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Tim Peter Thinks

Tim Peter

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May 10, 2019

The Hotel Marketing and Distribution Trend You Care About Most This Year

May 10, 2019 | By | No Comments

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Hotel marketing and distribution: Why Google matters

Let’s talk distribution for a minute. Yeah, I know, distribution is one of the least sexy aspects of the hotel industry. It’s also one of the most important, especially for hotel owners and independent hotel operators. Hotel owners, operators, and brands looking for ways to reduce costs and increase profitability need to continue thinking about how they’re going to acquire guests in a cost-effective manner. Also, hotel marketing and distribution are joined at the hip. And the whole topic is about about to get much, much more interesting.

Why? What’s going on here?

In a word, it’s Google. Google is what’s going on here.

The Beast That Scares the 800-lb. Gorillas in Hotel Marketing and Distribution

Google isn’t the 800-lb. gorilla of the hotel industry. No, Google is a much larger and more ferocious beast that has all the industry’s 800-lb. gorillas running for cover. Google is stealing mindshare — and potential margins — from OTA’s and other intermediaries every single day. No less an observer than Expedia CEO Mark Okerstrom plainly stated that Google represents his company’s biggest competitor. In his words, “The internet has been littered with the bodies of companies put out of business by Google.” Okerstrom’s job is to make sure Expedia isn’t one of them.

Okerstrom is right. It’s no secret guests increasingly use Google as the first stop in their decision-making journey. And with recent integrations of Google’s artificial intelligence-powered, travel booking capable Assistant into Google Maps on Android and iPhones alike, expect even greater use of the search giant when guests plan their stay. There are over 3 million searches on Google every minute, with more than half of those on mobile and roughly 20% of those using voice. That’s at least 300,000 voices searches every minute, many of them targeted towards travel. Everyone’s scrambling for share, further driving up the cost of acquiring guests.

For example, Expedia, Booking.com, and others — OK, Expedia and Booking’s subsidiary brands and metasearch channels — recognize this shift, spending more on marketing and advertising with Google to drive more traffic to their direct channels. That’s a switch, huh? But it’s a fact. To drive traffic to its sites, Booking.com paid Google in Q3 alone last year somewhere in the neighborhood of $1 billion.

Nice neighborhood, eh?

At the same time, as Google increases the amount of metasearch and paid inventory in its search results page, it’s also driving up costs for individual hotel owners and operators. Worse, without solid connectivity solutions — which far too many independent hotels lack — hotels can be shut out of Google’s latest product offerings and miss out on direct revenue opportunities altogether.

How to Deal With Google’s Domination of Hotel Marketing and Distribution

So how can you ensure you earn your rightful place at the table and gain booking share without significantly increasing your cost of guest acquisition? Here’s how:

  • Develop a comprehensive distribution strategy that includes both search and metasearch. Search is a distribution channel. And the search landscape gets more and more challenging every day. SEO, paid search, voice search, metasearch, AI, schemas, and whatever else Google rolls out next can’t be considered in isolation. Each plays a role in driving guests towards your direct booking channels and in delivering flow-through — positive or negative — towards your bottom line. Similar thinking should shape your OTA agreements. Do your internal team, website development firm, and marketing agency understand how to best make these work together to deliver the lowest total cost of distribution for your property? This is critical question that your property must get right. Otherwise, you risk continuing to fund OTA’s bidding against you in search, driving up the costs of your hotel marketing and distribution, and further risking your property’s distinct value proposition.
  • Offer destination content to gain guests earlier in their decision-making journey. Data shows that guests who start their research on OTA’s book on OTA’s. I strongly suspect the same will be true for Google before long, most likely in the form of metasearch and partnerships. Already, Google displays a remarkable number of paid listings and metasearch results before getting to organic results. This is a huge problem for hotel marketers. Why? Well, to put it bluntly, guests who don’t come to your website never get the chance to book direct. It’s critical you use content about your destination to move deeper into the long tail of search, getting guests to your site early in the journey and for terms that aren’t flooded with paid/metasearch offerings already. Google’s AI-driven search results place significant value on quality content. Give them — and your guests — something worth finding.
  • Focus on increasing conversion rates on direct channels. Here’s a simple truth: It’s always going to cost you something to get guests to contact you. You’d damn well better make sure they convert when they do. It doesn’t matter whether guests come to your website or call your reservations line; every lost opportunity increases your cost. Take a close look at where your reservations come from, how effective your direct channels are at turning interest into action, and how to improve those results to get the best return on your spend.
  • Ensure your connectivity options support Google — and potential future competitors. Do your direct channels appear in Google’s metasearch results today? Or does your property only appear via intermediaries? The latter is a clear sign you’re paying more for reservations than you should — likely much more. Make sure your team is working towards placing your property’s direct channels front and center in metasearch on Google, as well as on other metasearch partners who offer the opportunity to challenge Google in the future. Or accept the fact that you’re always going to pay more for bookings than you should. But that doesn’t seem like a good long-term plan to me.

