SMART HOTELIER S GUIDE TO 2019 DIGITAL MARKETING & TECHNOLOGY BUDGET PLANNING

Transcription

1 SMART HOTELIER S GUIDE TO 2019 DIGITAL MARKETING & TECHNOLOGY BUDGET PLANNING

2 TABLE OF CONTENTS:

3 INTRODUCTION: With budgeting season comes the time to analyze digital marketing initiatives and plan for trends that may arise throughout the year. When constructing your budget, think about upgrades your property needs to make regarding digital technology and marketing strategy. Knowledge of where the industry s key benchmarks are headed is critical to budgeting appropriately and knowing where to focus your efforts to see results. According to STR, the US hotel industry is projected to see growth, slow yet steady, through However, supply will continue to outweigh demand in many major markets (2.3% vs 2%). Occupancy is increasing by 0.3%; ADRs are growing by 2.4%; and RevPAR is increasing by 2.7% (STR, Tourism Economics). 3

4 KEY INDUSTRY FACTORS & INSIGHTS KEY INDUSTRY INSIGHTS TO CONSIDER WHEN CREATING YOUR PROPERTY S 2019 DIGITAL MARKETING & TECHNOLOGY BUDGET 1. In 2019, the industry will continue to see healthy growth. The hospitality industry is enjoying its longest expansion and healthiest growth in decades is shaping up to be another stellar year in hospitality with demand (2.3%) outweighing supply (2%); occupancy increasing by 0.3%; ADRs growing by 2.4%; and RevPAR increasing by 2.7% (STR, Tourism Economics). All industry forecasts for 2019 predict another stellar year in hospitality: demand (2%) again outweighing supply (1.9%); occupancy increasing by 0.1%; ADRs growing by 2.3%; and RevPAR increasing by 2.4% (STR, Tourism Economics). What do these excellent market conditions mean for hoteliers? More profits to invest in your hotel s digital marketing presence, from redesigning your website to upgrading your CMS and CRM technology. These investments will provide long-term benefits namely boosting revenues from the direct online channe and help you engage your best guests and turn them into repeat customers. The end result? More repeat guests, more incremental revenues, and lower distribution costs and OTA dependency. 4

5 KEY INDUSTRY FACTORS & INSIGHTS 2. Hotel profitability is down. Despite of record-breaking industry benchmarks, profitability is falling and net room revenue revenue that remains with the hotel after accounting for distribution costs (OTA commissions, traditional agency commissions, and other distribution expenses) has been declining steadily over the past several years. In 2017, U.S. hotels earned roughly $155.2 billion in guest-paid revenue but paid an estimated $25.2 billion to acquire guests in the form of OTA commissions and other distribution costs. They retained significantly lower net room revenue of $130 billion (Kalibri Labs). Revenue capture net room revenue that remained with the hotels declined from 84.9% in 2015 to an estimated 83.5% in 2018 (Kalibri Labs). As far as falling profitability is concerned, 2019 is shaping up to be a repetition of the past. The overall growth in room revenue, occupancy, and RevPAR that many hoteliers have been enjoying in recent years cannot possibly compensate for the loss of wealth in the form of steadily increasing distribution costs via the OTA. So what should hoteliers do to increase profitability and fulfill their fiduciary obligations as responsible managers? Lowering distribution costs is one of the very few strategies hoteliers can employ to increase profitability by reducing overall expenses, since all other main cost drivers in hotel operations are beyond hotelier s control: labor cost, debt service, franchise fees, utility fees and real estate taxes. 5

