Industry Update
Opinion Article21 July 2020

How To Wring The Digital Ecosystem During These Testing Times For Luxury Hospitality

By Rasika Iyer, Business Manager, Paid Media – Performics India

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Luxury Hospitality and the Pandemic

Luxury hospitality has been at the brunt of this pandemic due to closures and unavoidable overheads. As the world is moving towards recovery, the industry also is evolving and trying to thrive by adapting to changing consumer behaviour. The consumer is being thriftier and cautious but the internal persona remains the same. Brands need to re-invent and re-imagine their offerings as well as marketing strategies to emerge victorious at the end of this tunnel.

Navigating through the Recovery Phase

The pace of recovery is varying in geographies and a great indicator for brands to plan timelines can be based on the below consumer buying funnel by BCG.

F&B outlets were the first revenue stream they focused on, by extending delivery options and safety standards for connoisseurs to enjoy a delectable meal from the comfort of their homes.

Weddings being another complementary revenue stream, is a golden opportunity brands are tapping on. Government restrictions on guests and personal inhibitions about hygiene are swaying a new set of customers towards luxury brands.

Re-imagining Marketing Practices

With the uncertainty and restrictions, marketing is an integral aspect for the hotels to both inform the consumers about offerings and provide a sense of comfort in these distressing times. With the current economy and financial bleeding, it is of prime importance that the hotels plan and strategize investments as marketing does not generate direct revenue.

Strategizing marketing for recovery

A major step towards this is battling the Bandwagon effect. Marketing is highly dependent on case studies and what has worked in the past or for competitors. But brands need to respond with sincerity and sensitivity. There is undoubtedly immense value in joining the bandwagon as it has the strength to influence consumer behavior but it should be done with certain precaution.

Most leading brands have come up with offers encouraging and enabling consumers to embrace the new normal. If not executed rightly this can backfire and have a negative impact.

  • Avoid Tokenism - The discount cannot be the only highlight of your messaging. For most consumers offers have moved down the ladder of priority preceded by hygiene and amenities.
  • Deliver value - Luxury industry is often based not on rational decision-making process and reasoning but on emotions and feelings. These brand are built based on their story and values. This is the time to highlight the values and differentiate.

Need for information: Uncertainty is uncomfortable. This is the time to be detailed and thorough with messaging. Acknowledge the need, identify the common questions, answer them and keep it up to date.

Shifting mindset and marketing to the new consumer

The new consumer needs to be persuaded for travel as they have new priorities. In times like these one return to the basics of Maslow's hierarchy and travel does not make it to the list. But due to (fatigue) we see that millennials are still looking out for an out. While the traffic has dropped in absolute numbers but engagement has picked up. Leisure travel is going to be the first to pick-up. Being in lockdown and learning new ways to work will reduce business travel even after the crisis ends. 35% of them say they will consider traveling in the coming few months this year and will plan just a month prior due to the uncertainty. They are planning it with friends and the plans are moving to domestic drivable locations.

  • Luxury chains loyal customers who trust the brand. This should be the starting point. Maintaining relation with them through loyalty program benefits is a great way to garner leads.
  • Focus should shift from features to ethics and value

Keeping up with the Trends

The world has faced crises before. Each, gives rise to new trends. This provides the scope to rethink and revamp your brand offering.

38% of the interviewed choose villas, cottages and private homes over Hotels.

F&B outlets are coming up with meal bento boxes, cocktail mixes and vouchers were some new offerings that were introduced. Modifying menus for single portions is another great way they are ensuring distancing while trying to enhance business.

Hotels are working on enhancing digital technology by introducing apps for self-check-in, meal orders, appliance controls and payments. Gourmet food vending machines reduces a lot of Room service interaction; making it safer, ensuring peace of mind for the guests to unwind.

  • Identify the needs gap, change identity, focus on different offerings
  • Introduce new features/modifications
  • Simplification to ease reception for the consumer

Choosing the right marketing channels and content

An ill-timed campaign or misplaced messaging can create a tone deaf brand image. A normal event promotion or transactional content can be perceived as insensitive.

