Does the internet really improve hotel profitability?
17 Comments
Fabrice Burtin asked this question in a comment here on the blog:
The Internet in the hotel industry has been a revolution. No doubt about that. It has completely changed the way we find, discover and book hotels within 10 years.
However, how much the Internet has actually improved the bottom line in the industry? Have we seen an increase of occupancies? Average room rates? REV PAR? Gross Operating Profits? While the Internet and social media have revolutionized the way we promote hotels and sell rooms, are we spending less on sales road shows? Have we seen a decrease in sales departments payroll? Or have the savings simply been re-allocated to the newly created large e-commerce departments?
In other word, if technology has increased the efficiency and rationalize expenses, has it been only balanced by a dramatic increase of all sorts of new expenses?Or have the buyers (guests) been the only big winners in a revolution that was initiated by the sellers (hotels)? Have the hotels lost out at their own game?
Guillaume and I discussed this in the most recent episode of This Week in Hotels:
For those of you that don’t have time to watch the video excerpt, our big points were:
The internet doesn’t improve overall occupancy
More people probably are not traveling now because the internet exists.
The web is just a platform for communications
Savvy hotels have more opportunities to listen to their guests, and provide better service.
The web probably does improve efficiency
You can share information easier than ever. You have instant access to nearly anything. Of course, you have to avoid distraction from this.
If you’re not in, you’re left behind
Other hotels will use new tech to gain market share and attract the guests you want to host.
As with any quickly changing field, if you’re not taking any action, you’re moving backwards.
It gives smaller, independent hotels an advantage
As a web publisher, you are on an equal playing field with the big guys. If you’re using all 3 components in the one-line social media success formula, you have a distinct advantage.
…
Fabrice is working on a white paper on this topic, and you can share your feedback with him on his blog.
I found one comment on his site especially interesting:
[The internet] has turned us into paranoid computer slaves! Both as hoteliers and as potential hotel guests. As hoteliers, we are constantly fussing about our reviews and worrying about overbookings by overlapping online booking systems… As potential hotel guests we are never sure if the website pictures are real and which review to trust… In short the opportunities are fantastic, but the psychological cost unbearable!
What are your thoughts? Does it even matter what we think – must we adapt or die? Or is there a better route?
You should enter your email below to receive new tips like this each Monday morning:
+1 347 422 6784
There can be no doubt that the internet has altered the marketing of Hotels.
For some hoteliers the anxiety levels have increased dramatically as to which options to choose.
I would imagine that profitability for the hotelier has dropped as third parties aggressively vie to get between the hotelier and the guest.
It is important to note that Google uses relevancy and therefore if a guest running searches for accommodation, a hotels’ own web site is very likely to appear above the agencies. There is research that indicates people prefer to view the hotel site directly.
My suggestion to any hotelier is to get a (commission free) booking form on the site if the facilities are not there already, and get the site visible using the techniques shown on this site and many others.
Options always increase anxiety. Find something that works, and stick with it.
Does the internet improve hotel profitability ? I don’t know.
Did the internet improve MY hotel profitability ? Absolutely.
Thanks to the internet:
I am able to get in touch directly with my future guests without begging and pleading with a third party intemediary/ travel agent to send a few guests my way.
I am able to tell my own story to the world without begging and pleading with a newspaper/ magazine to interview me or publish a review of my hotel.
I am able to establish a personal brand and tell everyone who I am and what I do and like thanks to Schmocial Schmedia without being an anonymous shadow figure in the background.
Really, what more could I ask for ?
Cheers
Mihir
I love it! Thanks for sharing your experience.
“Did the internet improve MY hotel profitability?” << that's the only question each hotel marketing professional should be asking themselves. Industry averages mean nothing to your profitability.
‘You should enter your email below to receive new tips like this each Monday morning:’ sounds a bit too harsh and forceful.
Why not replace should with could ? Or rephrase it altogether:
‘To get valuable new tips like this every Monday morning in your inbox, simply enter your email below’
Just a thought…
Cheers
Mihir
Good eye! Each word of that phrase is intentional. I’ve tested different wording, and this one line caused subscriptions to more than triple.
Maybe it sounds harsh, but it works like crazy. I follow the numbers
Great post, J.
I think paranoia, user-review obsession and worries about the authenticity of online photos can all be managed by focusing online attention to things that are within your control, and remembering that the web doesn’t create cranky and unappeasable customers, dishonest hoteliers and false promises — it just puts them out in the open where they can stress us out — if we choose to give them our time and energy.
A streamlined online booking system and online guest-complaint procedures eliminate alot of potential hassle on the hotelier’s part, and consistently posting feedback and calling out hotels on any misleading photos/information keeps hoteliers honest, which cuts down on customer stress, as well.
Basically, we shouldn’t just throw our hands up and blame the system. If something isn’t working, make the system better.
This line caused subscriptions to more than triple ??? WOW I guess numbers don’t lie…
It’s quite strange but I would never have thought about using that line if I were you…maybe it’s time to forget the gut feeling and go with plan, hard figures instead…
Cheers
Mihir
I’m not surprised that the command “you should….” would triple your subscriptions. People that respect your opinion are prone to take your directive to heart. It screams, “I know the stuff you want to know and you are a fool not to take advantage of this.” The alternatives offered by Mihir are less authoratative and seem apologetic in comparison. Those reponses are polite and appropriate of course but make signing up seem less urgent. Of course, cultureal and regional sensibilities may dictate the most appropriate line to use.
Exactly, Seely! I’m just a die-hard scientist when it comes to testing.
But of course, I’m from the US, and Mihir is based in India. I’m very aware of the regional sensibilities, and am not saying this is the best direction for everyone in all situations.
Ahhhh that great unknown called culture…
But I will be experimenting with a more harsher tone from now on… no more Mr Nice Guy
Cheers
Mihir
I’m not sure if I’d make “harsh” my goal….maybe something more like directness and clarity?
But I like Mr. Nice Guy!
Ehihihi…then Mr Nice Guy it is
Hi.. I agree to Peter. A marketing strategy in your hotel can help you to achieve your marketing goals online by outlining the techniques and actions you can take to achieve your marketing objectives. Anyway, thanks and I will definitely visit here more often.
I disagree with the point about internet not improving occupancy. I think more people are traveling now because the internet makes it much much easier.
With the advent of websites like expedia, travelocity, and priceline people can make traveling arrangements to anywhere in the world with just a few clicks of the mouse. And since these websites lists flight and hotel prices, there is increased competition, which in turn drives down cost for the traveler. Internet allowed people to go further for less. With the internet becoming ever more powerful and personalized, this trend is only likely to continue (http://www.msnbc.msn.com/id/7222569/).
Change in hotel profitability as a result of the internet is more tricky. It depends how the hotel is using it to create buzz and traffic to their site. Internet can be a very powerful tool for any business to reach customers if used correctly and creatively.
To individual hotels It doesn’t really matter if there are more travellers now than pre-net. What is important is driving people to your business.
Now that the internet is the main source of hotel bookings for most establishments I have noticed that many hoteliers are using online agencies as their default ‘marketing’ method. However, whilst this is an important resource, handing the marketing over to third parties is both unimaginative and expensive.
Methods such as e-mailing an existing database of guests is cheap (or free), productive and quick. The recipients of the e-mail will know what is offered and (hopefully) want to come back. We get very positive feedback from hotels that do this. Also giving a drinks voucher to revisiting guests who book through your own website is a great incentive to save on commissions.