6 KEY INDUSTRY FACTORS & INSIGHTS 3. AirBnb enters the OTA space. Airbnb has recently been courting hoteliers and luring them to join Airbnb.com as a distribution channel. There is no doubt about Airbnb s true intentions of entering the OTA space and aggressively competing with online travel agency giants such as Booking.com and Expedia. Why is Airbnb interested in hotel distribution? For once, Booking.com, Expedia and TripAdvisor are already competing directly with Airbnb in the home sharing/short term rental business. Booking.com even has more private home listings 5 million vs. Airbnb s 4.7 million. The lure of higher commissions from hotels in the range of 15%-20% vs. the lesser 3%-6% from private accommodations is the main reason why Airbnb is venturing into the OTA space. Another reason is that hotel accommodations are instantly bookable while most of the private accommodations on Airbnb require reservation requests to be approved (only 45% of listings are instantly booktable). Airbnb is already capturing 10-12% of travel demand in New York City, Paris, London and other major global metropolitan areas alone, and hoteliers must fight for every guest inclined to stay at an Airbnb rental. The Airbnb impact on demand affects overall occupancy and ADRs, not allowing hotels to raise ADRs in periods of traditional peak demand. Many surveys show that as many as 49% of travelers book Airbnb in place of traditional hotels. 6

7 KEY INDUSTRY FACTORS & INSIGHTS 4. Mobile devices are at the forefront. We already live in a mobile-first world. Mobile devices dominate the travel planning journey: 40% to 50% of desktop bookings worldwide are preceded by a click on a mobile device, and 94% of leisure travelers use multiple devices (mobile, tablet, desktop) when planning and booking travel (Criteo). The massive shift from desktop to mobile and tablet devices continued its rigorous pace in 2018 and today over 60% of web visitors and more than 52% of page views are generated from mobile devices (HEBS Digital Client Portfolio Data). This dramatic shift to mobile is the reason why, in March 2018, Google announced that it was switching to Mobile-first indexing, meaning its crawlers will begin using the mobile version of the webpage for indexing and ranking in order to help mobile users find what they are looking for. Google made good on its promise: Since July 2018, website pages that are slow-loading (read: desktop and not-up-to-date mobile pages) perform less well for both desktop and mobile searchers, meaning they rank lower or not at all. According to Google, 40% of US travel site visits come from mobile devices this number will continue to rise in

8 ACTION PLAN ACTION PLAN FOR CREATING YOUR 2019 DIGITAL MARKETING & TECHNOLOGY BUDGET Excellent market conditions predicted for 2019 present an opportunity to capture increased direct bookings next year, which translates to larger profit margins. With a proactive and smart approach, hoteliers should be able to gain more control over their profitability, which the industry has historically been slow to do. In 2019, the competition in the online marketplace will be even more fierce than this year. To stay competitive and achieve year over year increases (a success indicator for every hotelier), digital marketing and technology budgets should increase on average of 12-15%. Outliers to this include hotels in need of investing in a new hotel website or other substantial capital expenses they should budget for a larger increase. If this increase is not possible and you need to keep your budget flat this year, funds spent on outdated, unproven or old-fashioned line items should be carefully analyzed and shifted if they are not performing. The exact percentage your property spends on digital marketing is dependent on a variety of factors including property location, ADR, amenities available on property (such as a restaurant or spa), and meeting and event space. If there is increased competition in the area or a renovation is planned, market conditions may affect bookings (increase or decrease in flights to the area, natural disasters, political events). This will necessitate a need to be more strategic in your budget allocation. 8

9 ACTION PLAN An organized and helpful way to organize your budget, which in turn also helps guide the strategy and reporting of performance for each initiative, is to allocate each initiative into one of three categories: 1. GUEST ACQUISITION MARKETING: Digital marketing initiatives that should run year-round and are focused on bringing guests into the booking funnel should go into this section. This includes paid search campaigns on Google and Bing, Search Engine Optimization, Digital Display Advertising, Social Media Advertising, Content Marketing, Marketing campaigns, and Meta Search Marketing. 2. GUEST ENGAGEMENT, RETENTION, & RECOGNITION (CRM): These initiatives are focused on improving the guest experience and driving guest engagement and retention. These include having a Guest Data Management Platform, Marketing Automation technology, transactional s, and a guest recognition or loyalty program. Choose technology that uses past guest data to help drive new customer acquisition and marketing efforts for the most comprehensive approach that drives loyalty, deeper levels of engagement, and overall higher revenues. 3. DIGITAL ASSETS, CONSULTING & WEBSITE OPERATIONS: These line items make up the foundation of any successful digital marketing strategy, projects or initiatives including the property website, hosting the website, technology that drives conversions such as personalization and reservation abandonment tools, GDPR compliance tools, and a strategy/consulting partner (a good strategy partner will be able to offer solutions for all three categories). 9

