Hotel Bookings on Mobile – Lessons from China and what it could mean for Indian Hoteliers

With the advancement in technology and changes in user behavior, hotel industry dynamics are changing constantly. Many customers pre-book their entire trips online rather than go to a traditional travel agent. Mobile hotel bookings have been growing exponentially in recent years as consumers become ‘smarter’ with smart phones.
There is no doubt that China has been a success story for mobile hotel bookings. CTrip, the leading online travel agency in China, has seen phenomenal growth in recent years. In fact, Forbes reported an article on the success story of CTrip describing the journey of the company as “remarkable” According to Yahoo Finance “Ctrip’s mobile platform contributed to over 40% of total hotel booking transactions at its peak level, which exceeded the respective booking percentages from its websites and call centers. Mobile is becoming the key booking platform for Ctrip.”
Likewise, Elong, the closest rival to CTrip, has also developed its own mobile application that helps potential clients to easily book desired products. Hotel companies, after cleverly targeting their audience, are now launching their own apps that help bring in direct customers.

HotelMarketing.com writes in an article, “Several hotels have built their website and apps in such a way that it provides a complete guide to travelers during their stay. The mobile is a personal device and one can access it all the time. Thus, apps that provide mobile bookings should be the strategy of hotels for the coming years. It’s only going to increase from here.”
Tnooz, a leading newsletter focused on travel reports, “Talking of mobile penetration in China, 98% travelers carry at least one mobile phone. According to a survey by PhocusWright, it is estimated that, by 2015, more than 20% online bookings will be via mobiles.”
“Thus, the mobile booking tendency is trending in China and is likely to increase further. Also, the travel industry in China is worth around smashing $100 billion. However, mobile hotel booking in China is at an emerging stage at around $218.4 million,”
India is not far behind in this sector and Chindia (China & India) together are the fastest growing mobile markets in the world. Travelers in India as well are following the footprints of their Chinese counterparts, and now they too prefer online bookings over traditional booking methods.
India is a large country with almost 67 million Smartphone users in 2013. Indians are becoming increasingly inclined towards online booking as it has made life easy for them. (http://techcircle.vccircle.com/2013/05/30/india-has-67m-smartphone-users-desi-netizens-more-open-to-sharing-everything-online-mary-meeker/)
MakeMyTrip, India’s largest online travel company carried out a survey recently and found that 97% Indians would prefer to book hotels online. Also, about 77% of people have already reserved their travel plans online through OTAs. 40% Indian travelers had booked last-minute hotels for the same day check-ins. About 14% Indians have used mobile applications for hotel-booking. (http://www.thehindubusinessline.com/industry-and-economy/info-tech/indian-travellers-prefer-online-booking-for-hotels-makemytrip/article4973705.ece)
The survey also reveals that Indians don’t care about the brand value as much as they do for price, location and service. As per respondents of the survey, the most influencing factor for Indians while making an online booking is price. The least influential factor for Indian travelers is the brand value of the hotel; they don’t care if they are in Taj or any unbranded luxury hotel, as long as they provide same facilities.
All said and done, mobile bookings in India are going to boom in the near future and we are going to see a lot of travel industry experts revolving their marketing strategies around mobile phone bookings.

So what should you do as a hotelier to ensure that you do not miss out on this opportunity?

Responsive design website– The first thing that a hotel needs to have is a website that is optimized for mobile bookings. The mobile consumer is looking for an experience that is simple and ensures that bookings happen in a few clicks. Consumption of content on mobile is different from traditional desktop sites therefore if a hotel does not have a site that adapts for mobile consumers it would lose out on this very important segment of travelers. If 40% of the consumers are booking last-minute and around 20% on mobile, it is a good idea to see how a hotel’s website behaves on both Android and IOS platforms. Also ensure that location and user ratings come out clearly in the first few clicks and pictures are large and represent the key aspects of the hotel- the room, the lobby and the facilities.

