Four Key Trends the Hotel Industry Can’t Ignore During 2020
Now that we’re all back at work, attention is turning to the year ahead.
NB: This is an article from Dori Stein, CEO at Fornova
I thought I would share my predictions for the main trends that will influence hotel chains’ success in 2020.
1. Google domination
Google stepped up its game in 2019 as it looked to further dominate the global travel sector and we expect this to continue throughout 2020 and beyond. Their price-match promise for the flight industry sent ripples through the hotel industry. While a similar promise is unlikely for the hotel industry, there are plenty of changes underway that hotel chains need to be up to speed with.
Google search: We will see a further increase in the prominence of hotel search functionality. Hotels will need to ensure their SEO and Pay Per Click strategies are optimised to ensure they don’t get lost among the competition.
Google, the OTA alternative: Google is set to dramatically increase the number of hotels it works directly with, positioning itself as an alternative to established OTAs. Its simpler bidding options in Google Ads are attractive to hotels who only have to pay when there’s a sale.
Google’s driving focus is to make its search as relevant as possible for its users and keep users on the page rather than diverting them to a hotel page or elsewhere. While Google is getting close to becoming an OTA, it offers none of the additional services and support a hotel would expect from an established OTA.
Book on Google: As consumer trust builds and the number of hotels available on the platform increases, we expect to see a big increase in the use of Book on Google during 2020. Part of Google Trips, it is yet another opportunity for hotels to attract potential guests at an earlier stage of the booking journey.
Opportunity: There are even greater options for hotels during 2020 to gain fresh exposure at the start of people’s travel planning process. Building a direct and effective working relationship with Google is crucial.
Risk: In a world, where everyone is exposed to Google’s Metasearch engine, rate integrity has become much more important. If hotels don’t manage their rates effectively, they risk giving the perception that it’s cheaper to book elsewhere and will lose out on direct bookings.
2. The slow demise of the wholesaler model
In 2019 the downfall of Amoma underlined the hotel industry’s increasing frustration at the impact wholesalers have on their net Rev PAR. I expect to see a few more Amoma moments during 2020.
We have seen a concerted effort from many of the global hotel chains that we work with to reduce the inventory that is made available to wholesalers. Booking.com’s efforts with its Price Quality Score (PQS) to improve rate parity with the hotels it works with has also led hotels to stop working with wholesalers because of the steep reduction in their Booking.com revenue when room rates become an issue.
This will continue to be a major trend throughout 2020. As more players reduce their exposure, more wholesaler companies will go bust.
Opportunity: Improve quality leads and bookings by refocusing attention on OTA and direct booking channels rather than making inventory available to wholesalers
Risk: While we have seen how leakage from wholesalers negatively impacts room rate party, the wholesaler model does help to balance out the power of the OTAs. For many hotels, they remain an integral part of their distribution mix but, hotels who work with wholesalers must be proactive in monitoring and tracking room rates.
3. The rise of programmatic advertising
In 2020 programmatic advertising will increase at the expense of search engine marketing (SEM) and social media. Hotels will increasingly use software that automates the buying of digital advertising space – helping hotel marketing teams to better plan, better optimise and better target their advertising.
According to an eMarketer report, spend by travel and hospitality brands on programmatic advertising will grow from $36.8 billion in 2017 to $65.6 billion in 2020. This rise is being partly driven by the increasing use of retargeting by travel and hospitality firms. The report also highlights that brands are increasingly incorporating their own data into programmatic strategies: half of travel marketing execs say their companies now use first-party insights for programmatic buying. (source: mdg)
Opportunity: Better control over your hotel chain’s digital advertising campaign. The software manages the time-consuming tasks so that you can focus on optimizing campaigns.
Risk: While display advertising is a core part of the marketing mix for many hotel chains, it’s clear that search and social media continue to remain critical channels and shouldn’t be overlooked.
4. Getting smarter with your data
Hotel chains are increasingly turning to data to inform their business decisions rather than relying on gut instinct alone. Yet, with so many different data streams to reconcile senior decisions makers are spending so much time on collating room revenue and marketing reports that they struggle to find the time to focus on other important areas such as optimizing food and beverage and MICE (meetings, incentives, conferences and exhibitions).
Business intelligence tools are providing hotel chains of all sizes with a clear and simple way to visualise their operations data on user-friendly dashboards. Revenue and Marketing Directors can quickly segment data streams to identify opportunities, trends and risks.
Eliminating the need for multiple spreadsheets and reports helps Directors and Manager make decisions, faster and frees up time to focus on strategic priorities.
Opportunity: Gain control and visibility of your main data streams to make more informed decisions, more quickly.
Risk: Sticking with the spreadsheets and wasting more days this year crunching numbers!