New York, NY (April 3, 2013) – HeBS Digital, the leading digital marketing and direct online strategy firm for the hospitality industry, is pleased to announce the launch of the “Shift Share from the OTAs to the Property Website” package, created to help clients lessen their dependency on the OTAs and drive more direct bookings. (more…)
Posts Tagged ‘hotel digital marketing’
November 28, 2012
The following article is Max Starkov’s latest contribution to EyeforTravel’s website.
Recently we had a professional chat with Ritesh Gupta, a technology writer for EyeforTravel, about deals being offered by OTAs and hotels across various channels. Ritesh is the resident Travel Journalist at EyeforTravel, and can be reached at firstname.lastname@example.org. (more…)
HeBS Digital hosted a successful webinar last Wednesday, October 10, illustrating a step-by-step path toward building a strong 2013 hotel digital marketing budget. Presented by Mariana Mechoso Safer, Vice President, Marketing, and Margaret Mastrogiacomo, Senior Manager, Interactive Media & Creative Strategy, the webinar covered a wide variety of topics, including the state of the hospitality industry, a comparison of hotel marketing channels, case studies and sample budgets, and a complete analysis of the core marketing initiatives needed in any successful digital marketing plan for the upcoming year.
By Max Starkov
The following article is Max Starkov’s latest contribution to the “Successful eMarketing” blog on HOTELS magazine’s website.
On March 21, 2012, TripAdvisor subsidiary Smarter Travel Media launched Tingo.com, a new hotel-booking site. This new OTA site is an affiliate of Expedia.com, which means the site uses Expedia’s inventory feed and pricing and receives part of Expedia’s booking commissions. Tingo’s main value proposition and big selling point is that it will refund the difference to customers if the price of the room they have booked on Tingo.com actually drops after booking.
The press release announcing the launch of Tingo.com had the provocative title: “Travelers Overpaid Millions for Hotel Rooms in 2011: Tingo Comes to the Rescue.” It further proclaimed that “In 2011 alone, Americans could have saved nearly $314 million if they had had access to a site like Tingo.com.”
How anti-industry is a statement like this one? It makes the industry look like a bunch of corporate thieves who are cheating and overcharging the traveling public to the tune of hundreds of millions of dollars. Tingo.com to the rescue, indeed!
Back in February of this year I published an article on HOTELS Magazine, “Can TripAdvisor Transform Itself From an Industry Foe to an Industry Friend?,” in which I argued that after its “divorce” from Expedia, TripAdvisor still remained a foe of the industry and that TripAdvisor had to make a clear choice: Continue its anti-industry, pro-OTA, and one-sided pro-travel consumer policy and business model; or dramatically change its corporate attitude toward the industry and its business model.
I argued that TripAdvisor needed to overhaul its business model and make the site industry- and advertiser-friendly. It needed to dramatically improve its perception in the industry and invest in online self-serve campaign management technology to enable micro-campaign management for the highly-fragmented hospitality industry, including opening the “Show Prices” functionality to smaller and mid-sized hotel companies, independent hotels and resorts.
I warned that if TripAdvisor failed to do that, it would end 2012 more like a 600-pound gorilla from its current 800-pound gorilla status, and by 2014 would be reduced to mere 400-pound-gorilla status.
My old business friend Frances Kiradjian, Founder & Chair at The Boutique & Lifestyle Lodging Association, provided the following feedback to my article: ”Agree with your synopsis and hope that TripAdvisor takes your suggestions seriously. This was actually very generous of you to point them in the right direction.”
So how does Tingo.com fit into TripAdvisor’s strained relations with the hospitality Industry?
With the launch of what de facto is another OTA website, it is clear that TripAdvisor has not paid any attention to my advice and continues on its path as a pro-OTA and anti-industry player.
I truly expected that after its “liberation” from Expedia, TripAdvisor would try everything possible to repair its strained relations with the industry and try to embrace the industry and send a strong, unequivocal message to hoteliers: “I am no longer an OTA subsidiary and I am an industry friend. I am now part of the direct online distribution channel and I am on your side. I will work with you to understand your need periods and help whenever possible. I am unbiased and will work with you to improve the quality and credibility of customer reviews and help you address customer concerns. I will help you reach travelers interested in your destination and in your hotel.”
