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It may surprise hoteliers to know that email consistently offers a superior return on investment when it comes to attracting customers

ask about size of budget, allocation, and guest acquisition strategies, a hotelier actually needs more context on return on investment (ROI) to make an informed decision on 2017 spending. In other words, how can your digital marketing efforts support your hotel or owner’s broader goals of maximising revenue and profit?


INVESTMENT ALLOCATION Digital marketing budget sizes vary widely by size of hotel and market, but the majority of hotels have this in common: Most hotel mar- keters we speak with allocate roughly half of their digital marketing budget to search and display, but they are investing in a range of mar- keting activities, including social media, email marketing, and other assets like the website.

Beyond the marketing budget, another con- sideration is cost of distribution from OTAs. In a hotel P&L, these OTA costs are separate from the marketing budget line item, often showing up in cost of goods sold. Depending on the type of commission cost (ie, agency versus merchant), it may not even show up in the P&L. Therefore, not considering your mar- keting budget side-by-side with what you’re spending on OTA commissions can under- mine any direct booking efforts, including and email marketing investments.

THE (POTENTIAL) PAYOFF Across industries, 2016 research from DMA shows that email continues to drive at least four times higher ROI than all other market- ing formats. Within the retail industry, email marketing is by far the most effective digital tactic for driving customer acquisition and retention, according to an emarketer report.

These findings translate to hospitality as well, but unfortunately, email often receives the lowest marketing budget allocation in hotels. Email marketing is the most effective driver of return guests, ahead of social media, accord- ing to Performance Horizon. And, encourag- ing past guests to book direct via email supports channel shift away from the OTAs. Even Virgin Hotels, a brand that focuses heav- ily on social engagement, says that email mar- keting is still their best ROI digital investment.

48 | Technology Prospectus 2017

s hotels begin to budget for next year, it’s a perfect time to look at their digital marketing mix. While many vendors


So what does all this mean? In a nutshell, determining the right marketing mix for your organisation is critical. The most important lens is your ROI.

Step 1 Gain a complete ROI view of all of your digital investments, including OTA commis- sions. You may need to work closely with other departments like revenue management to uncover true OTA spend and how that com- pares to the marketing budget.

Step 2 Make the necessary adjustments to your digital marketing mix, if required, to optimise for your highest converting and retention- driving channels. For example, we are seeing smart hoteliers reallocate some spend from paid search and display to email marketing, given the retention and conversion benefits.

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