Total revenue strategy means different
things to operators. A budget hotel, for exam- ple, may simply focus on beds, while casi- nos barely care about room rate because their main revenue is from guests’ gambling spend. But a total revenue strategy also needs to take the cost of distribution into account. Guadagnini warns that while OTAs have grown the market and boosted occupancy, the distribution costs have reduced profitabil- ity in rooms. Although many businesses use trevpar (calculated by dividing net revenue by available rooms), a clearer picture can be provided by netrevpar, which is net of com- missions, such as distribution costs, transac- tions and OTA fees. “OTA fees can be 20% [or more],” says Guadagnini. “It is not about total revenue, it is about total profit. The cost of distribution needs to be accounted for. “The market spend of OTAs is huge – and
that comes from the charges paid by hotels. Everyone wants to sell a room direct. You can offer guests incentives if they book direct. But you also need to look after guests and give them confidence in you, so they don’t want to shop around, because at the end of the day, guests get a choice in the OTAs. “Offer an out-of-the-ordinary experience and guests will share it on social media. We think of the Instagram moment in our hotels, such as a birthday cake or towel origami. Hotels need to customise offers – know what guests’ hobbies are and give them the wow factor.” Guadagnini believes revenue and marketing
will merge to such an extent that it will revolu- tionise the level of customised offers for guests. “You will offer guests a package based on their personal preferences, which is based on infor- mation we can find out about them,” he says. Guest relations technology helps hotels to manage OTAs through boosting customer satisfaction and reinforcing brand integrity on review portals and social media channels.
12 | Technology Prospectus 2018
“Hotels are realising the need to catch up with technology. Retail and e-commerce are
so far ahead of hotels” Thomas Landen
Thomas Landen, marketing director at reputation management company Revinate, explains: “OTAs are great but they cost money. They have their place, but hotels need to look at how much they spend with OTAs and how they can improve direct channels. “Also, you need a more holistic view of
marketing, including social media and email rather than one single channel.”
BUILD EXCITEMENT BEYOND THE STAY One way to attract direct bookings is to build excitement before and after a guest has made their booking, rather than just during their stay. “When you check out, few hotels ask you to come back or email you,” says Landen. “The retail industry sometimes does this to an annoying extent, but hotels don’t even ask. “With airlines, you get prompt emails at seven days and 24 hours before the flight. That helps you prepare and sets an expectation of the whole journey. There should also be a whole- journey experience with hotels. OTAs do it –
Booking.com will send maps.” Guest relations technology helps
hotels to compete by finding out more about guests, so they can deliver personalised experiences that lead to repeat business. Revi- nate, for example, offers an auto-
mated marketing tool that is paired with rich guest data so companies can segment guests and create and send targeted emails in less than an hour. It also collates online reviews and social media references about a hotel and brings them into a single, integrated view. Hotels can then adjust operations, respond or use positive comments to raise their profile on the internet and attract bookings. Other tools can help hotels improve online ratings and rankings by soliciting guest surveys and collecting reviews for TripAdvi- sor or Google. Landen says Revinate custom- ers who publish their surveys on TripAdvisor see an average 409% increase in new review volume and can improve their TripAdvisor ranking by 15% or more.
What each revenue manager must decide is the ideal ratio of OTA to direct bookings that a business can sustain. “If a guest visits a hotel more than once and books through the OTA, it is a missed opportunity,” Landen points out. Looking ahead, he predicts that next year there will be an increase in the trend of personalising messages via website, emails and communications generally. “Hotels are realising the need to catch up with technology and this will continue,” says Landen. “Com- panies such as Marriott are hiring tons of data and marketing people. There is still a knowledge gap. Retail and e-commerce are so far ahead of hotels.” So how much should you invest in tech- nology? “There is no magic number,” says Guadagnini. “You have to invest in all the tech- nology that allows you to get all functions to work together. To me, marketing, distri- bution and revenue management are bigger than sales, although a big con- vention hotel may need a big sales department. But those three have exponentially grown in hotelkeep- ing and you need to invest in them.”
www.thecaterer.com
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