None of the above happened and TripAdvisor has continued conducting business as usual. Now comes Tingo.com, an affiliate of Expedia, TripAdvisor’s former master. This is it? Who advises this newly independent public company?
Let’s analyze the viability of Tingo.com
To begin with, Tingo.com has no unique content, pricing or inventory of its own. Its only value proposition – refunds when and if a lower hotel rate becomes available – is based on factors that are at the mercy of the other OTAs and the travel marketplace as a whole. Expedia could replicate Tingo’s offering within five minutes or less. Orbitz already offers and widely publicizes similar automatic refunds.
Tingo.com’s business model does not take into consideration the following:
- Hospitality is experiencing rising travel demand and miniscule new supply, which results in increases in all three performance metrics. As reported by STR, in February 2012, which by default is the lowest of the low seasons for most of the country, the U.S. hotel industry’s occupancy rose 3.5, its ADR was up 4% and RevPAR increased 7.7%.
- With travel demand rising, how many hotels will lower their rates to begin with? Increasing rates over time as occupancy rates rise is the prevailing trend today, not the other way around.
- In addition, booking windows, i.e., how well in advance people book hotels, have shrunk to their lowest point ever, due to the full transparency of the online channel and the exploding mobile channel, where 65%-80% of all mobile hotel bookings are made for the same day!
In other words, Tingo.com’s main selling point – that it will refund the difference to customers if the price of the room they have booked drops after booking – is practically mute and irrelevant.
There is a bigger picture here that involves the fierce battle of the industry with the OTAs. Rising demand means that the OTAs’ merchant commissions are already shrinking due to fierce push back from the major hotel brands and the industry as a whole. Contracts with the OTAs are up for renewal this year and the major hotel brands will be pushing for commissions below 15%. Hilton has already suspended its merchant agreement with Orbitz over commissions, last room availability, etc. Independent hoteliers would not be willing to pay merchant commissions above 20%.
Sooner or later, to counteract decreased merchant commissions and the growth of travel demand as the economy improves, OTAs will be forced to re-institute booking fees that were dropped back in 2009. How would the Tingo.com business model work when there are non-refundable booking fees involved?
I am not even discussing how the paltry 7%-8% affiliate commission would allow Tingo.com to be a sustainable business venture. The cost of establishing a new travel consumer brand is staggering! In my view, Tingo.com will most probably not “explode” as a new travel site, but linger out there.
Tingo.com is another wrinkle in TripAdvisor’s confused business model:
As discussed, the launch of Tingo.com is a direct affirmation of TripAdvisor’s continued anti-industry and pro-OTA business model. Analysis of this business model clearly shows how confused and misguided TripAdvisor is as a company:
Focusing on a handful of big OTA and Hotel Brand Advertisers
The vast majority of current advertisers on TripAdvisor are big OTAs and a handful of major hotel brands. More than 80% of TripAdvisor revenues come from the “Show Prices” CPC program, which is exclusive to major OTAs and hotel brands.
TripAdvisor’s requirements for minimum advertising spend practically exclude all of the 52,000 U.S. hotel properties from display advertising and the “Show Prices” CPC program on the site. There is no online self-serve campaign management technology to enable micro-campaign management for the highly-fragmented hospitality industry. Compare this to Google AdWords, where any hotel can become an advertiser and launch live paid search campaigns within 1.5 minutes!
At the same time, more than 95% of advertising dollars in hospitality are controlled by the property and at the property level. You can do the math: at a typical 4% from room revenue spend on marketing and advertising and $107.2 billion room revenue in 2011 for the U.S. hospitality industry, the annual advertising budget controlled at the property level is in excess of $4.3 billion! Yet 52,000 U.S. hotels and more than 300,000 hotels worldwide are practically excluded from the main advertising formats on the site.
Focusing on “Show Prices” CPC Program
Over the past few years TripAdvisor has turned its “Show Prices” CPC program into the centerpiece of the website. The “Show Prices” availability/pricing widget dominates the website and is smacked right in the center of any property page on the site. As mentioned, more than 80% of TripAdvisor’s advertising revenue comes from the “Show Prices” CPC program.
There is no doubt that TripAdvisor has carved a niche for itself in the “last mile” of the online travel consumer’s travel planning process. But exactly what portion of this “last mile” does TripAdvisor occupy? Is TripAdvisor considered a hotel pricing/availability research tool like Expedia, Kayak.com, etc. by the traveling public? NO!
TripAdvisor is the largest hotel customer review site: This is how travel consumers have perceived the site since its inception in 2000; this is how TripAdvisor describes and promotes itself. Typically traveler consumers visit TripAdvisor after they have selected the hotel or hotels at which they are planning to stay to read what their peers have said about the hotel or hotels they have already selected.
Let’s face it: TripAdvisor is poorly equipped to handle any of the three main criteria in hotel search and hotel selection: hotel location, price and availability. The mapping capabilities of the site pale in comparison to Google Maps or Expedia’s hotel location maps; the depth of information about any hotel is miniscule compared to any major hotel brand or Expedia; the real time availability and pricing functionality on TripAdvisor is from the 1990s and consists of an avalanche of pop-up screens that flood your browser.
This is why travel consumers do their hotel location, availability and price research on meta-search sites like Kayak.com, via search engines like Google, Yahoo and Bing, on major hotel brand sites like Marriott or Hilton, and on OTA sites like Expedia. Once they select the hotel at which they would like to stay, become comfortable with the location and price, and check availability, then and only then they go to TripAdvisor to read customer reviews.
In my view, this is the reason why only a few of the visitors to TripAdvisor ever click on the “Show Prices” functionality. Naturally this is proprietary information that is not being disclosed in the public domain, but I believe the “Show Prices” click-through rates (CTR) are far below the similar CTR rates on Expedia, Kayak.com or Marriott.com. In other words, only a small fraction of the total number of visitors click on the “Show Prices” widget, compared to people who click on Expedia.com’s or Marriott.com’s search/availability/price widgets. I do not believe TripAdvisor’s “Show Prices” CTR rate is above 1% of the total number of visitors.
In other words, “Show Prices” serves less than 1% of unique visitors to the site and TripAdvisor is not monetizing the remaining 99%.
In conclusion, I believe Tingo.com is another declaration of TripAdvisor’s misguided and confused anti-industry and pro-OTA business model. By failing to position itself as an industry friend, TripAdvisor is denying itself access to the bulk of advertising dollars in the hospitality industry, controlled at the property level. As for Tingo.com, initiatives like this one further alienate the industry from TripAdvisor and ultimately will weaken further the site’s market position.
Click here to read the entire blog article on HOTELSMag.com, as well as a full selection of Max Starkov’s blog articles on hot industry topics and latest trends in the online channel in hospitality (FREE registration required).
About the Author:
Max Starkov is President & CEO of HeBS Digital (Hospitality eBusiness Strategies), the hospitality industry’s leading direct online channel strategy, full-service digital marketing and website design firm (www.HeBSdigital.com)
By Max Starkov & Lauren DeGeorge
In 2012, hoteliers face more challenges than ever. From resolving to concentrate on “SoLoMo” (social, local, mobile marketing), to navigating “new” distribution channels, to implementing a Google+ strategy, to improving local search rankings via citations, it is near-impossible for a hotelier to distinguish viable strategies from trendy or temporary opportunities without a dedicated digital marketing partner.
With so many new “don’ts,” it is easy to confuse or let slide the “do’s” of hotel distribution. In 2011, 26% of total bookings for the top hotel brands came from the Internet, with 18% from Brand.com and 8% from OTAs (PhoCusWright, STR, HSMAI Foundation). For non-branded hotels, the situation is more troubling, with 42 percent of bookings from the Internet – 32 percent from OTAs and just 10 percent from hotel websites. In light of these recent findings, hoteliers must focus on their own websites; increase direct online revenues via SEO, SEM, email marketing, packaging, etc.; and utilize the OTAs in the most strategic ways.
Below are HeBS Digital’s 2012 Do’s and Don’ts of Hotel Distribution. We welcome feedback from our colleagues in the industry. What are your property’s do’s and don’ts?”
2012 Do’s of Hotel Distribution:
1. Focus on the Direct Online Channel: Your Hotel’s Website
First and foremost, your website must be “in good health” in order to follow and comply with best practices in hotel distribution. Make sure your current website adheres to industry’s best practices for design, site architecture and SEO. Most importantly, make sure it is compatible with the recent Google Panda and Freshness algorithm updates.
Be sure that all site content is engaging, unique and branded. Create dedicated pages as well as specials and packages that appeal to key customer segments such as business travelers, extended stay guests, weekend travelers (“girlfriend getaways,” couples celebrating anniversaries), etc.
Once your website is in tip-top shape, use search engine optimization (SEO), search engine marketing (SEM), email marketing and other digital marketing efforts to drive traffic to the hotel’s website and encourage direct reservations.
Bring SoLoMo (social, local and mobile) initiatives to the forefront of your hotel’s targeted digital marketing strategy. The convergence of these three content and marketing platforms allows the hotel to deliver more personalized, relevant content to existing guests and customers in real-time like never before.
Though most hoteliers understand the importance of being ever-present across local listings and maps as well as social media such as Facebook and Twitter, the power of mobile marketing must not be underestimated. Five percent of all hotel bookings are made via mobile devices, and 51% of business travelers use mobile devices to get travel information (Google), more than double the rate of two years ago. Mobile is a must, and it starts with a mobile website, mobile and tablet SEM campaigns and SMS/MMS information capture strategy.
In the end, perhaps the most convincing reason to focus on the direct online channel is Google’s “Zero Moment of Truth (ZMOT)” phenomenon: After visiting countless websites and sources, consumers tend to migrate back to their computers to book reservations. By focusing on content and design quality, and powerful brand and marketing messages, you will ensure consumers migrate back to your hotel’s website. Once in place, the next and ongoing steps are “test, test, test” to determine effectiveness and return on investment (ROI), and benchmark and analyze to make smarter use of analytics technology to increase returns.
2. Maintain Rate Parity
A principle once considered elementary now merits a reminder: All hotels must maintain their best available rates and last-room availability on their own websites!
According to RateGain, from December 2011-February 2012:
- 60-87% of 3-star hotels were cheaper on OTA sites
- 75-93% of 4-star hotels were cheaper on OTA sites
- 69-86% of 5-star hotels were cheaper on OTA sites
A thorough rate parity strategy, including a Best Rate Guarantee and complementary claim form, will encourage consumers to book direct for logical reasons:
- All changes to reservations must be made through the hotel
- All special requests (such as ADA rooms) go through the hotel
- The hotel provides superior customer service, not the OTA or other outside booking channel
- The hotel guarantees the reservation
Hoteliers, remind your friends (not your competitors): All publically available rates, including 24-hour sales with OTAs and flash sales, must be available on the hotel website and within its online booking engine. The mobile channel is not exempt either, and must be treated as an official rate parity gatekeeper.
3. Market to International Visitors
Analyze foreign tourist arrivals in your hotel’s destination, the property’s guest data and its website data to determine the top international feeder and demand markets for the hotel. Then, implement five- to ten-page optimized foreign language translations for the markets with the most potential and existing demand for the hotel’s destination and product. (Be sure to translate your booking engine, too!)
These translated pages will serve as the home base for all marketing to international customers. First, implement foreign language SEM campaigns on Google and Yahoo/Bing that land on your translated site. Then, implement listings on worldwide travel directories and increase your hotel’s visibility across other hubs for international travelers.
Finally, consider complementing the hotel’s direct efforts using OTAs with high market shares in foreign countries (e.g. Booking.com, Expedia).
4. Use the OTA Channel Correctly
Though no stone should be left unturned when it comes to supporting the hotel’s direct online channel, HeBS Digital recommends the opposite approach in relation to your OTA strategy: Focus on the “big players,” e.g. Expedia, Priceline, Booking.com, Travelocity and Orbitz. Smaller OTAs do not provide additional reach; rather, they require more work.
From day one, include in all contracts that neither the OTAs nor their affiliates may bid on branded keywords in SEM campaigns, i.e. the hotel’s official name-related keywords.
Use strict rate parity when using OTAs, and monitor their attempts to sell “lower” rates for your property by reducing their commission/markup, or using math gimmicks when calculating the overall taxes and fees.
Use OTAs for need periods: weekends, group cancelations, low season, etc., and not as a replacement for or alternative to the direct online channel. Additionally, any sale or promotion via an OTA should be used only as a last resource and should equally be promoted via the hotel website and support marketing (SEM, email, mobile, social).
Benchmark your property’s OTA contribution against industry results. For example, most hotel chains mandate that OTA contribution to franchisees be lower than seven to eight percent. And always remember that the more you focus on your hotel’s website, the less you will depend on the 800-pound gorillas.
5. Tailor Strategies to Competitors’ Strengths & Weaknesses
In any business, everyone who does what you do is a rival. Hotels are no different, and therefore must consider multiple and varied groups of competitors. Your hotel should not only have a product-related competitive set (other boutique, business or full-service hotels in the area) to which you compare your own property, but also geographic (downtown, Union Square, Quincy Market), digital (who’s doing what you do – or more – online) and aspirational competitive sets. As Michelle Davis of HVMG recently said in HotelNewsNow, “My number one competitor might be Hotel X for a certain weekday and during the weekend my number one competitor might be Hotel C. It’s the same thing and the same thought process. Who I compete with online might not be the same person I compete with at the front desk.”
2012 Don’ts of Hotel Distribution
1. Don’t Participate in Flash Sales/Social Buying Sites
While flash sales may address the hotel’s immediate needs – occupancy – they do considerably more damage than good in the long run.
With heavily discounted rates out in the open, flash sales have inherently flawed business models, causing your hotel to rebuke the principles of rate parity (one of the do’s of hotel distribution!), to breach existing agreements with corporate accounts and OTAs, to diminish its brand integrity and to create the perception that rooms are always on sale!
The most powerful reason to forget flash sales and social buying sites is “The Law of Unintended Channel Share Loss”: Any booking via the most discounted channel (i.e. flash sale sites like Groupon or Living Social or BloomSpot or OTAs) is one fewer booking for the same hotel via its own website, call center or GDS. These sites also lead to the cannibalization of the hotel’s existing loyal consumer base as 65% of daily deal buyers are already frequent (38%) or infrequent (27%) customers of that business (ForeSee, 6/11).
During urgent need periods, consider the following options:
- Launch a limited-time offer and promote it via:
- The hotel website with a promotional slide on the Home page or a highly visible tile
- Dedicated SEM campaigns on Google and Yahoo/Bing
- An email newsletter to the hotel’s opt-in list
- The hotel’s Facebook, Twitter, Google+ pages
- Online or email sponsorships to main feeder markets
- Blog posts on the hotel’s blog
- Launch a 24-hour sale on an OTA while simultaneously promoting it on the hotel’s website as described above
- Do an opaque OTA promotion on Priceline or HotWire.
2. Don’t Do Last-Minute Discounts via OTAs or Mobile Discounters
Both hotels and airlines manage perishable inventory, so rather than launching a last-minute Groupon or sale with HotelTonight, why not take a cue from the airline industry? The closer to the date of departure or check-in at the hotel, the higher the rate – not the other way around.
Mobile is by nature a last-minute distribution channel. Most hotel mobile bookings are for the same or following night; therefore, these bookings will occur in any case without discounting. Use mobile SEM and SMS marketing for last-minute reservations, but market your true best available rates and avoid the temptation to discount.
