How to utilize OTAs as a marketing channel
(2011 Marketing Plan Prep Series Part 3)
As you prepare your 2011 marketing plan, I have a radical suggestion. Include the commissions you pay to Online Travel Agencies (OTAs) as a marketing expense and budget for it.
Make sure to compare 2011 projected commissions to 2010 actual commissions, and a story will begin to emerge. Chances are OTA commissions are, and will continue to be, the single largest line item on your budget, and the revenue associated with the expense will dwarf that of any other marketing initiative. While I understand that ballooning your budget in 2011 by including commissions as a marketing expense might not be prudent, the exercise is worth thinking about.
I have consistently argued that OTAs are customer acquisition vehicles. They are a marketplace of uncommitted travelers. Hotels and resorts battle to generate exposure with those travelers. How exactly is that different than, say, advertising to uncommitted travelers on Google? Shouldn?t costs associated with your customer acquisition efforts be considered marketing? The difference is perspective. By changing your perspective, you can become far more strategic in how your property approaches OTAs.
? OTAs have unfair control of my inventory and pricing
? Selling rooms through OTAs is far more expensive than my website
? The best way to generate online revenue is to focus on paid search and online advertising
? The long term goal of any Internet marketing program is to drive hotel direct revenue
? OTA customers are not loyal and will not be become repeat guests
These assumptions seem to have become accepted as fact, and most hoteliers spend their time thinking about how to focus their efforts to drive hotel direct revenue, reduce dependence on OTAs and improve performance on search engines. All noble goals. But what happens when you change your perspective slightly?
Let?s agree that in most cases, someone searching for ?Miami hotel on the beach? on Google is an uncommitted traveler. They know they are going to Miami, but have not decided where to stay. As a hotel in Miami, you will spend US$1.50-US$4.00 every time one of those uncommitted travelers clicks on your advertisement. Let us then assume that you will convert 2% of those visitors to sales. That means every customer that you get through the term, ?Miami hotel on the beach? cost you US$75 to US$200, plus the reservation fee for your booking engine or brand. Not as ?inexpensive? as you thought?
The key argument in changing perspectives is to lump both utilizing OTAs and finding new customers through marketing your website as the same category — new customer acquisition.
How are you converting ANY new guest into a loyal repeat guest? Are you capturing email addresses on property when an OTA customer checks in? Do you communicate with them during and after their stay, making sure they know that they will benefit from doing business directly with the hotel in the future? Do you treat OTA customers differently in terms of the rooms or services they receive? Do you have a past guest promotion that gives your loyal fan base a reason to book direct the next time they stay?
Marketing to past guests will always be less expensive than acquiring new customers. All acquisition channels are expensive, but you miss an opportunity if you don?t have a clear, defined and well-managed process to bring them back, no matter where they book their first stay.
Proposed New Perspective
? Commissions to OTAs are a marketing expense
? Hotels benefit from quickly establishing direct relationships with customers, no matter how they book their first stay
? Time and dollars must be allocated to customer retention in 2011, or you miss the opportunity to earn a long term guest while still incurring the expense of an OTA commission
? Don?t shun OTA customers by putting them into inferior rooms or assuming they will never be loyal to a particular hotel
? Utilize past guest email marketing, social media and other communication channels to stay forever present in your past guests? minds