In the hospitality industry, one of the big challenges is generating direct online bookings. For those of you unfamiliar with the concept of direct online booking, it specifically means a reservation made through the hotel’s website. Nowadays, hotels not only compete with neighboring hotels, but also with OTAs (online travel agencies). Examples of some of the well-known OTAs are booking.com, Expedia. com and hotels.com. These sites list and rank all hotels and then provide links to book them. The reason why OTAs are a significant source of competition for the hotel has to do with the massive size of their marketing budget, the concept of parity and profit. By agreement, hotels must provide their exact BAR (best available rate) to OTAs. This means that OTAs and hotels will show similar low prices, hence the parity. The issue is how much money the hotel makes from booking direct on their site versus booking on an OTA. On a direct booking, the hotel retains 100% of the revenue. With an OTA booking, the hotel keeps between 75-90% of the revenue through the commission agreement it has with the OTA. Hotels that lack awareness desperately need OTAs to drive bookings.
This is where the challenge lies. In these types of situations, the goal is to try to funnel the transfer from the OTA to the hotel’s website. The typical pattern of the customer journey booking a hotel in an unfamiliar location is to first visit an OTA to narrow down their list of hotels based on location, price, and reviews. Then, the customer typically goes to the hotel’s site, learns more about the hotel, and views relevant content. In the last step, the customer usually returns to the OTA to book. One of the goals of the hotel website is to drive the customer to search and entice them to book on the hotel website rather than returning them to their previous OTA channel.
In addition to trying to change shares, hotels are leveraging SEO, SEM, banner campaigns, as well as meta-targeting to attract and increase awareness in an effort to entice potential guests to visit their site. website. Once on their website, hotels have the option to convert the viewer (customer) into a reservation. This conversion attempt can be augmented and facilitated by third-party solutions that hotels often place on their website. These solutions include custom post formats with optimized display timing, a robust set of dynamic targeting options with custom content, widgets that pull price comparisons from OTAs, widgets that pull customer reviews and reviews to be posted on the hotel’s website. The challenge is to determine the value of this conversion and show the ROI from the annual/monthly cost of this service. To do this, the hotel needs to determine how much additional traffic the solution helps convert beyond what the hotel page would be able to do on its own.
Companies similar to The Hotels Network that provide this specific type of technology are creating ways to measure and attribute value to their messaging and revenue. These tools typically generate a 10-20% return on investment. They do this in several ways. They track bookings per clicks as well as revenue associated with an influential conversion message that the viewer was exposed to during their booking journey. This type of attribution is similar to companies that run banner campaigns associated with post-view attribution.
The best way to measure the conversion of these campaigns on your site is to perform A/B testing. A/B systems test a message that is automatically split between the (exposed) campaign and a control group. The next step is to wait until you get a statistically valid measurement to increase the level of confidence in the results. For hotel websites that have high traffic, results come quickly with an industry standard minimum benchmark of around 10,000 impressions. However, with lower impression rates, the expected margin of error should be increased or hotels should continue to run the test until the expected threshold is reached. If there is strong direction in the results before reaching the threshold, the test can stop and the results can then be added to the hotel team’s overall marketing learning.
“One of the goals of the hotel website is to entice the searcher and entice them to book through their hotel website rather than returning them to their previous OTA channel”
Different types of messages can be tested regarding urgency (low inventory), limited time offers, exit messages, and nudges. Regardless of what is placed on the site, it should be tracked and conversion should be assessed. For these types of messages, the system must, at a high level, track visitors, bookings, revenue, and the specific campaign group. Beyond that, to get to more granular levels, there needs to be an assessment of device type and even country (at least these days) to see how that information relates to the booking.
All in all, when it comes to hotel websites and conversion, hotels need to lean in and embrace the tools at their disposal. In addition to the myriad of channels that can be leveraged to drive traffic to the website, hotels must now use technology to convert the traffic they have. The cost of not doing so means the potential loss of bookings. Not just to a competitor, but perhaps to a lower profit source of an OTA.