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September 4, 2014 / BSP Marketing

Today’s Savvy Hotelier Adapts to the Digital World

Digital World - Old Hotel Marketing GraphHotel Profits Linked to Strong Digital Strategies  

Running a successful hotel in an industry where profit margins have been historically thin is a challenge. It takes competent management to control costs while still offering the amenities and true value that attract paying guests.

Adapting to the New Way of Marketing Hotel Rooms

In previous generations, before the digital age, traditional travel agents, brochures and hotel travel guides were used by travelers to find and book hotel rooms. Most often, travelers chose their accommodations based on the brand and not on reviews posted on social media sites. Having a strong brand is still very important because it tells guests what to expect when they visit a branded hotel in any city around the country or around the world. The way people are booking their travels today however – researching hotels online, reading reviews and reserving rooms through their smartphones – is forcing hoteliers to step up their digital marketing strategies.

Hoteliers Now Have to Work Harder and Smarter

It is no longer enough to simply have a website for your hotel. Your website must be robust and allow visitors to interact with the site when they arrive. Since the depths of the recession five-rears ago, the hotel industry has bounced back and is now posting positive numbers. Broadly speaking, Revenue per Available Room (RevPAR), occupancy, and the average daily rate are all up from 2009. While the country was digging its way out of the recession, hotels have been steadily prospering. Currently however, many hotels are finding it difficult to continue to beat the previous year’s key numbers. 

Margins are Being Squeezed by Online Travel Agencies

Customers love the transparency afforded them by the various online travel agencies, hotel booking sites, and array of ways they can find out more about hotels before they actually book a room. As evidenced by the enormous growth of companies like Priceline and Expedia, people want low prices and value when they search for accommodations. While great for customers, the competition is squeezing the profit margin for hotel operators.

  • Google gets five percent of its total revenue from Priceline and Expedia and only financial services and retail generate more sales than the travel sector.
  • TripAdvisor ($13.9 billion) and Airbnb ($10 billion) both have higher market values than industry stalwarts Hyatt Hotels ($9.55 billion) and the InterContinental Hotel Group ($9.97 billion).
  • • In the first quarter of 2014, hotel brand sites accounted for 27.1 percent of all bookings while OTA sites booked 13.2 percent of all hotel rooms. At first sight, this sounds like good news for the major hotels, but looking more closely, the OTA share has grown by 9.2 percent from year-to-year as compared to a growth rate of only 6.1 percent for branded sites.
  • Use of metasearch engines (search tools that aggregate information from several search engines at once) to decide on which hotel room to book is becoming more prevalent in the industry. In 2013, millennial travelers in the key 18-36 age group used search engines 39 percent of the time when booking hotel rooms.

The Savvy Hotelier

Industry analysts and experts in digital marketing almost unanimously agree that hotel owners and managers must incorporate enhanced websites, a strong social media strategy, as well as innovative apps that make booking rooms from a smartphone, or other digital device, a snap. Although it may be difficult for traditional operators to change from what has worked well in the past, in today’s hotel industry, hoteliers must either adapt to the current environment or watch the competition steadily pull ahead.

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