10 BREAKING DOWN THE : RECOMMENDATIONS FOR KEY INITIATIVES 1. SEO SEO continues to play a critical role in driving direct bookings, with at least 30%-35% of hotel website revenue generated as a direct result of organic search engine referrals. If your property is not actively running campaigns such as SEM, marketing, or smart data marketing, then this number will be higher despite lower total revenue. Creating quality, optimized content, refreshing website content regularly, claiming and optimizing local listings, and maintaining a spam-free inbound link portfolio are the pillars of a successful SEO strategy. 10

11 SEO STRATEGY RECOMMENDATIONS FOR 2019: 1 Invest in voice search and local SEO. Voice search and AI will have a huge impact on SEO in the coming year. With the rise of voice assistants like Alexa and Google Home, hoteliers need to make sure they are allocating enough resources and time to be able to stay on top of these trends. This includes updating on-page SEO with more long tail keywords, updating schema and more. Google recently shared that 80% of Google Home answers come directly from featured snippets. So, there can be a significant advantage to researching queries that result in a featured snippet. Go responsive. With more than half of website traffic coming from mobile devices, it is crucial to have a responsive site. Following the overarching industry trend, websites that are not responsive will see a huge decrease in traffic from all devices, not just mobile. It s important that hotels without responsive websites budget for a website redesign in Pay attention to page speed. With recent updates like Google AMP, the need for speed has never been more important. As page load times increase, bounce rates increase. Websites that take 2 seconds more to load see bounce rates increase by 50%. 3 Not only do page speeds affect bounce rates, they can also affect positioning on search engine results. Websites with faster loading speeds are indexed higher than those with slower. 11

12 BREAKING DOWN THE : RECOMMENDATIONS FOR KEY INITIATIVES 2. SEM SEM is one of the highest revenue drivers for hotels, with more than 20% of direct online revenue coming as a direct result of SEM/paid search. Hoteliers should execute various advertising formats in the Google Ecosystem to reach travel consumers through the travel planning journey including: Google Paid Search Ads Google Display Network Google Hotel Ads YouTube TrueView Gmail Ads 12

13 SEM STRATEGY RECOMMENDATIONS FOR 2019: 1 Destination campaigns can catch travelers in the dreaming and planning phase. Providing the right information to the customer when they need it is extremely important. Carve out budget for destination campaigns which help bring users to your website using nonbrand keywords. After that you are able to serve them a retargeting banner on the Google Display Network, where your hotel will always be top-of-mind. Investing additional budget allows for A/B testing, which is important in order to stay ahead of the OTAs. Take advantage of the rise in popularity of videos and YouTube. Video is expecting to account for 85% of total internet traffic by By utilizing YouTube TrueView, hotels can attract more users to the hotel website through captivating video content. For those who do not have the resources to create video, GDN banners that are displayed on YouTube are a good alternative to get in front of this audience. 2 Build voice search campaigns. 3 As previously stated, with the rise in voice search and mobile increasing, additional budget is needed to build campaigns to cover keywords that users would speak rather than type. Explore near me terms which can be used for dining campaigns or hotel campaigns to capture last minute bookings. 13

14 BREAKING DOWN THE : RECOMMENDATIONS FOR KEY INITIATIVES 3. CONTENT Good content marketing can go a long way. Not only does it help boost overall hotel SEO, fresh and relevant content generates social shares and inbound links which can significantly improve search engine rankings. When used in multi-channel campaigns, content marketing for hotels can help drive bookings by reaching travelers throughout every phase of the planning journey. 14

