Category Archives: Return On Investment

A Greek Lesson

I think that one of the overwhelmingly consequential stories of 2011, was that of the Greek financial and social issues. The topic has been covered very thoroughly by the world media, so I am guessing that just like me, you will have mixed emotions about my fellow countrymen as a whole.

On the one hand, the irregularities (ranging anywhere from innocent mistakes all the way to blatant stealing – from both Europe, but also from the poor to give to the rich) have happened within the country itself. Unquestionably it has been the Greeks making their own bed (albeit messing up everyone else’s as a result) and that apportions blame squarely and wholly somewhere within the country.

On the other hand, under several very misguided and very unfair governments for almost 30 years now, it is typically the “non-thieving” hard-working type of Greek (majority) that is paying a very disproportionate price for all the irregularities that went on. Which is also hard to forget…

To use some culinary parallels to explain my views: whatever your position on the matter, I believe that the whole mess can be boiled down to a few key ingredients that have been cooked by certain people (from what in Greece is now called “the elite”) for almost three decades; unfortunately these were the same people that also happened to be in control of the books which were also thoroughly cooked.

From these few ingredients, the one that is very easily underestimated is complacency. And in my experience complacency is a very contagious disease.

“The Greek physics law of Inertia” – AKA the Greek version of “mañana”

The one thing for which I will dare to “throw a stone” to my countrymen is that us Greeks are pretty much governed by some cultural imperative, similar to the physics law describing inertia. When we aren’t doing anything, we are very likely to maintain our state and continue not doing much. (Incidentally, although much more rarely, the opposite also applies: when we somehow find ourselves in motion, we can find it difficult to stop). All this can make us relaxed company and great party friends, but in business it can be a disadvantage…

During the autumn of 2007, when our BABEL Multilingual product was still in its infancy, I was starting talking to hotels about multilingual versions of their websites, and international marketing packages. Knowing that Greece attracts people speaking foreign languages in their millions every year, I did some research in new hotels in the country that were more likely to use and benefit from our services.

Amongst many potentials, I remember finding a wonderful candidate. It was a five star property with some 450 rooms, in a prime location in Crete, near an airport (but far enough) and by a superb sandy beach. The hotel was independently owned, and only on the second year of its operation – which to me it meant that there would normally be a lot of room for growth of business. To cut a long story short, this property’s vital statistics made them an excellent candidate. According to my guestimations at the time, they could find themselves generating some pretty impressive profits within the first season of using us. I couldn’t wait to talk to them..

Unfortunately, my initial enthusiasm quickly evaporated by the hotel’s lack of a booking engine on their website. In fact, there was no way to make a reservation at that hotel, other than calling them, or emailing them and hoping for the best. Obviously there is very little point in pursuing, finding and getting visitors to your website from abroad if you don’t have a way to convert them to customers!

For those of you that aren’t familiar with the issue of booking engines, I should briefly highlight here that for such a property having a booking engine is an absolute necessity. I don’t want to send anyone to sleep talking about a the different pricing models of agencies and the comparative costs; so let’s just say that in a country like Greece, a decent-sized independent hotel of this type on its second year of operation, would easily pay the equivalent of 30% for a reservation in commissions to all manner of agencies. Forgetting about the numerous benefits that further enhance the argument and necessity for a booking engine, I will just mention that when someone books a hotel on the hotel’s own website, the commission costs for that hotel would drop to anywhere between one and five per cent. It is relevant to mention here that agencies already squeeze hotels as much as they can, and as hotels have costs associated with servicing a room, bookings over the hotel’s own website represent a staggering benefit in  profit levels – a 25% reduction in commission payments could be very nearly the entire profit on a room sold!

So why on earth would anyone not have a booking engine – I hear you ask. I didn’t know either and I was too curious to let this go, so I decided to find out. I picked up the phone, got through to the General Manager, and basically asked the question.

Well, someone would have to manage it..” – came the answer.

[What? As opposed to bookings from agencies that are OK to be left unmanaged?!!]