Easy cancellation policy – Have an easy cancellation policy for last-minute mobile deals. As a hotelier you are well aware of the pick up of bookings and if you feel that your rooms are going to go empty, might as well take a chance and have a margin for a few no shows. Having a flexible cancellation policy is one of the key things that guests look for and having non-refundable rates here is a bad idea.

Mobile only rates – once you have a good platform that allows your customers to book easily, it is a good idea to experiment by offering mobile only rates to customers on-the-go. This could get you some incremental business that was not coming to your hotel in the first place and would add to your occupancy.

Participate in last-minute deal programs – Sites like MakeMyTrip and Booking.com are working hard to capture the last-minute customer. Do participate in their last- Continue reading

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Should Independent Hoteliers Outsource Their Digital Presence?

The question to ponder on is why a hotel should outsource anything? Be it security, laundry or housekeeping, let alone their digital presence. Outsourcing is counter intuitive to many traditional hoteliers but over the years many have realized that the right specialists can do a better and cheaper job of many functions. It not only frees up bandwidth but brings in more efficiency to support the core function of a hotel – to ensure guests are happy and have a great stay experience.

A couple of decades ago life was simpler. One would open a hotel, get a sales & marketing team, establish a few key relationships with companies and travel agents to get business in. Competition tracking was simple and hotels would bench mark against a few competitors in the city to track how they were doing. The front office managers would exchange occupancy and ARR figures in good faith and things were in nice rhythm.

It got a little more complex when OTAs came on the scene but was still manageable. Customers were booking from desk tops and large American chains like Marriott and Intercontinental pioneered the concept of rate parity. OTAs and Hotels were selling rooms at the same price. Hotels created websites and there was a well established ecosystem of products like Booking Engines and Channel Managers that hotels could leverage to maintain parity.

The big change from those good old days and now is that traveler personae are getting extremely complex. They are searching, getting influenced and booking travel using social media, search engines, meta-search engines and OTAs. They access the web using multiple devices interchangeably – Desktops tablets and mobile phones until finally coming to a decision about the hotel they want to stay in. The companies who are good at understanding this complex user behavior are the ones that are thriving and growing exponentially. The likes of TripAdvisor, Booking.com spend millions of dollars and countless hours doing AB and usability testing, crunching data and ensuring that they are always ahead of the curve. It is rumored that market leader OTAs run more than a thousand tests a month! It is no coincidence that Priceline and TripAdvisor are valued at USD 58 and USD 12 Billion respectively. The scales are rapidly tipping in favor of intermediaries vs Hotel Direct.

While some may argue that the model of outsourced digital marketing and distribution reduces a hotelier’s control over their brand, independent hotels might not have any choice but to bring on board some specialists instead of preferring the model of recruiting their own teams.

Here’s 3 scenarios when hotel digital marketing should be outsourced:

When Knowledge, Resources & Time Is Against You.
Sure you can get around this by recruiting the best in the market, but you would be surprised at the kinds of salaries you would need to fork out and how difficult it is to retain talent. The best folks want to work for the best companies in their fields just like the best hoteliers want to work for the best hotels.

When you are getting extremely uncomfortable about your cost of customer acquisition through third party channels and want to do something about it.

When you want to experiment with emerging sources of hotel bookings and traffic including social media, Tripadvisor and other meta search channels like Trivago and Kayak and feel that the learning curve might be too steep.

Finding the right partner is the key. Every consultant is a self declared expert on social media, SEO and PPC marketing. Work with someone who is willing to work on a success fee rather than fixed numeration.At the end of the day, hoteliers should focus on their core expertise i.e. running the day-to-day operations of their properties. Having an outside perspective can be invaluable and highly profitable.

The Conference Games!

I love Travel Conferences! They are a great place to meet old friends, make new connections and pick up the latest trends on what’s happening in the profession. Having attended, spoken and met so many exciting new people in various conferences over the years, I thought it might be a good idea to put down a tongue in cheek account of how they work.

Travel conferences can be like ‘The Hunger Games’. Rotten Tomatoes summarises the movie as ‘thrilling and superbly acted’. Or they could be like ‘The Hungover Games’. According to Influx Magazine it a ‘Great idea let down by not so great writing’ What ever the case may be there are various characters trying to play their part. Who are they?

