Can hotels win the booking?

In the battle to win customers to direct channels, hotels need to adopt a multi-pronged strategy finds new report.

Hotels are struggling to win direct bookings in a hyper-competitive age of online travel booking. However, there is still room to improve performance and make major headway in this important arena by reaching consumers in the channels that matter and perfecting those channels for maximum effectiveness finds a new report. The State of Hospitality Distribution: Direct report, which is free to download now, notes that hotels that focus the efforts on a carefully crafted strategy across Search Engine Optimisation (SEO), metasearch, their own sites, loyalty programs and social media and User Generated Content (UGC) stand a good chance of boosting their direct bookings.

Looking at what tactics are viewed as most critical amongst the travel industry, SEO, content marketing and social are seen as the most critical for customer acquisition. The report notes an EyeforTravel industry survey, which found that travel suppliers reported that their top area of investment for customer acquisition is SEO, at 54% of respondents, followed by content marketing at just under half of respondents and then social media and blogs. Reinforcing the importance of SEO and social, as well the pervasiveness of the most powerful advertising networks on the internet, 63.7% of travel suppliers said that Facebook and Google were positive influences that help their businesses.

It is therefore critical that hoteliers address these fields. When it comes to SEO, the game has to be played cleverly as more generic keywords reaching the broadest segment of the market are already likely to be subject to fierce bidding and therefore difficult to generate strong returns from. The report suggests that hoteliers need to research their field of keywords, focusing on long-tail keywords more specific to their properties, as well as the following:

●        Move to a responsive website: Responsive sites help with ranking as it is easier for search engines to crawl and uses a single URL, and Google has tweaked its algorithm with the release of Hummingbird to be more focused on the mobile experience.

●        Look at code and content carefully to reduce page load times: Look at page weight and figure out where the biggest strains are as well as where there might be smaller savings. Approach imagery in a smart manner, looking to compress, run off an image server, and combine background images into a single image to reduce requests. Consider a Content Delivery Network (CDN) to reduce latency.

●        Think about user purpose at all stages: Consider the user intent at all stages and make it easy for them to navigate to the next step.

●        Create quality, original content: Focus on being trustworthy and authoritative. Poorly conceived and created content will mean low dwell times, a lack of backlinks, high bounce rates, and poor ClickThrough Rates (CTRs). Create content hubs related to your destinations or offerings that interlink with each other and answer specific things that visitors would want to know about the area or service.

●        Remember search engines are mostly text-based and you need to make their lives easy: Look at underlying structural data that can help engines and therefore your position. These include: meta titles, meta descriptions and header tags, particularly the H1 tag, that use keywords appropriately and help describe the page; alt tags, related file names and descriptions for key images; and provision of a sitemap to Google.

●        Set up a Google Search Console account: Google’s Search Console is an incredibly helpful tool to track site performance and organic SEO.

Alongside SEO, social is highly influential, particularly in initial phases of thinking about and researching a trip, most notably among younger consumers. “Social media plays a big part in who we are and how we reach new audiences,” said Kate Martin, General Manager of the Luma Hotel Times Square in New York City. “Because we’re new and hip, we find and connect with customer who appreciate us for being different and social media is a big part of that.”

Jason Lee, Senior Director of Product and Technology at Travel Media Group, finds that social media and in particular Facebook affect all phases of the buying process, with “Facebook delivering the most bang for the buck because there’s nothing like it in the social media sphere.”

Lee’s strategy for hotel clients is to both invest in promoted content and ads and to create content that builds engagement. Consumers will likely use social media as a research tool, going elsewhere to book and largely ignoring Calls to Action (CTAs) except when closely targeted, such as at choice moments of heightened interest. For one hotel client, Lee spent $10 on a Facebook post promoting room availability during dates when a high-profile artist was giving a concert at a venue near the property. Within minutes of the post going live, it was viewed several hundred times, shared 87 times and generated seven room nights.

Some of the above principles for social and search should be applied to the hotel’s website itself, which is perhaps the most crucial element of driving direct bookings. Similar to social, imagery is critical. For Sonesta International Hotel Corporation relaunch of its website it took the route of going “Much more visual that what we had previously,” said Scott Weiler, vice president, marketing and communications at Sonesta. “We commissioned a lot of new photos so that the site would be in lock step with the look and feel of the hotels.”  Much of the website balances a single hero image across the top of a page with tiles that Weiler described as visually providing users with a way of navigating a number of ideas very quickly

Honolulu-based Aqua-Aston Hospitality chose to position itself on its website as a Hawaii destination expert in addition to offering lodging facilities. Travel suggestions are tailored to users’ preferences and content themes change regularly and are tied together with customized itineraries created by local influencers and ambassadors. The company also amasses user data as they spend time exploring the site; that information is used to improve target marketing capabilities, serve up more relevant offers to users and further build its Customer Relationship Management (CRM) system and loyalty program.