I was shocked. That was a prime example of (these days already hard to find) old-style Greek public-sector complacency having permeated the private sector. Of all the people to show such lack of interest in the hotel’s well being, to hear such a blatant statement of laziness from a General Manager… To me, that was just wrong.

A year after this conversation took place, the financial world imploded. Today travel agents control the business for that hotel (and so many other hotels like it) and have forced the General Manager to drop her prices and increase the commission she pays to them. The owners were probably far too removed from the day-to-day decisions to identify the missed opportunity, and have now fully blamed the Greek corrupt elite for their misfortunes. Complacency and lack of understanding are a poisonous mixture for a business.

Following that incident (and a few more like it), and seeing the  suffering of Greek hotels in these trying times for Greece, I have quickly developed a strong aversion to complacency. It is therefore with considerable worry that I share with you my suspicion that this affinity to a “mañana” approach to life is not entirely alien to Britons either…

Having worked with hotels from all over the world [and aware that I have no other evidence than our own contacts with the markets (hardly a statistically acceptable sample)] I would suggest that British hoteliers are on average less keen to move forward with international marketing than their international counterparts.

Despite us being a firmly UK based company, today only 23% of our clients are located in the UK – the rest are based pretty much everywhere else around the world. The hoteliers around the world to whom we sell our services seem to be much more aware that hoteliers sell to travellers and that these days travellers don’t come from the hotel’s neighbourhood, and they don’t always speak the neighbourhood’s language.

Looking at the flickering lights of the world economy today, I am strongly advising hoteliers to go after international business even if they do well domestically. Every incremental demand point is of benefit not only to the hotel’s pricing and yielding flexibility. It is also another point of safety in an unsafe world.

If the pessimists of this world are correct, there is a lot of pressure for everyone in the not too distant future, and it will be only those who are prepared that will stand a chance to thrive.

Thank you for reading,

Yannis Anastasakis

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Filed under eCommerce, Hotels, International, Marketing, Multilingual, Return On Investment, Sales Strategies

Foreign gemütlichkeit in the UK

Looking at the primary findings of a recent hotel online market research we conducted, it became somewhat obvious that multilingual international travellers are not “chased” by hoteliers. Unlike the occasionally surprising proficiency one can find in a hotelier’s online strategy when it comes to same-language markets, international source markets are – to put it mildly – mostly ignored. This suggests a significant opportunity for hotels, in the form of what is – in every way that counts – a “new” marketplace; one in which linguistic barriers have so far kept the competition away!

If you are a hotelier, think of your PPC and SEO efforts… do you think you are selling to the Japanese in the same way that you are selling to the Brits? I am afraid that unless you KNOW the answer to be “yes”… you aren’t.

Although this changes dramatically from market to market, the rule of thumb for the top city destinations around the world seems to be that a disproportionally low number of hotels chase international business.

For such markets (think London, New York, Chicago, Miami, Paris, Munich etc.) this imbalance is presenting us with an interesting dynamic of supply and demand. On the one hand we have some finite and proportionately small – and (in most western countries) fairly accurately measured – demand for local accommodation from international markets. On the other hand, we have a very low number of hotels that appear to be interested in, and actively trying to reach, international markets. There also seems to be a very clear divide between large international chains and independent hotels – irrespectively of the standing or reputation of the properties in question.

It would be somewhat impolite for me to point to any specific properties here. But, to get an idea of the point that I am trying to make without naming any names, think of the 5  independent quality hotels in London that spring to your mind. Find them in Google and see if you can find any languages there… Now, I know they have their reasons for this – maybe they really don’t need any more business directly to their website – at least not at an additional cost. However, the conclusion (which will be visited again further down in this entry) is clear. If you want to stay in one of those hotels, and you happen to come from Japan, you pretty much have to find and book this hotel via an agency.

Now, it is personally important to me to mention here that the more I study, the more suspicious I grow of statistics and evidence. However, I have to agree that the figures available to us suggest a staggering opportunity for independent hoteliers, in the international/multilingual markets as a whole. In the case of certain cities with strong international demand, only those hotels that can speak the customer’s language (literally) have the chance to attract international traffic directly to their own website. The rest, don’t.

