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Hotel Marketing Budgets: How Much is Actually Enough?

September 18, 2018

Hotel marketing budgets: how much is actually enough?

According to a recent study, Booking.com and Expedia return $16 for every dollar spent on marketing. This looks great on paper, but the reality is that over the last decade OTAs’ return on marketing investment decreased by 15%. 

This explains why Booking.com dramatically decreased its advertising spend. 

The same story is playing out across the hotel marketing landscape… cost-per-acquisition is soaring, and if the Goliaths of the industry had to change their strategies, it’s probably time to sit down and address the elephant-in-the-room: how much should you be spending on marketing? 

First: What’s in the Marketing Budget?

Allocations within the marketing budget vary from company to company. According to The CMO Survey sponsored by Duke University, Deloitte LLP, and the American Marketing Association, “less than half (47.9 percent) of companies include expenses for marketing employees in their marketing budgets. Most companies (61.3 percent) include direct expenses for marketing—such as advertising, trade promotions, and direct marketing—in their marketing budgets, but this varies by industry (See below):

What does your hotel or resort include in its annual marketing budget? Do you include employee or outside agency costs in your budget? How about OTA commissions or GDS fees?

This is a critical definition that will determine how much you need and how your results are perceived by ownership.

THE INVERTED U-CURVE

Hotel marketers can learn a valuable lesson from Malcolm Gladwell in his inspiring book David and Goliath. In the book, Gladwell talks about “inverted U-Curves:”

“Inverted-U curves have three parts, and each part follows a different logic. There’s the left side, where doing more or having more makes things better. There’s the flat middle, where doing more doesn’t make much of a difference. And there’s the right side, where doing more or having more makes things worse,” according to Gladwell.

The curve has been around for over a century and it has been applied to a wide range of different situations:  

Money: Scholars who research happiness suggest that more money stops making people happier after they exceed $75,000 per year

Class Size:  Contrary to popular belief, a class size decreases beyond an optimal number, learning effectiveness decreases. Apparently, the optimum number is 18-24 students per class

Punishment and Crime: Past a certain point, cracking down on crime and locking people up stops having any effect on criminals, makes crime worse and the juvenile delinquency rate increases

Similarly, hotel marketing budgets have an inverted U-curve; doing too little will result in sub-optimal results, but doing too much is often wasteful.

So how can you identify this sweet spot? 

WHERE ARE YOU ON THE CURVE?

Hotels on the left side of the curve (usually large branded properties) typically allocate little to no budget in marketing beyond their brand fees. 

They often have a lackluster brand.com web page, no outside marketing investments and their distribution relies almost entirely on third-parties. The good news is that if your flagged hotel is on that part of the curve, any additional marketing investment will help you move to the flat middle of it, where investments and return are in balance and your profitability is at its zenith. 

The majority of hotels fall between the left side and the flat middle of the curve (and need to spend more to achieve their goals. However, if you categorize OTA commissions as marketing costs, virtually every hotel immediately moves to the right side of the curve, where spending more often delivers diminishing returns. As Kalibri Labs notes in their recent report: Demystifying the Digital Marketplace: “if you’re growing top-line revenue —but you’re spending a lot to do it—then you’re ultimately less successful in contributing to overall profits. Not an optimal strategy.”

However, if profit is not your primary goal (i.e. hotels rebranding, new openings, brand awareness projects, etc.) spending MORE may be the correct strategy, but for the vast majority of hotels (if you believe Malcolm Gladwell) it is not. 

So, how much is too much when it comes to hotel marketing?

Marketing effects profitability

According to a recent Gartner Research study, companies spend an average of 12% of their annual revenue on marketing. A recent CMO Survey comes to similar conclusions, highlighting how tech companies are among the biggest spenders (14%) when it comes to marketing. The hotel industry, however, seems to pay an even higher price (up to 25%, according to Kalibri Labs).  Tom Klein, the former CEO of Sabre, recently stated in a Tnooz interview that Travel “is not 90% margin like many of the businesses that Google and Facebook and others are in.” With OTAs’ average commission at 19% and direct booking cost-per-acquisition growing year after year, industry margins are under siege. 

So while ADR and RevPAR are important metrics, you should also focus solely “ProPAR” (Profit per Available Room): the revenue generated per room minus the investments needed to acquire the guest. Here again, we strongly recommend categorizing OTA commissions as marketing costs to get a true picture of your marketing budget and its effect on profitability!

WHAT ABOUT DIRECT BOOKINGS?

Because of high 3rd party acquisition costs, there has been a lot of attention on building direct channels, just think about Hilton’s Stop Clicking Around campaign:

The unavoidable truth is that it is also very easy to overspend when it comes to direct booking investments and you can find yourself on the right side of the inverted-U curve without even realizing it. Similar to the OTA channel, direct reservations also have growing costs. 

Special discounted rates, loyalty programs, hotel digital marketing, PPC, metasearch engines and social media ads to name a few. Our advice to clients has always been: “you should have an unlimited budget for things that work…”

This philosophy requires a near-manic obsession with ROI tracking and analytics that requires serious software and some intensely nerdy data, scientists. As the CMO Survey reinforces: when respondents were broken into three groups—high, medium and low usage of ROI analytics— marketing budgets were 70 percent larger in the high group than the low group.

HOW MUCH IS TOO MUCH?

Before you can determine how much to budget for marketing, hotel execs need to answer three critical questions:

1.  What are the revenue targets by segment? (more on this here)

Without a concrete understanding of targets by segment, hotel marketers cannot quantify (or deploy) their budgets properly… leading to misalignment with ownership and missed targets.