The Heroes: (Large Travel Brands). You can spot them as they generally have a ‘speaker’ badge on their necks and a swagger in their gait. The big boys on stage attend for free. They know, that the organisers know, that Big Brands sell tickets to the event. They could be Super Heroes- the ones that make the key notes or just about Heroes- the folks who sit on panels and make presentations, but all of them are the lead actors nonetheless.

The Professors: (Google, Phocuswright Research and the like). Adding real value to the event by showcasing the latest trends they ensure that you get your money’s worth even if you pick and implement a couple of points in your business. There could be an information overload so It is always a good idea to go over their presentations once again when they get published online.

The Dream Merchants: The money bags who grease the wheels of the various events-sponsoring our happiness by providing tea breaks and cocktail evenings. They pay a pretty packet for small booths, always on the look out for their next lead or networking with old customers. They follow the audience who follow the heroes. God Bless them for without their generosity, these would be 2 long days and 2 dry evenings!

The Sponges: Very interested in absorbing every word spoken and getting value out of every cent spent. A big encouragement for the speakers, they are usually found on the first few rows. Always eager to ask questions and the only ones who voluntarily are in the room for the post lunch session by when quite a few in the audience have absconded-especially on day two. Starry eyed students and journalists come in this category too. They make the event engaging and interactive.

Networkers: Never to be found in conference rooms but always around for drinks and tea breaks. They have a clear agenda and full marks for that. Quick with an introduction, they believe who you know is as important as what you know.

And finally ‘The Director’– The one who can make the difference between making the event ‘The Hunger Games’ or ‘The Hungover Games’. Some deeply passionate and committed like Siew Hoon of WIT and some others more interested in smoothly churning the Heroes-Audience-Dream Merchants ecosystem because as long as these three groups play their part, the cash registers keep ringing and we would keep coming!

Till we meet again…

Loyalty – Building on this sustainable competitive advantage

It is no secret that larger hotel chains that have well-managed loyalty programs manage to retain customers better than smaller independent hotels. The latter either do not have such a program or have programs that are not attractive due to single locations. A double whammy for independent hoteliers is that companies like Agoda and Hotel.com are trying hard to popularize their own loyalty programs. They offer 1 room night free on 10 paid nights – bankrolled by the hotels themselves, who have been parting huge commissions to these OTAs. This research by Cornell University throws up some interesting points on the correlation of loyalty programs with better take rates http://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-17604.html

So what does a small hotel do under these circumstances? Here are some simple tips:

Service: There is no short cut to good old service that ensures that your guests want to come back to you. This is the foundation on which a hotel’s retention strategy is based. Screw up here and no amount of good selling or engagement would be able to get guests to come back on a sustained basis. They would also thrash your name on social media and Tripadvisor which would make it difficult and more expensive for you to acquire new customers starting a downward spiral.

Actively Source TripAdvisor Reviews: What’s the connection? It’s stronger than you think! Tripadvisor does a fantastic job of making the reviewer feel great by constantly engaging with them and egging them on for their next review. Their social media strategy is also highly focused, so please be assured that your guests’ family and friends would see their review of your hotel. Guests would also be reminded of your property every time someone finds their entry ‘helpful’ and so on. Once you have more attention in cyberspace and offer decent value, you would find that your conversion rates start creeping up. (A hotel with a rating of 4 from 200 reviews has better credibility than a hotel in the same vicinity with a rating of 4 from 16 reviews). Conversion rates play a huge role on how much interest OTAs would pay to your property. Simply put, they are interested in selling products that are easy to sell and would give you a good listing; even if you offer slightly lower commissions. Basically it puts in motion a virtuous cycle that has loads of benefits in the long run. Actively source reviews, even during the stay or just before / after check out. Have guest relations stock Ipads to get this done. It would also ensure that you have real-time feedback on what is happening in your property without having to rely on the traditional guest feedback form route. They are going to share their experience at your property anyway – might as well have it in real-time when you can do some service recovery if required.

