THE. 24 HOTELS January/February

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1 THE DIGITAL MARKETER 24 HOTELS January/February

2 AS BUDGETS SHIFT DRAMATICALLY TOWARD DIGITAL PLATFORMS, hotel marketers are working to unlock the big opportunities, all the while addressing new challenges and surprises. contributed by JERI CLAUSING websites and From banner ads, social media to slicing big data and metasearch, hotel digital marketing budgets are, not surprisingly, on the rise, with some companies now turning almost exclusively to the online world. But while the wealth of new technology and data collection tools have made it easier to target and track customers, it hasn t necessarily made it cheaper. At the same time, the digital world presents a host of new challenges for marketing, advertising and public relations executives as they increasingly shift their budgets to keep up with and work across the seemingly endless influx of new channels, data points and mobile devices. It s a lot of trial and error, says Stas Pietrucha, vice president of online marketing and global ecommerce for Wyndham Hotel Group, Parsippany, New Jersey, which like most companies is shifting more and more of its marketing budget away from traditional print and broadcast channels to the digital marketplace. Pietrucha says since 2010, Wyndham has doubled its online spend, which now represents about half of its marketing budget. And that s well below what Chris Jackson, president of the hospitality industry-focused GCommerce Solutions, Park City, Utah, estimates is the average for independent hotels. It really varies, Jackson says. But we have seen it increase pretty dramatically in the last two years. I would say on average digital marketing is in the 70% to 75% range. We have some hotels that are spending 90% to 95% of their entire marketing budget on digital. The social equation One big variance is whether social media is included in digital marketing numbers. At global companies, social media is generally handled separately by each of its brands. Like Wyndham, Accor says about half its marketing budget is digital. Dubai-based Jumeirah Hotels & Resorts says its digital marketing budget is over 50% of its total marketing spend at the brand level, while Miami-based boutique hotel management firm Trust Hospitality says digital marketing for its independent hotels ranges from 15% to 50%. Social media is also being used less for promotions and increasingly more for interacting with customers. At Omni Hotels & Resorts, Chief Marketing Officer and Senior Vice President of Sales Tom Santora says the company recently merged its ecommerce and marketing departments into one. Since then, Omni has quadrupled its spend from print to digital in the last few years. Digital sort of leads that strategy, he says. From a digital standpoint, you can track everything. You can quickly determine if this booking is costing me 6% or 20%, and how do we adjust that pricing. Pointing to the old adage that 50% of advertising is a waste of money, you just don t know what 50%, Santora says. Now we can monitor, adjust, literally by the hour, by the January/February 2015 HOTELS 25

3 day. It s really a chance to be more fluid and develop a presence, real time. Santora adds that Omni still spends on print by targeting the right publications where people are that in that dream stage of travel. Omni also still uses some newspaper advertising to keep the company top of mind for things like annual Top 10 rankings. In the digital world, hotel companies say they are focused on updating and creating new websites, using banner ads, search engine optimization, marketing and other tools to keep their listings relevant. Omni recently launched a new website that resembles a news site with constant updates about the brand. It is also creating new websites focused on the destinations where Omni has properties, not the hotels themselves. The first site was recently launched for Austin, Texas. Similarly, Accor s new website has a comprehensive destinations guide, and it is launching a new digital platform focused on mobile. Romain Roulleau, director of ecommerce for Accor, says the company is also unique in that it has videos of each and every one of its properties on the Internet. Jumeirah s digital and loyalty Vice President Ross McCauley says the company allocates a larger share of its marketing budget to video because of We have some hotels that are spending 90 % to 95 % of their entire marketing budget on digital. CHRIS JACKSON, GCOMMERCE SOLUTIONS the popularity of YouTube in its regions. In fact, Jumeirah s YouTube channel has surpassed 5 million hits. All that data Some of the biggest digital challenges, however, come as hotel companies venture into metasearch and big data. Global chains are leading the way, helped by the wealth of data from their millions of rewards members. Starwood has a team of about 30 people from its call centers monitoring mentions of its brand on Twitter and Facebook in 11 languages, 24/7. Jackson of GCommerce Solutions says he helps his clients with big data solutions by outsourcing to companies to help target consumers who have indicated intent to travel. BlueKai is one of the largest aggregators of consumer data in the world, he says, noting it has data from all the major Fortune 500 companies to all the travel companies from Expedia to airlines. What we do is integrate this third-party data to create segmented audiences. So if we have a hotel in Los Angeles, we identify consumers who have shown intent to travel to Los Angeles. We want to find people who have either looked for tickets from New York to Los Angeles, or have recently bought in the last day or two, or who have purchased a rental car. Jackson adds that hotels can also pull consumers past hotel purchase activity and household income to create a segmented audience that can be targeted with the best rates for their dates of travel, as well as spa specials, if the data shows they are spa enthusiasts. It s expensive, but not really as expensive as you might think, Jackson says. Such ads represent about a 20% to 30% increase in cost per impressions. But the campaigns are so much more targeted that the increase is totally offset by the returns. Wyndham s Pietrucha calls metasearch the new battleground. Wyndham has data from 38 million rewards members that it can leverage on channels like Google to adjust its bids and messaging when their members start searching. The biggest problem? It s a very open market and we are competing against our OTA partners and they have very large budgets that we really can t match, Pietrucha says. 26 HOTELS January/February