Conclusion

Distribution funnels through a limited number of chokepoints and gatekeepers. And, at least for the foreseeable future, the number of gatekeepers continues to shrink towards just one: Google. If Expedia worries about Google eating its lunch, you might want to given the search giant some thought too. And then you want to put those thoughts into action.

Google may be the beast that 800-lb. gorillas fear. That doesn’t mean it should scare you. Individual property owners and operators may not be 800-lb. gorillas. But unlike the big guys, they can run through the jungle much faster. Think about your hotel marketing and distribution strategically and you’ll be able to outrun the big guys for a long time to come.

Past Insights from Tim Peter Thinks

If you’re looking to learn even more about how changing customer behavior will shape your marketing going forward, be sure an register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:

Finally, you might enjoy some of these past posts from Thinks to help you build your e-commerce strategy and your digital success:

A version of this article originally appeared on Hotel News Now as "The Distribution Trend You Care About Most in 2019"

Tim Peter

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August 14, 2016

10 Great Hotel Direct and OTA Distribution Posts: Hospitality Marketing Link Digest

August 14, 2016 | By | No Comments

Want to drive more direct bookings to your hotel? Click here to learn more


10 Great Hotel Direct and OTA Distribution Posts: Hospitality Marketing Link DigestHowdy, Big Thinkers! Super hot here in the wilds of New Jersey today, so I’m going to skip the setup and get you straight to this collection of these 10 great hotel direct and OTA distribution posts from the past week. Enjoy:

  1. Leading off, we’ve got these “3 Myths About Hotel Direct Revenue You Must Stop Believing” for you. Great stuff.
  2. You also won’t want to miss these “8 Outstanding Insights: the Top Travel Marketing Posts of Summer, 2016.” Definitely worth your time.
  3. One of the reasons you’ll want to pay attention to the tips outlined above comes from Business Travel News, who report that “Hotel Occupancy Flattens Across Global Regions.” It seems like the good ol’ days are starting to come to an end. Most of the RevPAR growth in the past year has come more from rate than occupancy. While that’s a good way to gain growth, it’s also a sign that demand for rooms is beginning to fall, the supply of rooms is increasing, or, most likely, a bit of both. Definitely time to get ready for a tougher market ahead.
  4. Inc. Magazine looks at “3 Travel Hacks Millennials Use and You Should Too.” Interesting insight into how millennials — and many consumers, really — actually shop for travel and well worth your time.
  5. In other less-welcome news, HotelMarketing says that “In Search of Hotels, More Travelers Turn To OTAs Than Hotel Websites.” That’s not great, really.
  6. EyeForTravel looks at “OTAs vs Hotels: Why ‘An Old and Tired Story’ Keeps Running.” Well, for starters, there’s things like this: “OTA’s vs. Chain Brands: Expedia Comes Out Swinging.” Though, I suppose, we also ought to consider “A Fair and Balanced Look at Balancing Direct and OTA Business” too. OTA’s have their role to play in your distribution strategy. It’s your job to ensure you use them correctly.
  7. Before moving on, Director in the UK explains how “Booking.com Envisions the Future of Travel.” Absolutely something you should check out, if for no other reason than “know your competition.”
  8. And on a highly related note, TheStreet says “Here’s Why TripAdvisor Is Becoming the Facebook of Online Travel” that you should take a look at too.
  9. If you’re looking to grow your direct business, these “5 Helpful Hospitality Marketing Stories for You” from our Hospitality Marketing Link Digest are worth a look.
  10. And, finally, pay attention to these “Four Key Elements of Modern Hospitality Marketing” to help you reach and attract more guests to your hotel. You’ll be glad you did.

