Hitting the (Super)Highway!1 Nov, 2012 By: Kirsten Saladow Response
Travel marketers are using every bit of online media in the DR arsenal to overcome obstacles to higher revenue and profit.
The travel industry has fallen on tough times, really since Sept. 11, 2001. Between that tragic day and the U.S. economy’s downturn in late 2008, the travel and hospitality industry has taken a huge hit financially. Now that the economy is slowly recovering, the travel industry is quickly rebuilding. People are traveling again and travel industry dollars are slowly, but steadily, climbing.
Today’s traveler is savvy and thrifty — people looking to leave home on vacation or on business are constantly searching for the best deal. Researching and booking travel online has replaced telephone reservations, travel agents and other third-party entities.
Due to numbers not being quite where travel marketers they would like them to be, the industry is continuing to use direct response marketing, particularly because of its ability to target consumers. In particular, marketers are turning to digital media — everything from E-mail campaigns to social media like Facebook and Twitter.
Online seems to be the space that gives the hospitality industry the greatest return on investment. Considering the Internet is where the majority of consumers book the vast majority of their travel, it makes sense to focus on online and digital marketing as a way to directly impact customers. Not only are people booking online, but they are blogging and talking about travel online — just more reason that it makes sense for brands to jump in and be a part of the conversation.
E-mail Marketing: Not Just Customer Loyalty
E-mail marketing programs are incredibly successful for the travel and hospitality industry. Kimpton Hotels has a loyalty program that recognizes and accommodates individual preferences of all guests including details such as what type of pillow they prefer and how close to the elevator they prefer to stay. Steve Pinetti, senior vice president of inspiration and creativity at Kimpton, decided that if hotelier’s E-mail campaign matched the InTouch customer loyalty program, it could increase overall revenue.
Kimpton created seven affinity boosts, which were promoted via E-mail, including wine, pets, dining, eco-issues, LGBT travelers, “hot dates and great rates,” and “packages and promotions.” By integrating its databases, Kimpton guest information was updated in real time.
Once this system was set up, Kimpton began sending customized E-mails based on individual personal preferences. Just by creating this simple online system to reach customers, Kimpton began to solve the problem of directly reaching customers when the cost of online marketing is climbing but hotel marketing budgets have reached a plateau.
Kimpton certainly isn’t the first hotel to offer a customer loyalty program, but it is innovative in the way it retains customer information and directly customizes an E-mail marketing program to reach those customers based on their preferences.
Do Online Travel Agencies Help Or Hurt?
Some contend that one of the largest hurdles the travel industry faces right now is the high-powered online travel website — think Expedia, Hotwire or Priceline — that possesses a multi-million dollar budget. These websites have relied on struggling hotels liquidating their inventory of hotel night stays through them by offering highly discounted rates.
“After 9/11 and the economic crash of 2008, online travel agencies convinced the travel industry that they needed them, particularly the hotel industry. Unfortunately, these online travel agencies end up costing about a billion dollars of leakage for the hotel industry,” says Jason Price, executive vice president of business development for HeBS.
Smith Travel Research has attempted to quantify the financial impact of third-party websites and their effect on the hotel industry profits. To describe this loss, they coined the term leakage. In other words, revenue leaked from the hotel industry to third-party websites from abnormally high merchant commissions of 25 percent and more. Smith Travel Research has estimated that the leakage from hotels utilizing these sites has reached well more than $1 billion.
Industry leaders have lost 5 percent of market share to online travel agencies, which results in millions dollars of lost revenue.
“Without the right understanding of how digital channels work, individual hotels are working at a significant disadvantage in today’s complex and hypercompetitive marketplace,” says Price. “These businesses must dive into their data to understand what it means and to better strategize ways to engage new audiences, boost revenues and continually optimize campaigns and websites.”
Since its inception more than a decade ago, HeBS Digital has fueled substantial growth for the more than 1,500 properties it serves by developing highly engaging, locally targeted strategies for a range of branded hotel ownership and management groups, hotel marketing companies, casinos, convention and visitors bureaus, and boutique hotels. HeBS Digital uses both Adobe Digital Marketing and BrightEdge, a global leader in SEO, to help capture useful data for hotels directly marketing to customers.