2. Where is the property in its lifecycle?

Recently opened hotels, or properties which went through a rebranding, in fact, should be less focused on return on investment and more on building awareness. In cases like these, 20-25% of annual revenue spent on marketing is common. If, on the other hand, your hotel has matured to a more advanced stage and it’s been in business for 3+ years, then 8-15% of your annual revenue on marketing should be more than enough to guarantee you a good balance between profit and visibility. 

3.  How much revenue is marketing accountable for…?

As the CMO Survey points out: Marketing is responsible for leading revenue growth at 38.4 percent of companies. These companies have larger marketing budgets as a percentage of the overall company budget than companies that do not assign primary responsibility for revenue growth to marketing.”

Are comments about your hotel falling on deaf ears?

May 1, 2018

Hotel social media monitoring needs to go way beyond Trip Advisor

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Hotels take reputation management seriously when it comes to guest feedback on TripAdvisor but often underappreciate the need to closely monitor other social media channels.

This is a lost opportunity to gain short-term insight and long-term goodwill.

Here are 3 reasons hotels need to prioritize social listening:

1. Instant karma

Social Media is a two-way communications channel; you can talk to guests, and guests can talk back. You can have a real conversation with an individual. Not so with TripAdvisor: By the time you respond, the damaging review may already have been posted.

Not to mention, social media trains consumers to expect an immediate response, and an already irritable customer can get more irritable if they don’t receive a response in an adequate amount of time. Ignoring a problem doesn’t make it go away. It can often exacerbate the situation.

Most negative posters on hotel social media channels are still on the property when they post.

And they aren’t doing it for their own enjoyment, either: 78% of people who complain to a brand via Twitter expect a response within an hour, according to a study by Lithium. By monitoring and responding ASAP, hoteliers can potentially engage these dissatisfied guests during their stay—and win them over—before they turn their vitriol into permanent TripAdvisor or OTA reviews.

Another instant benefit of social listening for hotels is the ability to glean insight on guest experience and product/service issues— both positive and negative.

If your hotel makes the mistake of ignoring positive comments about your property, you’ve just lost out on valuable testimonials you can utilize, as well as gaining useful feedback and a chance to strengthen relationships with users. And if you ignore negative comments, you’ll damage your brand and foster negative social proof.

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Further, by listening to social media channels and acting quickly, hotels are often able to delight guests with unexpected surprises that create long-term loyalty and evangelism. These opportunities—which are fleeting and must be capitalized on almost immediately—can offer significant branding value, at minimal cost.

One company making tremendous strides to this end is Marriott, which has tasked its M Live team with constant monitoring of social channels, for the sake of surprising guests with enhanced service touches, like a free bottle of champagne delivered on-site for guests who got engaged while staying at a property.

2. Complete strangers are talking about you…

It’s not just your fan base that you have to worry about.

Non-fans and non-followers are talking about your brand too. It’s crucial to listen to these potential influencers as well.

Surprisingly, 96% of the users who discuss brands online don’t actually follow those brands’ profiles, according to a Brandwatch report.

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You can be reactive and ONLY monitor people who directly comment or tag your hotel’s Instagram “handle” (your actual Instagram account name) in a picture. You’ll receive a notification and you can respond accordingly.

But there are more proactive ways of monitoring ALL relevant sentiment on Instagram. By typing the generic name of your hotel (see illustration above) or property specific hashtags in the search bar, you can discover additional content that guests have posted about your prop.

If you don’t have the time or resources to monitor your hashtags and geo-
tags, Tools like Tout allow you to find and license the content with ease.

3. Discover (and celebrate) the evangelists

Hotel social media monitoring isn’t just about catching people bashing your hotel: It’s equally valuable when guests are celebrating their experiences on channels such as Instagram.

Over the last few years, storytelling and other forms of user-generated content (UGC) have become some of the most popular and cost-effective methods for hotel marketers looking to harness digital and social media and put more heads in beds.

capturing guest-generated social proof from The St Regis in San Francisco

An example of capturing guest-generated social proof from The St Regis in San Francisco

This is driven by a decline in consumer trust in advertising; instead, consumers now look to one another for credibility. UGC such as photos, videos, and posts about hotel experiences are viewed as more authentic and less sales-focused, so using that content to your advantage can offer tremendous benefits.

By monitoring things closely, you can locate and celebrate those brand ambassadors who are taking pictures of their property experience, allowing you to benefit from what is essentially free positive publicity.


About Tambourine

Tambourine uses technology and creativity to increase revenue for hotels and destinations worldwide. The firm, now in its 34th year, is located in New York City and Fort Lauderdale. Please visit: www.Tambourine.com

Friday Freebie: How to Uncover Guests’ Hidden Instagram Photos

April 27, 2018

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Welcome to the Friday Freebie!

Each week we share one impactful hotel marketing tactic that you can implement immediately to drive more conversions and more revenue. 

This week’s Freebie: Your guests are creating FREE ultra-creative marketing content almost every day. Here’s how to uncover that treasure trove of evangelism!

Right now as you read this, a guest is documenting their stay at your property and posting it on Instagram for all their followers to see.

From breakfast in bed to epic balcony sunsets, these photos and videos are far more authentic, unique and imaginative than anything the most creative hotel marketer can come up with consistently. Plus, your guests’ posts carry more influence since they are authentic, not manufactured. This SOCIAL PROOF builds validation and inspires their followers to consider a stay. You can collect these posts and use them for future marketing collateral (with permission) or to repost on Instagram to your own audience.

In other words – Your guests’ Instagram posts are precious marketing gold. And, the goodies just keep flowing in. 

Only problem is that many of these photos and videos are ‘hidden.’ You’ll only be notified of a guest’s post if they happen to use your official Instagram account name, otherwise known as a ‘handle.’ So, if a user leaves that out, you may never see their post.

Unless, you get proactive.

