The New Hotel Mantra – “Drive Profitable Direct Bookings
By Madigan Pratt, President of MP&A Digital & Advertising
You are witnessing an upheaval within the Online Travel Agency space and it doesn't necessarily spell good news for independent luxury hotels. Expedia buying Travelocity. Booking.com no longer sharing client emails with hotels. Analysts estimate that Expedia, Priceline and Travelocity will generate a combined $80 billion in hotel and vacation rental bookings this year. And so it goes.
Don't expect this competition to lighten up any time soon. It will most likely intensify. Consequently, there has never been a better time for hotels to commit to driving significantly more direct bookings. Here are some actions you should consider taking immediately.
- Determine Your OTA Costs – OTAs get net rates, therefore it's difficult to determine just how much your hotel is paying for their service.However, you can go to OTA Hidden Cost Calculator, enter a few figures and get a good sense of what OTAs are costing you. In the majority of tests we have run for small luxury hotels, the amount paid to the OTAs was significantly more than what the hotel spent on marketing directly to consumers.
- Commit to Capturing Every Email Address - If your best prospects are your current customers (and they are), then each guest's email address is like a little golden nugget. With first-hand experience at your property getting a past guest to become a repeater should be significantly less expensive than attracting a first-time guest. Staying in touch and providing relevant information will encourage them to both return and recommend your hotel to friends and relatives.Put a plan in place to make sure you capture every email address. It may not be easy, but the long-term financial health of your hotel depends on it. You need to turn your PMS into a high production goldmine for years to come.
- Embrace Customer Relationship Marketing- CRM, when implemented properly can provide hotels with a significant boost in overall occupancy and revenue. It should increase revenue from all sources, but particularly from direct bookings. There are a number of hotel specific CRM software options like NAVIS on the market today. They tie-in to your PMS so you can actually measure revenue generated as a result of any marketing effort. For email you receive information on opens, click-throughs, and revenue generated. Send customized confirmations, pre-arrival and thank-you emails. Set automatically triggered emails to be sent to specific segments of your database.In short, CRM has the ability to differentiate your property allowing you to send relevant messages and content to your guests and prospects talking to them on a 1-to-1 basis. Isn't this the way to grow relationships?In short, CRM has the ability to differentiate your property by sending relevant messages and content to your guests and prospects thus talking to them on a 1-to-1 basis. Isn't this the way to grow relationships?
- Hire Direct Marketing Specialists – Direct marketing is a science designed to get people to act – open an email, click through to a website, book a vacation or call reservations for more information. There is an extensive body of research with proven techniques to get people to do what you want them to do. It is very different from simply composing messages or writing advertising copy. Head-to-head tests of copy written by direct marketing specialists and advertising copywriters show the hands down winners are the DM specialists.Beyond that, effectively building, segmenting and managing a hotel's database takes an expert. It is very different than managing an Excel spreadsheet.If you want to maximize direct bookings make sure you are working with Direct Marketing experts. The best ones will show case studies that emphasize the revenue they have helped generate.
- Integrate Your Marketing – Hoteliers need to move away from housing their various marketing disciplines (web, PPC, PR and advertising, etc.) in silos with little cross-platform communication. There are just too many moving parts today. As a hotelier have you ever tried to keep five, six or seven different marketing partners up to speed on all your strategies and initiatives? It's beyond Herculean – it's impossible.Having fewer partners who offer an array of services you need can make your life easier and increase productivity at the same time. These are two of the main benefits of a new breed of integrated Customer Relationship Marketing (iCRM) specialists.While hoteliers may think that iCRM is expensive the truth is it's probably not much more than what they have budgeted for marketing and could actually be less.
- Have 24/7 Direct Booking Capability – Most luxury hotels attract guests from many different times zones so your reservations department needs to be open 24/7 to answer questions and encourage each caller to Book Now. Don't let them go.If reservations is not open 24/7 it is better to switch after hours calls to a live operator that can take information and have a reservationist return their call ASAP. Don't send it to voice mail. Our research shows that few people like to leave phone messages so potentials sale can be lost.It goes without saying that your online booking engine should be state-of-the-art with all your inventory available whenever a potential guest feels like booking.
Summary – Drive Profitable Direct Bookings – OTAs will process over $80 billion in hotel bookings this year and are on track to do even more in 2016. In the process, by training people to buy on price, they will be commoditizing your hotel and every other one on their site.
Hotels cannot survive by paying 20 – 25% commissions to OTAs and participating in all their promotions that squeeze your margins.
The only way an independent luxury hotel can compete in the future is to maximize its percentage of direct (commission-free) bookings. It's not impossible. And in fact it is both easier and more cost effective than you may think.
Take up the mantra – Drive Profitable Direct Bookings!