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In the hotel industry, one of the great challenges is to drive online direct bookings. For those of you unfamiliar with the concept of an online direct booking, it specifically means a booking that is made on the hotel website. These days, hotels not only compete with neighboring hotels but also OTAs (online travel agencies). Examples of some of the well knows OTAs are booking.com, expedia.com, and hotels.com. These sites list and rank all hotels and then provide links to book them. The reason the OTAs are a significant source of competition to the hotel has to do with the massive size of their marketing budget, the concept of parity, and profit. By agreement, hotels need to provide their exact BAR (best available rate) to the OTAs. That means the OTAs and the hotels will display similar low prices, hence parity. The issue relates to how much money the hotel makes from a direct booking on their site versus a booking on an OTAs. On a direct booking, the hotel keeps 100% of the revenue. With an OTAs booking, the hotel keeps between 75-90% of the revenue due to the commission agreement they have with the OTAs. Hotels that lack awareness desperately need the OTAs to drive bookings.
Herein lies the challenge. In these types of situations, the goal is to try to channel shift from the OTAs to the hotel website. The typical pattern of the customer journey booking a hotel in a location they are unfamiliar with is to first go to an OTAs to narrow their hotel list based on location, price, and reviews. Next, the customer typically goes to the hotel site, learns more about the hotel, and view relevant content. In the last step, the customer typically returns to the OTAs to book. A goal of the hotel website is to entice the researching customer and engage that customer to book on the hotel website rather than have the customer go back to their prior OTAs channel.
A goal of the hotel website is to entice the person researching and engage them to book on their hotel website rather than have them go back to their prior OTAs channel
In addition to trying to shift share, hotels leverage SEO, SEM, banner campaigns, along with meta targeting to attract and drive awareness in an effort to drive potential guests to their website. Once on their website, hotels have an opportunity to convert the looker (customer) to a booker. This attempt at conversion can be augmented and facilitated by third-party solutions that hotels often place on their website. These solutions include customized message formats with optimized display timing, a robust set of dynamic targeting options with personalized content, widgets that pull in the price comparisons from the OTAs , widgets that pull in guest review ratings and comments to display on the hotel website. The challenge is to determine the value of this conversion and show the ROI from the annual/monthly cost for this service. To do that, the hotel must determine the amount of incremental traffic the solution helps to convert above and beyond what the hotel page would be able to do on its own.
Companies similar to The Hotels Network that provide this specific type of technology build ways to measure and attribute value to their messaging and revenue. These tools typically yield an ROI from 10-20 percent. They do this in a number of ways. They track bookings through clicks as well as revenue associated with an influential conversion message the looker was exposed to during their booking journey. This type of attribution is similar to companies that manage banner campaigns associated with view-through attribution.
The best way to measure the conversion of these campaigns on your site is through A/B testing. A/B systems test a message that is automatically split into the campaign (exposed) and a control group. The next step is waiting to get a statistically valid measurement to increase the confidence level in the results. For hotel websites that have significant traffic, the results come quickly with a minimum industry-standard benchmark of around 10,000 impressions. However, with lower impressions rates, the expected margin of error needs to be increased, or the hotels need to continue to run the test until the expected threshold is met. If there is strong direction in the results prior to meeting the threshold, the test can stop and the results can then be added to the overall marketing learning of the hotel team.
Different types of messaging can be tested relating to urgency (low inventory), limited-time offers, exit messaging, and nudges. Regardless of what is being placed on the site, it needs to be tracked and conversion needs to be evaluated. For these types of messages, the system needs to, at a high level, track visitors, bookings, revenue, and the specific campaign group. Beyond this, to get to more granular levels, there needs to be an evaluation of device type and even country (at least these days) to see how this information relates to the booking.
Overall, when it comes to hotel websites and the drive to conversion, hotels need to lean in and embrace the tools available to them. In addition to the multitude of channels that can be leveraged to attract traffic to the website, hotels now need to utilize technology to convert the traffic they have. The cost of not doing so means the potential loss of bookings. Not just to a competitor but possibly to a lower profit source of an OTAs.