If you’re looking for even more travel marketing goodness, you might also want to take a moment to review the slides from my recent seminar, “Digital Marketing Directions 2016: The Key Trends Driving Your Hotel Marketing Next Year” here:

Finally, you will definitely want to check out some of our past coverage of the mobile, local, social web and how to make it work for your hotel, including:

Tim Peter

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July 24, 2016

5 Fantastic Travel Marketing Insights: Hospitality Marketing Link Digest

July 24, 2016 | By | No Comments

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5 Fantastic Travel Marketing Insights: Hospitality Marketing Link DigestHey, Big Thinkers! It’s a gorgeous day here in the Garden State. Hope you’re having a fabulous late summer afternoon wherever you are too. As you get ready, why not check out these 5 fantastic travel marketing insights for this week’s Hospitality Marketing Link Digest entry? Enjoy:

  1. Leading off, we rounded-up “21 Can’t Miss Travel Marketing Insights: The Top Posts of 2016 (So Far)” for you.
  2. Building from those top posts, one of the more popular items over the last few months took a look at “OTA’s vs. Chain Brands: Expedia Comes Out Swinging.”
  3. This next post explains why “Personalization Starts With a Person” that you’ll really want to review.
  4. You might also want to check out a couple of entries from the Hospitality Marketing Link Digest series, including these “5 Helpful Hospitality Marketing Stories for You” and these “7 Special Hotel Marketing Insights.”
  5. And, finally, this “New Sabre Study Outlines Key Mega-Trends Shaping Travel Marketing.” You’ll definitely want to give it a look.

If you’re looking for even more travel marketing goodness, you might also want to take a moment to review the slides from my recent seminar, “Digital Marketing Directions 2016: The Key Trends Driving Your Hotel Marketing Next Year” here:

Finally, you will definitely want to check out some of our past coverage of the mobile, local, social web and how to make it work for your hotel, including:

Tim Peter

By

May 24, 2016

OTA’s vs. Chain Brands: Expedia Comes Out Swinging

May 24, 2016 | By | No Comments

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OTA's vs. Chain Brands: Expedia Comes Out Swinging

Shots fired.

In the last several months most of the major hotel chains have worked aggressively to promote the concept of driving guests directly to their brand websites. And, amazingly, the major OTA’s have simply sat back and done nothing to respond to this challenge.

Oh, wait. That’s not what happened at all. Quite the opposite, in fact.

In a recent post on Tnooz, Melissa Maher of Expedia responded to this recent competitive shift, and, in effect, declared all out war on the brands by claiming that these hotel programs actively hurt individual hotel owners. Maher’s key quote:

“In recent years, Expedia’s average compensation rate has gone down several hundred basis points to make the OTA value proposition to owners even stronger. Unfortunately, the chains, who are mostly asset-light marketing and distribution companies, have yet to make a step in the same direction for the benefits of their owners by reducing their franchise fees.

Expedia has outpaced the chains’ direct channels growth by demonstrating consumer value and, as a result, increased the OTA share of the mix of chain hotels’ bookings. This means that owners are now feeling the pinch of the large franchise fees that chains charge on bookings made via OTA channels even more.”

Damn. That’s harsh. Maher continues,

“Owners of franchised hotels should take a step back and consider how these actions by their chains impact their results.

If an owner agrees that making great rates available for consumers shopping and booking on Expedia is not only in the best interest of consumers but also in their own best interests, they should contact their chains and let them know.

More generally, they can work with their Expedia contacts on how they can better serve their mutual customers.”

That logic might not hurt hotel owners. But it does make my head hurt. I’d point out that Maher’s official title is senior vice president of the Global Partner Group. “Partner,” eh? In the immortal words of Inigo Montoya, Ms. Maher, “You keep using that word. I do not think it means what you think it means.”