Try Never to reacquire the same customer:The reality is that Online Travel Agents have it hard here as they constantly need to reacquire customers. There is very little loyalty in the online world since it seems to always be about the price. This is not the case with end-service providers and it is a big advantage. Customers have a natural tendency to be loyal towards actual service providers (Singapore Airlines Vs Travelocity or Ritz Carlton vs Expedia). As it is expensive and hard work to acquire customers, so not having to reacquire them through a paid channel makes perfect sense. Remember that paying an agent commission is also an expense. Giving an offer for their next stay and for referring their friends to your hotel works very well provided the offer is meaningful, has a long enough validity and is given electronically (paper coupons get lost). Good booking engines come with a ‘Promo Code’ functionality, use it to facilitate this. Uber (the limousine hire company) does this very well.

Social Social Social: So the rules of the games have changed. No one is interested in the monthly newsletter that you barely manage to push out on time carrying your coffee shop’s promotions starting 6 weeks from now. People want to know what is happening tonight! – use your Facebook page effectively to communicate real time offers. In fact, focus all your corporate communication effort on it. There are several tools available that can allow you to manage this for little or no cost – check out Woobox, Shortstack, Lujure, Wix or Pagemodo. How often should you post on Facebook? Read more on http://www.insidefacebook.com/2014/01/28/how-do-hotels-and-resorts-stack-up-on-facebook/
What about other social networks? Sure, they are important but it’s better to get your arms around Facebook first and then move on to Twitter or Pinterest depending upon your guest profile and location. The number of ‘likes’ on your page is a metric but a very loose one. Incentivize your team on real engagement – contest participation, bookings, discount /upgrade coupons used, real-time posts from events etc.

Ditch that half-hearted loyalty program: If you are running a loyalty program do an audit to see how it is faring. A good metric to see is redemption. If redemption rates are weak and the response to your offers and mailers is lukewarm, quietly kill the program. It would save time and effort that can be well spent in doing other more effective work.

Get on mobile: You need to make it easy for your loyal customers to get through to you. With more than 20% customers already booking on mobile on OTAs, ensure that your mobile presence is best in class. The same goes for the web but it is less of a problem as most hotels having some kind of functioning website.

Finally, do it yourself! Sure, take some tips – but you know your customers best and so say good-bye to your social marketing ‘consultant’.

The Current Reality

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Hoteliers have been losing control to Online Travel Agents for their direct bookings because of very average websites, no focus on mobile, legacy booking engines and lack of resources. According to the latest Phocuswright report published in November 2013, for APAC, in 2012, OTAs command 65% of the online hotel market share booking USD 14.7 Billion dollars worth of Online Gross Hotel Bookings while all supplier websites booked only USD 8.1Billion.

One of the main reasons for the success of the OTAs globally is the single minded focus on all aspects of hotel bookings funnel, where every pixel is optimised for better conversion. This coupled with access to huge resources on digital marketing and mastering sources of traffic has made for a formidable combination, definitely that a small to medium size hotel cannot even fathom, let alone compete with.

Online travel agencies build a bulk of their business on independent hotels. Larger, organised chains are also part of their agenda but are tougher and smarter to deal with, leading to lower take rates and more water tight contracts that don’t allow them to bid on brand keywords. Considering that they are only intermediaries, OTAs have created tremendous value for themselves in comparision to asset heavy hotel companies. The most successful of them all, Priceline, along with their international brands- Booking.com, Agoda.com and now metasearch Kayak have a market cap of USD 58.99 Billion as of 20th November 2013.
The combined market cap of leading international hotel companies- Accor, IHG, Marriott and Starwood is USD 48.10 Billion

In India the leading hotel company is Taj Hotel’s (India Hotels Company) with a market cap is USD 733 million. MakeMyTrip’s (NASDAQ: MMYT) market cap is over USD 1 Billion as of today (1st Feb 2013)

Here is an interesting link that lists the top 15 publicly traded travel companies. http://skift.com/2013/07/08/the-real-15-largest-travel-companies-of-2013/