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THE ULTIMATE GUIDE TO DRIVE DIRECT BUSINESS AND BETTER REVENUE 2 CONTENTS FOREWORD 3 PART 1 – REVENUE MANAGEMENT FUNDAMENTALS 4 Section 1 - Simple Forecasting Basics 4 Section 2 - Establishing Successful Pricing 10 Section 3 - The Advantages of Automation 14 Section 4 - Sweet & Satisfying Results 15 PART 2 – THINK DIRECT & BOOK DIRECT 16 Section 1 - Traffic Generation – Attracting Qualified Prospects to the Hotel Website 16 Section 2 - Hotel’s website – Improving the user-experience 22 Section 3 - Building e-Reputation to earn conversion 29 2 3 In today’s ultra-competitive hospitality marketplace, any competitive edge can translate into a stronger bottom line, and it’s no secret that driving direct business and better revenue is one of the top priorities facing all hoteliers. Successful revenue management and direct business practices are vital in increasing profits for every organisation. Tried and true principles will help your organisation yield triumphant results, while the combination of inconsistent tactics and trends end up leaving your hotel looking for better revenue results. IDeaS Revenue Solutions and FASTBOOKING have teamed up to bring you this revolutionary new eBook with industry-leading insights to help your hotel organisation drive direct business and better revenue. 4 Simple Forecasting Basics Forecasting hotel demand is a key cornerstone of the practice of revenue management. Understanding your hotel’s total demand in advance enables hotels to price based on the occupancy they will achieve, rather than incrementally adjusting their pricing as the hotel occupancy fills. This key shift in approach allows hotels to maximize their outcomes - driving optimal revenue optimization through pricing, market segmentation and length of stay levers. Hotels use forecasting to help accurately predict the time frames throughout the year that will bring them higher or lower than normal occupancy, demand and revenue. A good demand forecast assists with not only room rate decisions, but also staff allocation, marketing campaigns, property maintenance and hotel operations as well. Utilizing data and analytics through accurate forecasting is also the best way for hotels to determine future strategies that drive successful changes in total revenue optimisation and outcomes. There are typically three types of forecasts in a hotel: operational, financial and revenue management. Hotels often overlook the differences between these forecasts; however, it is important to distinguish their differences because they are used for different functions. An operational forecast is often used to manage the hotel’s resources such as: how many room attendants will be needed to clean rooms, how many people will be checked into the hotel, or how many guests will dine in the restaurant. Financial forecasts are often used to determine the end fiscal results to provide owners and investors with an outlook on revenues and profitability. 4 5 A revenue management forecast, however, is intended to estimate the expected future demand for a hotel so they can manage that demand to achieve the hotel’s ultimate revenue objectives. This forecast may also be referred to as an unconstrained demand forecast. The calculation of unconstrained demand is a critical forecasting requirement because its success affects the entire pricing, inventory and revenue management process. To put it simply, unconstrained demand is calculation of your property’s total demand and can be higher than your actual inventory. Understanding this vital factor means that you can “pick and choose” your hotel’s most lucrative business and structure pricing to drive maximum RevPAR result. 6 The calculation of unconstrained demand is a critical forecasting requirement because its success affects the entire pricing, inventory and revenue management process 6 7 For accurate revenue management forecasts, it is important that hoteliers have detailed data that contains both historical and future information. The historical data should include the number of occupied rooms, as well as the achieved revenue by market segment per day. Future data should include the number of rooms and revenue on-the-books by day (and by market segment) for a minimum of 90 days in the future. When data is collected daily, the hotel can establish simple booking pace forecasts by market segment and day of week, and compare this to historical data. When this is done consistently, it allows hoteliers to quickly identify when demand picks up (or decreases) and enables them to adjust their sales and marketing strategies accordingly. In most markets, it is also important to understand the prices changed by your competitive set and, more importantly, the affect this can have on your own forecasting and pricing. Only IDeaS analytically folds in competitor data into the demand and pricing at the room type level. 