REPORT FROM THE U.S.—As revenue managers gear up to take advantage of incrementally increasing demand, experts in the distribution field this week offered a 90-minute Web-based crash course in optimizing pricing strategies.
“Is revenue management art or science?” was presented by HSMAI in conjunction with HotelNewsNow.com and STR as part of the 2011 Revenue Management Webinar Series: Question Everything.
Presenters discussed four crucial channels by which to market hotel rooms: the global distribution systems, mobile devices, social networks and online travel agencies.
Supply/demand landscape
First, Jan Freitag, VP of global development for STR, gave an overview of the hotel landscape. “The nice thing to see is an extremely strong demand rebound,” he said. “It’s the strongest we’ve ever commented on.”
However, looking at previous downturns in the hotel industry, Freitag said with every swing in demand, the swing in average daily rate actually gets worse, meaning hoteliers discount rooms more drastically and the recovery time is longer.
Although demand rebounded in the beginning part of last year, it wasn’t until recently that the hotel industry saw increases in ADR. “What we’re afraid of is that we didn’t do that well on the revenue management side, and next time it will be a lot worse. That’s our fear,” he said.
Transient demand is back, Freitag said, which is a positive sign for the recovery. More transient rooms were sold in the first quarter of 2011 than ever before, although rates were still below 2008 and 2009 numbers. Group demand came in just below the peak in 2007 but above 2008, 2009 and 2010 levels.
“The hotel meeting season is September and October, and it will be interesting to see how the industry shakes out as we get to that peak season,” he said. “It’s going to take a lot of time to get 2011 rates that were negotiated in 2010 off the books.”
Demand across the independent segment is just as high as the upper end of branded hotels, Freitag said. Occupancy is also just as strong, but rate is lagging.
“Independent hoteliers are not quite ready to match the luxury and upper upscale in terms of pricing,” he said. “We hope to see stronger rate growth as the year progresses.”
Role of the GDS
John Walker, manager of distribution partnerships for Sabre Hospitality Solutions, said marketing to the GDS is still important for hotels. It’s the key source for travel agents to access inventory, he said.
“Travel agencies do a good job of managing corporate travel,” he said.
It’s a common misconception, Walker said, that GDS software is outdated and unattractive to travel agents. New graphic user interfaces that don’t sacrifice response time are continually upgraded to enhance the user connection experience to the GDS.
“Make sure someone at your hotel makes time to review your property description annually,” he said.
Mobile marketing strategies
Although mobile is really “a drop in the bucket” in the grand scheme of booking revenue, Jason Price, executive VP for Hospitality eBusiness Strategies, said not having a mobile-enhanced website can be a business killer.
According to a recent study, Price said 41% of iPhone users purchased something on their phone, 39% researched hotel rooms or rates or were likely to do so, 35% booked a room or would likely do so, and 42% would check-in to a hotel or flight.
“It’s very similar to 2003 when, if a website didn’t have a booking engine, what does it say about your hotel?” he said. “Does it have hot water? Does it have lights? Today the same position can be applied for having a mobile site.”
The cost of creating a mobile website for a hotel isn’t as much as some would expect, Price said. A simple mobile website can cost as little as US$1,500 while a hotel mobile application starts at approximately US$3,000. Hotels pay about 10% to 15% of revenue generated for pay-per-click ads, and SMS messaging programs can be as low as .03 cent per text.
“Apps tend to provide more value once the guest is at the hotel, not before they arrive,” he said.
One strategy to employ early on is to generate an opt-in phone number list on the hotel’s website and connect that list to the customer-relationship management database so the sales and marketing team can send SMS or MMS promotions down the road. The strategy can be deployed the same way hoteliers began collecting email addresses 10 years ago, he said.
“There’s always the adage that you need to be in it to win it,” Price said. “Those hotels that come up on mobile Google results are going to be served. If your website isn’t mobile-enabled and your competitors are, are you really that top of mind?
“When mobile users are searching, mobile websites will always rank higher than on the standard side.”
Getting social
When it comes to marketing to the multitude of different social-media channels, John Elston, founder and CEO of Yo!Dog Marketing, suggested finding clarity. In other words, pay attention only to the channels that cannot be ignored and leave the lesser-known sites for a later project.
What sites matter most? Facebook has more than 700 million followers, Linkedin gets 47.5 million global unique visitors a month, Twitter will pass 1 billion tweets per month this month, and YouTube has become the second-largest search engine in the world, Elston said.
“Take one bite at a time and step back and think about what you can,” he said. “Initiate a process that finds clarity. You need to understand what channels your competitors are beating you in.”
If hoteliers already participate in the four big social-media channels, Elston said they can ramp up their efforts by focusing on engagement.
“You have to have a plan that communicates and you have to collaborate. You communicate to produce collaboration and then build loyalty through collaboration,” he said. ““Educate your followers. Our followers and fans expect to be educated, such as how to make a great martini or great places to stay and great experiences.
“Lastly, no one will stay around in social media without the opportunity to be entertained,” he continued. “Entertaining is done successfully through contests, trivia and sweepstakes.”
Optimize your OTA space
OTAs are best used in aligning where the opportunities are, said Nick Graham, director of market management for greater New York at Expedia. After using a promotional campaign to build occupancy, hoteliers can add length-of-stay restrictions or use value adds without sacrificing ADR.
“Use packages to build your base. Use opaque sites to sell your rooms fast. Move unsold inventory without eroding your bar pricing,” Graham said. “OTAs are a key channel not only to drive business but for exposure.”
For independent hoteliers, Graham said sponsored listings on distribution sites such as Hotels.com are a great place to get started.
“You can put dollars against whatever time period you’re looking to fill availability,” he said. “Maybe you need to fill on weekends or weekdays or holiday periods. T
