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Measures hotels can take to remain profitable

June 18, 2009 - Mumbai.

As an industry, hotels are typically reactive, making decisions based on the market situation and demands. However, the travel market has shrunk in the past year as corporates cut back on expenses and individuals put their travel plans on hold. If hotels remain reactive, it could mean a smaller share of the already shrunk travel market. If hotels remain reactive, it could mean a smaller share of the already shrunk travel market.

To stay afloat during these trying times, hotels need to become proactive and stop letting the turbulent economic climate control them. This article contains pertinent information and some easy to implement steps that will help you reduce your dependence on OTAs and increase your revenue with a steady stream of guests directly through your own hotel website.

Pay close attention for changing behavior. Today, while many people are cutting costs by not travelling, those who are planning a trip are being more cautious and tight-fisted. Instead of just picking a travel agent and accepting their travel advice or booking the best deal on the third party site, travelers are spending more time researching hotels and comparing prices on the different sites. In fact, since the best price is more often than not found on the hotel’s own website, most travelers are now choosing to book directly on the hotel’s website. This change in travelers’ booking patterns makes it extremely important for you to offer best price and instant booking and payment facility on your hotel’s website.

The fall of OTAs. As travelers choose to book at hotel websites rather than OTA’s, a change can be seen in the division of the online travel market. While OTA will never disappear and will always be an effective way of getting heads into empty beds, the recession and changes in traveler’s booking behavior has severally curtailed their dominance over the online market.

Redistribute your marketing budget. Typically, hotels have a 70-30 marketing budget - 70% offline and 30% online. Based on changing behavioral patterns, to remain profitable a budget reversal is in order i.e. instead of allocation a majority of your budget for offline marketing, you now need to allocate a larger section of your budget to online marketing.

Develop a strong online marketing strategy. Industry experts believe that a strong direct online channel strategy can counterbalance the overall decline in revenues. So, instead of cutting your marketing budget as an automatic, knee jerk response to the market conditions, a better alternative is to reevaluate your budget and reallocate funds from offline to online ROI centric initiatives. This activity in conjunction with the changes in traveler behavior can help you increase website traffic, conversion rates and overall revenue. Here are tips and suggestion on what your marketing strategy should involve:

  • Redesign your website. The number of online bookings are steadily increasing. To gain a share of the online travel market, you need to make sure that your first contact with your guest is faultless. A well-designed site with attractive sales oriented copy plays a big role in persuading and converting visitors into guests. One surefire ways to draw traffic to your hotel website is by redesigning it. Redesigning your website includes not only layout and content but also elements such as photo gallery, instant booking facility and easy navigation tools based on the current industry standards. All of these details will add to your website’s appeal and help make your website user and search engine friendly. If you have recently redesigned your website or if you cannot afford to redesign your website, you can opt to optimize your website.
  • Optimize your website. Today, the most popular mode to book accommodation is ‘Online’. Approximately 70% of traffic arrives at your hotel website is via search engines. So, if you want to draw more traffic to your website you need to increase your ranking on search engines. The best way to increase ranking on search engines is optimization i.e. website optimization. Website optimization is defined as the process by which a website is streamlined to become more efficient for three audiences: the website developer, the website reader and the search engine. When you optimize your website, you have to include optimum keywords in your sales copy, add unique H1 headers and page titles etc. For example: If you are operating a 3 star property in Bangkok, Thailand – some optimum keywords to include in your website content are ‘Hotel in Bangkok, Bangkok Thailand and  3 star hotel Bangkok’. You should also give every image a unique title, for example: Hotel Atrium, Bangkok, Thailand. Remember to use text titles not image titles, as search engines do not read images.
  • Advertise Online. Online users are influenced by all types of online marketing and advertising – banners, emails, pay-per-click campaigns, paid searches and social media advertising even online chatter and customer reviews. Use previously collected information to run online marketing campaigns, for e.g. if you know that most of your bookings come from the US then use this information to target US based audiences.

Another benefit of online advertising is you can track and monitor your advertising efforts (bookings, revenue and room nights) and make instant online changes depending on activity. For example: if you have two paid banners on a peer review site such as Trip Advisor and banner ‘A’ is performing (attracting & converting) better, you improve your revenue potential further by reducing the budget assigned to banner ‘B’ and increasing the budget  of banner ‘A’. Offline advertising does not offer this type of flexibility, measurability and return on investment.  

To summarize, the changes in booking patterns makes this the perfect time to position your website as your most important sales tool. So, increase your website’s presence online by employing a ROI-centric online marketing. Also, i nstead of letting the turbulent economic conditions control what your moves, pay close attention to the changing conditions, redistribute your marketing budget appropriately, develop and implement a strong online marketing strategy using the website optimization and online advertising tips and suggestion proved in this article. By focusing on the most important Internet marketing fundamentals and with robust Direct Online Channel strategies, you will be able to stay afloat during these turbulent times. Good Luck!

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