Running a hotel is a challenging business where you need to work on selling your rooms on time and maintain a healthy occupancy. Room not sold today is a lost sale and that can never to be recovered. This is why any short term social / environmental crisis such as Covid-19 pandemic can make a huge impact on the hospitality industry.
So, in surface one would think that filling the hotel and maintaining occupancy will make the business profitable. This school of thought drives the sales team to fill the hotel at any cost. However lately it is understood that not just occupancy but yield or revenue management plays an equally important role in the hotel’s overall marketing and distribution strategy.
With Covid-19 pandemic selling rooms have become a challenge and adhering to new health and safety guidelines makes it even harder to run at the same level of occupancy as before. And on top of it all, there is the pressure from the market for low rates, special offers and discounts. All this attribute to low margins and the need for distribution channels with low cost of sales. So, it is crucial and evident that any hotel should implement a strategy to maximize yield and looking at ways to reduce cost of sales / distribution.
The best way one can look at reducing cost of distribution is approaching the customer directly. Digital Marketing is the most cost-effective channel and the best investment in getting to the customer direct.
Why e-commerce / Digital Marketing as a Distribution Channel for hotels?
- Go Direct and Save Money
- Generating direct booking revenue helps you to reduce of cost of distribution and build long term relationships with the client. You can avoid paying high commissions to third party agents.
- Convenience for Your Customers
- It’s easy for customers to book online at their convenience without the hassle of calling or sending back & forth emails. Customers can select their preferred offer, room types, rates, meal plan and make that booking directly with you.
- Platform that works 24×7
- Your website will generate money around the clock, allowing customers across the world to book whenever they prefer. This is instant revenue to the hotel. Having a smart chat option on the site is also an addition benefit to clarify any doubts customers have before making the booking.
- Reach New Customers, Markets
- Help to reach new customers, new market segments and brings new sales channel directly to your hotel.
Components of a Highly Effective Digital Strategy
- Website plays an important role in hotel’s digital strategy. While it has to be attractive and beautiful (which is subjective) most importantly website should be mobile responsive, informative, conversion driven and experiential driven with pictures, videos of the property etc.
- Online Booking
- This is a must. This allows your website to generate bookings round the clock. Since the customers have endless options, not having online booking could result in losing the customer to a competitor or they book with an intermediary (Online Travel Agent) where hotel ends up paying 15% -25% of the booking value as commission
- One can’t talk about digital strategy without having proper analytics implementation. Analytics will help you monitor what your customers do on the website, conversion rates, exit points, how much time they spend and most importantly help you fine tune your digital campaigns by analyzing the visitor behavior on the site.
- Search Strategy
- Search Engine Marketing plays a major role in hotel digital marketing mix. Usually a 65% to 75% of hotel websites revenue and bookings are generated by search marketing (SEO + Paid search). Search brings more quality customers who are actively searching for your brand or hotel options, so the conversion rate is usually high.
- Re-marketing and Re-targeting Campaigns
- 70% of a hotel website booking are generated by returning visitors. In general, this is around 30% of the total visitors to a website. This shows the importance of bringing customers back into the booking funnel. Implementing re-marketing / retargeting campaigns on search, display and social platforms is very important.
- Social Media Presence
- While this channel is used mostly for upper funnel awareness generating activity, we have seen an increasing contribution to lower funnel during recent times. Primarily due to the high number of social media users and ability to retarget the potential customers.
It’s not just Digital Strategy
- Customers are expecting Brands to offer special rates, discounts during a time like this. Hence having attractive and competitive offers in place is a driving factor for customers to make a purchase decision.
- Cancellation Policy
- During these uncertain times, flexible cancellation and booking policies are a must to entice customer to book with you. Make sure you allow them to cancel at the last minute. 24 hours cancellation policy is the best.
- More than ever before maintaining rate parity now is a must. More and more customers are looking to book directly with the hotels since they feel safe due to the current situation. And if the hotel sells at a higher rate on the brand website compared to OTAs you will not be able to convert that consumer.
- Something New
- Think out of the box! Selling gift voucher packages & cash vouchers is a new way of generating Instant revenue to the hotel, while offering confidence to the consumer to leisurely plan their travel and flexibility to decide when they want to travel. It’s not just a great deal but also a confidence booster to travel on their own leisure time.
- Value Adds Not Just Discounts
- Discounts aren’t the only factor that attract customers to book with you, value additions such as free breakfast, free spa vouchers, early check in, room upgrades, hotel credits are a vital part of the offer.
- Not just Rooms Ancillary revenue
- Looking at all streams of revenue is a must now, aside from rooms how you can improve restaurant, excursions, Spa revenue etc… is important. Having combined offer packages with room + other services will help increase ancillary revenue. Introducing F&B credit will encourage them to dine at the hotels or use other services like Spa.