Here are three easy and proactive ways to unearth guests’ Insta content:

  1. Search the generic name of your hotel. For example, the Grafton on Sunset (@graftononsunset), should search ‘grafton hotel’ or ‘hotel grafton’ to catch any posts where guests used those names.
  2. Search any property specific hashtags that a guest might have used instead of your handle, like #graftononsunset or #hotelgrafton
  3. Monitor your property geo-tags, an automatic label that is marked when an Instagram user posts from your location.

Monitor these three methods daily to catch any timely content, as well as to catch any feedback or comments that guests make about their hotel experience.

Get More: Why Every Flagged Hotel Should be Rethinking Instagram


About Tambourine

Tambourine uses technology and creativity to increase revenue for hotels and destinations worldwide. The firm, now in its 33rd year, is located in New York City and Fort Lauderdale. Please visit: www.Tambourine.com

Bad Habits: 5 things hotel marketers should stop right now

April 17, 2018

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Usually, we offer insight on the hotel marketing tactics, tools and strategies you should adopt to drive more revenue to your hotel: add chat to your hotel website. Focus on this webpage as your SEO secret weapon. Try these tips on your mobile website, etc…

Today, we want to turn things around and recommend a few things NOT to do!

From our experience, here’s five negative habits inhibiting hotel marketers from reaching their full revenue-generating potential:

1) Using the wrong message to fight OTAs

Travelers aren’t as obsessed with low prices as you may believe. According to a recent JD Power & Associates’ North America Hotel Guest Satisfaction Index Study, customers who booked on third-parties are more likely to face problems (like last-minute changes and canceled reservations) and be dissatisfied with their hotel experience. 

A common review from an unhappy OTA customer…

A common review from an unhappy OTA customer…

So, instead of using price to win back OTA customers, focus on a common fear: Fear of a ruined travel experience.

It’s no secret that OTAs have left thousands of travelers in the lurch with their cancellation policies and ability to change/reassign hotels at their own discretion.

So, use that your advantage. Remind customers that booking direct with your hotel is the SAFER option. Unlike OTAs, you have a staff that actually, truly cares about them and will do all that’s possible to avoid and quickly amend any issues.

2) Tolerating an Inferior Product

Not even the most creative hotel marketing strategies, sophisticated hotel booking engine, or targeted hotel ppc campaigns can compensate for a sloppy hotel experience. Just as the saying goes, “You can’t put lipstick on a pig,” you can’t cover the signs of your hotel’s frayed edges or lapses in service. Travelers are more sophisticated than ever and they’re well aware of their options, especially with so many shiny and new boutique hotels stealing their attention.

No amount of “lipstick” can cover up an aging, inadequate product

No amount of “lipstick” can cover up an aging, inadequate product

While you can’t decide what gets fixed and replaced, that shouldn’t stop you from diligently pointing out to your owners what guests are complaining about. Each year, leverage your guest reviews that show the shortcomings that are deterring guests and hindering revenue growth. Convince your owners that property upgrades and enhancements are urgent if they want to compete in today’s marketplace.

3) Working in a Silo

It’s a common scenario playing out in hotels across the globe:

Hotel marketing departments that don’t communicate, share resources or vital updates.

The result?

Marketers left in the dark about upcoming periods of weakness. Group sales managers with no leads. Revenue managers clueless about why marketing continues to target one audience (or date period) over another.

It’s time to end this disconnect.

Smart hotel marketers break down silos and work closely with sales and revenue management

Smart hotel marketers break down silos and work closely with sales and revenue management

Your entire hotel and its financial success depend on all three pillars of the sales & marketing platform working together in unison and towards the same revenue goals. One easy way to break down these silos is to schedule an all-team meeting every week. This meeting should include ALL associates, not just managers. Share your current priorities, upcoming projects, recent discoveries, ask for feedback and share resources.

This not only gives every team member access to what’s happening outside of their department, but it also fosters teamwork and enhances collaboration that results in success across all S&M departments.

4)  Ignoring the sales team

Meetings and events account for a major portion of your hotel’s revenue.

Yet, hotel marketers tend to solely focus on driving leisure business, leaving sales managers to generate their own group leads.

This is a dangerous habit, as more and more hotel owners and asset managers become less impressed with your branding initiatives or your hotel’s number of social media followers and more obsessed with how much you contribute to your property’s revenue.

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So start using your skills in digital marketing for hotels to champion the sales team’s efforts and drive group business. Smart hotel marketers do three fundamental things to support their sales teammates:

a.  Run campaigns that consistently engage the sales team’s high-value targets (HVTs) with relevant and entertaining content
b.  Deploy marketing automation tools to alert sales managers when HVTs are on the hotel website and what pages they are looking at…
c.  Optimize the meetings and events pages on the hotel direct website with ALL the resources meeting planners need… AND create compelling content showcasing your destination as an exciting locale for meetings and events attendees

5) Focusing on meaningless stats

Because the best hotel marketers know they’re only as good as their metrics, measurement and tracking of key performance indicators (KPIs) are an ongoing commitment.

However, with more sophisticated technology comes more data.

While analytics are vital for doing what we do, we’re also burdened with an avalanche of irrelevant KPIs stealing our attention from the metrics that actually matter.

Don’t get dragged down trying to keep up with useless numbers, such as bounce rate, online page views and social media followers.