It is the last point that is also perhaps being overlooked currently as the report finds that the loyalty program and hotel loyalty in general are not dead.

Loyalty programs continue to drive value for brands, attracting the highest spending consumers, driving positive views of the brand and being a way to reach younger consumers, surprisingly.

Over 90% of travel organizations believe that their loyalty program has had a positive effect on their brand’s perception among consumers according to an EyeforTravel industry survey featured in the report.

The results also note that 78.5% of hoteliers reported that their loyalty program members spent more than the average, with 30.8% reporting that they spend ‘considerably more’. In a consumer survey also within the report, membership for loyalty programs was skewed to higher income brackets, explaining this higher spend.

Furthermore, satisfaction regarding hotel loyalty programs was highest among the youngest age group. More than 80% of those aged 18 to 35 and members of at least one program think that hotels provide good or excellent service when it comes to loyalty membership. This declines to 73.8% for those aged 36 to 55 and 65.4% for over 55s.

Even better, the most engaged members are those aged 18-35. In this demographic cohort 70.3% report that they use their rewards on all or most of their journeys, falling to 66.1% from the middle-aged group and then to 51.8% for those over 55

This suggests that there is enormous value to be mined from a well-run loyalty program in targeting key groups of consumers and understanding the brand’s customer base, as well as generating repeat bookings.

For more, download the report now to get the inside track on direct bookings. This report features:

• Industry and consumer survey data from hundreds of travel suppliers and thousands of consumers
• Viewpoints from major hotel chains and independents on key tactics
• Analysis of the state of direct booking rates to benchmark your performance against
• Tactics to improve direct channel booking rates and increase loyalty
• Strategies to increase channel visibility and get more guests into your funnel.

This report is part of the State of Hospitality Distribution Report Series. In this we cover metasearch, direct and OTA channels, assessing the health and landscape of each before giving you the information to maximise their effectiveness. Keep an eye out for our upcoming OTA report and click here for the metasearch report.

Hotels no longer own their guests

Reaching the consumer is absolutely critical but hotels are failing to capture enough of the market and are paying the price says new report.

According to an EyeforTravel industry survey, which captured nearly 800 responses from travel suppliers, OTA ownership of the customer is the single biggest external challenge they face. The results featured EyeforTravel and Fornova’s new The State of Hospitality Distribution: Direct report, which is free to download now, show that hotel brands are struggling to reach the consumer and get them to make a direct booking, with the fierce competition hurting revenues.

This can be seen in the soaring cost of acquisition. When EyeforTravel asked travel suppliers what issues were standing in the way of getting their products in front of customers, cost of acquisition came top at 43.4% of respondents, followed by another highly relevant issue to the direct question: Intermediaries.

The position of intermediaries as the supreme sellers of hotel rooms has put hotels at a disadvantage, in large part due to the accumulation of data expertise, along with the resources to interrogate and fully utilize the findings in marketing campaigns.

OTAs have an advantage that hotels continue to struggle to match, from proper data analytics to being overmatched in PPC campaign spending.

The net result of this is that the major OTAs have created a sense of brand loyalty among travel consumers and created a powerful market position. In a consumer survey of more than 5,000 travelers from Australia, Canada, the UK and the US also featured in the report, OTAs came out strongly ahead of hotel and traditional travel agencies for driving consumer bookings. Expedia, Booking.com and Hotels.com were the brands attracting the most repeat bookings, far ahead of the big hotel brands, with Best Western, Hilton and Marriott the best performing of these but still far behind the OTAs.

This means hotels needs to look more carefully at how they attract and retain business from consumers, considering profit per guest and customer lifetime value, as well as the value of owning the data from each guest.

“The question is, do you look at it from the perspective of operational results, which means profitability for the transaction, or from the point of view of lifetime customer value or customer retention?” Posited Sanchit Rege, manager, distribution strategy at Hyatt Hotels Corporation. “Even if I have to spend five extra dollars [on metasearch costs] for someone to book direct, I have an advantage over the other transaction because now I know who this person is before he arrives and I have the ability to drive profitability on my food and beverage or some other form of ancillary revenue and I have the ability to actually make him loyal over a period of time.”