You Are Not Alone

Figures for international inbound travel to the UK are readily available for anyone with an interest in accessing them. One of my favourite sources is www.visitbritain.org who frequently update their figures and implicitly remind us of the magnitude of the opportunity in the international traveller. A good summary of the latest update on international tourism facts can be found straight on their website here (http://www.visitbritain.org/insightsandstatistics/inboundtourismfacts/index.aspx).

Some of the quoted figures are truly staggering. Almost 30 million visitors in 2010 have generated almost 16.9 billion pounds in revenue to the country, and certain key performance indicators have pretty much stayed the same over the last four years – despite the rare turmoil in the international and domestic markets since 2008. More than half of those visitors (52%) were visiting London.

The Language Mosaic

There is no escaping that we live in a multicultural, multilingual world. The consequential complexities and inconsistent (and even incompatible) patterns of consumer behaviour between the various international markets make marketing to such an international audience a seriously complex affair. The very simple fact that a hotel is ideally trying to sell the same room to anyone in the world who potentially wants to come to the area, makes it all more tricky than we would ideally like it to be.

However, and as it often happens with similar populations, there are some demand patterns that can make our lives a little easier…

The – almost – 80/20 rule

It turns out that almost 70% of all international visits in 2010 happened from the top 10 source countries (only 10% of the countries that have direct flights to Britain). The top ten in terms of market volume and spent can be seen in the table below:

Source: VisitBritain.org 2011

We also know that not all visitors behave the same way. The reasons behind travelling (e.g. VFR vs. Business Travel), the age of the visitor, as well as the source country itself can make a great difference in the suitability of a traveller for any particular hotel.
Furthermore, from a linguistic point of view (and despite that with the exception of two English-speaking countries (USA and Australia) all other top 10 source countries (by volume) are within Europe) the complexity that we are faced with isn’t too scary…

The Big Four

Looking at the table above, and making the assumption that all the Dutch visitors speak English (I have yet to come across a Dutch person that doesn’t speak English better than I do) leaves us with four major foreign language “powered” contributors to inbound international travel in the UK. France, Germany, Spain and Italy. These four countries alone represent exactly one third of all the international visitors that came to the UK in 2010!

Lost in Translation?

According to eye4travel (2008) some 70% of all internet users don’t speak English at all, or are uncomfortable using it for transactions… this is obviously a figure that refers to everyone with a computer and an internet connection, and we would be dishonest with ourselves if we didn’t assume that international travellers are more likely to speak English than the average user. Yet, the significance of language barriers is pretty evident from that figure – 70% is a high number in any language, and so is 60% or even 50%.

In any case, I believe that there are only two significant questions to be asked by any hotelier trying to increase its direct traffic.

1. “Do I think that international travellers understand my site when they visit it?

Before anyone raises their hand to talk about Google Translations and risk giving me an aneurysm (however brilliant and useful their translations tools are) I would like to ask you the even more pertinent and logically preceding question:

2. Do you think that travellers from abroad are actually able to find you online, in order to have the opportunity to try and understand what you are selling to them?”

…..

Even if it were only a minority of international inbound travellers that didn’t speak English (and it isn’t), them being unable to find your website in the first place is – I am sure you would agree – a major issue!

If you are a hotelier and you’re are reading this, the chances are that you are already doing some SEO and PPC for your website. Also, the chances are that you are NOT doing SEO or PPC for your German, French, Japanese etc. potential customers. Hilton is, Marriot is, and crucially Expedia, LastMinute and Bookings do (have a look at the Google screen captures below).

At eHotelworks, when we were thinking of offering the BABEL Multilingual product, we run multiple search tests from several countries for multiple types of hotels, using a variety of languages and IP locations (in other words we were pretending we were searching for UK hotels from abroad).

The results were really fascinating. From certain countries (most clearly show in Holland than anywhere else) the evident problem of being found appeared to be little. In Dutch searches, hotels without international languages on their sites produced mixed results (and much better than we expected).

It seems that the Dutch’s ability to speak perfect English has permeated Google’s results. A lot of hotels – especially in what we call “narrow” searches (e.g. “hotel name” and “location” were used as search terms) – did come up in the first pages, no problem.

