Think the OTAs have it in for you? Think again. On the contrary, you can learn useful revenue strategies from them to help rebalance the competition.
While attending the Hospitality Industry Technology Exposition & Conference a few weeks ago, I spoke with a number of hotel owners and operators who are struggling with what to do to grow their hotel’s revenues and profits.
Faced with rising cost of guest acquisition and increased competition from online travel agencies for both search placement and reservations volume, these folks are not entirely sure how to succeed in a challenging marketplace. Just like many relationships on Facebook, it’s complicated.
The thing is, you can solve this challenge for your hotel. As you’ve undoubtedly heard before, a problem well-defined is half-solved. We’ve just got to dispel a few myths first and focus on how you actually can attract profitable revenue for your hotel.
First, though I’ve said it before, OTAs aren’t evil. They’re simply doing their best to make life better for guests and shareholders. Seriously. They want to offer guests great travel experiences at a reasonable price and make a profit while doing it.
OK, some of their recent actions aren’t exactly warm and fuzzy, what with Expedia doing its best to sour the relationship among hotel owners and their franchisors and management companies. But I swear they’re not doing it to be evil. In the immortal words of Don Vito Corleone: “It’s just business.”
Second, competing on price is a losing proposition. Lowering rates should be your last resort. It hurts your ability to provide a better experience for guests and, in most cases, doesn’t work at actually driving demand.
For a 150-room property selling at $200 per night, every 5% discount—just $10 a night—away from your target ADR represents a topline loss of around $300,000 per year. And if you’re offering that $10 discount through OTA channels, you’re leaving even more money on the table once you’ve accounted for commissions and net rates. Thus, it makes it that much harder to surprise and delight guests with an amazing experience when you’re leaving yourself a few hundred thousand dollars less to work with.
Finally, there are no “white knights” waiting to ride in and save the day, at least not the way most people think about it. Not metasearch—many of whom are owned by OTAs anyway—nor Google, nor Facebook, nor Apple, nor anyone else is going to solve your problem. They may each help solve for a piece of it, mind you. But ultimately, your success depends on doing a number of things well.
What are those things?
Well, I’m glad you asked. Here are a few to get you started.
- Tell a great story: Every property has a great story to tell. It doesn’t matter if you’re the finest luxury property in your town; or a hip, urban, trendy hotel sitting in the middle of a cornfield; or are simply situated nearest the world’s largest ball of string. Find what attracts guests to your property and share that story across every interaction.
- Focus on guest experience: Guests, whether traveling for leisure or business, want to enjoy a great experience during their stay. And a great experience emerges from each touchpoint they have with your property and staff. You don’t have to go “above and beyond,” but you do have to make sure that you consistently meet your guests’ expectations every step of the way and that you help them enjoy their stay at every opportunity. It should go without saying, but if something goes wrong, do your best to ensure it’s fixed. They’ll remember you making the effort more than they will any short-term issues.
- Build your property’s content: How do you tell your property’s story? Through images, videos, and text. Have you noticed how much time, energy and money Google, Facebook, and the OTAs have invested to improve their content offerings to potential guests? Do you think they know a bit about what attracts interest and action online? Learn from their example and build your content library to help guests answer key questions and move them from “dream” to “desire.”
- Hold rates: Guests don’t book “rate.” They book “value.” If you consistently tell a strong story and provide a great experience, you won’t need to discount. Studies have shown—and real-world experience supports this—that the best-reviewed properties across most markets and chain scales also achieve the highest average daily rate, occupancy, and revenue per available room. Focus on becoming one of them and watch your revenues grow.
- Help your guests tell your story: Guests love to share their experiences with their friends and family and also with fans and followers on social media and TripAdvisor. A 100-room property builds relationships with over 30,000 guests per year. And those guests typically reach between 4 million and 8 million connections through their social networks. Use social to put those folks to work for your property and to complement your other marketing and distribution channels.
- Work your hotel’s database: Oh, and while you’re at it, keep a dialogue going with those 30,000 folks in your guest database to drive repeat stays and increased loyalty. Segment your guests and test which messages resonate to improve engagement and revenue.
- Test and learn: Finally, great brands anticipate customers’ needs, analyze the results of their actions and adapt to what they’ve learned. Despite the rising costs of guest acquisition, you can still conduct small-scale tests for relatively little money, then apply what you’ve learned to reach a broader audience. Test and learn from every interaction with potential guests to improve your return on investment. This can help increase reservations and revenue, too.
The simple truth is that there’s no magic here. Each of the steps I’ve outlined takes some effort and investment.
What it takes most of all is a belief that you can solve your problem and a commitment to doing the work. The great thing is, if you focus on doing this well, you’ll find your white knight when you look in the mirror each day. And that’s no myth.
Tim Peter helps hotels and resorts put digital to work to grow their business. Since 1995, he has developed innovative e-commerce and digital marketing programs designed to increase sales and revenues. An expert in e-commerce, digital, and marketing strategy, Tim focuses on influencing customer behavior and delivering business results.
Prior to founding hospitality digital marketing strategy 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 using digital to help hotels and resorts around the globe drive billions of dollars in revenue. He can be reached at timpeter.com/hotelmarketing or email@example.com.
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