“These tools are data intensive. They help us capture abandonment rates, customer behavior and are really valuable when we are trying to capture customer data as well as demonstrate successes and failures,” says Price.
Once keyword campaigns are optimized, marketers can watch for emerging website traffic trends and increases in conversions, and conduct customer pathway analysis to further refine campaigns to be more relevant and drive higher conversion.
It is clear that relying heavily on online travel agencies to book rooms, hotels will continue to suffer from leakage and continue losing millions of dollars. The solution is to focus on a direct online channel that reaches the customer without using a third party. Hoteliers need a robust direct response strategy, accompanied by adequate marketing funds, to be able to take advantage, prevent leakage and to sustain their businesses by driving customers to book directly through them.
“Reaching the customer directly must be what the hospitality industry moves towards in order to be successful. It’s what we do, and we have seen an incredible return on investment. It’s important to build a direct relationship with your customer,” says Price.
Reservation Recovery Strategy
Customers often visit a hotel website with the intent of traveling. They’ll peruse the site, check dates, look at the different rates and room availability — and then leave the website without booking a room.
One of the ways HeBS utilizes Adobe Site Catalyst is to look at the reservation process overall. These tools capture how many rooms a customer looked at, how many pages he or she had to get through to navigate the website, and where that particular potential customer was in the process of booking the room.
Once the potential customer leaves the site, he or she could receive several direct marketing messages — from an E-mail from the hotel with rates to a pop-under ad with a best rate guarantee. When that potential customer comes back to the website, cookies remember where that customer left off and bring them back to that page of the booking process.
“We also see if sales messages are capturing the best customers, and we use content that is more relevant for that particular customer,” Price says. “For example, for a business traveler, we use business-related content. For a customer looking for summer family vacations, we are able to identify that and bring them that content, which relates to them and feels less noisy than getting generic advertisements, E-mails and pop-unders. In addition, we are able to see direct results that are data driven — we are able to see how many abandoned reservations that were returned and booked.”
Price explains that there are people that will come back to the website on their own, regardless of any marketing the hotel does to bring them back, and there is no way to measure that data.
The Future Of Online Hospitality
While social media becomes more and more important across all verticals, the travel industry is no exception. Airlines directly communicate with their customers via social media in all ways — from offering rates and deals to customer service. Hotels do the same, also using social media to directly reach their target customers.
Social media provides a voice that reaches customers across all channels. For example, The Nines Hotel in Portland, Ore., has several employees on Twitter — from chefs to general managers to reservationists. Having individual staff members produce content provides a wealth of material for customers and also directs them where to go when they have a question. In addition, these channels will direct consumers to the hotel’s website, not a third-party website, to book a room. By doing so, the hotelier retains all of its profits.
Niche social media, like Pinterest, is a valuable tool and a way to connect with a particular audience and build brands. By curating particular content that speaks to a brand, hospitality companies are able to display their particular lifestyle messages that resonate with their customer. Plus, Pinterest is growing more rapidly than any social media network. Utilizing Pinterest is a way to stay on trend and show your customer base that your brand cares about the same things that they do.
Above and beyond social media, Google is getting in on the hospitality industry in a huge way. Google Hotel Finder (http://www.google.com/hotelfinder/) provides customers real-time rates and availability, eliminating the customer’s need to check multiple sites for the best rate and availability information.
According to Price’s research, an average consumer goes to 21 websites before booking a flight or hotel room. It takes consumers an average of eight hours to create a travel plan by the time they go to all the websites. What Google is doing is combining all of that research onto one page, making it easier for the consumer and better for the hospitality industry.
“Google Hotel Finder is a game changer. On top of the convenience of being able to see all rates and availability at once, you can use Google Hotel Finder seamlessly on all devices – from your desktop to your tablet to your phone,” says Price.
The key to Google Hotel Finder is that the customer is still booking the room on the hotel’s website rather than a third-party website.
“I don’t think that Google will eliminate third-party sites like Expedia. Google gets a lot of ads and they receive plenty of revenue from those third-party sites — so it’s not really in their best interest to get rid of them entirely. However, I do think Google is leveling the playing field. I’m very optimistic about it — the third-party sites are 800-pound gorillas that hotels are desperately trying to compete with. Having a tool like Google is certainly like having a big guy in their corner,” says Price. ■