Calculating ROI from your Hotel website

November 20 , 2006 - By Amisha Joshe

Managing your hotel's website and the internet as a ‘channel of distribution’ can be a challenge, particularly when it appears to be a bottomless pit of investment – in terms of both money and time.

How do you justify the expense of managing and operating your website in a time of low season, cost-cutting and restrictive budgeting? How do you justify starting out on a new process to market your hotel on the internet, a medium or space that you possibly have little or no understanding of….and then having to wait weeks, maybe months before you’re website starts to get noticed or get ‘found’ by search engines (of course provided you have realised the importance of and invested in a sturdy SEO and PPC marketing campaign).

Generating bookings or leads and calculating ROI (return on investment) is the first and most important step to understanding your hotel's presence on the Internet.

How to calculate ROI: TRACKING
Is your hotel's website generating additional revenue or reservations?

An 'e-commerce enabled' hotel website is relatively easy to make sense of, because of the nature of the complete transaction through which the online bookings take place. If your hotel website does not offer an online booking engine to your potential clientele who visit your website, how can you measure your website’s success?

A non e-commerce hotel website simply remains an online brochure for people to receive information about your property. The site can at the most serve as a lead generator if the visitor decides to email or call your hotel / sales office. The role of a ‘sales lead’ site is to educate visitors on your hotel’s accommodation and services, then encourage them to contact you either by filling out a form, calling you on the phone, or emailing you directly. Once they contact you, you can complete the booking process the way you normally would.

HOWEVER, there is a very high possibility that this guest is browsing the websites of your competition hotels as well or those hotels that were ‘found’ on the search engines for the particular type of search conducted by him........and in all probability will book a hotel that offers him the ‘convenience’ of an instant rate and availability check and online confirmation.

Accurate traffic reporting:
Website traffic reporting is the building block for calculating your ROI.

How many people visit your hotel website on a daily or monthly basis?
Having our online booking engine on your site allows you to track your actual website sales vis-a-vis the number of visitors to your site, while a ‘contact us’ form allows you to track number of visitors to sales lead conversion rates.

For example, if for every 100 unique visitors per day to your hotel website 1 room night is booked via our online booking engine and booking inquiries for about 5 room nights have been made via the email ‘contact us’ form; one could conclude that your hotel website has a conversion rate of 1% on actual sale and 5% on lead generation. When 1 out of every 10 room nights ‘inquired’ for is confirmed, then one could conclude that for every 200 unique visitors to your site you will generate 2 room nights as a result of your online booking engine and 1 room night via email leads and ‘contact us’ form.

Now that we have established the conversion rates, we can also assume the following:
100 visitors per day multiplied by 30 days in a month equals 3000 visitors per month. If 1% of the visits convert into room nights, which would equal 30 room nights per month booked using our online booking engine. If 5% of the visits convert to email leads, that would equal inquiries worth 150 room nights per month. If 10% of the inquiries convert to actual bookings, you would have 15 room nights per month booked via lead generation. If your hotel’s ARR is US$ 100, then your hotel website's monthly revenue generation is:

Direct Bookings 30 room nights X US$ 100 = US$ 3000
Via Leads 15 room nights X US$ 100 = US$ 1500

How to increase ROI:
Now that you know how much revenue and how many leads originated from your hotel website, how does one increase them with minimal spending?

Costly redesigns and/or mass advertising need not be the only answer. Calls to action are important in encouraging your visitors to take the next step and contact you. More often than not people visit your website for a short period of time, leaving after a brief skim of the content.

You can achieve exponential results by adopting our online solutions and strategies that are bespoke for your hotel(s). The formula for escalating your hotel's online sales is to make it "e-ffortless™" for potential customers to contact you.

You can calculate leads, sales, revenue and profit on a monthly or even quarterly basis to determine business generated from your hotel’s website. Once revenue and profit have been totalled, website design costs and marketing / operating expenses can be subtracted to determine the exact ROI.

The importance of tracking results cannot be overstated. After measuring results, if you can improve your sales conversion rate from 1% to 2% you‘d essentially double the revenue generated from your hotel website - with the same number of visitors.

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