Survey shows hotels are going back to basics by increasing focus on offline and direct sales to reduce third-party costs instead of new social media techniques
Hotels are putting social media on hold as a marketing and selling mechanism, while they focus on driving direct bookings in response to their continuous struggle for better margins with the Online Travel Agents (OTAs), says research by Ecole hôtelière de Lausanne (Switzerland) and RateTiger.The six month qualitative study, ‘The Distribution Challenge 2012’, conducted in five countries, found that while social networks including Facebook, Twitter, TripAdvisor and YouTube are recognised as new forms of digital marketing, hotels are still unconvinced about the impact these channels will actually have on bookings and are therefore deterred from implementing strategies in the short term. One in three of the hotels have no social digital media strategy, and only one in eight use any form of social media as a marketing tool. Hotels have instead focussed on the development of offline strategies to build more corporate contracts that deliver more predictable business, and to diversify their online distribution mix to generate additional revenue opportunities.
“We have found that hotels work with more travel agents and consortia contracts for the corporate segment, apply BAR to walk-ins, and develop special offers for returning customers, including the introduction of loyalty programmes,” said Horatiu Tudori, Senior Lecturer, Revenue Management, Ecole hoteliere de Lausanne, Switzerland. “This is an interesting turn-around from the unbalanced and heavily online-focused sales strategies of the past few years, which are not bringing the yields independent hotels so much need right now. We also found that hotels just don’t see the true revenue value in social networks, opting for more traditional methods to engage customers.”
“We’re not at a point where we can track social media. There must be a point of sale for it to really become a valuable resource, but even then we need to master the techniques,” said a Revenue Manager in charge of an 82 room 4-star property in Paris, France.
RateTiger CEO, Michael McCartan added, “We’re seeing hotels increase direct booking and create more relevant packages and promotions for their customers by engaging in social media. Hotels need to look at how they can save time through technology and not just see additional tasks as an uphill struggle. It’s time that hotels start to get the balance right and ensure the conversation is flowing between Revenue, Sales and Marketing managers.”
According to the research findings, while a few hotels have used travel deal platforms like Travelzoo and perceived it as an opportunity to stimulate demand, more hotels aim at optimising the use of Google (both PPC and Adwords) and SEO. Their goal is to bring more direct bookings and take potential bookings away from high-commission OTAs. Hotels are looking to reduce the cost of distribution by directing bookings to their own website but also by increasing the share of smaller third-party websites within their distribution mix.
Methodology: The intention of the review was to collect feedback from 3-star and 4-star hotels evenly distributed in five geographical markets: France, Germany, Spain, UK and the USA. Among the 72 hotels participating in the survey, 65 per cent were chain and 35 per cent individual properties, with capacity spread between 25 and 392 rooms. All the interviewees are in charge of managing pricing and distribution, two thirds being Revenue Managers and the others General Managers or Directors in either sales or reservations.
Source = EHL