4 MARKETER: SOCIAL On Black Friday last November, The Langham Chicago launched its first exclusively social media-driven sale. The response to the 30% savings offer was tremendous, says Social Media Manager Eric Ziegenhagen. Nonetheless, the social sale likely isn t something he will make a habit of repeating. Instead, Zeigenhagen and most social media and marketing executives agree that Twitter, Facebook and Instagram have become places where brands interact rather than try to sell rooms. They agree that the medium is more for connecting and staying front of mind. For instance, Four Seasons Hotels & Resorts recently launched a new wellness program called Energy by Four Seasons. On social media, they introduced it with a 30-day wellness challenge for their followers to try. Four Seasons followers were encouraged to try a different energizing tip or technique and invited to share their experiences via Instagram, Facebook, Twitter and Google+ using the hashtag #30DaysofEnergy. Participant posts were then shared on Four Seasons social media channels. Social media channels have also become key extensions of much more than just a hotel s marketing department. I think one of the challenges and opportunities now is even figuring out where to put social media on a property s organizational chart, says The Langham s Ziegenhagen. It used to be marketing, now it s more operations. It s becoming an extension of the call center, front desk and concierge. Indeed, whether it s getting a quick response to a complaint or getting saved from a lockout, examples of Twitter being I think one of the challenges and opportunities now is even figuring out where to put social media on a property s organizational chart. LANGHAM CHICAGO SOCIAL MEDIA MANAGER ERIC ZIEGENHAGEN used for unique guest outreach abound. Starwood Hotels & Resorts, for example, which has a team of about 30 people from its call centers monitoring mentions of its brand on Twitter and Facebook in 11 languages, 24/7, was able to rescue a guest who tweeted he had been locked out on his hotel room s balcony. At Omni Hotels & Resorts, Santora points to an instance in which a customer in Fort Worth, Texas, was tweeting that the Wi-Fi was poor. They went and found the guy in the lobby and bought him a glass of wine while they reconfigured something, he says. Omni also says it has also had good luck with Pinterest, where it started a campaign that before the holidays focused on The Art of Pie, offering recipes from its different properties and calling for others to share recipes. It s more about interaction, awareness, says Santora, who notes that the project also helps build out the brand from a search engine optimization perspective. If there are people out there searching for something pie-related, they are going to bump into Omni. In the United States, many hotel companies say Instagram has become a fast favorite. I think people s attention spans are getting shorter and shorter as the amount of content grows and grows, says Patrick Goddard, president and COO of Trust Hospitality. Now you have to figure out a way in 15 seconds or less to engage with somebody. So really, Facebook is becoming a bit obsolete as people are turning toward Instagram as a communication tool. It s very challenging to engage on any other channel. You have to be very targeted. With the growing emphasis on visuals, Ziegenhagen says hotels can easily use a good picture without having to worry about coming up with any fancy text that over-describes it. He says people often follow hotels on social media after they had a good time and just want a continuation of the experience they had while staying there. Ziegenhagen also likens social media posts to an amenity card rather than a sales pitch. Advertising says buy now, whereas on the property itself you would never tell people what to do unless there was a fire, he says. Other good practices, Goddard says, include ensuring posts are unique, interesting and speak to the brand. But there are also a lot of don ts. Don t forget to be relevant, Goddard says. Don t forget to communicate often. Don t be dull. Don t be redundant. You don t want to clog up people s feeds. You don t want to post for the sake of posting. 28 HOTELS January/February