On the other extreme, in countries and languages where English is not a prominent language or the language has a significantly different alphabet (Japanese, Arabic, etc.) no searches gave us any independent hotel results at all. Even when we were looking for hotels by their exact name and location, only agencies came back with results. Fascinatingly, Bookings.com – presumably through their very popular xml feed based service – seemed to power the staggering majority of results in the more obscure source markets (such as Greece in the example below).

Have a look at the example of two searches (used the keywords “hotel in London”) here:

First, from England, in English

Search Results for "Hotels in London" in Egnlish, and for England

Even for the traditionally expensive keywords "hotel in London" there is a multitude of hotels having their direct links seen. Especially in the Local Results section.

Then from Greece, in Greek

Results for a search on Hotels in London in Greek

You don't have to speak Greek to notice that there are NO results, either organic or paid for, which belong to a hotel. The OTAs have the opportunity to rule the first pages of Google. Even the mighty Marriott and Hilton of this world have to give those bookings away to OTAs.

The inability of hotelier to market to the many – and obscure – international languages is arguably – and at least in part – justified. As those that do engage in the “get the international traveller” game would testify, the law of diminishing returns applies with unforgiving realism.  After the first few “top-tier” languages have been put together and offered to consumers, adding more languages is not necessarily a good idea. Going after certain countries that represent only a very small proportion of the overall inbound UK market is simply too expensive for the returns this market will generate, and therefore a good commercial decision to leave them out.

It is most likely for that reason that you don’t get to see Expedia, Hotels.com, LastMinute etc. featuring in the Greek search results of Google above… It is too expensive to build Expedia in Greek and their commercial model is nowhere near as attractive to local wannabe OTAs as that of Bookings who seem to thrive over there not only through XML feeds to smaller operators, but also directly, on their own two feet.

So what is one to do?

Some markets are – I would argue – no-brainers! With a third of all international travel to London coming from France, Germany, Spain and Italy, and (statistically speaking) with only a fraction of the hotels in your competitive set offering rooms to these countries through their own websites, there is a huge internationalisation opportunity that should generate some real results.

Whatever your country, do talk to us. BABEL Multilingual is of the risk-free variety and I certainly believe in it. The nature of building and maintaining international presence against the OTAs doesn’t have to be alienating or difficult. We think it is completely worth it.

Thank you for reading – as always we are completely open, interested and grateful for any feedback you may have.

Yannis Anastasakis
Director

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Filed under Cultural Optimisation, eCommerce, International, Marketing, Multilingual, Pay Per Click, Return On Investment, Sales Strategies, Search Engine Optimisation

ROI Considerations For Hotels

An excellent question that come up on LinkedIn from Simon Carkeek, Executive Director at the equally excellent EyeForTravel, is relevant to every hotelier out there. It most certainly inspired this article (unfortunately it is of very little use to him as an answer – for which I apologise) which I wrote thinking of “the best in class” rather than what is really happening in the market. The question (reproduced with his permission) can be found here:

What determines where travel companies advertise online? And what rates are paid for various types of advertising?

I am currently looking into the costs of and reasons for online marketing campaigns and wanted to ask the group what determines whether a site is worthy of advertising budget. I’m less interested in SEO or the PPC campaigns on the likes of Google, MSN and other generic search engines, but rather the budgets people allocate to advertise on travel specific sites such as deals publishers, meta-search engines and online travel communities / social media sites. Specific information I’m looking for includes:

What kind of volumes of traffic do advertisers look for? What kind of click through rates do they look for? What are the going rates? What revenue models work the best (PPC, PPA, commission based)? Banner advertising – do companies still pay for impressions/page views, or would it always be a PPC model these days? What do advertisers look for in a site other than traffic levels?

Does anyone have/know of any documents/research with this kind of information that you are able to share with me? Or do you know how I’d go about find this out for myself?

Any advice you can give is much appreciated. Will be happy to share my findings with anyone who is able to contribute.