Instead of leaning on metrics that only sound impressive on paper, pay attention to the numbers that will actually measure your contribution to hotel revenues. Every day, you should be checking the KPIs that actually matter to your hotel’s owners and asset managers, including:

  1. MCPB (marketing cost per booking): Tracks the cost of each sales and marketing channel versus actual conversions. Try using this for OTA commissions as well… and see how that channel stacks up versus your other campaigns.
  2. DRR (direct revenue ratio): Measures percentage of online revenue from direct sources (your website) versus pricey third-party sources, like OTAs. If you’re not garnering 40 percent of your revenue from direct reservations, you still have work to do!
  3. Website conversion rate (from unique visitor to entrances into the booking environment): Converting a higher percentage of visitors into booking searches (or phone calls) is critical to reducing your cost of revenue and MCPB.
  4. Variance from revenue target: This metric showcases revenue goals versus actual results (by segment).

 


About Tambourine

Tambourine uses technology and creativity to increase revenue for hotels and destinations worldwide. The firm, now in its 33rd year, is located in New York City and Fort Lauderdale. Please visit: www.Tambourine.com

5 Things Modern Hotel Marketers Can Learn From Vintage Travel Posters

April 4, 2018

Hotel marketing hasn’t changed much in 100 years…

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In the Golden Age of travel in the early part of the 20th century, there were no online banner ads. Nor guest analytics, marketing technology, mobile apps, retargeting campaigns, email offers, Insta-influencers, or search engines.

Instead, airlines, CVBs, resorts and railway companies relied on one of the most powerful mediums of their time – the travel poster.

These travel posters shared common characteristics: exuberant colors, a gorgeous single graphic, and bold eye-catching lettering that all evoked a lust for travel and exploration with a single glance. In fact, these poster designers have been nailing it for more than a century. These vintage travel posters are still provoking inspiration for adventures far and wide today.

There’s a lot we can learn from these beautiful illustrations.

Decades before the creation of modern hotel marketing, poster designers inherently understood and integrated five key elements of successful hotel marketing:

1. Take time to CRAFT your story

Your hotel is different.

You may know that, but your prospective buyer doesn’t.

So, you need to make it obvious. Your hotel marketing needs to deliver relevance and intrigue immediately. A mistake many hotel properties make is ‘me too’ marketing that is cliché and already overused by many of their compset neighbors. For example, describing your hotel as ‘in the heart of New Orleans’ or ‘oceanfront hotel,’ making it difficult for travelers to differentiate your property from other central New Orleans properties and oceanfront hotels.  Ditch these overworked marketing messages and present something brilliant and provocative, instead of bland and predictable.

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This poster for a French hotel tells a unique story of mountain air and healthy activity!

2. Tell It Succinctly
The marketing concept behind travel posters is simple: combine one vibrant image and bold text to create a uniquely effective marketing medium that inspires travel.

These posters were easily understood and were perfect for capturing the attention of people on the go. Today, attention spans are at an all-time low, so every second of your hotel marketing counts. Hotel marketers need to be cognizant of the first five seconds that a visitor lands on a property website, that short span of time determines if the person will book, bounce or return. So, you need to squeeze performance out of every second for higher chances of conversion and revenue. Cut the clutter, get rid of slow-loading graphics, keep things simple.

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Is there any question where this Rio hotel is located?

3. Be Visually Arresting

Your marketing images and hotel photography should be more than just pretty pictures. Just like the eye-popping colors and a single image on a travel poster, your images should catch attention in seconds and convey your experience in a single glance.

In fact, studies show that travelers spend time scouring through hotel images before making a decision. And, that your hotel photography has the power to change a buyer’s mind, for better or for worse. Ditch the stock images or dated blurry photos. Invest in a photographer experienced in shooting interior design, real estate, architecture or other hotels. Plus, leverage your hotel’s best FREE photographers – your own social media-savvy guests. Instagram enthusiasts are producing images on par with paid professionals for their personal channels.

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Sometimes, the best image for a hotel is not the hotel at all… it’s the nearby attractions!

4. Keep messaging consistent

Back in the heyday of travel posters, hotels could not change messages very often… so they were forced into being consistent in their marketing.

Today, rate parity isn’t the only consistency your hotel should be vigilant about. Maintaining your hotel’s STORY parity is also vital to your bottom line. Smart hotel marketers know their Unique Selling Proposition (USP) has to be consistent across all touchpoints and marketing channels. If consumers see your hotel described as ‘cosmopolitan and sophisticated’ on one channel, then as ‘central and family-friendly’ on another, potential guests will be confused and leery of moving forward. Consistency builds trust and trust turns into buyer confidence.

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For many years, the Outrigger hotel in Hawaii used images of guests enjoying the surf with the locals. They were the early advocates of celebrating authentic local experiences!

5. Be Intentional with Time and Place 

The biggest boon of marketing technology is the ability to target and automate campaigns, allowing you to reach the right audience, with the right message, at the right time.

Use it.

The most popular travel posters were commissioned by airlines and railway companies and were respectively displayed in airports and train stations touting resort destinations, thrilling cities, and weekend getaways. Today, consider where and when to deliver your marketing messages. For example, consider the impact of a billboard promoting a Caribbean resort and its sunny beaches displayed in New York City during the bone-chilling months of winter.

 


About Tambourine

Tambourine uses technology and creativity to increase revenue for hotels and destinations worldwide. The firm, now in its 33rd year, is located in New York City and Fort Lauderdale. Please visit: www.Tambourine.com

Friday Freebie: Crush the Compset with This Group Sales Tactic

March 16, 2018

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Welcome to the Friday Freebie!

Each week we share one impactful hotel marketing tactic that you can implement immediately to drive more conversions and more revenue.

This week’s Freebie:

Stay ahead of new compset properties. Harvest your city’s special events to get ahead of lucrative group business opportunities

Nothing can shake up your group sales numbers more than a new hotel in your compset. Meeting and group travel planners are hungry for what’s new and will likely include the new space in their consideration set… unless you employ smart strategies to provide your hotel with a constant flow of revenue from other sources.

