Apathy Could be Killing Your Hotel

One of the biggest challenges facing hotels today is low website conversion rates that not only accentuates ineffective/unprofitable marketing campaigns but also increases the dependency on OTAs. Average conversion rates for Hotels are 2-3% with 95% booking process abandonment (Hospitality Times) and more than 76% of online bookings for non-branded hotels come from OTA’s (STR/HSMAI). However, given these challenges many hotels are falling into a death trap by becoming complacent and comfortable with the status quo. Blame it on bureaucracy; management skillset or fear but what hotels are faced with today is apathy.

Ask an owner or asset manager what their primary focus is and most likely revenue management will be at the top of their list. The strategy asset managers want to see their hotels focus on is a strategy that optimizes profitability and maximizes RevPAR. Despite heading into another year of projected strong RevPAR growth, dependency on 3rd Party booking channels remains strong and acquisition costs are increasing. It is easy to fall into complacency; managing OTAs is more predictable than managing a digital marketing strategy. Investing in Facebook Ads and retargeting seems logical because everyone else is doing it. However, resigning to OTAs being be the most dependable source of bookings and expecting marketing teams to drive direct bookings with SEM, display retargeting + Facebook ads is hurting hotels.

There needs to be a culture shift from the top down whereby owners or asset managers encourage their management teams to move beyond the status quo and make bold yet smart decisions that will make a positive impact on the bottom line.

Hotel Owners/Asset Managers: Asset managers bring a holistic picture to operations given that they have exposure to a wide variety of properties in various markets. If asset managers are in a unique position to observe the operations of multiple properties, they haven an incentive to promote a culture of innovation. Innovation drives creative thinking towards problem solving and while there will be successes and failures, asset managers can share ideas that did and didn’t work within their portfolio.

A Culture that promotes innovation: A hotel that is resistant to change, will not only leave money on the table, it could kill it. Hotels need to hire in-house management teams that embrace the rapidly evolving landscape of trends, tools, and marketing concepts. Its common today to see management teams who are getting overwhelmed with change, tend to avoid these changes all together and follow the path of least resistance. The only way a hotel is going to grab more market share is to differentiate itself, hire a team that believes in that vision and will fight tooth and nail to achieve it.

How to promote change: This is up to each individual hotel; however, before a hotel looks to implement a culture change, first define the culture you want to promote, then outline your objectives then develop strategies to achieve them. Let’s say a hotel focus on reducing dependency on OTAs; strategies could include creating unique experiences for those who book direct vs. OTA, and more creative & efficient marketing campaigns. Hotels should give their existing teams the chance to embrace these objectives but these teams will need to obsess over them. Owners should meet regularly with these teams to review strategies and to push for more fresh ideas regularly. If teams are resistant to this culture shift, it’s a sign to replace the team with one that embraces innovation.

“Survival does not belong to the strongest, but rather those that adapt more easily to change.” –Charles Darwin