Simon Carkeek, Exec. Director, eye4travel

Mr. Carkeek’s question is indicative of the complexity and variety of answers he is expecting to receive. Different companies obviously have very different ways of thinking, and there will hopefully be many different, specific figures that will go his way. If this is the preliminary groundwork for another excellent report from eyefortravel, I can only wish them the best of luck in quantifying some of this stuff.

The Bottom Line Looks Better

The answer to "where do I spend my money best for marketing" is one you should be answering every day.

Having worked in multiple environments, I know that less accountable factors such as “gut feeling” or habit are still in use, but I have also come across a couple of examples of “doing it properly”, and that is what I think you might find useful here.

The client was a luxury collection with properties mainly in USA and the Caribbean. Upper 4 star hotels in their majority – with a couple of really famous properties in the mix and an unusually structured management team. (Hopefully further down it will become clear that this is relevant because it allowed for efficient flow of critical information amongst executives).

  • Can we measure the results?

Investment in electronic advertising was always subject to one paramount criterion: Measurable ROI. Irrespectively of the method of calculating charges (PPC, % commission or “exposures”) if a channel or the company’s internal processes and systems could provide reasonable measurement of results, the campaign had a good chance of taking off.

  • How much additional work would it cost us?

It is relevant to mention here that the costs of the campaign were also evaluated against the processes and work-load that would be generated by the campaign. The specific collection was rather “lean on the ground” without large teams of people delivering at property level so if a campaign had certain complexities to it (e.g. delivering of a promotional item or value-add-on for a booking) we would always take these into consideration.

  • What were the opportunity costs?

Opportunity costs were also looked at in every case, and from two slightly different points of view.

Traditionally, we would examine the potential return in terms of volume (we were looking primarily at volume of roomnights here, not just the % of ROI as the right roomnight levels always justify a little more aggressive payments). If a certain opportunity A was looking like generating more than another opportunity B, then opportunity A would get the green light first. This staggered processing of opportunities was very useful – amongst other reasons – because of man-hour considerations; so only the number of opportunities that could realistically be handled would be eventually allowed to take off, and the decision didn’t have to be conscious (you often run out of time before processing opportunity F, but you didn’t run out of time in the midst of working on opportunity B or C just because you allowed the processing of opportunity F take up vital time).

The second, and rather non-traditional view of opportunity costs, is associated with the cross evaluation of ROI against all other revenue generating channels and segments.

To understand this approach and the logic behind it, it is relevant to mention here that the collection run almost completely (they were in the forefront of trying to do so with wholesale business as well) on BAR.

With occupancy levels being low during large sections of the year (this was a very new company with a lot of properties coming out of massive long-term renovations, so the starting point was lower than one would expect) the importance of filling up the hotels was at the top of the to do list. (Every revenue manager will tell you that you fill up your hotel first; then you may start any serious efforts to yield through improving your ADR).

Working with such a pricing structure, and with empty rooms to fill, the company would look at each campaign and could compare the opportunity costs and potential ROI across segments. As long as the ROI could be measured, a comparison was very easy. Would we spend 5 thousand dollars in aiming at incremental business in Expedia for additional % commission in each booking, or would we give this money up as a promotional add-on for an e-mail campaign to loyal members? Would we invest it in GDS cpm based advertising or would we go for brochure contributions with yet another wholesaler (which would produce results in a year and a half from the point of investment)?

The primary decision making tool was a universal % target for commission/payment levels. All BAR model channels would be analysed for a % cost of roomnight. The most expensive would be the “walk” point in negotiations for pricing of advertising, the cheapest would be the “wish” point and anything in between would be acceptable.

Another important criterion came from relationships. Larger organisations, companies that were important to the collection had more bread-and-butter business for the hotels, would always get priority. Without breaking parity, and working with a narrow range of commissions even for the best partners, giving them advertising dollars was the single method of showing preference to them on a day to day basis – and it worked well too.

The principle of this universal % payment/ROI approach rings true. For me, comparing costs and monetary/relationship benefits across all relevant channels (which is only really realistic if your pricing model is BAR and parity) has to be the correct way to run a business. It allows for nimble, justifiable and accountable investment.