Do you know what actually drove down Expedia’s average compensation rate over the last several years? Aggressive negotiation by those same brands that Maher takes issue with. It’s understandable that OTA’s might have some lingering feelings about that.

(Full disclosure: I used to work for two major hotel brands and still hold stock in one. However, I’m not “pro-brand;” I’m “pro-hotel.” Brands are a useful option for many hotel owners, but many independent hotels can and do succeed without chain affiliation. Most of our hospitality clients today are independent hotels and manage to do quite well for themselves. It’s not a question of one being better than the other; it’s a question of which approach is right for your hotel. Additionally, I’m not anti-OTA. I’ve argued OTA’s represent an important component of your distribution mix — at least when not trying to soak you for more money. Again, it’s back to where do they fit the needs of your property.)

What’s Really Going On With Expedia vs. Chain Brands

The biggest problem with Maher’s post is that comparing Expedia (or any OTA) to a chain brand is like comparing apples and supermarkets. One tries to satisfy your hunger on an as-needed basis. The other tries to keep your pantry filled all year long. It’s absolutely true that sometimes all you need is a snack. It’s also true that some supermarkets need to do a better job of filling your pantry at a fair price. But they’re still radically different solutions to the same underlying problem. In the analogy, hunger. In the real world, putting guests in your hotel, night after night.

Maher’s right about one thing. Margins on OTA’s have fallen dramatically over the last couple of years, sometimes ranging as low as 12-15% for branded properties (independents often pay more due to a lack of scale/bargaining power). And in some cases, that percentage comes close to the share of revenue chain properties pay to their brand each year.

The core problem with Maher’s argument is this: Most chains provide lots more than just reservations. They also offer some combination of services that can include:

  • Your hotel’s technology stack (PMS, RMS, connectivity services, etc.);
  • Recognition/rewards/loyalty programs;
  • Additional reservations channels such as a GDS chain code, travel agency sales, and a call center;
  • Revenue management services;
  • Operational and training support;
  • Access to financing;
  • Marketing of your destination and individual property alike;
  • volume purchasing and various other management services/support for your property managers.

Oh, and the negotiating power that’s helped drive down the cost of OTA margins.

By contrast, do you really think Expedia purchased Travelocity and Orbitz simply so they could lower margins for hotel owners? Probably not.

Does Your Hotel Need a Brand?

All that said, that doesn’t mean that every hotel should carry a brand. Everything I’ve just mentioned that a chain provides only matters if your hotel and your guests actually need it and if you can get it for the right price. In fact, in many ways it’s easier today for the right kinds of properties to survive and thrive as independent hotels than ever before.

Thanks to significant innovations by folks like Amadeus, Sabre, SHR, SiteMinder, TravelTripper, TravelClick and others, independent hotels have a wealth of options to connect with guests. Plenty of outstanding hotel marketing solutions exist (including some offered by your humble blogger’s company) to get your property’s name in front of potential guests.

“Soft” brands, including legacy players such as The Leading Hotels of the World, Preferred Hotels and Small Luxury Hotels of the World, as well as new entrants from the major chains themselves (BW Premier Collection from Best Western, Choice’s Ascend Collection, Curio from Hilton, Marriott’s Autograph Collection, Starwood’s Tribute Portfolio, etc.) provide yet another set of alternatives.

And the OTA’s have responded here too with Priceline introducing BookingSuite a couple years back and Expedia looking to power bookings and investing in Alice to support guests throughout their journey in partnership (there’s that word again) with hotels.

In other words, you’ve got plenty of options available to you. The real question remains which one works best for your property’s — and your guests’ — needs.

Conclusion

Almost a year ago to the day I asked, “are hotel brands doomed?” (independent hotels, too, for that matter). At the time Starwood had just put itself up for sale but had not yet joined forces with Marriott. Airbnb and OTAs were putting heavy competitive pressures on hotel brands. And at that same time, most hotel brands were still figuring out how to drive more direct business.

Fast forward a year and, oh, how the world has changed.