The companies should seize the opportunity in hand to re-evaluate their strategy. People are more receptive to brands that do good; cause-oriented campaigns can work wonder for Branding. Highlighting your efforts towards the community at testing times builds credibility and trust.

Slashing costs is barely the solution. Instead re-strategizing, exploring a new media mix, negotiating and most importantly asking the right questions is the way ahead. The company needs to focus on short-term changes that will reap long-term value.

Leveraging the digital ecosystem

Digital marketing has proved to be the go-to strategy in cases where customisation, measurement and ROI play a role.

  • CPM/CPC rates are lower than normal
  • Consumers are spending more time on their devices increasing the search universe and engagement rates
  • With very few advertisers, it is easier to gain share of voice in the open inventory

1. Restructure: The previously existing media plan must have worked well, but the structure needs to change in tandem with the new consumer.

  • Opt for localized and more narrowed down targeting
  • Reallocate budgets basis market availability and performance of geography
  • Keep the government restrictions in mind while crafting the tactical plan
  • Focus on the new needs and tweak the messaging accordingly

2. Optimum media mix: Make sure you balance branding and sales

  • Branding, even though is not a direct revenue generator, plays a major role in building presence and creating recall. Showcasing stories, experiences and keeping the customer engaged in a difficult time helps in building loyalty and trust. 40% of the respondents say they have recently seen an Airbnb ad and this showed a corresponding effect in their choice of stay.
  • Revenue generation cannot be sidelined, run performance ads to support the branding activities with non-transactional messaging

3. Utilizing platform features to optimize efficiently

  • Google Search
    • Target intent based non-brand keywords to gain visibility but at a lower CPC
    • Maintain a high top of page impression share for your brand keywords to prioritize the hotel website over OTAs (88% of interviewed said they book through an OTA platform which reduces direct revenue for the hotel)
    • Use feed ads to customize messaging, make frequent changes and increase relevance of ads
    • Run hotel ads with commission program (GHACP) to pay only for stays completed
  • Google Discovery
    • Avoid use of audience segments that are too broad
    • Use customer lists from the Hotel CRM along with retargeting lists created from tags
  • Facebook
    • Detailed targeting and right objective will help reach your segment in lower costs
    • Travel Ads will help serve ads basis current inventory and prices
    • Trip consideration will enable you to reach audience with travel intent
    • Experiment with creating content and formats
    • User generated content plays an important role (51% of the interviewed say, friends and family influence their choice of stay)
    • Retarget to reach customers at different levels at the user journey with relevant messaging
  • LinkedIn
    • Reach customers based on their incomes and spending power
    • Authenticity of customer information and unique targeting options
  • Twitter
    • Platform should be used for opinions and information
    • Influencer marketing through video ads
  • Email marketing
    • Reach loyal customers with targeted offers and loyalty programs
  •  Affiliate marketing
    • Can be used for branding activities to a specific audience
  • Analytics
    • Very important to track the activities and analyze the returns for better planning and optimization as trends and benchmarks are changing
    • Analyze call data as people might opt for calls in current situation and it's a great way to get insights on understanding the consumer pain points

4. Evaluate multiple plans: Always have multiple options to choose from and evaluate basis the following:

  • Impact: How will the plan improve and contribute to the marketing goals
  • Confidence: What is the familiarity and credence does team have on the plan
  • Ease: How difficult is it to execute

The key here is to be better than your competitors and changing the situation into an opportunity to reimagine the brand through the ever-changing lens of the consumer. It is a make or break situation with your loyal customers. It also provides tiny cracks to penetrate a newer customer segment or also lure them from your competitors. The recovery will be slow but with the right plan, a brand can expect the fastest route barring the unpredictable external factors.

*A survey was conducted; 43 respondents from South-East Asia and Europe responded. Age: 21% below 25, 65% between 26 and 30 years, 14% above 30 years of age.

Rasika Iyer

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