John Washko, VP of Expo & Convention Sales at Mohegan offers this powerful tip:

Work ahead by keeping close tabs on all the special events scheduled for your city as far in advance as possible; monitor the area’s convention centers, concert venues and CVB websites. Events, such as conventions, sporting events or concerts, almost always bring meeting and/or group opportunities with them.

Your sales team should be researching and reaching out to any related clubs or organizations that would likely travel to attend the event, then directly offer up a block of rooms at a group rate. Your hotel can offer even more value through discounted transportation to the event.

For example, consider a Bon Jovi Fan Club, says Washko. This is a group, typically ages 40 to 50, that are enthusiastic fans of Bon Jovi and travel to his performances. Other examples are car clubs for major races or car shows.

Washko says the key to staying ahead of your new comp set is by being the first to reach out to these groups. So, set up processes with your sales managers to seek out these groups several months in advance.

Get more examples: The New Supply Threat: How Hotel Sales Teams are Fighting Back


About Tambourine

Tambourine uses technology and creativity to increase revenue for hotels and destinations worldwide. The firm, now in its 33rd year, is located in New York City and Fort Lauderdale. Please visit: www.Tambourine.com

Why Do Some Hotel Marketers Get Everything They Want?

March 13, 2018

Smart hotel marketing pros are using simple math get more budget.

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With the hotel industry enjoying a period of record performance, posting all-time highs for occupancy, ADR and RevPAR, one of the most talked-about ways to improve performance (and delight ownership) are to reduce the cost of guest acquisition.

And that begins with fully understanding a vital metric: your hotel’s CLV-to-CAC ratio.

But unlike many other industries that have already embraced the concept, too many hotel marketers are still unable to quantify their CLV-to-CAC formula.

This can be overcome with a little effort, offering a major potential boost to the bottom line and a far stronger bargaining position when asking ownership for more marketing dollars (and a raise)!

What Does It Mean?

To get started, there are some basic principles to know, beginning with terminology.

CLV stands for “Customer Lifetime Value,” meaning the revenue your hotel can expect to earn from each guest over the lifespan of that customer’s relationship with you. CAC, meanwhile, is short for “Cost to Acquire Customer,” or your total sales and marketing spend to attract each customer and obtain the aforementioned CLV. The premise behind the CLV-to-CAC formula is to maximize that ratio as much as possible.

There are multiple benefits from having a strong CLV-to-CAC ratio, including enabling hotel marketers to ask owners for more investment dollars, for example, imagine being able to tell ownership: “We spent $300,000 last year to attract 5,000 NEW guests, who represent a LIFETIME VALUE of three million dollars in revenue… in other words, for every dollar you give me, I’m giving you ten dollars back in gross revenue.”

So how do hoteliers calculate their CLV to CAC ratio?

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According to Kissmetrics, a well-known web/data analysis company, Starbucks CLV is more than $14,000.

Here are the core steps:

1. Making the Calculations

To come up with your CLV, first, consider how many times a guest typically stays at your hotel(s) over a multi-year period. Then, deduce the total value of those stays. Multiply that value by the total amount of visits per guest and that is the CLV you will use in the formula.

Next, to arrive at a value for CAC, simply divide the TOTAL amount your property spends on sales and marketing for each segment (ie: transient vs group vs corporate) by the total number of guests from that segment.

EXAMPLE:
So, if a hotel attracts 1,000 new guests this year and spends $100,000 to do it, the CAC equals $100.

2. What to include in CAC?

When calculating CAC for each demand segment, be sure to include salaries, expenses, technologies, advertising and any other investments made specifically to attract bookings for that specific segment. That may include, for example, a customer relationship management (CRM) system and trade show booth that is part of the CAC for your hotel’s sales efforts for attracting the corporate business segment.

Other costs, like Google pay-per-click (PPC) advertising, email marketing, and social media fees should be attributed primarily to transient guest CAC calculations. On the other hand,
your hotel’s website, the salary for your director of sales and marketing (DOSM) and other “shared” costs can be distributed evenly across all segments that your property targets.

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3. The Results:

Using the calculations described above, divide the CLV by the CAC to arrive at the ratio.

For example, if a hotel has a CLV of $5,000 per transient guest and the CAC for each transient guest equals $100, then the CLV-to-CAC ratio is 50x. In other words, for every dollar spent on sales and marketing to target that guest, the hotel will earn back $50.

That is the kind of return owners love!

And that is the kind of math that separates serious hotel marketers from those just focused on pretty pictures!

Now compare results to your OTA costs!

Once you know your own CLV-to-CAC ratio, you can compare it to the CLV-to-CAC of bookings derived from third-party online travel agencies (OTAs).

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You’ll most likely be pleasantly surprised by what you find: Typically, OTA-driven guests are less loyal and will have a lower CLV as a result. Also, the commissions on those bookings may be higher than the CAC you are achieving on your own.

So, in the quest to drive hotel profitability even further into the stratosphere, make it a top priority today to learn your CLV-to-CAC ratio for each customer segment you target. By offering such compelling insight, the CLV-to-CAC ratio can be an incredibly powerful stat for hotel marketers to cite to owners when requesting more marketing dollars.

You’ll be much more likely to obtain the budget you need when your owner is assured their investment will lead to a far better payoff down the road.


About Tambourine

Tambourine uses technology and creativity to increase revenue for hotels and destinations worldwide. The firm, now in its 33rd year, is located in New York City and Fort Lauderdale. Please visit: www.Tambourine.com

How Guests Decide Whether to Buy on Your Hotel Website

February 20, 2018

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Psychology plays a deeper role in online hotel booking decisions than you may think, particularly when it comes to building trust among hotel consumers. And creating that trust, experts say, is not as simple as just touting your brand affiliation or Trip Advisor rating.

