Traveler habits are changing post-pandemic, and the direct channel is retaking center stage in the relationship between hotel and guest.
NB: This is an article from Pegasus
With travel business continuing to pick up pace through the summer and financial analysts projecting an economic boom beginning in Q4 that could last until 2023, hoteliers must act now to get their ecosystems configured and take advantage of the coming surge in business.
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Disjointed technology stacks and siloed data have long been well-known problems in the hotel world, but it’s not often pointed out that these silos are a reflection of the hotel departments they serve.
The direct booking experience, for example, is traditionally segmented across three different business units: 1) Marketing, which owns top-of-funnel acquisition activities like Targeted Ads on Facebook, paid search, and social media; 2) E-commerce, which owns the website experience, determining pathing for different kinds of visitors and the exact messaging on brand.com; 3) Revenue, which owns the booking engine experience, setting pricing and facilitating the final part of the conversion.
This fragmentation, where each stage of the booking funnel “hands off” a user to the next stage, is clearly not optimal for the customer and also creates a variety of problems for hoteliers:
Stakeholders from each department work to optimize their own part of the direct funnel, and often these efforts are not coordinated with one another. For example, marketers are generally incentivized to deliver a high volume of traffic to the website, so they spend their time devising new ways to bring in more visits. E-commerce execs are incentivized to boost conversion rate on site, so they work with technology to merchandise and discount more dynamically. And revenue professionals are incentivized to protect ADR, manage inventory, and protect channel parity, so their booking engine tools are built around those functions.
A plausible scenario in a poorly aligned organization includes Marketing driving up traffic with low-quality visitors, which decreases conversion rate (CVR); E-commerce in response being more aggressive with their discounting to help CVR recover; and finally Revenue increasing rates to protect ADR, countering any discounts offered. Each department is protecting their own metrics, and in turn neutralizing their colleagues’ efforts. Incentivizing different teams with different metrics in this way leads to inefficiencies if the teams are not united by a common, centralized strategy.
The use of different tech products in different departments naturally results in the use of different reporting structures and data conventions. Issues that seem trivial, like formatting differences in CSV exports, can create recurring errors, delays, and inefficiencies. But deeper problems, like discrepancies in the way that two vendors calculate conversion rate, or attribute a site entry, or define their AB testing parameters, can produce genuine confusion, and in the worst cases pit internal colleagues against one another.
Vendors are always incentivized to frame data in the most favorable terms for themselves possible, so the more vendors you have, the more opinions and data sets you have about how to interpret your business. Having vendors compete in your booking funnel means departments competing in the same way.
Tech Stack Bloat
As each hotel stakeholder has their own segmented part of the booking funnel, each seeks out vendors that drive the specific metrics they care about. These vendors’ tools may be the “best in class” for optimizing their one specific metric, but they almost never integrate seamlessly with one another. Seemingly small product gaps can lead to duplication of work, overlap of technical capabilities between vendors, and lack of orchestration in building towards big picture goals.
It is almost impossible to achieve true automation or to streamline processes when piecing together a patchwork digital ecosystem. Using a variety of hyper-specialized tools can often feel like the most strategic approach to marketing, but it rarely results in the most efficient, cohesive experience for either your consumers or for your internal teams.
So how can hoteliers achieve a holistic, streamlined tech ecosystem starting today?
From an organizational standpoint, executives must come together to create a centralized strategy where team members from each department are not only incentivized based on their own departmental metrics, but on the health of the entire direct channel. Alignment on the volume and type of traffic that should be acquired on a monthly basis, how aggressively rooms will be merchandised on the website compared to other channels, and which conversion tactics will be employed across the funnel should be coordinated across all stakeholders, not managed separately by siloed teams.
In terms of managing data, it’s important to create internal standards for the most important metrics to your business—conversion rate, what constitutes a unique site visit, acquisition cost per visit, cost per conversion, etc.—and request that vendors accommodate and match your equations. There is not necessarily any fundamentally right way to calculate any of these metrics, but having consistency across departments and vendors is critical. Do not let your vendors determine how you measure what goes on in your business.
In the end, true top-to-bottom alignment is only possible with a fully integrated digital ecosystem. Working with technology vendors whose platforms were designed holistically, and whose value proposition centers around driving overall channel health as opposed to one or two highly sequestered metrics, is the best way to align your various departments and provide your customer with the most seamless brand experience possible.
Travel, and the economy as a whole, is coming roaring back by the end of 2021. There’s enormous opportunity to capitalize on your direct channel. Now is the time to reimagine and remake your direct channel into a single, streamlined entity instead of a collection of siloed, bolted-together tools.