Kyle Mais, general manager of the Jamaica Inn in Ocho Rios, Jamaica, called guests who book directly “more sticky”. “Once the booking is made, we follow up with them directly to get them ready for the trip and create a relationship from an early stage,” he attested. The hotel will advise guests of packing needs, ground transportation and seasonal activities taking place on property during the guest’s travel dates. At check-in, these guests will ask to meet the reservationists with whom they’ve been communicating because of the relationship and want to thank them before their vacation has even begun. For guests who book through an OTA, their initial interaction with the hotel is upon arrival and the hotel is starting from square one without data on the customer to help them.

For more tactics from both major and independent hotel brands and data, download the report and receive:

• Industry and consumer survey data from hundreds of travel suppliers and thousands of consumers
• Viewpoints from major hotel chains and independents on key tactics
• Analysis of the state of direct booking rates to benchmark your performance against
• Tactics to improve direct channel booking rates and increase loyalty
• Strategies to increase channel visibility and get more guests into your funnel.

This report is part of the State of Hospitality Distribution Report Series. In this we cover metasearch, direct and OTA channels, assessing the health and landscape of each before giving you the information to maximise their effectiveness. Keep an eye out for our upcoming OTA report and click here for the metasearch report.

Priceline’s Meituan investment is a big deal

Priceline has long been one of the smartest players when it comes to mergers and acquisitions and it looks to have made another key move with its recent investment into Meituan-Dianping finds EyeforTravel’s new report into the company.

Priceline just strengthened its Chinese market position by investing into Meituan-Dianping, one of the fastest growing players in the Chinese digital space, showing its ambition in international expansion and giving it a new edge says the report into the online giant. In October 2017 Meituan-Dianping announced the investment as part of Series C funding into the start-up, which brings together group buying, booking and reviews.

It is a rapidly rising power in Chinese online travel thought to be behind only Ctrip and Qunar. Reportedly, Meituan-Dianping recorded more than 18 million room night bookings in July 2017 alone and claims to have meteoric growth rates that are quickly making it one of the world’s top start-ups by reported valuation. In the latest round of investment the company was able to raise USD4 billion, giving it an estimated value of around USD30 billion – a valuation that would put it among the biggest of the emerging tech companies and perhaps even bigger than Airbnb.

Although Priceline  has a comparatively small stake in the company, with its investment reportedly valued at USD450 million, it also announced that it was to create a distribution partnership between the company’s travel division and Priceline’s main Asian arm, Agoda. This is potentially more crucial than the investment itself and likely what Priceline was mainly looking to get at in the funding round.

“Now, Priceline has a fantastic presence in Asia-Pacific through Agoda, its partnership with Ctrip, and now this additional investment,” says Alex Hadwick, Head of Research at EyeforTravel. “It is therefore sitting on a well-fortified position within the market space and is also hoping to grow its Booking.com presence in the country with a local team. What’s more it has been able to achieve this without having to put in the huge sums other international tech giants have made into market. Famously Uber invested billions before conceding to local competition, so Priceline are able to minimise risk through their network of investments while growing market penetration.”

With a predicted Compound Annual Growth Rate (CAGR) of more than 8% between 2017 and 2020 and even a faster growing domestic market, the attraction is obvious for Priceline and getting involved with local players at this stage could be crucial as EyeforTravel’s research suggests that more than seven out of ten digital travel bookings in China are made with Online Travel Agencies (OTAs).

To preview and buy EyeforTravel’s Expedia report, click here, or here for the Priceline report. These are part of the Future of the Online Giants series, which will cover Expedia, Priceline, TripAdvisor, Ctrip and Google. Keep a look out through EyeforTravel On Demand for the rest of these reports.

Can Expedia transition to the travel industry’s tech partner?

A transition appears to be underway as Expedia increases the number of technology solutions it offers and builds partnerships out across the industry but will this strategy succeed asks EyeforTravel’s new report into the online giant?

A subtle change appears to have happened in the online travel environment. Emboldened by changes to regulatory frameworks, new technologies and growing revenues, travel suppliers are fighting to claw back market share. In response, Expedia appears to be pushing a new strategy to ensure future growth by growing its partnerships and services to support the industry according to a new report into the company.

Expedia sees opportunities in facilitating services in the travel industry and mobilizing its technical expertise to enhance its position at the center of travel distribution through partnerships and offering a full spectrum of travel products that are personalized for consumers, whether they are buying a hotel room, rail ticket or a whole package.