8 Pricing by room class level is an area of opportunity for a majority of hoteliers in Asia Pacific. Understanding the demand by each room class individually will enable hoteliers to make data driven decisions on whether to oversell the base level rooms, or to close these out and sell true to type (rather than forced upgrades at no charge.) By individually calculating demand by room class, the pricing difference between each room class can be elastic – and thus drive significant revenue uplift in periods where demand for higher room classes such as suites/ club rooms is high. The traditional approach of just adding a flat +X dollar onto the base room type rate often leaves significant revenue opportunities untouched. Accurate forecasts are important in revenue management because they not only influence rate decisions and strategies, but they also impact any displacement evaluations for potential group business. Displacement scenarios allow hoteliers to determine if a piece of group business will end up displacing higher paying transient travellers and hurt their potential revenue performance. 8 9 There are typically three types of forecasts in a hotel: operational, financial and revenue management 10 Establishing Successful Pricing One of the most important areas of revenue management is offering the right price for the right customer at the right time, and establishing the right prices is an extremely critical challenge facing many hotels. It can be a struggle to determine the proper pricing strategies that deliver maximum revenue optimization in an overly complex and time-consuming process, something that is virtually impossible in a manual environment. Consolidating the multiple, complex data points and predictive algorithms each and every day by market segment, and then forecasting by each segment for the next 365 days can only be achieved with automation and machine learning. Deploying modern technology to undertake these processes results in a revenue team focused on market position strategy and outcomes, rather than data compilation and consolidation. Over the years, hotels have been steadily moving away from fixed pricing strategies towards dynamic pricing strategies. Dynamic pricing is the continual adjustment of prices based on the value of demand for the remaining available capacity. There are a lot of variables that contribute to successful dynamic pricing and the ultimate goal is to determine the highest price that a guest is willing to pay to stay at your hotel for a given date range and length of stay. Dynamic pricing strategies don’t focus on purely setting prices; successful dynamic pricing optimizes a hotel’s demand and revenue to maximize total revenue performance. Demand and revenue are the two crucial components your hotel needs to balance because they combine to deliver your strongest revenue performance. 10 11 This is where the analytics of your revenue management technology become a critical component in organizing and deciphering data for you to employ an optimal dynamic pricing strategy. Dynamic pricing approaches use three main analytical components to complement one another: demand, inventory and price sensitivity. DEMAND Dynamic pricing approaches demand as a function of price. It basically follows the school of thought that if the price increases, the demand will drop and if the price decreases, the demand will be higher. Seems pretty simple? However, it becomes infinitely more complex when looking at market conditions, competitive dynamics and a myriad of market segments. Analytics help hotels determine the optimal prices to sell, the achievable demand at different price points, and any corresponding revenues that can be attained for each market segment. INVENTORY Taking maximum advantage of the available inventory is a primary goal that challenges revenue managers. Using analytics allows you to determine optimal prices based on not just the demand, but the available inventory (or capacity) in the hotel. Only the best revenue managers (or solution providers such as IDeaS) understand you have to manage pricing together with your inventory to maximize your revenues. PRICE SENSITIVITY How prices affect guest booking behaviour is important in dynamic pricing because it helps you offer specific pricing to market segments and optimize total revenue. Low price sensitivity means that changes in price have a relatively small effect on the quantity of the rooms demanded, while high price sensitivity means that changes in price have a relatively large effect on the quantity of rooms demanded. To maximize overall revenue, you’ll want to determine whether the market segment has low or high sensitivity, and understand the number of rooms those market segments are booking. 12 One of the most important areas of revenue management is offering the right price for the right customer at the right time 12 13 These analytical components are at the core of dynamic pricing and should be complemented with the evaluation of additional elements such as: costs, competitors, demand for products and services, and the overall quality of products and services. It is also important to consider the type of organisation you’re managing - a limited service hotel will generally have a different pricing strategy than a full-service property. The key to successful pricing is combining together technology with the human knowledge that revenue managers know first-hand. Using a dynamic pricing approach with a strong analytical base that evaluates demand, inventory and price sensitivity is a proven industry practice that helps you create the right prices for the right customers at the right time. 14 The Advantages of Automation A common challenge for hotels is