NEW YORK—Measuring and benchmarking digital marketing strategies can save hoteliers time and money by providing important return-on-investment perspective. Hoteliers and digital marketing experts say there are an abundance of tools and practices available today to help the industry better spend its time and money.
The Hospitality Sales and Marketing Association International began collecting digital marketing spend data from a small number of hotels in late 2013 and by February had information for a 200-hotel sample size. Paolo Torchio, chair of HSMAI's Digital Marketing Council and VP of e-marketing for Sabre Hospitality Solutions, shared some of the early results at the HSMAI Digital Marketing Strategy Conference.
Most surprising, according to Torchio, was that 70% of hotel survey respondents dedicated less than 50% of their marketing budget to the digital side.
Of the respondents, 83% reported spending less than 6% of their hotels’ total revenue on marketing in general.
On average, hotels reported spending $450,000 to $600,000 a year for distribution costs, according to HSMAI’s survey, which remains open to collect additional data.
Torchio said convincing guests to book direct is the solution, but one that isn’t simple to execute. “It’s not an easy problem to solve,” he said. “The technology, managing the data, getting it clean, synchronizing it. ...
“We’re also being told to do more with less.”
Lennert de Jong, director of distribution for CitizenM Hotels, suggested hoteliers reduce the amount they’re spending on commissions to third-party distributors and pump that money into their own digital marketing efforts.
De Jong noted 75% of the 200 hotels that provided responses and data to HSMAI didn’t have a dedicated employee overseeing the digital marketing and website efforts.
“It’s time to start tracking the real cost of distribution,” he said.
De Jong said funds should be earmarked in advance, and then analyzed, for the following expected expenses:
- website fees;
- agency fees;
- search engine optimization and marketing;
- display advertising;
- brand fees;
- sales staff;
- reservation teams;
- online-travel-agency teams;
- global distribution costs; and
- transaction fees.
“As an industry we spend too little on marketing,” de Jong said. “People aspire to travel; that is a marketer’s dream.”
He said partnering with OTAs is a must.
“There is a place for (OTAs) in your business,” de Jong said. “The key is knowing your business before you go to them. It’s not enough to seek out that full-service relationship; it’s incumbent on you to know your business and your partners’ business.”
Neil Cantor, former VP for Revel Entertainment and co-founder of Marriott International’s Autograph Collection, said multiple departments within a hotel today face rising acquisition-cost issues.
Rising commission costs are “really a sales, marketing, revenue management and distribution problem,” he said. Cantor touted franchisors for their work in helping solve the marketing cost conundrum. As an example, he said when independent hotels joined Marriott’s Autograph Collection, they would experience “high-teens” growth in occupancy within the first 90 to 120 days. Average daily rate followed, he said.
Brands, Cantor said, are constantly fine-tuning their tools to find the right customers and give visibility to the hotel. Joining Autograph also helped hotels decrease their dependence on OTAs, as much as 30% to 40% in the transient segment, he said.
Cantor shed some light on Revel’s digital marketing costs, saying the troubled Atlantic City resort-casino was paying less than $8 for every roomnight booked through its direct site but $43 for bookings through OTAs.
Big data
Much of the data available today can be aggregated to get a better picture of the digital marketing ROI, sources said.
Layton Han, CEO of Adara, which compiles consumer purchase and profile data to analyze purchase patterns and demographics, said collecting and aggregating data is cheap. “What’s hard is how you connect and interpret that data,” he said.
The key, according to Patrick Bosworth, CEO of Duetto, is making data actionable. “Right now it’s hard to get from the analyst to the decision maker,” he said.
Peter Kim, CEO of MightyHive, which partners with hotels and uses their internal data to create appropriate digital marketing strategies, said the data hoteliers collect must make sense to them. He also cautioned that third-party data can and will be used by competitors.
“Your internal data is the only thing you’ll have that they won’t,” he said.