In final point? There may be varying levels of money you have in the marketing pot, and as a company most likely there will be varying attitudes towards different media, accounting and payment practices and personal views. Choice for investment should come following consideration of alternative opportunities, their real costs (obvious and hidden) and always, always based on measurable results. Even if the non provable media with which you are presented has more to offer in your opinion, think of the way and cost you will have identifying bookings from it. In my experience you will always be better off with the measurable; if for no other reason, because you will be able to show your boss an unsinkable ROI figure 🙂

Yannis Anastasakis

eHotelworks

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Filed under Conversions, eCommerce, Hotels, Marketing, Return On Investment, Search Engine Optimisation

Letting Google choose the best web booking engine? Let the results speak up.

Experience has taught me (and I presume most of us) that Google comes up with lovely, useful and free solutions. Despite the massive influence they have on how you and I are designing and running our electronic business (I can think of many worse companies to do this) I constantly find myself admiring them as they seem to have a knack for identifying real solutions to real needs, before you and I even know we need them.

So, are you looking for a free way to collaborate with colleagues on a word or excel document (well, close enough to word or excel anyway)? Google docs will give you the answer.

Some results - like the efficiency of a booking engine over another - are easier to quantify than you may think

Do you want to use an interactive map for showing your hotel’s locations, maybe against local attractions, whilst allowing your on-line visitors to examine distances, directions etc.? Google maps is there for you and – again – it is free.

Do you want to evaluate the credit-worthiness of a website you are visiting? The Google toolbar will offer as much as any one company can, and it will throw in the deal (the free deal that is) a few useful extras like the really rewarding and empowering voting buttons. (So if Europcar upsets you with their dodgy last minute charges, you can always vent a little by clicking on the appropriate button). It is worth mentioning here that the best solution for quick site evaluation that I have come across this far is a toolbar in Firefox that apart from the Google ranking and backward link options, also offers data and options from Alexa and Compete.)

Of course, from all the great tools Google have, the Google Analytics are closest to my heart as they are very nearly the best solution out there, and they are (once again) totally free. It is one of these Analytics tools that I was thinking about today, as I was reminded that not everyone knows what they can do.

The topic was approached as I was having a conversation with a gentleman from Canada. Good properties with a rather imperfect website – which should nevertheless do enough of the job it is supposed to do. The company seems to be using two different types of booking tools between all their properties, one that comes out of the PMS – which is really, really badly done, but comes free – and one from SynXis – which is really, really well done, but you have to pay for it. Unsurprisingly, he noted that the properties using the free version of the booking tool are performing less well on-line than the ones that are using the paid-for SynXis’ tool.

He didn’t have to say much from there on, as the scenario is the same around the world. I could tell that he is fairly sure that the PMS’s questionable booking tool is damaging conversions to bookers, but it is difficult to argue against something that is free.

We all know that when it comes to the guys that pay the bills, taking a stance requires certainty and – if at all possible – facts.

In scenarios similar to ours, one needs to be able to argue that making a change will generate sufficient ROI. ROI which should more than cover the costs of the % commission to a paid-for booking tool provider. The ROI would also have to be demonstrably higher than the original solutions as one has to consider the opportunity costs of the % commission and the time/effort investment that one is inevitably going to undertake with such a change. Usually the problem is not so much the lack of conviction, but the lack of hard data.

There are a couple of solutions that I have seen to this problem, including the running of the two bookings tools on the same page (think two buttons, practically next to each other). This is obviously not all that brilliant for a number of reasons. Effectively, two “book here” options equate to introducing a factor that will confuse not only your results, but also your visitors. You are going to be using prime real estate on your home page for this, and by changing your web-page you are messing with the actual subject of your study. There will also be visitors that will choose by clicking on both, and there will be visitors that will visit one of the two (the one they would like least) and decide they don’t like it enough to use it. There are many more reasons that you will be able to think, but the underlying fact is that this is not the best way to go about it.

A better solution would be a process of concurrent website monitoring and analysis (hello Google Analytics). This is much more simple than it sounds, and it will give you (at least theoretically) a clear and clean image of visitor behaviour. It is a technique that allowed eHotelworks’s partners to develop the internationally culturally optimised templates we are selling through our HelloWorld packages (it effectively allowed us to see what types of look-and-feel in international versions of websites converts best on a per country basis).

