Here’s What’s Driving Growth at Choice Hotels

What’s the trick to competing in the mobile space? In the mobile space, you’ve got a smaller piece of real estate to work with, so you’ve got to be able to have content that’s of most interest to the consumer, relevant to them. For us, we’ve got two paths. One, we’ve got a bunch of folks who know what they want and want to get to the booking process very quickly. So we have a piece of an app called Rapid Book that in three clicks you can get: I know the hotel, I know the date, and I know the room type, I want to stay there. We actually took the room type out and through testing guests told us, “No, put the room type back. We don’t want two clicks, we want three.” They still want that choice.

You’ve got to have that express lane for those consumers who know what they want. You also have to have the opportunity for people to explore and to shop around. You don’t see a lot of shopping on this device. People are still using their tablet and their desktop to do more of that exploratory because it’s really hard still to do that on a mobile device. So mobile is a tool today we’re seeing a lot of our express lane guys on. But what we want to do, and a lot of folks are spending a lot of time on, is how do we get mobile to a point where you can do more of that exploring and shopping of the opportunities that are available to you through the app?

What’s Choice’s approach to getting more light leisure travelers into its loyalty program? Well, you have to do it at the various touch points. So on the website, when they’re booking a room, there’s an opportunity to say you want to join the loyalty program; here are the benefits to you. We actually use our property management system to queue up scripts for the front desk person to say, “I see you’re not a Choice privileges member, would you like to become one?” It’s a guerilla marketing type. You’ve got to hit people when they’re on your property, or you’ve got to hit them while they’re on your proprietary channels.

There was something I read where an online consumer stops at 22 digital destinations on the way to booking. What’s the trick in investing marketing dollars to hit the right points, because obviously they’re going all over before they book somewhere? For us, we invest a lot of money in our proprietary channels, the website, the call centers, and so what we want to do when folks are shopping is to keep them on the site. We knew folks were leaving to go look at reviews on TripAdvisor, so we put reviews that aren’t just some feed from somewhere else, they’re actual guests who’ve stayed in our hotels. The conversion rate really increased from us doing that, and we did that the beginning of this year. We’ve seen significant uptick from that. A lot of it is just, you’ve got to get the folks who are hitting your proprietary channels to stay with you and not get bled off onto other sites as they’re shopping around.

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Speaking of those other sites and OTAs in general, is there a way for hotels to reign in the rising cost of acquiring guests? I think what you’re seeing, particularly in the third parties, is if you look at where the commissions were five years ago—even 10 years ago when they were just getting started—the commissions have been coming down. If I look at the OTAs themselves, they’re acquiring competitors. They’re consolidating. So they’re spreading out their costs to kind of grow scale wise.

I think what you’re seeing is that there is downward pressure on those commission rates at this point. I think what you’re also seeing is the rise of search that’s being driven up, really by a price war between the major OTAs that have all those billions in search dollars that are going to Google. Those are really what are driving the industry dynamics around it. I think it really depends on the market you’re in as to where you’re seeing those prices go up. Obviously it’s very different in New York City than it is in Des Moines.

Are search engines still viable marketing mediums for hotels? They’re so flooded with OTA advertising and it costs so much to compete that it’s hard to keep from being drowned out? They’re a starting point. Some brands, some big chains, have gone on a path where they’ve gone dark on paid medium and just focused on organic, some have gone the other way. We’re in a position where we have done both, and we see both as viable opportunities that you have to optimize. It might become an optimization problem around how you do it. Organic is all driven by how relevant is your content and how fresh is it. You’ve seen a lot of companies—and we’ve done the same thing—hire people to be basically digital folks who look at your hotels and make sure that those hotels are rising up in the search order on the organic side and are also being optimized on the paid side so that you’re not wasting your dollars in the wrong places.

The beauty of that side is it’s very measurable. You asked me earlier about the ROI and where you put your marketing dollars. You’ve got a pretty good sense of where in the funnel your media spend is going on the search side and which ones are actually turning into booked reservations for you. That’s an ongoing game that’s become more and more automated, which is pretty interesting. They’re taking the people out of it and more and more of it’s machine learning. That’s the next phase of where that’s headed.

On the search engines themselves, the actual space available to non-paid has been shrinking over time. What I do think you’re starting to see is the original search engines, Google, Bing, and Yahoo, have now expanded into Kayak, TripAdvisor. There’s more available entry points than there were. You still have the 800-pound gorilla with Google, but you are starting to see the more travel related search sites that I think are attracting more and more people. For us, we have a deal with TripAdvisor where they can book directly through to our website through deep linking, which has been a great opportunity for us to figure out where those consumers eyeballs are that are looking at our product. How do we get them to book directly into our CRS without going back through the whole search engine process? It’s streamlined the process for the guest, and that’s driven up conversion for us.

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