The new year provides hotel marketers an opportunity to reset their priorities and grow their business. The following digital New Year’s resolutions offer a simple playbook to help you do just that.
Welcome to 2020, everyone. A new year. A new decade. A new beginning.
The start of every new year is a great time to take stock of the year gone by and think about how you can improve what you’ve done up until now. With that thought in mind, here is a set of digital New Year’s resolutions that every hotel owner, operator and marketer can get behind.
You will shift share to direct
Can we finally agree that guests coming from direct channels are worth more to you than guests coming from other sources? Think of the benefits. For starters, you typically generate an average daily rate at least 15% higher than third-party since you’re not paying commission for the reservation. You also collect email addresses and other customer data that contribute to improving your direct marketing. Our data shows that every 15 to 25 emails collected is worth one additional reservation per year for your hotel – and often much more. Combined, these two metrics alone can account for a material improvement in business results worthy of your time this year.
Yes, direct costs you something. And, let’s be fair. There are a number of great arguments in favor of third-party reservations. For starters, online travel agencies and other intermediaries often can reach guests you can’t reach on your own. They can help drive volume during softer periods. And, of course, you don’t need to pay them for any reservation until and unless they deliver that business. Those are all compelling, rational reasons to use OTAs… for some of your business.
But not for all. Third parties can play an important role for your hotel, but they shouldn’t play too big a role. Depending on any one channel for too much revenue puts you in a precarious situation when—not if—they change the rules of the road. This is true for everyone in travel. For instance, Mark Okerstrom relied on a key third party, Google, to drive traffic and revenue to Expedia and we all saw how that worked out, right?
OTAs can help grow your business. Use them where appropriate. But focusing on driving more business to your direct channels to grow both your bottom line and top line in 2020 is one resolution every hotel operator should readily endorse.
You will invest into the downturn
A number of experts seem to think the economy might, maybe, possibly head into a recession this year. Or maybe not. This proves the adage once again that if you laid all the economists in the world end-to-end, you wouldn’t reach a conclusion.
For the record, I think most markets will not see a recession in 2020. Yes, some will be softer than we’d like. And let’s be serious: Some markets already are facing a downturn in business, either because key customer segments have scaled back their travel, room-supply growth in those markets has put downward pressure on occupancy and rates, or a combination of those two.
But here’s the thing. You’re better off acting as though there will be a recession and having it not be true than acting as if there won’t be a recession and having it be true.
So how do you handle a downturn best?
First, look at continuing or expanding your investment in performance marketing channels. Paid search, including metasearch, continues to deliver excellent return on spend when managed properly. While paid search return on ad spend (ROAS) is down some in recent years, you can still easily expect returns of 7:1 or more on your investment—that’s usually well above the return from OTAs, too. If Google and other performance marketing channels will hand you $7 or more for every dollar you give them, why would you stop handing them those dollars?
Second, you want to continue to invest in content, including some video. Guests are starved for information about your destination and property. OTAs and review sites provide this information. They’re also sites where your competitors live. You can’t get guests to book direct if they never visit your site. And they’ll never visit your site if you don’t help them answer their questions.
It might seem odd to invest in marketing during a downturn, but it’s actually among the smartest moves you can make. When most of your competitors are running scared, the right move isn’t to mimic them, it’s to pick up share at a bargain price. Reduced demand from competitors on performance marketing channels lowers your costs. Helpful content attracts interest from those who are traveling. Why not make any recession your competition’s problem and pick up market share at a lower cost?
You will focus on ‘core and explore’
Finally, adopt a “core and explore” mindset as you head into this year. By “core,” I mean you must focus the bulk of your efforts on the distribution and marketing channels that work for your hotel. Expect to spend 80% or more of your time and budget on paid and organic search, email marketing, CRM, and improving guest experience. Ensure you provide an effective mobile browsing and booking experience to guests to improve your share of revenue from customers using mobile. And keep fishing where the fishing’s good.
“Explore” means keeping the rest of your budget—15% to 20%—available to test new channels, new ideas and new opportunities. This doesn’t mean you should chase every wild idea that comes down the pike. It means that you’re providing your team the flexibility they need to pursue opportunities if they appear—and to keep some “powder dry” where it’s needed.
Every new year is filled with uncertainty and this year more than most. Maybe we’ll see a recession; maybe the hot streak will continue. Focus on direct business, steal share from competitors who choose to sit on the sidelines and use a “core and explore” framework to provide needed flexibility as conditions shift.
While no one can predict what 2020 will bring, I’m a big believer in the idea that the best way to predict the future is to invent it. And, ultimately, inventing the future you want might be the best resolution you can make this year.
Tim Peter helps hotels and resorts put digital to work to grow their business. He has developed innovative e-commerce and digital marketing programs designed to increase sales and revenues. Prior to founding hospitality consulting firm Tim Peter & Associates in 2011, Tim led the world’s largest hotel franchisor and the world’s premier independent luxury hotel representation firm in driving billions of dollars in revenue for hotels and resorts around the world. He can be reached at timpeter.com/hotelmarketing or firstname.lastname@example.org.
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