The key takeaway is that you can’t let Expedia — or anyone else for that matter — try to confuse the issues here. Expedia’s claims have little to do with what’s truly best for your hotel and have lots to do with what’s best for Expedia. They’re (perhaps understandably) frustrated with the beating they’ve taken from the chains over the last few months and have decided to hit back. Hard.

As a property owner or manager, your job is to take care of your guests and to do so profitably. You can accomplish that effectively as part of a chain or as an independent, using OTA’s where they make sense and driving direct business everywhere else. Work on building relationships with your guests and telling your property’s story most effectively. And let’s hope the “partners” figure it out soon and then focus on helping guests, too.

OTA’s vs. Chain Brands: Expedia Comes Out Swinging — TL; DR

  • Hotels should consider the costs and benefits received of each component of the value chain: brand, channel partner, marketing agency, web developer, etc.
  • Brands and channel partners like Expedia offer vastly different services. Yes, there’s some convergence among their services going on. But it’s hardly an apples-to-apples comparison at this point.
  • Brands aren’t doomed. Neither are independents. Each can succeed in the marketplace if they offer value to their guests and choose the right partner(s) to help serve their guests’ needs.
  • Expedia — or any OTA — claiming they can meet 100% of your hotel’s needs at this point is, frankly, just silly.
  • Relying on any one “partner” only hurts you in the long run as it creates a gatekeeper effect, increasing their opportunities to charge you more for their services.
  • Don’t let Expedia — or anyone else in the discussion — misdirect you from your actual objective: Driving increased revenues, ongoing support, and exceptional return on your investment from each component of the value chain.

If you’re looking to learn even more about how changing guest behavior shapes hospitality marketing, e-commerce, and distribution, be sure an register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also want to take a moment to review the slides from my recent seminar, “Digital Marketing Directions 2016: The Key Trends Driving Your Hotel Marketing Next Year” here:

Finally, you will definitely want to check out some of our past coverage of the mobile, local, social web and how to make it work for your hotel, including:

Tim Peter

By

May 22, 2016

6 Super Hospitality Marketing Posts from the Past Week: Hospitality Marketing Link Digest

May 22, 2016 | By | No Comments

6 Super Hospitality Marketing Posts from the Past Week: Hospitality Marketing Link Digest

It’s been a big week for the hospitality industry, Big Thinkers. Need proof? Just check out these 6 super hospitality marketing posts from the past week to see why. Enjoy:

  1. The most important story of the past week, by far, is this Tnooz editorial from Expedia’s Melissa Maher that claims publicly available loyalty rates may be bad for hotel owners. I’ll have a lot more to say about this in our regular Travel Tuesday post later this week, but for now I’m shocked by the rhetoric from Expedia’s “Partner” Group. Stay tuned for more on this topic in the next couple of days.
  2. Deanna Ting from Skift explains why Airbnb and other travel brands are interested in blockchain technology. While it’s not a simple answer, the whole story is well worth reading.
  3. Carolyn Murphy talks about what Facebook’s algorithm change means for hotels on social media in a recent Revinate blog post. Good read. It’s also a good place to remind you that, for travel marketers, content is still king.
  4. Mobile Commerce Daily’s Chantal Tode reports that Kayak lands on Amazon Alexa, bringing voice search to travel discovery. I’ve used the technology and can say it’s really solid. Expect a lot more of movement in this space over the next couple of years as we see increasing signs of what the future of marketing might look like.
  5. A couple of recent posts here on Thinks looked at four key elements of modern hospitality marketing and asked where are all the mobile bookings?
  6. And, finally, don’t miss these 7 sensational social hospitality marketing insights from the regular Hospitality Marketing Link Digest series or this similarly-named collection of 7 sensational marketing and distribution insights, the Top Posts of February, 2016.

If you’re looking to learn even more about how changing guest behavior shapes hospitality marketing, e-commerce, and distribution, be sure an register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also want to take a moment to review the slides from my recent seminar, “Digital Marketing Directions 2016: The Key Trends Driving Your Hotel Marketing Next Year” here:

Finally, you will definitely want to check out some of our past coverage of the mobile, local, social web and how to make it work for your hotel, including: