For all the fanfare that accompanied the start of brands’ campaigns a year and half ago, hotel CEOs’ public discussion of the success of this media blitz around hotel loyalty and direct bookings has been fairly muted. That’s not for lack of significant growth in memberships in loyalty programs.
But what’s far harder to discern is how effective the marketing has been at driving the most important metric of such campaigns: conversion.
What matters most to the hotel owners who are funding much of the cost of the advertising through their franchise fees is not the number of people visiting a brand website rather than an online travel agency or signing up for the loyalty club. Every hospitality company talks about personalization as a goal, but how are they quantifying that?
The conversation is pivoting to conversion in part because the biggest advertisers like Marriott International, Hilton Worldwide, and others have done such a good job training potential guests to seek the best rates on the hotels’ direct channels. That has increased the number of members in their loyalty programs and bookings sourced from those clubs.
It’s important to maximize these top-line traffic numbers, but properties have to be able to convert those website visitors and members to actual heads in beds or the unit economics are going to move in the wrong direction.
Hotel revenue managers will have to collaborate better with the sales and marketing teams than they have been by using available data to segment all the new customers in the loyalty club. More importantly, they should dynamically price rooms at the highest rates that still convert to bookings for different customer segments or distribution channels.
Luckily, many hotels already have the personnel to pull this off. In many cases, they just need a new strategy that better aligns the revenue goals and incentives of their different departments.
Right now is a critical time for hotel brands to improve the conversion rates of their direct channels, as per-booking commissions from OTAs are trending downward for many hotels, which has put more pressure on the biggest chains to ratchet up participation in their loyalty programs.
Whether it’s true or not, hotel owners feel like they’re paying more and getting less. The brands need to deliver more than aggressive advertising campaigns and millions of sign-ups to the loyalty program. Brands need to add value to the booking process. It’s not limited to just the website, either. Conversion will be crucial for a hotel’s call center, property direct, and, increasingly, mobile bookings as well.
There are plenty of variables within a hotel’s control that allow the property to run tests and know empirically what converts more consumers from looking to booking. Obviously, pricing is a big lever, and not just in terms of how much a hotel is willing to discount a room to drive pickup. The right kind of data can measure how high revenue managers can yield rate up and still secure the booking. A hotel can also A/B test how different room type options, package deals, or upsell combinations move the needle.
Properties should also seriously explore data and analytics from third-party providers that let them know more about unknown customers in addition to what they know about their repeat guests and loyalty members. Having customer information for known and unknown guests lets a hotel create a unique experience for anybody shopping a direct channel.
Personalization shouldn’t be reserved for only the highest-tier members of a loyalty club—all customers should be able to see the value of booking direct. If they do, the hotel’s conversion should improve significantly.
Conversion initiatives can be relatively inexpensive for brands to achieve on behalf of their property owners. Brands don’t need a $10 million ad campaign to try tweaking the sort order of search results to serve up the most relevant options for an individual customer. It just takes a plan to properly leverage the data that most hotels already have and to use that information to alter the guest experience.
About the Author
Patrick Bosworth is CEO and a co-founder of Duetto, a hotel revenue strategy technology company based in San Francisco.