The headwinds remain strong across hospitality. Yet, momentum is building – especially when it comes to digital marketing. Right now we’re seeing digital spend rebound to about 50% of the levels that it was towards the end of 2019, when spending was at the highest level we’ve seen. The outlook looks more positive into 2021, where larger brands are setting aggressive budgets in a bid to combat OTAs and maintain the profitability of direct bookings.
Profitability has also taken pole position for smaller groups and independents. Even as many operate under strict occupancy restrictions (and thus limited revenue), the OTAs haven’t taken their foot off the gas. They continue to invest in marketing and work to steal revenue from the direct channel. In light of this, hotels must continue to get their names out there and maintain the profitability of bookings. After all, when running 50% occupancy, they can’t afford to give away 25% margin on an OTA booking. Profitability is paramount in the current market conditions.
To protect profitability, and preserve competitiveness in a world with occupancy restrictions, hotels must be better than ever at digital marketing. Thankfully, with the right tools and partners, that is easier than it’s ever been!
How does your digital spend impact your STR report?
Even in the best of times, hotel marketers that most effectively align their digital spending with performance will stay ahead of the competition. That’s doubly true during downturns when demand is constrained, and budgets are limited. Marketers must be mindful with their digital budgets, closely correlating performance and spending. There is less room for error and more pressure for results.
With that challenge in mind, we built a calculator to help you see the actual impact of your digital marketing campaigns on your STR report. It combines your marketing performance and your STR report to clearly assign value to your marketing activities so you can assess if you are having a positive impact on your STR metrics. Then you can take these results to management to show how the marketing investment is paying off – or use the results in your regular strategy meetings to adjust spending and segmentation. Either way, you’ll be able to justify how your team is spending the money allocated to your marketing activities.
How it works
The calculator takes two things into account: your hotel’s overall performance on key metrics, pulled from the latest STR report and the performance of the marketing campaign. In a single view, you can see how impactful your marketing activities have been on the key metrics, such as ADR, occupancy and RevPar. Then, you can benchmark those results against your compset to see how well your marketing is influencing bookings.
This gives you a grand view of the impact of your campaigns. You can see what the actuals and STR would have been without the campaign and assign clear value to each campaign to prove efficacy – or to identify underperforming campaigns to tweak or end.
What to do with this data
To further evaluate marketing performance, consider these four key metrics for digital marketing. These metrics are especially urgent during a global downturn, when you want to have a level-headed understanding of how well you are turning your marketing budget into bookings.
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Return on Ad Spend
It’s always important to have an accurate view of which marketing campaigns drive results. You can further refine this by drilling down into how well each marketing campaign influenced individual metrics such ADR, RevPar, occupancy and market share.
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Feeder markets
You also want to evaluate how well your marketing is attracting business from drive markets – key to survival during the pandemic. Go further down your list and choose your 6th to 15th feeder markets and monitor improvements based on your targeted marketing. Monitor results and systematically optimize your marketing to capture more business from those markets near you.
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First-time bookings
With a narrowed focus on feeder markets, you are likely welcoming many first-time guests. So, you want to identify which marketing campaigns bring you those bookings, and then match the average booking value to an individual campaign. These insights guide you to more “lookalike” guests similar to those higher-value guests – something that’s especially important for hotels of all sizes…and then find similar guests.
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App downloads/loyalty signups
You may also want to consider how well your marketing is driving app downloads and loyalty sign-ups. These programs can be important drivers of first-time business; understanding how well your marketing delivers these downloads/sign-ups means that you can do more of the marketing that brings you closer to your customers.
Also, use this data to enhance the quality of your relationship with revenue management. You want to take time and really understand the demand patterns so that you can fill accordingly. Take Las Vegas for example, a market whose demand patterns have been dramatically upended. Driven by conference business and reliable full-freight weekenders, modern-day Vegas has never grappled with a short booking window, with pick up occurring during the week for the week.
First, marketing and revenue management must partner to identify “the who:” the high-value guests. Then, they create a collaborative plan to substantial percentage of the base business three weeks out and then drive remaining room rates up in the week for the week.
That’s the who. Then you look for the where. You identify the nearby sources of demand, those secondary and tertiary markets that were less of a priority before but have become critical today. Local and regional guests are the bright spots, and everything must be oriented around actively targeting these segments – and measuring all performance against pick up in key feeder, probably not traditional, markets near your hotel.
Preparing for tomorrow
Full recovery is likely a couple of years away. While disheartening, it is also an opportunity. You can use this time to prepare for the future – specifically the death of the cookie, which is slated for 2022. You must get your first-party data ready for primetime. Use your CRM to capture more of your guest data so that you rely less on third parties – otherwise you are going to be underprepared, entering the strong recovery only to find that you no longer can rely on marketing techniques that worked well before.
The road to recovery may be long but we have been here before. Those who take the opportunity to shore up foundations and prepare for the future will find themselves ideally positioned to ride the wave once it arrives.
About the author
Michael Bennettoversees global marketing, product and data science at Download Cendyn’s free digital spend calculator now.