5 MARKETER: BIG DATA Big data may be one of the most exciting ideas in marketing, but many hotel companies are still grappling with how best to get, crunch and match all the information in a relevant, useable and affordable way. I am not sure everyone in the industry really understands what big data is, says GCommerce s Jackson, and it s really worthless unless you know how to act upon it, monetize it. Most big hotel chains are in the big data game, drawing on information on their millions of rewards members that allows them to fine tune and target ads when those members start searching. But individual hotels don t have the resources to build out big data that meaningfully, says Bob Gilbert, president and CEO of HSMAI (the Hospitality Sales & Marketing Association International). Companies like Jackson s GCommerce are working to help even that playing field. But the problem, he says, is that the cost of acquisition is rising faster than demand, and we have to address this as an industry or it is going to be in big trouble when the next downturn comes. It is unsustainable, Jackson adds, because there have been so many intermediaries that are out there. Jackson points to consumer tools that monitor prices and automatically cancel and rebook if the price drops. With so many new channels, hotel companies around the world report their cost of advertising is rising. All of these things are starting to eat into the value chain, Jackson says. So a lot of hotels think that a direct reservation is the cheapest form of booking they could ever achieve. But Jackson pointed to a recent study of 200 New York properties that showed the cost of acquisition for direct bookings was between 15% and 25% for independent Digital cost of management is not going up. The cost for advertising is going up. There s more competition, more advertisers. PATRICK GODDARD properties and 25% to 30% for branded properties. That compares with the 20% to 25% normally paid to OTAS. The advice is, you can t control cost per acquisition until you can effectively measure it, he says. I would say most hotels, particularly independents, cannot, or are not, measuring it right now. Jackson says his company can tag every form of media out there, from to paid search and social media, and pull it all into a model that shows the cost for acquisition across all the different channels. Then we can dive into the individual bookings and look at what are the most affordable channels, and control or lower your cost per acquisition. At the boutique hotel management firm Trust Hospitality, President and COO Patrick Goddard says he uses technology from Tambourine to measure ROI. We have a dashboard that measures, on a daily basis, all our key performance indicators, Goddard says. Digital cost of management is not going up. The cost for advertising is going up. There s more competition, more advertisers. Jackson says ROI can range from 30- to-1 to 50-to-1, depending on where the customers are in the booking funnel. We are shooting for a minimum of about a 7-to-1 return, he says. We re a lot more happy when it s in the 10- to 12- to-1 range. MARKETER: MOBILE Accor recently unveiled its Digital 360 plan. Digital 360 is largely focused on building out an app that gives travelers access to everything they need for their trip, such as restaurant reservations, airfares and car rentals. The app will also store all of a user s loyalty program and travel bookings, regardless of whom they are traveling or staying with. With the new program, the company will be driving the vast majority of its technology to mobile an area many hotel executives say still represents the biggest challenge, particularly in the United States. While consumers in some markets like Brazil and Asia make the majority of their purchases on mobile devices, people in the U.S. tend to use multiple devices, with many beginning their search on their phones but completing their bookings on computers. When someone switches between devices, I don t really know who they are, Jackson says. How do we get over that? We are reliant on technology. Google is trying to help us with that, but nobody has figured that out yet. 30 HOTELS January/February