Ultimately, your sales will suffer if you fail to foster trust with your hotel website visitors and give them psychological motivation to buy. According to a recent Western University study recently discussed in the Harvard Business Review, that begins with understanding the two methods of reasoning customers use when making online purchases, depending on the level of risk involved with that decision.

Parallel Processing

There are two different, yet complementary “parallel” means in which humans decide to buy. On the one hand, potential customers use logical, rules-based “deliberative” system of reasoning when making small, low-risk purchases.

That means that when buying lower-priced items online, shoppers are mostly looking for the standard signs of business legitimacy, like a secure checkout, a strong search-engine presence, online reviews, etc. Buying in this situation is a deliberate, informed choice that satisfies a very basic customer need.

But for more expensive, complicated transactions where personal comforts are associated (ie hotel stays), humans tend to rely on what is called “associative” reasoning, which is far less structured and rules-based than the deliberative process. Associative reasoning relies more on the individual’s own intuition and personal experience, and here is where building virtual trust becomes so important. Instead of creating a bond in person through your sales charisma and the reassuring experience of meeting your client in person at your office or storefront, you need to find the online aesthetics instead that trigger the same associative customer trust.

But how?

Here are three proven ways to build trust and increase your hotel website conversion rate:

1. Actually be authentic

You’ll never connect with consumers with a generic, cookie-cutter hotel website that fails to convey a truthful story. But there are also a number of subtle visual cues, as well as content features, that can go a long way toward enhancing a sense of authenticity that eases suspicion and fosters trust. Some useful tips include:

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The great ad man David Ogilvy reminds about the importance of being truthful in our marketing

  • Be truthful

Travelers are no longer drawn to sterile facts, puffy promises of a wonderful stay or mentions of your recent industry awards. They want to be a part of something that intrigues them, connects with them and gives them something to brag about. Telling a meaningful, TRUTHFUL story is what can truly attract travelers. Correctly telling your story means knowing your audience, being honest about your assets and getting all stakeholders into consensus about your property’s unique identity, so you can convey it poignantly across all marketing channels. Also, be truthful in how you tailor your messaging, language and imagery. Avoid using models in photos who don’t look anything like your typical visitors. And write your copy with language that speaks to your intended audience.

  • Avoid stock photography

Those dull, lifeless stock images that are used all too often on the web do little to motivate buyers or convince them they should do business with you. Instead, try and use your own unique photos. If that means hiring a professional photographer in order to create quality images, then go ahead and budget for that. And most importantly, every hotel should be capturing guest-generated content and repurpose it across every marketing channel

  • Get hyper-local

Give visitors the most authentic personalized content and recommendations you can. Offer “Staff picks” on great places to eat, “in-the-know” events and other local suggestions that go beyond the typical tips already available online for your area. Position your hotel website as the epicenter of the destination!

2. Provide social proof

Social proof can have a huge effect on building trust, because it taps into that fuzzy human logic that drives associative reasoning, including the fear of missing out (FOMO). Some core methods of providing social proof include:

  • Celebrate Past Guest Experiences on Social Media

Travel consumers are heavily influenced by “social proof” (this is why TripAdvisor is so popular). By sharing past guest stories, reviews (and best of all videos) on their hotel’s social media channels, you can turn your past guests into a perpetual army of experience evangelists.

Harvest their good times!

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An example of capturing guest-generated social proof from The St. Regis in San Francisco

  • User Testimonials

Post glowing past guest reviews directly on your website (especially for meeting planners). If possible, include a photo of the person leaving the review, which enhances the perceived legitimacy of the testimonial

  • Media Labels

Showcase awards on your hotel website from the reputable news or travel industry organizations who’ve recognized your property. The equity of these organizations creates buyer confidence at a quick glance

  • Partner Logos

Also display the logos of the businesses and organizations you partner with, even if they are smaller, less easily recognized brands. This bolsters credibility and draws other partners and customers to you

3. Create helpful content

Research has shown that people are more likely to do you a favor if you do something for them first. In marketing, this is called reciprocity, the principle of give and take. If you offer something of value upfront, travelers will have an innate desire and obligation to return the favor.

So when planning and executing content strategies for your site, create content purely for the sake of being useful to your customers. Don’t make content a thinly-veiled sales pitch. That’s a surefire recipe for a rapid bounce rate (how quickly someone clicks on a link and then leaves) and is a general turn-off for viewers, who see right through this tactic.

Design content to help solve problems and address customer pain points. Local area guides, FAQ pages, area events calendars etc are all examples of selfless content that conveys helpfulness and generates trust

For more on the psychology of buying as it pertains to the hotel booking process, check out our in-depth series on “The Surprising Psychology Behind Successful Hotel Websites,” Part One and Part Two.

 


About Tambourine

Tambourine uses technology and creativity to increase revenue for hotels and destinations worldwide. The firm, now in its 33rd year, is located in New York City and Fort Lauderdale. Please visit: www.Tambourine.com

It’s Valentine’s Day: What Are Hotel Marketers Loving?

February 13, 2018

Hotel marketing folks are infatuated with these 7 things…

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Each year around Valentine’s Day, we ask clients, partners and industry insiders what they are feeling warm and fuzzy about… here are the 7 things they’re smitten with right now:

1. A Strong Economy and Positive Industry Forecasts 

The smart folks at STR, CBRE and PWC all generally agree that 2018 will be another year of steady growth for the hotel industry. (You can download STR’s detailed breakdown by market here.) Fueled by a strong global economy, relatively low gas prices and limited supply growth, the US hotel industry is once again expected to enjoy positive RevPAR and ADR growth. And since all boats rise with the tide… hotel marketers are riding the wave to happiness and career growth.

image22. Robust Career Opportunities

Speaking of career growth… hotel marketers are seeing more opportunities than ever. Industry results have expanded budgets and created new roles. While the allure of the hotel industry and the fast-tracked promotional opportunities make hotel marketing and hotel social media jobs some of the most coveted in the country.

