The ‘traffic toll’ driving up costs for hotel marketers
 
The ‘traffic toll’ driving up costs for hotel marketers
12 JUNE 2019 1:06 PM

Hotel distribution continues to evolve. Google increasingly sets the agenda for hotel owners, operators, brands and OTAs alike. Here’s why that matters for your hotel this year.

There’s one huge problem with direct reservations that no one seems to be talking about.

Direct bookings largely depend on people coming to your property’s or brand’s website. This raises the following questions: How do you do that? What drives potential guests to your hotel’s site or app?

More importantly: What does it cost to make that happen?

Well, it’s a good news/bad news scenario. The good news? Organic traffic almost certainly represents a healthy share of your website’s traffic. Woohoo!

The bad news? You’re probably seeing the growth of those numbers decline or slow down relative to their historical averages.

Why? Well, it’s complicated. Let’s dive into what’s going on here and, most importantly, why that matters to you and your hotel.

First, “free” isn’t free. Organic search and social, email and referrals (i.e., other sites linking to you) demand high-quality content. And, unfortunately, most hotel marketers haven’t invested near enough in developing/delivering the kinds of content their customers need. That’s a mistake.

Second, internet giants like Google and Facebook are working to make “organic” non-existent. Their revenues and share prices depend on paid traffic, and they’ve taken a number of steps over the last few years to reduce how frequently customers see organic content—or increase paid placements, which given finite screen real estate, amounts to the same thing. On the road to direct reservations, Google and Facebook keep introducing toll booths. For instance, Google’s introduction of Trips is just the latest move designed to keep searchers using Google. And, this trend appears to be only accelerating with time.

This is true for Google, Facebook, YouTube (which Google owns), Instagram (which Facebook owns), Android (which Google owns) … are you beginning to sense a pattern here?

Now, to be fair, none of this is “evil.” Google, Facebook, and all the rest are simply doing what’s right for their shareholders. Yes, it looks like that Google may soon face an antitrust investigation around these practices, but I wouldn’t count on that to improve your results right away. Instead, there’s a simple playbook that can help your property succeed right now.

Here’s how it works:

1. Get potential guests to your hotel’s website.
Guests can’t book directly with you if they never visit your site. Look for the most cost effective channels that help you continue to grow direct traffic. But also budget for increases there to reflect this changing environment.

2. Explore other placements on the search engines.
Search isn’t just “10 blue links” any longer. Maps, videos, images, answer boxes, featured snippets and a number of other compelling placements exist within the search results. Make sure your marketing team and agency are using these features to drive traffic as well.

3. Offer guests compelling content that sells your destination as well as your property.
Guests have lots of questions about where to stay, especially early in their purchase journey. Make sure you’re providing answers to those questions to help them choose your market first, and then to choose you. Great content powers the various placements outlined in Step 2. It also gives guests great information to share on social and in email.

4. Speaking of email, get them to join your email list.
Email remains one of the top ways to connect with guests in a cost-effective manner. Are you doing enough to collect email addresses from your site’s visitors? In many ways, this is the first conversion and may be equally important as driving the reservation. In my experience, every email address collected, when used properly, is worth roughly $15 to $30 in future direct revenue (based on ADR, length of stay, repeat stays, and other factors). Ensure you’re including email addresses collected in your standard reporting and track how those contribute to your revenues over time.

5. Convert to bookings.
Obviously, this is the Big Kahuna. If you’re paying more for traffic to your site, you must also work to improve conversion. Pay close attention to which offers resonate with guests, which content drives repeat visits, and what messages produce direct reservations. Then work to highlight those more effectively on your site and in your off-site marketing for greater results in the long term.

6. Get guests to tell a positive story on your behalf.
Finally, put your “secret sales force” to work. Say you’re a 100-room hotel, running at 60% occupancy, with 1.4 guests per room, and you host 31,000 guests per year. An average guest has over 200 friends, family, fans and followers across social media. That provides you the opportunity to reach 6.2 million potential customers every year. Even if only 10% help, that’s still some 620,000 potential guests you can reach. Give them a positive story to tell about your property. Encourage them to share their experiences with their friends, family, fans and followers. And then, follow this same playbook (content, email, convert) with those friends to build your email list, drive low-cost direct traffic, and increase direct bookings.

Think I’m nuts? Well, guess what. Booking.com and Expedia must be nuts, too. Yes, they spend a significant majority of their marketing spend on Google and some $10.6 billion on marketing overall. But Booking.com increased its brand marketing, designed to drive direct traffic, to “… $509 million during 2018, compared to $435 million in 2017. It paid $295 million in 2016 …” That’s a 17% jump in just one year and roughly 20% compounded annually over the three-year period. Expedia’s numbers, while less transparent, seem to follow a similar pattern. Expedia is spending in other channels to drive potential guests directly to its websites and attempting to bypass Google altogether. There’s a lesson there.

Of course we all want to drive more direct business. Direct bookings remain incredibly important to your hotel’s business strategy. Please, please, please, don’t think at any point that I’m suggesting you don’t want direct reservations. No, seriously. Please. In fact, in most cases you should want more direct business and work to drive greater volume there … almost regardless of how much business comes direct today.

It’s also true that direct business is going to get more expensive. Google and Facebook are working to make that true. They’re collecting more tolls for the traffic they send you. They have to; their business model depends on it. Your job is to make sure you lower your costs over time, that you reduce the tolls you have to pay. Follow this playbook and you’re well on your way to making sure that’s true for you, too.

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 tim@timpeter.com.

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