioned to capitalise on the upswing that will invariably come.

Dr Des O’Mahony is CEO and Founder at Bookassist, the leading technology and online marketing supplier to the hospitality industry.

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