3. Elevated Consumer Awareness of Direct Booking Benefits

Thanks to the massive media outreach by Hilton and Marriott’s direct booking campaigns, we’re seeing heightened public recognition of the benefits of booking direct. The idea is to educate travelers and chip away at the myth that OTAs save guests money. With the stage set, more and more hotels are following in Hilton and Marriott’s footsteps with their own hotel marketing campaigns enticing audiences to book direct.

Plus, hotel marketers at properties of all sizes are now armed with new digital hotel marketing tools and previously unaffordable technology that can help them drive direct room revenue, instead of settling for costly OTA bookings. The momentum of the “book direct movement” is growing and hotel marketing folks are excited to see where it’s headed.

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4. Owners’ Investment in a Remarkable Product

New hotels with bold concepts and fresh guest experiences are springing up in all directions, so hotel owners need to invest in their properties to keep up with modern expectations.

Thankfully, more and more hotel owners are realizing that the best hotel marketing investment they can make is in enhancing their property, the experience and the service.

If your property is providing a lackluster experience with frayed edges, outdated décor, and musty smells, no amount of brilliant marketing can save you from the downward spiral of lost revenue.

5. Social Evangelism

Hotel social media managers are feeling blessed to have guests who gush and brag about their stay on Facebook and post foodie pics to Instagram. Not only have they made marketing travel engagingly personal and authentic, they come at no cost to the hotelier.

Over the last few years, storytelling and “user-generated content (UGC)” has become one of the most popular (and cost-effective) ways for hotel marketers to win guests’ hearts and wallets.

Why?

Because consumers no longer trust advertising… they trust each other. As this article in AdAge so aptly put it: “Your brand is defined by the interactions people have with it.”

User-generated content, especially photos, videos and posts about on-property experiences are more authentic, less sales focused… and let’s face it, usually more creative than anything hotel social media folks could ever dream up.

6. Metasearch: An Attractive and Less Expensive Option

It’s easy to see why travelers love metasearch, such as Google and TripAdvisor: They receive all the key details needed to research and book their stays all in one place, like real-time pricing, availability, hotel information, guest reviews and location.

But, hotel marketers are loving metasearch too.

They are using these sites to boost direct bookings instead of relying on OTAs and paying high commissions. You can pay-per-click or pay booking commissions (still less expensive than traditional OTA fees) – all while getting brand exposure and access to travelers who are just entering the consideration and booking funnel.

7. Digital Personalization

Every year, new hotel website and booking engine technology allows hotels to know more about who’s looking, booking and bouncing. With this robust analytics and demographic data, hotel offers are now personalized and optimized to reap the biggest ROI.

And hotel marketers are smarter than ever about crafting hotel marketing campaigns that are tailored to the right travelers and delivered to the right place, at the right time. And, best of all – everything is measurable, which provides tremendous power to hotel marketers when it comes time for annual performance and budget reviews.


About Tambourine

Tambourine uses technology and creativity to increase revenue for hotels and destinations worldwide. The firm, now in its 33rd year, is located in New York City and Fort Lauderdale. Please visit: www.Tambourine.com

10 Killer Hotel Website Conversion Hacks

January 16, 2018

Hotel website conversion is key to any direct booking strategy. image1

There’s a good chance you’re killing the conversion rate of your hotel website.

Right now, potential guests are bouncing off your hotel website as you read this.

What good are your brilliant marketing strategies if you can’t hold onto the customers’ attention once they get there?

Your hotel product is not to blame.

Most likely, there are holes that need to be taken care of on your hotel website.

Make these fixes and watch your conversions increase.

Hack 1: Use Dynamic Personalization

Too many hotel websites use sliding graphics to showcase different messages, amenities and promotions. If the first screen isn’t right for the visitor… maybe the next one will be!

Unfortunately, it turns out that sliders kill conversion rates. Instead, we recommend using simple dynamic personalization to deliver the right message/promo to each visitor.

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An example of dynamic personalization welcoming past direct bookers with their previous date search.

For example:

By using campaign tracking codes to identify various inbound traffic sources, you can customize the messaging of your homepage to be more relevant to your visitors. For example, if you are promoting an in-state resident sale, you can dynamically set your home page to detect website visitors from your state and display that promo first.

• You can prevent abandonment to OTAs by dynamically showing gated/loyalty rates (see example above) to users who are automatically identified as consumers who have used your direct booking engine.

• When a guest from London visits your website and moves into the booking engine, your website can automatically pass the user’s location and localize room rates in the booking engine to the guest’s native currency (i.e. instead of charging $100 USD for a room, you could charge 100 British Pounds, which is worth $1.32).

Hack 2: Keep Offers Consistent

Using promos across all your digital channels to drive traffic is nothing new, but if you don’t keep the offer consistent throughout the purchase journey, you are causing dissonance and inhibiting your direct hotel website conversion rate.

This is especially critical when guests expect to see the promo they clicked on reflected in the pricing inside your hotel booking engine. If an offer disappears during the booking engine conversion process, visitors can lose confidence in their purchase and abandon their checkout.

Here’s a great example from Couples Resorts showing a 7th Night Free promo on their Specials page, then carried forward all the way through into the booking environment:

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The jump between your website to your booking engine is a dangerous place. If the transition isn’t seamless, it’s notorious for causing people to ditch their reservations. One thing to blame for the abandoned reservations: Mismatched online experiences.

The best booking engines are the ones that go unnoticed by the guest. If you transfer guests to a booking engine with a different design, different colors, different fonts than that of the website, it will cause guests to feel uneasy about moving forward. Even the smallest of differences can be jarring to the customer and will slowly chip away at the trust that you worked so hard to establish. So, keep things consistent to boost both customer trust and conversion rates.

