How much are you spending to acquire new business?
It’s an interesting question, but one that didn’t really have a precise answer until now. Strange, too. On one hand, the hotel industry seems pretty sophisticated, but then again there are many indications it’s not at all.
Such as "Hotel Hell." Watching that show, it’s obvious no one in the lodging business knows what they are doing. I mean that has to be fact since reality television would never ever never distort the truth for the sake of a shameless ratings grab. I could never imagine a for-profit television network obfuscating the truth. Right?
But truthfully, the industry is always in a constant position of learning, evaluating and implementing new approaches and technologies. And many are much better at adapting than others. Some of those attended the Revenue Strategy Summit last Thursday in Washington, D.C., and while I’ll be covering it more in depth in an upcoming issue of HOTEL MANAGEMENT magazine, there was one bit of news ripe for discussion in this column.
Cindy Estis Green, CEO and co-founder, Kalibri Labs, presented some startling information. And from what her research discovered, it appears the hotel business is losing the battle when it comes to guest acquisition costs.
“The Billboard Effect is dead,” she proclaimed, as part of a presentation unveiling some critical new information.
Apparently the industry has been fooling itself into believing that it can easily convert in high numbers guests coming from online travel agencies when it comes to future stays. Interestingly, my friends at the OTAs have been telling me all along anecdotally this is not, and will never, be the case.
Yes, unlike the lame do-nothing-but-whine politicians in Washington, I have been able to bridge the divide to have friends on both sides of the room-distribution aisle.
The people OTAs bring to a hotelier’s front door is a different type of guest entirely. The hotel industry must recognize that this specific type of customer is rarely interested in joining a loyalty program, typically because of infrequency of travel. More important, these guests are fixated on price and location for each individual stay.
Estis Green’s research, which will be officially released in more detail shortly, points to just 7 percent of guests going back to a hotel after booking an OTA in 2014.
But wait, it gets worse. That number was 9.3 percent in 2012, according to Kalibri Labs data. That points to a losing battle for hoteliers. Or is it? Perhaps hoteliers need to stop fighting entirely. You all must work within the construct of reality rather than trying to change customer behavior.
In fact, you’re already doing it. But for this issue there’s a destructive emotional component not being discussed openly, and it’s having a dire effect. Many hoteliers claim OTAs have bullied them into a losing position, though it was the hotel business that created the opening for what has become a powerful OTA duopoly. And rather than accept reality on reality’s terms, time and energy are constantly invested in fighting a battle that's already been lost.
The hotel business is rapidly adjusting to customer behavior changes in other areas, such as guest experience. So we’ve proven to be adaptable. Most recently, the industry has gone gaga over emerging customer trends such as revamped lobbies, adapted guestrooms and elevated food-and-beverage offerings. It all points to a distinct understanding of giving guests what they want and how they want it.
There are some guests that still want, and will always want, to go through an OTA. There is no shame in that, and time is better spent building your business elsewhere.
“The OTA’s are outspending our industry on marketing, and are providing a platform better servicing customer’s needs from an experience perspective during the booking process," said Gary Isenberg, president, LWHA Asset and Property Management Services. "[They offer] the ability to shop across brands and independents, as well as to view and shop experience through sites like Trip Advisor. There is a lot of talk and activity; however, it may be too little too late."
My advice: Take all that mental energy and convert it into finding ways to get loyal guests to pay more. They already like you, want to spend time with you and are more apt to spend more to do it.
Get out of your own hotel hell and focus on what you can really control instead of pretending you can control customers who book through OTAs.
Glenn Haussman is editor-at-large for HOTEL MANAGEMENT. His views expressed are not necessarily those of HOTEL MANAGEMENT, its parent company Questex Media Group, and/or its subsidiaries.