Four Effective Hotel Marketing Strategies for More Direct Bookings
Online Travel Agencies (OTAs) have become one of the star players in online bookings in Spain, with figures surpassing 3 billion euros. In the face of this striking figure, how can hotels position themselves and increase direct bookings on their websites? The direct booking percentage is small due to the consolidation coming from OTAs. In many cases, the dependence of many hotels on them is so high that it’s challenging for them to break away and operate without their help. The solution lies in applying hotel marketing strategies. The solution lies in applying hotel marketing strategies.
Four marketing strategies for hotels
Diversification attempts to reach growth by adding new products and amenities that allow the hotel to attract new kinds of travelers. Tourism destinations need (or should) to opt for this strategy when they need to expand their offer when their current one is rendered “obsolete,” or the industry trends are going in a different direction. We can:
We shouldn’t only bet on sales coming directly through our sites and a secure, renowned OTA, but we should also amplify and sell our products on more niche OTAs that allow us to avoid the risks of selling on too few channels. This concept was coined the Billboard Effect by a professor at Cornell University after direct bookings increased by 20% when hotels used in the study showed up on Expedia.
We know how fundamental it is for us to have a multichannel strategy to reach our target market in the right place at the right time. In an interview for WAM, Iberostar eCommerce and Online Marketing Director Ignacio Ochoa declared: “We understand omnichannel to be the umbrella term for acquisition channels as well as the devices we use to communicate with customers. On the one hand, we seek an omnichannel experience with tour operators to optimize rates, bed banks, etc. On the other, we’re looking for an optimized experience for every customer on every device. That means we deem omnichannel to be something we have to achieve for every channel to play their best role in the customer journey.”
It’s about going out of your comfort zone and attracting new markets that, after a previous study, meet the optimal characteristics and requirements to achieve a positive ROI. That mean’s it’s fundamental you have an international tourism marketing strategy for every audience. Every market will have its buyer persona with different interests and concerns that will use as our jumping-off point. Merely translating content from one language to another isn’t enough; we have to transcreate and give it meaning according to the context. The timing for every market also varies, so we can’t have everything be uniform. That’s why personalization will be fundamental for boosting conversions.
Developing new products will let us add demand to what we already have since this new strategy is based on looking for new market niches. An example of this tactic would be AR Hotels and its products and services specially tailored to cyclists.
As we noted in our tourism trends report, several studies presented at the World Travel Market in London in 2018 agreed that tourists from all over the world don’t cease to look for different, one-of-the-kind, off-the-beaten-path experiences from the ones most often visited and photographed. As a result, destinations have an exciting opportunity to create new products. You’ll need the imagination to make that product you’re developing attractive, accessible, and available online.
In Tourism Destination Marketing: Analysis and Development Strategies (Marketing de destinos turísticos: análisis y estrategias de desarrollo), the authors point to incorporating new consumers/tourists, an ample knowledge of the effective tourists, implementing new destinations to the market, or maintaining leadership in the global tourism market as some of the main characteristics that justify following this diversification strategy.
2. Undifferentiated Strategy
A brand bets on cost competitiveness in this hotel marketing strategy. This route implies they’re the most efficient in the market to offer the best possible price: once we’ve identified our target audience, we focus all efforts on placing products for the whole market to those potential customers. What we’re looking to do is to execute an advertising and social media campaign for only one product.
This type of strategy works for “commoditized” products or those for which there is demand, but it’s satisfied without any added value. An example would be if a hotel competes with many others without its competitive advantages, it has to resort to competing on price and at a lower cost.
3. Horizontal – Vertical Integration
Integration-based growth strategies focus on acquiring enterprises that are related to the industry in some form. There are three formats in this type of strategy:
Examples of Horizontal-Vertical Integration
Horizontal integration in the hotel sector leads to a larger market share, lower costs stemming from shared resources, fewer competitors that could prove to be a severe threat to our operations, and a higher negotiating power with vendors (due to higher market strength). It is the perfect launching pad for your brand’s international expansion.
The Iberostar Group is a clear example of integration. The group has four lines of business that includes the following Iberostar brands:
- IBEROSTAR Hotels & Resorts (hotels and resorts).
- IBEROSTATE Golf, Villas & Condos (properties with five-star amenities).
-Travel & Inbound (focused on travel experiences).
-IBEROSTAR THE CLUB (a loyalty program).
Vertical-Horizontal Integration Subtypes
Regressive Vertical Integration: A company merges with or acquires competitors that are in a prior stage or the same stage as they are in the product or service value change.
Progressive Vertical Integration: Similar to regressive vertical integration but the company or companies are in a later stage of the value chain.
Horizontal Integration: Different competing companies come together to achieve a higher concentration to increase their purchasing power over their vendors, control over their distribution, and market sales.
The hotel industry and disintermediation
The Digital Transformation in the hotel industry has forced companies to face the new intermediaries that users trust in their choice and purchase. They include specialized review and forum platforms like Tripadvisor, travel price comparison platforms like Trivago, or other platforms like Booking or Expedia that offer “the best hotels at the best prices.” These “agents” earn a commission worth between 15-20% of every reservation, making it advantageous for the consumer and challenging for the hotel.
The map of touchpoints between a company and customer is increasingly more extensive, making it imperative for companies to create a comprehensive database that lets them offer direct, personalized service. They can do it through email marketing, retargeting, and social media, as well as offline when checking in, during their stay at the hotel, upon checking out, etc. Strengthening, improving, and optimizing the online customer relationship will help us offer guests what they want when they want it: greater satisfaction with the hotel, a higher level of commitment, and engagement.
4. International expansion
International expansion in the hotel industry is part of opening a business up in new geographic areas. This expansion impacts the company’s organizational structure, as well as its resources and abilities. It’s essential (better yet, imperative) that we’re aware of everything we need to know before expanding a business abroad.
The digital space is fundamental in international expansion, but having a website translated into the native language of the market we want to conquer isn’t enough. There’s a lot more involved. It includes deploying strategies fostered in tools that adapt to new needs such as a CMS (Content Management System) that lets you update content, offer a user experience that’s adaptable to native users’ preferences and needs, or have presence on the right social media that makes sense for the target market we want to be.
Iberia is an example of this through how they understand online customer service: they have all queries passengers could have in a simple, friendly format, including video.
Each of the four hotel strategies has different aims, so you first need to figure out where your business is to figure out whether you should apply one over the other. Knowing your situation is fundamental for deciding your goals and path to reach them. You’ll manage to relaunch your business by taking the right steps.