The same technology (without the complexity and costs associated with significantly changing your website) will allow you to take your existing pages and copy them next to the original ones. You then change the link of the “book now” button (or the code of the search behind your mini booking tool) to that of the new booking tool. You then promote your website normally, but each time someone clicks to see your webpage they are given one of the two versions. Assuming that all other parameters are unchanged, you could theoretically sit back and wait for the enlightening and comparable results.

The theory is that if your new booking tool is performing better than the old one, you can look at the incremental revenue that the new conversion % across all bookings and you can see how much better off you would be if you were using the new tool for everything.

This is also going to give you interesting data for your negotiations with your CRS supplier. I can think of no more solid an argument from a hotelier asking for a discounted % fee from its CRS provider, than the one that is backed with hard data of this type. “This is how much money I make above what I get from the PMS’s tool, so I can only go ahead with using you if you make your tool available at this reduced percentage”. Solid, truthful and backed by data. To be honest, as a systems sales person I would do my utmost to give this intelligent hotelier the reduced percentage, just to keep them as a friend! (The grumpy old man inside me is already muttering under his breath that there just aren’t enough good negotiators out there any more).

So this is all good and easy, in theory. Alas, practice is always a little different, so please beware:

In practice, using a better CRS, one that will allow you to do more things than the old one, and one that looks better than the old one (thus giving the all important signals to your visitors that you care), should always generate more conversions. It really always should. And running the experiment as described above – sticking to visual comparability – is not giving the better tool a full chance to shine. In other words, changing only the link may not give it enough of a chance to generate more bookings. And if you do more of the stuff you should be doing (promoting your product through the additional features) you are not running a straight comparison any more.

Not to mention that having a good account manager from a CRS specialist firm looking after you, over time, it is always going to be more productive for you than having a PMS account manager who is invariably treating connectivity and the booking tool as an “add on” rather than a lifeline.

Additionally, very rarely have I come across a hotel that is doing all it could to maximise visitors to their website. With less than the potential numbers of visitors arriving, the value of the increased conversion ratios is also lower than the potential. In other words, 5% increased conversions is nothing to write home about if you take ten bookings a month from your website, whilst it is a lovely increase in profitability if you take a thousand.

It is interesting to mention here that increased numbers of visitors (usually driven through aggressive campaigns and because no campaign is perfect) tend to be more demanding than your usual lot. If for example you are running a PPC campaign for the first time, you will get visitors that would otherwise not find you. And you will find that they are less determined to stay with you than the usual clientele – that found your website organically after doggedly looking for it. So suddenly you are talking to visitors that may be much more easily put off. Hence, looking good throughout may suddenly be much more important than it used to be when you weren’t pushing for visitors.

For all these reasons and depending on your property and market, the better booking tool may be one good step in the direction of more bookings, but as a standalone step it may appear not to be worth it. An orchestrated web business generation effort is usually worth much more than the sum of its parts, because your website booking process (from search engine optimisation to repeat guest hunting) has each step optimising the results of the previous one, reducing drop-outs. This is a fine yet important point as introduction of the improvement elements one by one may never individually look good on paper. In the website optimisation business, more is much more!

In conclusion, I recommend caution but definitely action. Run the test (it is cheap, and it is easy), have a look at the results and use them to your advantage. Use the new booking tool’s bells and whistles through a gradual introduction to the concurrent website to evaluate the impact of each step. Use this data to estimate the benefits of additional facilities that you won’t be able to use in a test environment. Get the results and interpret them. Run a campaign and use links directly to the features of the booking tool. Compare results to older campaigns.

There will still be a lot you won’t know as most of the advance facilities of a booking tool come into their own with time as people don’t adjust to new technology overnight.

In any case, there will be hard data in your hands. Data that will most likely show you how you are better of with a good booking tool. Even if you don’t take into consideration the other long term benefits of empowering technology, you are going to be better off for having tried to stop your accountant and floor manager (PMS) to run your sales.

