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Back to Basics. How Digital Marketing Can Transform Hotel Revenue Management!

Most of the Revenue Managers have a lot on their plates as they try to maximize revenue per available room (RevPAR). They need to manage occupancy levels, OTA commissions, room rates, and much more. To get the best results, Revenue Managers should be working in unison with the Director of Sales & Marketing (DOSM), or whoever is responsible for marketing at the property level. However, many hotels tend to separate these teams and their corresponding responsibilities, resulting in a lack of communication that could be hurting the hotel’s bottom line.

  • You need to know where your bookings are coming from, what channels are most profitable. By knowing this, you can ensure room rates are competitive and get booked.
  • The most valuable bookings come from your direct channels. Not only because they generate more revenue, but also because they give you valuable guest data to inform your future marketing initiatives.
  • Direct bookings provide more upsell opportunities, increasing your RevPAR.
  • Direct bookings also help you improve guest relations. With a direct booking, you have more control in setting expectations, to ensure guests enjoy their experience and are more likely to become repeat guests, or recommend your hotel.
  • The more you know about your guests, the more you’ll be able to tailor your sales and marketing strategy to drive more bookings at a lower cost of acquisition.
  • Demographic insights help guide your marketing programs. What type of travelers stay or show intent to stay at your property? What is their reason for traveling, business or leisure? Are they traveling alone or a couple or in a group?
  • Market insights provide valuable information about where your guests are coming from, and which regions have the biggest impact on your bottom line. Revenue managers can use this information to adjust rates based on when demand is picking up or slowing down.
  • Booking insights help you evaluate the type of booking your marketing programs drive. Do you rely on last minute bookers, or travel planners booking well in advance? On average, how long do guests stay and what is their ADR?
  • Studies have found that your hotel website is the most influential factor for travel shoppers, outranking: word of mouth, OTAs, search engines and review sites.
  • 70% of OTA bookers will visit your website before booking through an OTA.
  • To drive more direct bookings, you need more qualified traffic to your website.
  • Let your Brand target head search terms like “Hotels in Mumbai,” while you focus on long-tail keywords.
  • Long-tail keywords contain 4+ words, they are more specific, less competitive to rank for, and convert 2.5x better than head terms.
  • Use your hotels booking and demographic data to help determine which keywords to target. Tools like Google AdWords can also help identify long-tail keywords.
  • Your website should tell your property’s unique story. Use visual storytelling to create an emotional connection with guests and distinguish what makes your hotel better than your competitors.
  • Provide guests with social proof (e.g. guest reviews, awards, & ratings). 60% of travelers won’t book without first reading reviews and 80% will pay more for a hotel with better reviews.
  • Reward travel shoppers for booking direct. Add special offers to your website. Special offers don’t need to focus on price, they just have to provide value.
  • Your hotel website needs to be mobile friendly. 60% of travel searches and 1/5 of reservations are made on mobile devices.

The Rate Parity Struggle

Maintaining rate parity plays a key role in our industry as it a protection for the hotel brand moving forward with technology evolving rapidly. If hotels give up rate parity, they entirely give up the control of their sell rates across the internet. Today the internet has become a medium of search for the lowest room prices as OTA’s undercut each other  to gain their share of business.

  • Without parity you condition the market to search the internet as no one wants to pay more than they have to.
  • Rate Parity sets a clear value of your rooms to be sold online.
  • Rate Parity is not just something that OTA’s want,  It is an essential requirement of a hotel  equally before entering into any contract with OTA’s.
  • OTA’s currently focus on rate parity so consumers don’t land up at the hotel directly resulting in decrease of walk in business that can be used to achieve higher ARRs. Online channels today focus on only price as it is their sole advantage at growing their share over their competitors.
  • Not maintaining rate parity and having a lower price is dangerous in the current situation as very quickly the hotel looses visibility on the OTA’s / internet especially if online is one of the  main booking drivers.
  • Hotel can sell online package rates with value add which avoids rate parity issues and offers great package deals directly and I also works well as value add.

With the evolvement of Meta search technology (this is where the OTA’s are pitched against each other in front of the consumer so they can see straight up a list of OTA’s and their prices). Sites like TripAdvisor, Trivago and Google Hotel Finder are playing and facilitating this booking process currently big time.

Meta search technology today is a threat to the traditional OTA model as price options for the same hotel is the only thing that is in front of the consumer and it may sway them to book as per their choice. This technology puts more pressure on the OTA’s to not have rate parity as each one wants to come on top of the list with the lowest price to the customer so the customer chooses them.

The threat of this Meta search technology to the traditional OTA model is why sites like Expedia have introduced Trivago. With rate parity all the customer sees is a list of OTA’s with the same price and this still encourages the consumer to contact your hotel directly / brand website to check for best deals. Google and TripAdvisor are working with suppliers (hotels) and OTA’s as they facilitate this process. With Meta search the hotel website is listed as well (although this is usually small and right down at the bottom).

This is an evolving space and one needs to watch closely. Consumer booking preference may shift from the traditional OTA model to Meta search sites and when this happens it can place hotels in a more favorable bargaining position if the lead up is handled strategically.

Currently Google and TripAdvisor claim that they have no plans to become an OTA’s in their own right but we need to closely watch this space, so the most strategic and favourable deals moving forward can be made.

For now it is very important to maintain favourable relationships with your booking partners, maintain rate parity and ensure where exclusive’s are offered at times to OTA’s to assist need periods in certain campaigns and that the property is getting great exposure and value for their money.

 

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