Customer Segmentation: Leverage Emerging Fencing Techniques to Optimize Revenue Performance

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2 Customer Segmentation: Leverage Emerging Fencing Techniques to Optimize Revenue Performance 2

3 Josh Belkin Sr Director, Global Retail Merchandising Hotels.com 3

4 Fencing enables hotels to set prices and promotions based on customer segments Fenced rates for valuable customers while still protecting public rates Customer segments for fenced rates can be defined by several traits 1 Purchase device Booking on desktop vs. mobile device Fenced rates 2 3 Customer origin/ location Customer loyalty Domestic vs. international customers vs. local customers Loyalty program members vs. subscribers vs. others Public rates Fenced customers Public customers 4 Other observable traits Any other valuable segmentation traits 4

5 Fencing is important as prices and discounts are key to influence hotel buying decision of customers Price is the top factor influencing hotel booking decision ~ 60% of customers said Price influenced their hotel decision Special offers/discounts also has a large role in influencing decision Factors influencing last hotel decision for hotel stayers Price Location of Hotel Property Previous experience Hotel brand Amenities Special offer/discount Positive hotel reviews Hotel pictures Hotel star rating Loyalty membership Restaurants in the hotel Recommendations from friends/family Hotel size Recent renovation 4% 14% 13% 12% 23% 21% 20% Question: What factor influenced your last hotel decision? Select all that apply Source: Phocuswright (Dis)Loyalty and the US Leisure Traveler 29% 26% 32% 30% 29% 63% 61% 5

6 1 Purchase device fencing: target mobile customers who book last minute ~ 1 in 2 mobile customers book same day/day before their trip 1 in 4 hotel room nights are booked on a mobile device (and increasing!) 2015 Advance booking window for domestic US travel 2015 Forecasted YoY growth in US digital travel sales 40.7% 80% 53% 1+ days 5.5% 20% Desktop 47% Mobile 0-1 days -2.2% Desktop/ Laptop Mobile Overall Source: Hotels.com data Source: emarketer, April 2014, October

7 2 Customer origin fencing: target international travelers while protecting domestic pricing International customers book earlier and stay longer Foreign exchange rates can impact demand patterns 2015 Booking window (months) for US hotels Domestic customers International customers 8% 6% Source: Hotels.com data 27% 27% 3+ mo 13% 13% 2-3 mo 19% 2015 Length of stay (days) in US hotels Domestic customers International Customers Source: Hotels.com data % 42% 1-2 mo < 1 mo 58% +1.2 days GBP, EUR and CAD/USD exchange rate (Index, July 2014=100) Jul 14 Sep 14 Nov 14 Jan 15 Mar 15 US Hotels Growth rate (Indexed to July 2014 = 100) Jul 14 Sep 14 Source: Hotels.com data Nov 14 Jan 15 Mar 15 May 15 US->US Int l -> US GBP CAD EUR 7

8 3 Customer loyalty fencing: target loyalty program members who travel and comparison shop frequently The loyalty traveler population is vast and they travel frequently 1 in 2 hotel stayers and 1 in 3 OTA shoppers are loyalty members Loyalty participation increases with trip frequency so they are more likely frequent travelers US Loyalty traveler population (M) and program membership (% of segment) 118M Loyalty members are savvy travelers looking for best deals Loyalty members are more likely to shop across multiple websites than non loyalty members 61% of elite program members said they d check multiple websites to get a good deal Online shopping behavior by loyalty status When planning travel, I always check multiple websites to make sure I am getting a good deal 55M Non-members Loyalty members No hotel loyalty Entry level/ Mid-tier 42% 41% 36% 41% 56M (47%) Hotel Stayers 18M (33%) OTA shoppers Source: Phocuswright (Dis)Loyalty and the US Leisure Traveler Elite 61% 25% Strongly agree Neutral/Unsure Strongly disagree Slightly agree Slightly disagree Source: Phocuswright (Dis)Loyalty and the US Leisure Traveler 8

9 Linda Gulrajani, CRME VP, Revenue Strategy & Distribution Marcus Hotels & Resorts Member of HSMAI s Revenue Management Advisory Board 9

10 Scenario 1: Branded Strategy (Hilton) Target Customer Segment: Past transient guests who don t already have a reservation and did not book a negotiated rate. Fence & Method: $79 rate with a calendar that had the dates with that rate available highlighted (had other rates available for all dates) Sent out one campaign that was bookable for 7 days and covered a 6 week booking window and then sent another one when there was only one day left with the same offer. Success: Booked $27k in revenue The second one day left out performed the first Tracking: Through the Clairvoyix and Hilton.com 10

11 Scenario 2: Resort Strategy Target Customer Segment: Transient guests who have booked through a discount channel like Groupon, Travelzoo, etc. in the past that don t have a future reservation (Very important to collect addresses from these guests). Fence & Method: 48 hour sale promoting book now and get the lowest rates of the year sent out 1 week prior to the Groupon/Travelzoo offer going out Success: Booked 1,030 rooms through this offer, which decreased the next special offer production significantly, saving us the commission and capturing them direct Tracking: With a special rate code 11

12 Scenario 3: OTA Strategy Target Customer Segment: Fenced guests (or members) on OTAs Fence & Method: Discount for members only Success: 30% - 40% of the OTA bookings are coming from this channel Improved placement on the site This requires that a guest creates a login, but there are no other fences that prevent them from seeing the special pricing so is this really a fenced offer? Tracking: Reports provided by market managers 12

13 Kathleen Cullen, CRME SVP, Revenue & Distribution Commune Hotels & Resorts Chair of HSMAI s Revenue Management Advisory Board 13

14 Scenario 1: Goal: Fill Suite Occupancy without public discounting Targeted Customer Segment: Guests with stays more than once and have paid an ADR range of $400-$2500. Fence: Pull qualified customer list from CRM Method: Via Communication or private mailing with an invitation to stay in one of the remodeled luxury suites. Tracking: Campaign Statistics, Rate Code Production and if bookable via a landing page on brand.com - Google Analytics 14

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17 Scenario 2: Goal: Build occupancy base outside the 45 day booking window. Customer Segment: OTA International Customers Fence: Unique POS (Point of Sale) + include a cancel policy and/or MLOS restriction Method: Via OTA partners using Unique POS (ie: UK, Brazil, etc.) Tracking: OTA reports or set up a specific Rate Code to track all bookings. 17

18 Example: Extranet Results 18

19 Scenario 3: Goal: Increase Website Conversions Customer Segment: Direct Bookers Fence: Guests that are within Shopping Cart Funnel Method: Show LightBox to potential guest that has checked rates & avail but closes out booking engine. trigger to potential guest that started to make their reservation but does not complete. Tracking: Booking Engine Reporting + Partner Reporting 19

20 Abandonment 20

21 Booking Engine Pop-up 21

22 May Results # of Abandoned Carts 4,819 # of Guests we were able to invite back # of Reservations Recovered Reservation Value $ Revenue $13, * Cost $ ROI $33:1 * 15% of Pre-Opening Website Revenue 22

23 Scenario 4: Goal: Drive occupancy on select need dates Customer Segment: Local Residents Fence: Live in specific zip codes Method: Serve Paid Search Text and Display Advertising to shoppers with a Florida Zip Code Dedicated Blast to Thompson Hotel s database with a Florida address Load Florida Resident Rate to a Booking Engine Filter Tracking: Paid Search Reports, results + Google Analytics 23

24 Paid Search 24

25 Blast 25

26 Results April June MTD, 2015 Room Nights 161 Reservations 71 LOS 2.3 ADR $ Revenue $40, Cost $7, ROI $5:1 26

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