15 CONTENT STRATEGY RECOMMENDATIONS FOR 2019: 1 Blog about your destination. With interruptive marketing is on the decline, brands need to start becoming what consumers want to see, read, follow or engage with. For hotels, the foundation of content marketing is blogging about the destination creating travel content (not content about the hotel product/ services) that inspires and informs guests throughout all stages of the traveler journey. This content should be distributed organically via newsletters and social media, and bolstered with paid efforts like Facebook boosted posts and native ads. Take consumers behind the scenes. Consumers seek authenticity and transparency. Hotels can leverage their staff to create digital and social media content that engages their audience. Have the chef recommend the best places to eat in town for a blog post. Do an Instagram story of the bartender showing fans how to make a popular cocktail. Ask the concierge for monthly tips that can be turned into daily tweets about destination events and happenings. 2 Go live. 3 With Facebook Live, Instagram Stories, and IGTV, 80% of brands say they have a goal to create more video content. This video content tends to reach a greater amount of people organically (without paid advertising) than other forms of content. Similar to the above, hotels should think about who on property is an on-screen presence and can provide past, present and future guests with inspirational content. 15

16 BREAKING DOWN THE : RECOMMENDATIONS FOR KEY INITIATIVES 3. ONLINE MEDIA Online media is crucial to reaching potential guests at every stage of the travel planning journey. With Trip Advisor, metasearch, display ads, native ads and social media ads, hotels can guarantee that they will get in front of the right person at the right time. 16

17 ONLINE MEDIA STRATEGY RECOMMENDATIONS FOR 2019: 1 Invest in video for social media and display ads. Video assets give visual aid to a hotel s destination and tell a story about the property. The impact of video can be felt from Instagram Story Highlights to beautiful drone footage as the hero video on the hotel website. Utilizing video to give content to your destination and property is a must. Appeal to upper funnel travelers with native ads. Native advertising is on the rise. With more than half of consumers clicking on native ads with the intent to purchase, investing in this initiative is crucial. The decline in traditional ads leaves a hole in the industry for brands willing to serve more than a marketing message to in-market or interested audiences. 2 Utilize programmatic technology. Smart Data Marketing and Smart Remarketing utilize programmatic technology that helps to not only optimize targeting segments and geo targets, but also to optimize spend on display more efficiently based on the likeliness to convert. 3 17

18 THE MULTICHANNEL CAMPAIGN APPROACH IS THE MOST EFFECTIVE STRATEGY FOR ANSWERING SEASONALITY AND BUSINESS NEEDS THROUGHOUT THE YEAR Multichannel campaigns are one of the most effective ways to boost direct bookings during need periods, build a one-to-one relationship with current and future guests, and ultimately, encourage repeat guests throughout the customer lifecycle. Why are multichannel campaigns so powerful in budget planning? By effectively reaching potential guests in intent-rich micromoments across channels and devices with one cohesive brand message, multichannel campaigns are a great strategy to shift distribution from the OTAs, drive ADR, increase length of stay, capture a new segment, and achieve returns as high as 2,500%. DETERMINE BUSINESS NEED MAP THE PATH TO PURCHASE PREPARE CREATIVE LAUNCH CAMPAIGN Low occupancy period? Pull together budget & Design and buildout cohesive To reach people at the right Increasing length of stay? marketing initiatives: SEM, campaign creatives that will time, at the right place, on Driving ADR? SEO, marketing, Smart resonate with the audience the right device throughout Data Marketing, a limited and align with the brand voice. their travel planning journey. time offer minisite, and more. 18

