Mr. van Meerendonk

Revenue Management

Driving Maximum Profit Through More Direct Bookings

By Paul van Meerendonk, Director of Advisory Services, IDeaS Revenue Solutions

In today's ultra-competitive hotel environment, every dollar counts. Any competitive edge that translates into a stronger bottom line is sought out, and every piece of hotel business is evaluated to determine its true worth. With rising costs associated with acquiring new guests through third-party platforms, hotels are rightly considering their most effective booking channels and looking to maximize business from owned assets like their own website.

Guest Acquisition in a Digital Age

Today's costs for acquiring guests are significant: OTAs charge between 15-25 percent commission for every booking they secure, with hotels also paying hefty transaction fees to their selling systems if the reservation is received through them. These third-party costs influence the amount of revenue hotels are able to secure from each guest - ultimately impacting a property's bottom line.

While there are significant challenges in securing guests for the ideal price, at the ideal time, through the ideal booking channel today; hoteliers that effectively market themselves to potential guests, practice advanced search engine optimization strategies, and offer guests a unique value can greatly reduce their cost of acquiring guests.

Hoteliers currently using OTAs to secure bookings should also consider ways to use those platforms to better support their future business. To increase both business and return business, savvy hoteliers are letting their OTAs handle the initial capturing of guests, and then implement strategies and incentives that ensure those guests book future reservations directly with their hotel - eliminating ongoing third-party booking expenses.

Despite a high reliance on OTAs, the most cost-effective online booking channel for a hotel remains its own website. How can hoteliers maximize direct bookings through their website? The first step is increasing website traffic from potential guests and attracting more 'lookers.' To do this, hotels need to understand where, when and who those 'lookers' are. What dates are they searching for, where do they search and what is driving them to a particular market? Collecting this market intelligence provides data that can be used to develop targeted marketing strategies that attract the right type of 'lookers,' the ones most likely to become 'bookers.'

Hoteliers can also increase direct bookings by re-targeting past visitors and directing them to their website. When researching a location, potential guests may visit a variety of travel websites and OTAs before deciding where to stay. Hotels need to keep their property on the top of the consumer's mind and influence guests to book on the hotel's website. Technology that offers tailored adverts customized around visitor behavior or website activity can help hotels achieve an estimated 10 percent return rate on website visits - increasing direct booking opportunities.

Capturing Direct Business Through Effective Website Design

With so much competition today, driving direct business and better revenue is a priority for all hoteliers. A greater share of the hotel budget is being allocated to attract qualified website traffic; however, what if the website's architecture and content is preventing - rather than enabling - the booking process? If a website's booking process is not seamless and secure, guests will book elsewhere. That means all the work that went into attracting a guest led to providing someone else a commission for that booking.

With marketing funds focused on driving qualified traffic to the hotel website, the website architecture should deliver an enhanced customer experience with user-friendly features that enable easy navigation and booking, and offer a variety of payment options. The hotel website should be informative and assure guests of the level of service they can expect. It is also important the website can be viewed in multiple languages to cater to guests traveling from around the world. To help facilitate the booking process, content is key.

To increase direct booking opportunities, website content should not only attract, but also keep visitors on the website. Hotels should incorporate user-generated content from social media sites, such as user ratings and reviews, to assure guests of the credibility and service standard of the hotel. Including online reviews as a component of website content can keep guests from leaving the website, making this is a critical opportunity for hotels since over half of online bookers search online reviews before making reservations.

Since call centers are used less frequently by potential guests, many hotels have also neglected phone number placement for reservations on their website. With the advent of push-to-talk capabilities through mobile browsers, today's consumers are often looking to ask specific questions before booking. Hiding or removing phone numbers, or sending them to automated recordings, can quickly cause a hotel to lose out on a booking even though the guest may have had a straightforward query they wanted resolved prior to making a reservation.

The rise in mobile device usage needs to be considered when attracting more direct bookings. Mobile phones and tablets are increasingly used for researching and last-minute bookings. A recent eMarketer survey showed that 65 percent of same-day hotel reservations are made via smartphones. Hoteliers looking to capture guest bookings from mobile devices (which are frequently used during 'micro-moments' such as traveling on public transportation, or searching for information while on the go) need to ensure their website is user-centric, responsive, compatible on mobile and tablet devices, and offers a positive visitor experience.