having too many people in charge of revenue management decisions. You leave a strategy meeting confident that you’re all on one page, but you find out later that someone made a change you didn’t know about. Automation allows a revenue management system to send pricing and inventory decisions to other selling systems, such as property management or central reservations systems. It binds together your revenue management strategy and deployment – and its integration reduces human errors and ensures consistency. Automation is also a key factor in bolstering productivity at work. Using an automated pricing technology reduces the time and energy you spend manually collecting, entering, analyzing and reporting market data. Revenue managers are able to utilize their revenue management system as their central strategy hub, deploying changes and decisions to their selling systems both routinely and immediately. This frees up more time to focus on revenue strategies and additional work responsibilities. Effectively managing rate distribution also has a heavy reliance on automation, as it streamlines rate deployment across all channels. Manually adjusting rates on multiple channels – potentially multiple times a day - used to be a challenging part of a revenue manager’s role, but advancements in today’s technology have made channel management far easier to manage. This is also a benefit for evaluating your overall distribution strategy. There are often acquisition costs with third party sites, with opportunities to strategize different ways to shift from more expensive channels to direct channels that cost you less money. Combining automation and strategy allows you to better control your business – and ultimately drive higher revenues. 14 15 Sweet & Satisfying Results Strategies that blend classic and quality revenue management ingredients have been long proven to bring hotels more confidence, better operational results and higher revenue. Blending together accurate forecasts, optimal pricing and automation are three successful components that will contribute to bringing you the sweetest satisfaction of all: more money. And if that wasn’t enough, a total revenue management approach will deliver far-reaching results throughout your entire organisation: 4 Gain confidence in pricing strategies 4 Improve competitive position and market share 4 Make more (and better!) profitable, data-driven decisions 4 Streamline organisational processes 4 Manage multiple properties more effectively 4 Efficiently manage distribution 4 Report and analyse insightful data 16 Drive Direct Business and Generate Higher Margin Revenue to your Hotel In the ultra-competitive hotel sector of today, any edge that can be gained could translate into a better bottom line for the business. Driving direct business and better revenue is always a priority of all hoteliers. We have narrowed down to three fundamental pillars that can drive this business to your hotel. They are traffic generation, website and conversion. We would like to share some strategies which you can implement for your hotel. Traffic Generation – Attracting Qualified Prospects to the Hotel Website In today’s frenetic-paced environment, the cyber world morphs continuously. From 2014 to 2015, the share of paid traffic has significantly increased to the detriment of organic traffic. The change in the page layout by Google attributed to this increase. Organic traffic Paid traffic Source: Phocuswright2015 16 17 Google released a new layout in February 2016 with four ads on top (instead of 3 previously). The additional one ad on top combined with the extension of Google Hotel Search, which includes map results, relegates organic search results to positions much lower in the layout as illustrated in the diagram. In July 2016 Google announced another change. This time, the change is related to text ads. The Expanded Text Ads are two times bigger than current text ads and are designed to maximise presence and performance on mobile search results with a bigger headline and an extra long description. Google will continue to give more importance to paid traffic considering that this is part of their business model. The effect would be a rise in paid search results. Google search results page 19 July 2016 Sponsored Links Display limit Google Hotel Ads before scroll (13’’ screen) Organic Results Google Expanded Text Ad 18 Search engine marketing techniques are one of the services offered by FASTBOOKING, which assist hoteliers drive qualified prospect to the hotel’s website leading to a noticeable revenue spike. We would like to share some of the best practices and pointers: 1. Protect your brand from Brandjacking on Google Adwords. Your hotel name keywords are being brandjacked. Be bold and aggressive on your hotel name keywords for your official website to ensure that your official website is e-commerce oriented in order not to lose the qualified traffic there. In 2015, 65% of clicks on Google pages were on the Google sponsored links which are the first four results at the top of the page. Being placed in this position drives major traffic to a website. Worldwide brands, such as Samsung or Microsoft, also protect their brand on search engines to avoid traffic-jacking by irregular sites as well. Brand Protection Against Brand Jacking 18 19 2. List your brand name in Google Hotel Ads and meta search engines such as Trip Advisor, Kayak, Trivago, HotelsCombined and Wego. It’s important to be present amongst the OTAs as it is an opportunity to drive qualified traffic to your official website. It would be easier for consumers to believe and to convince them that they can find the cheaper or at least similar rate on your site through comparison of prices gathered from meta search engines. 