Most notably this can be seen in the roll out of new products and options for partners across 2016 and 2017. They have worked to give access to inventory and have invested in white-label technology, including for hotel loyalty, and also on advertising products. These have included:

·       Private Label Packages: Expedia worked with Marriott to create Marriott Vacations where the hotel chain uses a dynamic packaging platform powered by Expedia so their customers can book flights with accommodation, and earn Marriott Rewards when they book. Expedia has since built this out into a white-label option and has signed on Barceló and Omni Hotels & Resorts to the dynamic packaging system.

·       Partner Loyalty Enrollment: Red Lion Hotels initially kicked off this development as the first to have its own loyalty scheme actively promoted by Expedia in search results. Expedia claimed that there were three hotel chains signed up in August 2017 to the product, which allows users to enlist bookers directly to their loyalty programs from Expedia sites and in December 2017 announced that G6 Hospitality had signed up to the scheme. 

·       MICE Booking Technology: Expedia began testing their new MICE platform in mid-2017 and are hoping for a major roll-out in the near future. The system is a front-end booking tool and a back-end management and analytics platform.

·       Rev+: This is a B2B service for revenue managers of hotels, free to those already part of its distribution network, that runs of Expedia data and appears to be an attempt to provide a rival to BookingSuite. 

·       TravelAds Direct: Seemingly a reaction to book direct efforts, especially as Expedia’s official release stated that it offers “easier price comparison for consumers, and more potential brand touch points, bookings, and loyalty for hotels,” TravelAds Direct is CPC advertising that refers to hotel brand sites.

·       Accelerator: Finalized in Q4 2015, this product allows hotels to bid against each other, transforming the search results into a marketplace where hotels pay commissions for the top listings, increasing their chance to be booked by a traveler. This could be part of their strategy to compensate for lowering ADRs, as well as gain a share of online advertising revenues and sweat the assets of their platforms.    

The number of products and interest in pushing these out to major partners suggests a larger strategic focus on the area and a divergence from the approach of its biggest competitor, Priceline. Expedia has long thought of itself as a full-service travel agency, providing products that cover the entire travel spectrum. However, this advantage has narrowed as a growing universe of Application Programming Interfaces (APIs) and cloud platforms allows smaller players to access far more inventory than they previously would be able to. Whereas setting up agreements to sell car rentals, flights, or tour activities would have been technically and legally arduous to set up for a smaller travel company, they can now work through third parties and a single agreement can open up a global supply network.

“Embedding in a network of partnerships across the industry and supplying partners will help to insulate Expedia from disruption across the market and supplement their traditional OTA business,” says Alex Hadwick, Head of Research at EyeforTravel. “How successful they will be in this endeavour remains to be seen, as suppliers may prefer to take the fight to OTAs and keep them at an arm’s length in the battle for customer bookings and loyalty. However, a number of big names, including Marriott, Thomas Cook and Norwegian have signed on to various partnerships in the last 12 months, which will offer encouragement.”

To preview and buy EyeforTravel’s Expedia report, click here, or here for the Priceline report. These are part of the Future of the Online Giants series, which will cover Expedia, Priceline, TripAdvisor, Ctrip and Google. Keep a look out through EyeforTravel On Demand for the rest of these reports.

Priceline and Expedia continue to grow but at what cost?

They are still growing strongly, but Priceline and Expedia are increasingly reliant on marketing spend to drive expansion and this could leave them with vulnerabilities, finds EyeforTravel’s new reports into the two companies.

Both Priceline and Expedia continued to post some impressive growth numbers in their Q3 results, with double digit rises in gross bookings but these increases appear to come at an ever-increasing cost and concern is rising among investors. EyeforTravel’s new reports into both Expedia and Priceline finds that investors are right to be concerned as this is a potential weakness for both companies that empowers potential rivals in the form of the main digital advertising giants Facebook and Google.

Both companies saw soaring costs in 2016 continue into 2017 and appear to be trapped in a competitive spiral, focusing on matching increases in the other’s marketing spend for fear of falling behind. In 2016, Priceline increased its brand advertising spend by 8% and performance advertising by 27%, whilst Expedia saw selling and marketing costs rise by 29%. Through the first three quarters of 2017, marketing spend by Priceline has grown by 22%. In percentage terms this matches a 22% increase in the broader ‘selling and marketing’ element of Expedia’s costs across the same time frame. For the latter, selling and marketing costs now make up more than 55% of the company’s overall costs, whilst Priceline's combined selling and advertising costs make up 70% of overall costs.

There can be little doubt that the majority of this spend is heading over to Google, with Priceline appearing to be the more reliant on the search giant currently. Around three quarters of search engine traffic to Booking.com is generated via paid advertising, as compared to around half for Expedia. This also comes despite Expedia paying less in advertising than Priceline but is nonetheless a concern for both companies as Google continues to relentlessly but quietly ramp up its travel products.

