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HSMAI Special Section: Breaking Down Silos Between Online Marketing, Technology and Revenue Management

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April 04, 2016
Rajesh Rajan


For years, revenue management operated on its own. But savvy hoteliers know collaboration with marketing and technology is the way of the future. This trend hasn't swept the industry yet, but a look at what it can do for you might convince you to become an early adopter.

Marketing amplifies current revenue strategies. Technology provides the tools to execute those strategies. Today's revenue managers must understand these disciplines well. The relationship built between these three areas is critical in building a thriving revenue management culture building a 360-degree view of your guest.

To get to this level of sophistication, all your data sources must be synced to a single database. This includes transactional and non-transactional data. This means you'll have access to your PMS data, Web analytics, social, email, and more from one single platform.
A complete view of the guest allows an understanding beyond what rate he booked and how much he spent in the hotel. It really allows you to get to know the guest's preferences, booking pattern, favorite foods, socializing preference, and get feedback about previous stays. You can tap into this data to communicate in a way that feels one to one. You can personalize the stay and all the content he sees from the moment he lands on your site or logs into your app. Once you start using the data to have targeted interactions, it grows conversions and loyalty. That leads to increase in bookings and revenue.
Marketing's role is complex, but it makes a big impact when you do it properly. It allows you to synchronize your rate strategy with guest buying behaviour.
Mobile-only offers have become popular but the truth is a device does not dictate the price elasticity at that moment. If demand is high, people will book regardless of the device. There's no need to discount just because the offer is accessed via mobile device. You do have to provide the right experience for every device a person may use to your offer. Otherwise you won't get the booking. This is just one of countless examples of the integral role revenue management and digital experience play.
When integrated with the revenue team, the marketing team can deliver insights on consumer behaviour that can lead to better decision making on offers and conversions.
In some brands these departments operate separately. They are lead by an off-property team of experts and the on-property revenue manager doesn't have enough knowledge to leverage the relationship. Independent hotels, which may have fewer resources, often farm out online marketing to an agency. The revenue manager must work closely with them to drive results. This relationship requires the on-property team to understand something about marketing and to be able to make the relationship work.

When you have the revenue strategy and marketing teams aligned, the next layer is to review your technology infrastructure. Make no mistake, it gives you a proven competitive edge.
Technology not only allows you to execute ideas, it also gives you deeper insights into your business. Most hotels only think of technology infrastructure as it relates to guest interactions. They don't realize it provides the tools that will allow its business teams to deliver results.
The hotel industry has typically lagged a few years in comparison to others. But now is seeing a change where new players in the market and changing consumer behaviour are forcing hotels to up their game..
Technology framework was never thought of as a critical starting point in setting up for success. People matter most, but the right people need the right tool to deliver results. In comparison, OTAs spend millions of dollars to achieve their goals, whether it's better executing ideas or getting better insights into their guests.
On the other hand, booking engines are the place where many conversions go to die. In some cases you still can't enter any analytics code to get conversion data on your website. That means you don’t know how well your website is doing. On the other hand, an optimized website with the right booking engine solution can greatly improve conversion rates.
Lacking easy access to data or being unable to combine it in a meaningful way are huge obstacles for most companies. The limitation doesn't lie with the technology itself. Technology is just the tool. You have to choose the right partners, set it up properly and have a clear vision of what you want it to do for you.
Think about that when you're choosing a product and a partner. Make sure it works with your other systems, or you'll just be adding another problem, not creating a solution.

CONCLUSION: Building a collaborative environment where online marketing, technology and revenue management disciplines interact on a daily basis leads to massively improved outcomes. It not only reduces cost, it also improves revenues and keeps a hotel competitive over the long haul.
Think about the end-to-end experience when designing your strategy. The time you spend fine tuning each point will pay off when you're done. However, this isn't something you can do over a weekend. The key is to start simple and continue to build over time.
And, it doesn’t matter if everyone else is doing it or not. You should lead the charge because it's the right thing to do. (See side bar in the spring 2016 digital edition of Hospitality Upgrade.)

RAJESH RAJAN has over 10 years of experience in growing hotel revenues and is the co-founder of website personalization platform Offerly. He has been responsible for pricing, distribution and demand optimization for both branded and independent hotels, and has consulted for other key hospitality organizations providing insights on the intersection of new technology, trends and tools.

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CUSTOMER ACQUISITION COSTS: Hotels always believe direct bookings are the cheapest. That's because they don't know the actual cost. It isn't just the booking engine transaction cost; it's also the ad spend and the spent in building campaigns for results. Acquisition costs are a bit more nuanced than commonly understood. A strong marketing team can explain how money is spent to drive these conversions.

LIFETIME VALUE: How do you move a patron from a one-time transaction to a repeat guest? Retention comes down to several factors. Experience during the stay is paramount, but how you interact with the guest after checkout plays a key role in maintaining recall and overall retention. The Lifetime Value of the guest helps you understand where it's best to spend your marketing dollars. The guests acquired from those channels are more profitable over the long term than those that come from other sources.

AUDIENCE SEGMENTATION: Similar to market segment in revenue management there is segmentation in marketing channels. These segments can be based on various factors such as location, rate plans, devices and more. The idea is that when you're designing an offer for this audience, you incorporate value-added factors that matter to that group. A boutique hotel in Vancouver ran a promotion targeting local visitors to its website. The result: Its conversions went up by 75 percent.

REFRESHED WEB PRESENCE: Website design should change every few weeks, based on tried and tested results. For example, Booking.com spends a lot of money and effort to get visitors to book once they land on the site. They know what works because they continually test new methods. Although most hoteliers have the tools to do this for their own sites, many lack the expertise. A strong marketing group can take on this task.

HIGH DEMAND AND NEED PERIOD DISCUSSIONS: These talks are more insightful and allow you to better prepare for an upcoming need period. Constant contact allows teams to brainstorm ideas, gives them lead time to design better offers, and lets them test out ideas on sample audiences to boost conversion rates. At the same time it allows the team to know when to cut back on marketing spend. High demand periods don’t require as much effort.. That reduces your acquisition costs.

UNDERSTAND CHANGING CONSUMER BEHAVIOUR: It isn't about headlines but trendlines. As shopping behaviour changes it's important that the strategies and tools evolve accordingly. Marketing and revenue must be integrated to navigate the changing landscape. Mobile changed how consumers shop. Those who adapted first reaped the benefits. Those who didn't adapt to the changes lost out on many prospective guests

ASK BETTER QUESTIONS: When these two departments work together they look at two different sides of the business, but can provide integrated answers. Each department has a big impact on the hotel's overall revenue. When they collaborate they can ask better and bigger questions. How can we improve conversions? What happens to the Google ad spend when we're sold out or don't have enough inventory? How can we increase our audience size? What's the right offer for a particular audience?

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