For additional same-day bookings and last-minute sales, opaque sites such as Priceline and HotWire are preferable to flash sale sites as they maintain brand integrity until the booking is completed.
3. Don’t Use Social Media as a Distribution Channel
Social media is not a distribution channel, and it was not designed as a sales platform to sell rooms. Use social media instead for customer engagement, customer service, customer relationship management (CRM), branding, awareness, etc.
Social media is best managed at the property level and needs to be monitored 24/7/365. Establish onsite champions who will speak with a consistent brand voice, provide exemplary customer service and serve as models of the hotel’s product.
Use a full-service digital marketing agency for training, auditing, recommendations and technical design and build-out for custom tabs, backgrounds, widgets, sweepstakes, etc.
Post, tweet, respond and repeat!
4. Don’t Manage Promotions via the OTAs in Isolation
When 24- or 48-hour sales on OTAs are “necessary” to increase occupancy immediately, do not neglect the hotel’s own website. Though Expedia will not allow you to promote the same offer on Priceline, its “rate police” will not stop you from opening the same rate or package on your own site.
Sales on OTAs should be cross-promoted on your website and within the following direct marketing campaigns:
- Dedicated SEM campaigns on Google and Yahoo/Bing
- An email newsletter to the hotel’s opt-in list
- The hotel’s Facebook, Twitter, Google+ pages
- Online or email sponsorships to main feeder markets
- Blog posts on the hotel’s blog
When looking to immediately increase profits, forgetting the most profitable channel is the hotelier’s biggest downfall. To be informed is to be empowered!
5. Don’t Pin High Hopes on the New “Anti-OTA” Players
Don’t put all your hotel’s eggs into fancy new baskets. New hotel meta-search sites such as RoomKey.com, MyBestHotelRate.com and GlobalHotelExchange.com will have a very difficult time gaining traction with travel consumers in this highly competitive online travel marketplace; therefore, they won’t become the “big players” that deserve your revenue manager’s time. Though perceived as industry-friendly, these new sites provide no unique value proposition to the travel consumer. Additionally, it is prohibitively expensive to establish a new travel consumer brand. The last two major travel brands to be established were Orbitz (2003) and Kayak.com (2004).
While the do’s of hotel distribution are largely self-explanatory, the don’ts have more critical implications. Not all that glitters is gold, and “new” doesn’t always mean improved, particularly in the case of the latest anti-OTA players.
In this dynamic industry, it is important to stay on top of quickly moving trends, prioritize initiatives that generate direct online bookings and be flexible enough to continuously adjust digital marketing campaigns for optimal, time-sensitive results. As always, count on the basics and stick to proven methods to drive exponential ROIs.
Partner with digital marketing experts who will prioritize driving direct online revenues for your hotel, and who will keep you up-to-date on best practices and proactively bring forth ideas to generate the highest website revenues and ROIs.
Work with a team of savvy digital marketers who will show you new ways to recoup lost opportunities, teach you how to stay on top of changes in the industry, and provide your hotel and team with real value, not just a service.
About the Authors and HeBS Digital
Max Starkov is President & CEO, and Lauren DeGeorge is Manager, Digital Marketing. HeBS Digital (Hospitality eBusiness Strategies), the hospitality industry’s leading full-service digital marketing and direct online channel strategy firm, is based in New York City (www.HeBSdigital.com).
HeBS Digital has pioneered many of the best practices in hotel Internet marketing, social and mobile marketing, and direct online channel distribution. The firm has won more than 180 prestigious industry awards for its digital marketing and website design services, including numerous Adrian Awards, Davey Awards, W3 Awards, WebAwards, Magellan Awards, Summit International Awards, Interactive Media Awards, IAC Awards, etc.
A diverse client portfolio of top-tier major hotel brands, luxury and boutique hotel brands, resorts and casinos, hotel management companies, franchisees and independents, and CVBs are benefiting from HeBS Digital’s direct online channel strategy and digital marketing expertise. Contact HeBS Digital’s consultants at (212) 752-8186 or email@example.com.