Revenue management and marketing are ready for disruption. The same approach with the same tools, yielding the same results is no longer acceptable.
This past year, I’ve met with executives from countless ownership groups all over the world. Even though they all seem to be enjoying the performance of the current “up cycle” for the hotel industry, three themes emerged which frame their underlying concerns for the future:
- They don’t like the OTAs
- They want their brands and management companies to be smarter about pushing rate
- They think most travel marketing is uncreatively “formulaic” and can get better
Same Old, Same Old View on OTAs
The owners’ dislike of the OTAs is nothing new. But it’s not going away because the OTAs are not going away. Backed by a billion dollar advertising machine, OTAs are top of mind with consumers and their cost of revenue to a hotel is steep.
So owners want to know if hotel brands and management companies are doing all they can in the current digital distribution environment to maximize rate and capture higher levels of transient business with their marketing in the face of the OTAs.
Quite frankly, the answer is no – because hotels are using the same disparate tools to price and market as they have been for over a decade. The good news is – there’s light at the end of the tunnel.
Old Versus New Pricing Strategies
Let’s focus on the most important and volatile customer segment – transient travelers, which include both leisure and unmanaged business. Hotels determine published BAR prices by future arrival day generally using the following inputs:
- Day-by-day forecast based on their own historical data
- Evaluating the fluctuations in rate by future arrival period versus competitive hotels
- Monitoring pace to forecast
- Assessing past RevPAR performance in STR reports
- Reviewing future “on the books” business within the GDS or PMS through Hotelligence reports
- Newer tools add factors such as weather, events, economy fluctuations, etc., to capture nuances
It’s essentially an educated guess on tomorrow based on yesterday’s results forecasted forward. So what can be added to this process to improve future pricing decisions?
For starters, hotels should have an understanding of available transient demand and how well they’re doing in capturing it versus competitive hotels, or the broader market. It’s a key factor that hotels need to consider now.
Thanks to new BI innovations, this data is now becoming available to revenue management teams inside brands and management companies.
- Transient consumers do most of their “looking and booking” for hotels online, primarily on the vast network of OTAs and other third-party websites.
- Data can now be aggregated on consumer behavior as they shop, allowing a “real-time” view into how a hotel’s price and positioning is influencing the transient business it attracts and converts.
- Within a data warehouse, consumer behavior, rate and demographics can be integrated for a single view of how these factors influence each other and consumer decision-making.
More often than not, this new predictive data helps revenue management teams make different pricing decisions than they would have made using the same tools and information from the past.
For example, a hotel might see that in the next 30 days some of its competitors have lowered rate. The initial response might be to follow the trend. But if a hotel can see that consumer demand, or looks for the hotel and its comp set are strong during that period, there is justification to hold rate until you see the booking trend materialize. The consequence for this can be improved ADR and RevPAR performance.
Old Versus New Marketing Strategies
Generally speaking, hotel marketing teams think of marketing in four categories, each with certain channels utilized to reach consumers:
- Brand Marketing: television, radio, and print
- Loyalty Marketing: email and direct mail
- Social Marketing: Facebook, Twitter, Instagram, plus YouTube
- Digital Marketing: platform-focused in Google AdWords, banners on TripAdvisor and the OTAs, content marketing, and display banners and retargeting
No one ever said marketing was easy. However, hotels have unique challenges: it’s near impossible to get brand messages to resonate with consumers as they used to because of the sheer volume of OTA brand marketing.
What’s more, loyalty programs have expanded their scope, thus are less effective. They used to help a hotel capture a higher share of a frequent travelers’ business versus other hotels. But now loyalty programs must also convince consumers not just to book within their brand, but also, to do so directly with them and not on third parties.
That means if a hotel is going to significantly grow share of transient business it must do so primarily through digital and social marketing. The verdict is still out on the true ability of social to turn likes or pins into bookings, so let’s go right to digital marketing.
The fact that hotels are traditionally slow to innovate with digital strategies is a source of frustration with most owners.
NB: This is a guest article by Rich Maradik, founder, nSight For Travel
Read full article at: Tnooz