Not only are the two facing pressure from each other and the online travel agency market, but increasing pressure from their suppliers as well, as they try to recapture market share through book direct campaigns. Most of the major chains have initiated these alongside a broader consideration of what loyalty means in the industry. Combine this with a more combative regulatory environment in Europe, with wide price parity agreements being eroded, and what they will get is more competing forces for keywords and users’ attention across a wider number of search terms.

This has caused ripples on Wall Streets, with analysts focusing in on the growing costs and their effect on the bottom line as profit expectations are missed. After Q3 2017 earnings call for both companies, stocks plummeted, falling nearly 16% for Expedia the day following the call on 27^th October and 13% for Priceline on 7^th November. For Priceline this mimicked a similar stock drop following the Q2 earnings call, highlighting investor concerns.

Investor concern is unlikely to dissipate as these two are reaching such gigantic proportions that their growth is likely to slow naturally anyway and there doesn’t seem to be a way out of the marketing spend increases on the near horizon, with search engine marketing critical to their business models. Indeed, currently their ability to outbid almost any other player when required and their vast data regarding search term effectiveness currently makes this arena a competitive advantage for both players.

Nonetheless, the question remains, at what cost? It will be critical to continue to monitor marketing spend for both over the coming years to see what the limits of sustainability and effectiveness are. As the competition intensifies across the digital travel space and tech giants eye travel

To preview and buy EyeforTravel’s Expedia report, click here, or here for the Priceline report. These are part of the Future of the Online Giants series, which will cover Expedia, Priceline, TripAdvisor, Ctrip and Google. Keep a look out through EyeforTravel On Demand for the rest of these reports. 

China is Expedia’s Achilles heel

Expedia wants to expand outside the North America but making inroads into the world’s most influential travel market will be a tough ask in the face of increasingly fierce competition finds EyeforTravel’s new report into Expedia.

With a projected compound annual growth rate in outbound journeys of 8% to 2020 and an even faster growing domestic market, Expedia needs to get a slice of the Chinese market but since its sale of eLong, the competition has only got stronger and it may be too late to make inroads according to EyeforTravel’s new report into the company.

Expedia faces not only a series of rapidly growing brands that are beginning to establish themselves but an increasingly interconnected web of investments between these players that threatens to lock them out of the market. The key player is Ctrip, which is now reaching a point of near-dominance in the market. Other key brands in the market include Qunar, eLong, Tujia, Alitrip, and Meituan-Dianping, making it a competitive market place, but already several of these brands are falling under key rivals. Ctrip is the biggest player in the field, snapping up Expedia’s former brand in China, eLong, alongside Qunar, and it also has a subtantial investment into Tujia.

Expedia’s great rival Priceline is also deeply embedded into the market. It has investments and distribution partnerships with both Ctrip and Meituan-Dianping, tapping into two already key players, with explosive growth rates. In the case of Ctrip, Priceline’s investment gives them up to 15% of the shares in the company and also an observer on Ctrip’s board, allowing them a degree of influence in the company, one that is unlikely to be friendly to Expedia.   

Although Expedia’s weakness in the market is noticeable, it’s not just Expedia that has struggled in the Chinese market. Other tech giants, such as Uber and even Google, failed to truly make inroads despite putting in big investments, emphasizing the complexity and unique dynamics of the market. It appears that for now Expedia is choosing to focus on other Asian markets, recently announcing that it is investing into regional OTA player Traveloka. Traveloka focuses on Southeast Asia and Expedia reported in 2017 that the area is its fastest growing regional market.  

Nonetheless, the situation leaves Expedia largely bereft of options to open up the Chinese market currently and potentially facing a very large bill if they do want to establish themselves, both in marketing and platform terms. However, one potential route in the long term might be through its investment into SilverRail. Rail travel is already critical in China, making up the largest segment of the digital travel market in the country and is set to grow substantially in the coming years. A foothold in rail therefore could be a key competitive advantage, especially as Priceline is so heavily focused on accommodation and not as diversified in terms of revenue streams as Expedia. However, it remains a longshot in the context of an increasingly powerful number of localized and interconnected players.

To preview and buy EyeforTravel’s Expedia report, click here, or here for the Priceline report. These are part of the Future of the Online Giants series, which will cover Expedia, Priceline, TripAdvisor, Ctrip and Google. Keep a look out through EyeforTravel On Demand for the rest of these reports.