Personalising the Guest Experience

Today's hotel booking meta-sites and OTAs attract large volumes of traffic because they offer potential guests aggregated views of hotels in a particular destination. These sites make it easy to research potential accommodations by viewing and comparing locations, ratings, amenities and more. Ultimately, guests seek hotel experiences tailored around their unique needs, which is why they often visit a hotel's website for more information. However, if the hotel website isn't focused around the needs of the consumer (such as having more photos, videos and reviews than an OTA), they may quickly move onto another property.

A hotel's website should be the best online representation of the property available on the internet. Hotels may not be able to compete with OTAs on the level of website traffic they generate, but they should beat them at enhancing the guest's online shopping experience.

Throughout the research and purchase journey, hotels need personalize their website and differentiate their property to highlight what makes it unique. For example, most hotel rooms look similar, and while it is important for guests to know what the hotel rooms look like, hotels should focus heavier on other kinds of differentiators. These differentiators could be local experiences or their iconic rooftop pool, farm-to-table restaurant or intriguing history. Millennials, for example, may not be as brand loyal as previous generations, but they aren't driven solely by price either. They appreciate unique experiences they can share with their networks - and they are willing to pay more for it.

Maximizing Direct Bookings with the Right Pricing

While it remains vital that hotels are using the right processes to attract online traffic (and their website seamlessly facilitates the booking process), if the rooms or services are priced incorrectly, hotels can still lose out on critical business. Guests will decline to book at properties perceived to be too costly or, adversely, hotels might be attracting guests at price points that leave revenue unclaimed. The practice of revenue management ensures that revenue opportunities are maximized from all booking channels, which includes a hotel's website.

It can be a struggle for hotels to determine which pricing strategies deliver maximum revenue optimization. This can become an overly complex and time-consuming process, and something virtually impossible to do in a manual environment. Automation allows a revenue management system to send pricing and inventory decisions to other selling systems, such as property management or central reservations systems. One of its top benefits is that it binds together the hotel's revenue management strategy and its deployment - and its integration helps reduce human errors and inconsistencies. This also frees up valuable time for revenue managers to be more strategic since their automated revenue management technology is handling the heavy-lifting of executing a dynamic revenue strategy.

Pricing Advances Hoteliers Need to Consider

It is important to understand the pricing strategies employed by competing properties in the market and the effect this has on forecasting and pricing. Hotels should look for revenue management technologies that incorporate competitor data into their demand, pricing and forecasting at the room-type level.

Pricing by room type is an area of opportunity for nearly every hotel today. Understanding the demand by each room type enables hoteliers to make data-driven decisions on whether to oversell the base level rooms, or close them out and sell true to type (rather than forced upgrades at no charge). By individually calculating demand by room class, the pricing difference between each room class can be elastic - and drive significant revenue uplift when demand for higher room classes such as suites or club rooms is high. The traditional approach of adding a flat dollar amount onto the base room type rate often leaves significant revenue opportunities untouched.

Driving Direct Business

It's no secret that driving direct business and better revenue is one of the top priorities facing all hoteliers. In an age of rising third-party guest acquisition costs, hotels are increasingly turning their attention to their most cost-effective online booking channel: their website. However, driving website traffic is not enough on its own; to maximize and achieve the most profitable revenue results, hotels need to not only attract the 'lookers,' but be successfully converting them into 'bookers.'

As Director of Advisory Services for IDeaS Revenue Solutions, Paul van Meerendonk leads a global team of revenue management advisors focused on hotel revenue optimization projects. Mr. van Meerendonk is responsible for global development, management and operations of the Advisory Services team. He oversees the hiring, training and management of industry-leading consultants located in London, Beijing, Singapore and Atlanta. Mr. van Meerendonk also represents IDeaS on industry thought-leadership initiatives related to trends and best practices within revenue management, including authoring a number of white papers, conducting public speaking engagements, as well as leading key client webinars with an average audience of over 200 global representatives. Mr. van Meerendonk can be contacted at +44 (0) 118-82-8100 or Extended Bio...

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