The 1990s were halcyon times for OTAs and the hotel industry: commissions were low, and hotels were able to sell extra rooms and benefit from the “Billboard Effect.” But times have changed and OTAs dominate the market, commodifying the hotel industry in the process. Consequently, hotels will have to change their strategies to increase direct bookings.
In the previous section, we looked at how hotels could boost guest engagement during the pre-stay inspiration and planning phases, and also how they can streamline their booking experience for a mobile audience. Now, we discuss how hotels can nurture their guests during their stay, and maximize guest loyalty once the stay is completed.
During-Stay: Nurture Your Guests
Your guest has booked through your website and arrived at your hotel, so the journey is over, right? Not in the slightest! This is the perfect time to reinforce your brand, build guest loyalty and promote advocacy on social media. It’s important to continue the conversation with your guests throughout their stay.
And trust me, guests want to keep in contact with you during their stay. Amost 90% of travelers expect hospitality companies to share relevant information during their stay, and over two-thirds of travelers feel more loyal towards companies that do. And for good reason: 85% of leisure travelers only decided on their trip’s activities after they have arrived at their destination.
Again, mobility can be a crucial component of connecting with your guests. A cloud-based PMS can afford guests the convenience of mobile check-in/out, while also being able to send them personalized, automated offers for room upgrades and amenities. In-stay messaging 一 whether through SMS or a chat app 一 is also an ideal way to quickly process custom requests, or handle guest complaints before they turn into negative online reviews.
Mobility also has another benefit, namely incentivizing travelers to provide their email and other personalized data otherwise lost to OTAs. One Las Vegas property, for example, was able to capture email, phone and other personal data of almost 40% of their 1250/day arrivals using a mobile check-in feature. This can then be used to send guests targeted messaging and loyalty packages.
Post-Stay: Engender Customer Loyalty, and Make Sure Your Loyalty Packages are Worthwhile!
Boosting guest loyalty is crucial to capturing direct bookings.
This is more than just a truism: Due to parity agreements with OTAs, loyalty programs might be the only mechanism for hotels to offer travelers preferential rates. It’s also the driving force behind direct bookings: According to PhocusWire, 79% of direct bookings are made by guests who belong to a loyalty program.
Unfortunately, enthusiasm for loyalty programs is not spread evenly among all segments. Millennials, for example, only subscribe to 2.3 loyalty programs on average, compared with 3.2 for other brackets. To make matters worse, 39% of Millennials don’t believe it’s worth it to join a loyalty program in the first place.
How can hoteliers reach this key demographic?
Ultimately, by embracing the mobile-first engagement and nurturing programs outlined in this series. If your loyalty program exists on a single section of a desktop-optimized webpage, you’re simply not going to reach tech savvy Millennial travelers. You have to be continually communicating the value of your property and its amenities, so guests are given ample reason to join your program.
Proper guest segmentation is also key. You should be routinely auditing your guests’ stay and preference data to gain insights into their room and amenity preferences, behavior, and rate sensitivity. That way, you can develop loyalty programs based on well defined guest profiles, rather than simply an arbitrary discount.
Does any of this actually work in the real world? Of course it does!
A 2017 report from Kalibri Labs studied over 25,000 hotels in the US, to analyze the effect that direct booking campaigns had on consumer behavior. The results were “startling:” The median net revenue benefit from the loyalty programs ranged from $9,000 to $33,000 per hotel, even after taking into account all discounts and commission costs. Upper scale hotels benefits extraordinarily well from the campaigns, with loyalty members driving 40-60% of bookings, and loyalty membership growth growing between 30-40% yoy.
Hilton’s “Stop Clicking Around” campaign is a case in point. In 2016, Hilton launched a massive marketing campaign to encourage loyalty membership called “Stop Clicking Around,” which challenged the perception that the lowest rates could only be found on OTAs, and encouraged travelers to join Hilton’s loyalty program, Hilton Honors. The program was a runaway success, and Saw loyalty membership and direct bookings rise from 51 million in 2015 to 85 million in 2017. Because of the campaign, direct booking channels remained the fastest-growing in Hilton’s portfolio, beating out OTAs by a factor of three.
OTAs still hold the commanding heights of the direct booking market, but there is plenty that hotels can do to convince travelers to book on brand. If you would like to learn more, feel free to watch our OnDemand webinar on increasing direct bookings, here.