OTA Leakage – How Much Profit Have You Lost?

When Smith Travel Research first released data on the impact of OTA’s on the hospitality industry back 2003 it generated a lot of activity both online and offline. The hotel brands spent thousands of dollars on advertising campaigns designed to drive business directly to their corporate websites. The launch of the “Best Rate Guarantee” dates back to that time. The profit loss estimated by STR then was $1.4 billion.

Guess what? It has happened again. Only this time it is to a much greater extent! Can you say $5.4 billion (as estimated by HeBs)? There are many reasons for it.

The question is, what is going to be done about it this time? The Best Rate Guarantee has already been done.  Any more ideas?

What about maximizing revenue production directly from the hotel’s website across all market segments? A close examination of a wide variety of hotel sites exposed clear and present opportunities to do just that. The addition of micro-formats and RDFa programming are two items that would greatly enhance visibility and distribution. The inclusion of Google3D is a technology that has been available for several months yet not widely used in hotel marketing. These are just two examples that would greatly improve performance and allow a hotel compete vigorously with the OTA’s.

The hotel brands also need to allow franchise hotels to develop and launch vanity sites.

Note: A case study on the effectiveness of vanity sites, not only for the hotel but the brand a well, is available by emailing sales7@hyperdisk.com

The OTA’s are a valid channel for selling room nights. It is just that they are the least profitable method of selling them and consequently, should be a low tier (bottom tier we think) option for selling.

Its Time To Sharpen Your Saw

Hospitality marketing consultant, Neil Salerno, quotes Stephen Covey’s famous book, “7 Habits of Highly Effective People” in a piece for ehotelier.com titled, “It’s Time for Hoteliers to Sharpen the Saw.” He puts forth very compelling points regarding online marketing, the economic downturn and the tentative recovery he equates to cutting down a tree using a dull saw. He also asks questions that should be considered by many directors of sales and marketing, and corporate vice presidents of marketing in the hospitality industry.

Neil states, “The Internet and other forms of electronic marketing are critical elements for success now and into the future.” We agree except that we feel it is mission critical and has been for quite a while. If “other forms of electronic marketing” means mobile, we suggest he fell quite short on the emphasis here. Mobile marketing will soon eclipse computer use of the Internet according to comScore (see previous post on mobile marketing).

Neil continues, “Now, is the time to make an assessment of the production from your website. Start with the number of reservations received versus website visitors. Is your website attracting relevant visitors; are you receiving site analytics to help fine tune your website?”

These are all excellent questions yet need to reach deeper to get an accurate analysis of how visitors are interacting with your site. What is your Bounce Rate? Are you driving the visitors to the pages you wish them to go? What revenue is being generated outside of room nights? What is your traffic count versus your comp set? Have you implemented geo-locating code on your site to maximize Search Engine visibility that now relies on HTML 5?

“When was the last time you did a thorough review of your website for updates? Is it time for a new website to boost sales?” is perhaps Neil’s most important question. During the difficult period of late 2008 and all of 2009 nearly everyone either cut or froze marketing budgets. They typically put website redevelopment on hold until the booking forecast and revenue generation improved. Now is the time to rectify this situation. In the world of Internet marketing as little as six months is a huge time-lapse let alone over a year. The aforementioned HTML 5 has been implemented by Google, Hootsuite, and mobile applications making it essential for your hotel to have it incorporated into your site. And that is just one development!

With all of the major researchers (Smith Travel Research, Forrester, PhocusWright, etc.) forecasting a recovery in 2010 you cannot delay in have answers to Neil’s very timely questions.

Mobile Marketing For Room Nights

There are expected to be over 1 billion people with smartphones by 2013. What impact does that have for mobile marketing and booking room nights at hotels? Take a look a few current statistics:

• nearly 200 million smartphones are currently ready to book rooms
• Over 30% of smartphone users use them to access social media
• Nearly 5% of all hotel traffic is now mobile

And consider this report,

According to the “Deloitte Hospitality 2015: Seven key trends to shape future success” one of the most important factors is technology; and more specifically mobile technology. It states,

“…to be successful in 2015, hospitality companies must invest in technology. The battle to drive bookings through proprietary websites will continue, but all major operators will also develop applications and websites for mobile devices to meet consumer demands.”

Here is what a customized mobile app can do for you:

• Guest service functions
• Pre-arrival and in-room offers
• Integrated social media tools and tracking
• Mobile marketing outreach and targeting

Even with all of this, many hotels have yet to implement a strategy or invest in mobile technology. Market share and more importantly, revenue, could potentially be a risk. Don’t let this happen to you.

Hyperdisk Marketing produce emarketing revenue results for hundreds of high-end hotels throughout the world. We now develop comprehensive mobiel marketing programs that drive sales, improve branding and extend marketing potential.

Contact us if you would like a free mobile marketing analysis sales7@hyperdisk.com

UPDATE: State of mobile just released by comScore

Smartphones

Mobile usage on track to eclipse desktop usage