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A Benchmark Survey on Hotel Internet Marketing Budget Planning

03/14/2007| 5:02:00 PM| 中文

The top three Internet marketing formats hoteliers believe produce the highest ROIs are website optimization, Search Optimization + Organic Search, and website re-design.

Over the past few years, hoteliers have been hard at work trying to grow their online marketing revenues. Using techniques like website design, search engine optimization, paid search marketing and email blasts, many have been very successful. However, with all of the new Internet marketing channels now available (ie. Consumer Generated Media, Meta Search) many hoteliers find themselves at a loss, with no clear structure on the best strategy to produce the highest returns. They know they can do more but not sure as to what. They are willing to invest more but not certain as to where. They want to stay current with their peers but do not know what that means. This year, one-third of bookings in hospitality in the U.S. will be generated from the Internet and another third will be directly influenced by online research, but booked offline. Therefore, it is important that hoteliers know where the best places are to spend their online marketing dollars.

In a recent benchmark study, conducted in conjunction with NYU’s Tisch Center for Hospitality, Tourism, and Sports Management, Hospitality eBusiness Strategies (HeBS)  set out to identify trends in online marketing techniques that have developed in the industry to help grow this distribution channel.

This benchmark survey, a first of its kind, asked hoteliers what Internet formats and methods they are using to reach their customers, what Internet marketing practices they find most productive, why they choose to devote marketing dollars to certain mediums over others, and more. The results were impressive and foreshadow things to come in online travel marketing for 2007 and 2008.

Survey Participants

Hospitality executives worldwide, including general managers, revenue managers, sales and marketing managers, and other industry professionals participated in the survey.  Survey invites were sent to HeBS permission-based global database as well as through channel partners such as Hospitalitynet.org. A broad section of the industry completed the survey: boutique, luxury and upscale hotels, franchised and independent properties, resorts, casinos, branded or managed, mid-scale, budget and economy, etc.

Main Findings

Internet Marketing ROI

What are the Internet marketing formats hoteliers believe generate the highest ROIs? In the past paid search and SEO were usually named as the top drivers for increased revenues online. The 2007 benchmark survey shows that hoteliers have matured and now understand that long-term, strategic objectives and formats such as website re-designs and optimizations, email marketing and strategic linking produce higher ROIs than “quick fix” solutions, such as SEO and PPC.

The following chart shows hoteliers believe that long-term solutions such as website optimization produce higher ROIs vs. short-term solutions:

Budget Allocations Differ Across Industry Segments

Luxury vs. Non-Luxury Brands:
 Franchised vs. Independent Properties:     
This chart shows that hotelier’s are spending the highest percentages of their budgets on PPC, website redesign and optimization, search engine optimization and email marketing:
Budget Allocations Differ in the U.S. vs. Internationally
USA vs. International Hotels

2007 Internet Marketing Budget Allocations Trends

The benchmark survey shows several interesting trends in how the budget allocations and the usage of various Internet marketing formats are changing over the previous year (2007 vs. 2006), which is indicative of where the future focus is going to be:
Hoteliers are trying to improve their online distribution based on their knowledge of internet marketing by trying different techniques embraced by their peers. It seems evident from the results that there are many new tools being tested, if not already trusted – and new tools are still coming as this medium gets older. In fact, it seems as though the entire industry is aligned and trying most of the same tools to grow their online sales. But regardless of which tools are being used, one thing is certain: Online marketing for hotels is growing at an incredible pace.

Shift in marketing dollars toward to the online channel will continue well into 2007-2008. The results from the survey suggest stronger emphasis on the search engines where the focus will likely be placed on optimization techniques (both website and search engine optimization). Link creation and strategic linking will play a major role in the improvement of online visibility of many hotel websites.  More marketing dollars will be spent on meta search, local search and other specialized search tools as the use of these tools are becoming increasingly popular in hospitality. 

Email marketing continues to be viewed as a popular tool to build one-on-one relationships between hotel and customer and influence revenues positively for the entire industry, but only so when utilized in accordance with best practices.  The introduction of new technology formats and the advent of consumer generated media will likely grow in popularity and expect new business models to emerge from the practice. Many individual properties and chains have already begun to use such devices on their websites and these early adopters will determine for the industry how successful these models will become long term in the marketing mix.

Investments in website redesign will likely scale back as most hotels seem comfortable with their general website look and feel efforts accomplished in 2006 and are now planning to focus on optimizing these new sites – except for the US properties, which seem to be focusing more on design than optimization, likely because their websites are older.

Display advertising will probably take the biggest cut of any of the marketing tools discussed in this study. Display advertising is best used by the well-known brand names, as name recognition plays a big role with the individual Internet surfer’s desire to click on a banner advertisement, as users are less likely and more skeptical of clicking on banner ads from companies whose name they don’t recognize. 
US properties clearly are ahead of the international market in terms of developing websites – as displayed by the counter budget appropriations in 2007 with regards to website redesign and optimization. However, as far as search engine marketing knowledge is concerned the two groups seem to be almost on the same level. 

Overall, the results from this study show that hoteliers have become more comfortable embracing different opportunities to grow the direct distribution channel through the Internet and will be increasing their online marketing budgets in 2007. Revenue growth was reported across the board with stand alone independent hotel websites and corporate brand websites. As a result of the expanded knowledge and use of this marketing medium, new techniques and tools are being used throughout the industry to contribute to the growth of the direct online channel, which as defined by sales via the hotel website, has increased hotel revenues and reduced cost of rooms sold.

Consider seeking advice from an experienced Internet marketing hospitality consultancy to help you make the right online budgetary decisions. Get started on planning or adjusting the budget as according to trends in the industry. Speak to a HeBS professional in getting started.

About the Authors:

The HeBS team for this project consisted of Evan Rosenblum, Max Starkov, Jason Price, and Mariana Mechoso. We would also like to acknowledge research contributions from graduate students at the NYU Tisch Center for Hospitality, Tourism, and Sports Management.

About HeBS:

Hospitality eBusiness Strategies (HeBS), the industry’s leading Internet marketing strategy consulting firm for the hospitality vertical, is based in New York City (www.hospitalityebusiness.com). HeBS has pioneered many of the "best practices" in hotel Internet marketing and direct online distribution. The firm specializes in helping hoteliers build their direct Internet marketing and distribution strategy, boost the hotel Internet marketing presence, establish interactive relationships with their customers, and significantly increase direct online bookings and ADRs. A diverse client portfolio of over 350 top tier major hotel brands, multinational hospitality corporations, hotel management and representation companies, franchisees and independents, resorts, casinos and CVBs and has sought and successfully taken advantage of the firm hospitality Internet marketing expertise. Contact HeBS consultants at (212)752-8186 or info@hospitalityebusiness.com.
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