Yannis Anastasakis

eHotelworks

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Filed under Conversions, eCommerce, Hotels, Marketing, Return On Investment

ROI? ROI on what?

Before internet campaigns were popular, ROI started being used for hotel sales activities to help decision makers justify investment in one particular sales activity over another. This can fairly easily work well with certain traditional activities and it has been used successfully by most major chains’ sales teams over the last 10 years. I therefore want to make clear that my problem with it is not all-encompassing. In fact, it sits firmly outside this meaningful way of choosing investment and evaluating opportunity costs.

The reason the subject is making it to this page is ROI’s over-use, especially as a tool for hotels which select suppliers, at a time in the sales cycle when any talk of ROI is not – and can physically never be – anything more than a rough estimation (and in many cases, something someone pickes straight out of thin air).

So you are an e-marketing professional. You have identified the larger issues with your potential customer, managed to arrange an appointment and you have travelled to their offices to see them. You have presented your case, and with the use of solid arguments and facts, you are well on your way to convincing them that something needs to be done. Then, with almost mathematical precision, the man who is funding the operation (or he who has to do the justifying on the funds needed) will ask the inevitable question. “What is my ROI if I do this, and can you guarantee it”?

With time, I have come to believe that these people know the answer (they are far too intelligent not to), and they are only asking for two reasons. First, to see how I will respond. I am suspecting that if I were to come up with too aggressive figures, I would be dismissed as less serious than the next person bidding for the job.

The second reason is that if they like the number quoted back to them, they will hold it as a solid promise. This can be a major issue if you like to only give information that is accurate and you are not in the habit of letting people down.

Personally, I give my customers an honest view of my thoughts (as a proud cynic I have to say that I am amazed by how many potential clients appreciate honesty more than empty promises). Establishing an accurate ROI to my customer’s campaign before we start the work, would require a lot of work itself – man-hours that I am not prepared to offer for free. The only case where I w

When a hotelier asks about Return On his/her Investment, I now answer "that depends on you".

ill indulge in guaranteed figures without having done paid-for research is when I am fairly confident I know the potential, it is a major need for my client (they have bosses too) and if (and only if) I have reasonable control of their revenue management, sales and marketing efforts, as well as web development.

Why? Because it is only fair. And because once, before I knew about CentralR, I was caught out.

You see, even if you know how much an 800 room three star hotel in Kensington should and could generate from a three thousand a month PPC, they could be working against you and themselves. They could for example be giving CentralR (in my view the arch enemy of hoteliers everywhere) better rates than they do on their own website. They could even allow CentralR to have a site that is – for all intents and purposes – a clone of the hotel’s own site, which they are also advertising on PPC using proprietary keywords. Keywords for which they are charging the hotel by the way (at which point you have to start admiring their bravado and wonder how they have been getting away with it all this time).

Or – to take a less visible example – the property may be giving a wholesale agency FIT rates WITH permission for them to be published on the agent’s website unpackaged. These static rates will always create problems when the hotel is working with the BAR model on their own website – unless they are very sharp with their lowest rate management.

All in all, it is actually unreasonable to be asked to guarantee something over which you have no control. Revenue decisions, sales decisions, and even PR activities can have a massive effect on a hotels’ performance and conversions for a specific campaign, if that campaign is approached in isolation. Taking on guaranteed work without control – or at least a reasonable amount of say – in the aforementioned areas, is a gamble which (from experience) I do not recommend.

ROI is absolutely the primary, most important ratio attached to any investment, and each campaign’s main success measurement. Although there are proven tactics which allow for greater RevPAR through diminishing ROI, its improvement should be any campaign’s main focus and overall modus operandi. We should just keep in mind that it only becomes the all important figure once the campaign has started.

Before work has started it is no more than an estimation; and when it is based on gut feeling only (without any research and analysis work) it is nothing more than a direction, mostly useful as a method of finding out information about the professional that you have in front of you presenting their solution, rather than something on which you should be setting your expectations and rateplans for next year.

Yannis Anastasakis

eHotelworks

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Filed under Marketing, Return On Investment