3. Target mobile users. Mobile devices used for researching and last minute bookings are rising. Studies show that 65% of same-day hotel reservations are made via a smartphone. (Source: eMarketer Survey). Cost per click(CPC) is 28% less as compared to desktop CPC in 2015. Mobile CPC is also used to catch the user during its ‘micro-moments’ such as travelling on public transportation or researching for information while on the go. It’s necessary that your hotel’s website is mobile, tablet responsive and compatible; that is user-centric offering a pleasant user-experience rather than irritate them, causing abandonment. 20 4. You can use Geo-IP targeting for mobile searches. It is the most efficient method to catch last-minute bookings as it targets people who are in your geographic area and are searching for accommodation. 5. Reach new audiences with pretargeting (Display Ads). We use the most advanced technologies available to identify the right prospect for your destination and display your hotel’s website banner at the right place and time. Display Ads will help you reach people who do not know your hotel. John is looking for a flight to Tokyo and a cookie tracks his activity. John is now targeted as a potential traveller looking for a hotel room in Tokyo. An advertising banner of your website appears (Pre-advertising). 20 21 6. Re-engage your audience with retargeting which is crucial to recapture abandoned bookings from a traveller who showed initial interest in your hotel. It follows visitors after leaving your website without reservation to visit other sites online, keeping your property at the top of mind and inspiring the guest to return to your direct site to book. 95% of web users will leave your website without booking. With the appropriate retargeting solution, 10% will return to the site. You can also create different retargeting ads of varying interest and from various angles for maximum exposure. These ads are based on behavioural targeting techniques, which means delivering ads that are tailored to the visitor’s actual behaviour or action while on your hotel’s website. John checks your website. He checks rates and availabilities on your booking engine and exits. An advertising banner appears when he will surf on other websites (Retargeting). 22 7. The importance of content. Organic Traffic or what is called Search Engine Optimisation (SEO) is still relevant, and CONTENT is key. Keep your content simple and make use of text formatting. Website content not only attracts, but it also keeps visitors on your site thus making the decision to book with you. Hotel’s website – Improving the user-experience With marketing funds spent on driving qualified traffic to your hotel website, it is recommended for the website architecture to deliver enhanced customer experience with user-friendly features that allow easy navigation and ease of booking. The website must also be informative, enabling customers to be assured of the credibility and service standards of the hotel. “The best hotel websites are clean and straightforward to use,” observes Jean-Baptiste Kechi, Website Studio Director for FASTBOOKING in Asia. “It is important to develop the site to be efficient and optimised for viewing on the iPads, other tablet-sized devices and smartphone compatibility,” added Kechi. Some methods in which to position your hotel’s website as the primary vehicle to book, as it is the lowest cost channel that plays a fundamental role in driving revenue to your hotel are shown below. There are three components to a website that will direct users to the booking engine so as to maximise click-through rate (CTR): 4 Integrate the concept of storytelling into your hotel website. Grab users’ attention as the website takes them along the hotel’s journey. w Present stunning photos, videos, virtual tour or 3D imagery to capture user’s attention. (Images credit to Hotel Chinzanso Tokyo) 22 23 4 Anticipate questions and be informative so as to avoid users from abandoning your website. w Promotional messages that is easily noticeable. Indicate price ‘starting from’ and avoid stating static price. (Image credit to Centara Hotels & Resorts) 24 (Image credit to Okura Nikko Hotels) 24 25 w Include user-generated content from social media such as user ratings and reviews. These reviews would assure customers of the credibility and service standard of the hotel. (Image credit to Okura Nikko Hotels) 26 w Illustrate your location and surroundings clearly w Indicate relevant information such as hotel amenities & services, check in/out timing, cancellation policy, etc. w Quick room comparison: various rooms types can be viewed cocurrently for well-informed reservations that suit specific preferences. w Payment options. While hotels provide consumers choices in room types, F&B venue and other add-ons, it is also important to extend options at the