19 For the most effective results, begin building your multichannel campaign by answering the 5 W s of any great narrative and any successful multichannel campaign: Who, What, When, Where, and Why. WHO: Use customer data, campaign insights, website analytics, and customer research to build a customer persona of your campaign target audience. It s important to uncover both the emotional benefit and the functional benefit the target audience associates with your hotel brand and make sure this resonates in your marketing message. WHAT: Based on customer insights, craft the campaign message and brand narrative to reach the target segment with one cohesive message across channels and devices in key micromoments. WHEN: Determine the best timing and campaign flight to effectively reach your target segment in the appropriate booking window. WHERE: Map the path to purchase and determine the right marketing mix to reach the target segment throughout every touch point of the travel planning journey. WHY: Clearly determine the goals the campaign is trying to achieve in both performance metrics and positioning in the mind of the consumer. 19

20 ENSURE SUCCESS WITH YOUR MULTICHANNEL APPROACH WITH THE RIGHT BUDGET AND KPIs. Every year hotel marketers face a number of business needs such as seasonality and occupancy needs, revenue management needs such as increasing length of stay and driving ADR, as well as general business objectives such as increasing group business, targeting a new customer segment, and lessening the dependency on the OTAs. In order to successfully accomplish these goals and answer key business needs, it is important to reserve 15-25% of the overall digital marketing budget for multichannel campaigns. This portion of the budget should remain dynamic and flexible as the year progresses. Be sure to properly allocate your budget to each campaign, mapping out seasonality, business needs, top target segments, and any other big-picture business goals that a multichannel campaign can achieve. When allocating budget across campaigns, we recommend a budget of at least $10,000 dollars with a two month minimum flight to ensure success. Once you ve allocated the right budget, to build a successful multichannel campaign, you must establish an overarching business need your multichannel campaign is trying to solve, determine clear campaign goals you wish to accomplish, and set relevant key performance indicators to gauge success. Really getting to the core of your hotel brand s business needs when building a multichannel campaign will help you choose the most effective marketing initiatives and provide the blueprint for setting the right campaign goals and KPIs. 20

21 ENSURE SUCCESS WITH YOUR MULTICHANNEL APPROACH WITH THE RIGHT BUDGET AND KPIs. COMMON SEASONALITY & BUSINESS NEEDS Low occupancy need periods COMMON CAMPAIGN GOALS Lower cost of sale COMMON KPIs Cost of sale Increasing length of stay Last-minute occupancy needs due to group cancellations, etc. Expanding reach among top key customer segments Rebranding or repositioning the hotel to potential guests Increasing ancillary revenue from spa and dining Building brand awareness and brand loyalty with current and potential guests Reaching the best guest who is likely to book and likely to return Increase direct bookings Increase brand reach Increase business among a particular customer segment ROAS CTR Impressions Lead generation Engagement 21

22 CONCLUSION When constructing a 2019 digital marketing and technology budget, hotel marketers must think about how they are going to engage online travel consumers throughout their complex digital journey. The budget strategy must take a holistic approach in order to reach, acquire, and engage travel consumers throughout the entire travel planning journey, at the right time and on the right device. The 2019 digital marketing budget should not be looked at as just another expense for the property. This is a direct distribution cost vs. hotel expense, as well as an OTA commission-reducing investment. In this sense, the digital marketing budget provides a dual benefit: It increases direct bookings at the lowest possible distribution cost and it reduces expensive bookings made through the OTAs. The budget recommendations in this article are meant to guide you in how to achieve this from reaching consumers in the dreaming and planning phases, to the conversion point and beyond. It doesn t end with the booking. Hoteliers need to also enhance the guest experience while on property, and inspire their guests to book another stay. ABOUT THE CONTRIBUTORS MAX STARKOV President & CEO MARIANA SAFER Senior Vice President, Client Services MARGARET MASTROGIACOMO Vice President, Strategy ANGELA MATES SEM Specialist, Team Lead PATRICK MERRYMAN Team Lead, Digital Media & Creative Strategy NICK PAPA Senior Copywriter ADAM LAWLEY SEO Specialist KERRYN GOWER Marketing Coordinator CONTACT US SUCCESS@HEBSDIGITAL.COM