Hack 3: Keep Messaging Consistent

Sure, setting rates and keeping content consistent across the vast array of digital channels can get overwhelming. But maintaining STORY parity is vital to your hotel’s bottom line.

Smart hotel marketers also know that their USP (unique selling proposition) has to be consistent across all brand touchpoints and channels. If consumers see your property described as “urban chic” in one place and “a traditional business hotel” in another… dissonance occurs, causing erosion and attrition.

People are often distracted and impatient when they’re shopping for travel online. They’re eager to find information that gives them confidence in their purchase decisions. In the early days of the web, researchers at the Xerox PARC laboratory in Palo Alto defined this as “information scent.”

According to the conversion gurus at Unbounce, people follow visual and information clues that help them find what they’re looking for. If they lose the scent, they’ll abandon the trail. If the information scent is strong, they’ll keep going. The question is: How consistent is the information your hotel provides across all your digital channels?

Hack 4: Offer Live Chat

Smart customer service can give you a serious bump in bookings. A recent study found that 62 percent of online customers are more likely to make a purchase if you offer live customer support.

Let’s be real:

Most of the people who visit your website will have questions. Don’t assume they will read every word on your website to find the answer. They want answers now. And offering them instant responses and open dialogue will make them more confident in booking. Online chat is even more important within your booking environment itself. Up to 98 percent of guests looking for availability on a hotel website will end up NOT BOOKING. Invest a few dollars a month in online chat to reduce attrition and guide your most valuable prospects to booking.

Hack 5: Fix Your Clunky Checkout

The faster a guest can get through the booking process, the higher your conversions. A long and complicated booking process can derail all of your efforts to get the guest across the finish line. Studies show that 28 percent of customers abandon their online purchases because they were frustrated with the long checkout. So, simplify, simplify, simplify. Take out irrelevant steps, mandatory sign-ups and upsell pages. Reduce the number of room types. Pare down as much as you can.

Also, sometimes the simple reason shoppers don’t complete a purchase is that their preferred credit card wasn’t accepted in your booking engine. Smart hotels offer multiple payment options, going beyond Amex, Visa and Mastercard to include as many forms of payment as possible, including third-party online payment services like PayPal. Some even take it a step further like Couples Resorts, who offer a “loveaway” payment plan.

Also, don’t forget to mention security clearly on your checkout page, otherwise you run a serious risk of abandonment. Customers need to feel confident that their payments will be handled securely. A statement of secure payment (or security badges) reassures your customers and could be the difference between a new guest and a lost sale.

Hack 6: Be Very Picky About Photography

Don’t shrug off hotel photography as simply pretty pictures. They carry far more influence than that: They convey your experience with a single glance. A study by Cornell University School of Hotel Administration and Penn State’s School of Hospitality Management found that travelers thoroughly inspect photography to see if your room rates match your experience. And, that photography has the potential to change a guest’s mind. So skip the old, dated, blurry photos and kill the cheesy stock images. Invest in a legit, professional hotel photographer with a compelling portfolio of previous work at similar properties.

Hack 7: Harvest Social Proof 

Modern travelers, especially millennial and affluent guests, are highly driven by user-generated content. In fact, a recent marketing study found that UGC is 20 percent more influential than any other type of marketing when driving purchases among millennial shoppers. Leveraging your guests’ own images (especially images from Instagram) in your marketing materials not only shows authenticity, it brilliantly demonstrates ‘social proof.’

Also, potential guests turn to sites like TripAdvisor, Yelp, Facebook and OTAs to research what others are saying about your property. Our advice: Beat them to it. Select and showcase some of your best reviews directly on your hotel homepage to amp up conversions. Scour through guest feedback for the most poignant reviews, skip those that are too generic or lack-luster. The idea is to add credibility with authentic guest feedback, as well as build excitement about what’s in store.

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Hack 8: Automate Your Best Rate Guarantee

Having a Best Rate Guarantee badge on your website is no longer enough. Instead, smart hotel marketers now show 3rd party rates alongside their own direct rates, so that customers aren’t tempted to leave and compare prices on other sites. Widgets like TripTease make it easy for hoteliers to show rates form third parties… and (shameless plug) our very own booking engine takes the concept a step further by auto-matching third-party rates when direct rates are showing higher than third parties.

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Booking engines, like Tambourine’s, can now auto-display third-party rates and auto-correct direct rates when they are out of parity.

Hack 9: Speed Things Up!

Attention spans online are at an all-time low.

If you want to turn lookers into bookers, every second counts. The ramifications of a slow hotel website are swift, and often permanent as well. About 25 percent of visitors will abandon a website that takes more than 4 seconds to load. Almost 50 percent will abandon if the site takes more than 10 seconds to load. Worse, once they leave, they will likely never come back. Today’s consumers expect immediacy online, so this is essential to your conversion rate.

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Hack 10: Be Mobile-Friendly

Mobile bookings are up. According to eMarketer, by 2021, half of all digital travel sales will be made from smartphones or tablets. So, why aren’t your mobile bookings climbing, too? It’s not enough for your website to just ‘come up’ on a smartphone or tablet. Or, to merely offer a mobile version of your hotel website. Your hotel’s mobile experience has to match the expectations and habits of today’s consumers on-the-go. So, streamline the booking funnel. Design for one-hand navigation. Allow for alternate payments. Then, watch your mobile bookings rise.


About Tambourine

Tambourine uses technology and creativity to increase revenue for hotels and destinations worldwide. The firm, now in its 33rd year, is located in New York City and Fort Lauderdale. Please visit: www.Tambourine.com

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