checkout. Offer as many channels of payment as possible. Sometimes shoppers would not complete a purchase as their preferred credit card is not accepted in the booking engine. Securing the payment channel is crucial. Ensure that the URL for the payment page to begin with https://. (Image credit to Okura Nikko Hotel) 26 27 4 Clean and efficient user experience to drive user to your booking engine w The website can be viewed in multiple languages. Such multi-language capabilities cater to customers of different countries and nationalities. w The search box feature allows for checking of hotel room rates and availability effortlessly with a simple click of the mouse. (Image credit to Shiba Park Hotel) 28 w Think mobile: Optimise the website for viewing on the go with iPads, other tablet-sized devices and smartphone compatibility so as to cater to the need for greater efficiency and convenience of the guests who are mostly tech-savvy travellers to embark on their next travel experience. w The design and layout appearance must be identical so as not to confuse the visitor that moves from the website into the booking engine. w Speed to meet the fast-paced, instant-gratification culture. Visitors will abandon a website that takes more than 10 seconds to load. In our fast-paced, instantgratification culture, fuelled by high-speed internet, the consumer would expect your web pages to load immediately. Speed is even more important once visitors enters into the booking environment that is integrated with your hotel website. Hotel’s team must frequently test the load time of results in consumer booking searches. Studies were done where the loading times were delayed by 2 seconds, leading to a jump in the abandonment rate from 67% to 87%. Source: Radware 28 29 Building e-Reputation to earn conversion Reviews are critical to a hotel’s reputation online. Traveller is more likely to book a hotel with higher review scores that is within the same price range. FASTBOOKING now integrates e-Reputation system TRUSTYOU into its platform. Hotels can enjoy this added feature for FREE. Coupled the e-Reputation with the hotel’s services and customers experiences, the hotel can improve their scores and increase the number of reviews that can also assist to drive and increase traffic to your hotel website which may lead to better conversion rate. “The average e-commerce conversion rate is 2.6%, but a high-performer can exceed 4.5%,” said Christine Tan, SVP Strategic Sales & Account Management, Asia Pacific for FASTBOOKING. 30 Triptease The Hotel Network Converts Lookers into Bookers with Price Comparison Widget 76% of travellers think that booking a hotel room is cheaper through an OTA. To ensure that its customers take advantage of the latest e-commerce technologies and best practices, FASTBOOKING has partnered with two leading Price Comparison Widgets providers, Triptease and the Hotel Network, to reassure customers’ on their booking decision. This widget can integrate with our booking engine. Together with location and e-reputation, pricing is one of the top 3 criteria that convince a traveller to book a hotel room. The key is to reassure travellers of the best deal during their booking journey to boost the conversion rate. The widget also helps to retain the travellers on your website as there is no necessity to consult other websites for comparison. 30 31 Do You Have The Confidence To Execute Strategies That Drive Direct Business And Revenue To Your Hotel? Share your concerns and challenges with us. IDeaS and FASTBOOKING can be your partner to reach your objective on driving direct business and better revenue. About IDeaS IDeaS Revenue Solutions leads the hospitality and travel industries with the latest pricing and revenue management software and advisory services. Powered by SAS® and more than 25 years of experience, IDeaS proudly supports more than 7,000 clients in 94 countries and is relentless about providing its clients more insightful ways to manage the data behind their pricing practices. IDeaS empowers its clients to build and maintain revenue management cultures–from single entities to world-renowned estates–by focusing on a simple promise: Driving Better Revenue. IDeaS has the knowledge, expertise and maturity to build upon proven revenue management principles with next-generation analytics for more user-friendly, insightful and profitable revenue — not just for rooms, but across the entire hotel enterprise. For more information, visit www.ideas.com. About FASTBOOKING FASTBOOKING offers leading edge e-commerce solutions for hotels to boost their direct sales strategy. Its solutions based on a cutting-edge cloud platform together with its proven expertise in digital marketing, enable hotels to raise brand visibility and promote online sales through online and mobile channels. Our local experts offer daily support to 4,000 hotel properties in more than 90 countries, to help them leverage its solutions and retain their independence. Founded in 2000, FASTBOOKING is now part of AccorHotels group, as the specialist for digital solutions dedicated to independent hotels. For more information, please visit fastbooking.com or email: sales@fastbooking.net for a better solution to your challenges. 32 www.ideas.com Email: apac@ideas.com www.fastbooking.com Email: sales@fastbooking.net