Hotel Industry’s Untapped Opportunity to Win Back Market Shares from OTAs

22 Mar 2016

Hotel Industry’s Untapped Opportunity to Win Back Market Shares from OTAs

Hotel Industry’s Untapped Opportunity to Win Back Market Shares from OTAs



Online travel agencies (OTAs) like Kayak or Bookings.com will take at least 20%, roughly $32* billion dollars, in commissions from hoteliers this year. That number continues to rise as consumers, especially millennials, become increasingly reliant on OTAs for price comparison, ratings, inventory. Recognizing their advantage, OTAs are increasing their fees: Expedia's new and controversial 
Accelerator "pay­for­positioning" program will raise fees to as much as 40% in exchange for premium viewability. To reverse this trend, Hotels can take back massive shares of profits by engaging directly with customers through a grossly untapped channel: the peer­to­peer viral network.

Consider the Customer Journey

Google research study found that the best time to influence a traveler is during the research phase of planning. Yet, reaching consumers at this unstructured and informal phase is nearly impossible.

Our key insight comes from observing the customer travel planning and booking journey. After a traveler has chosen her destination and purchased her flight, she will turn Expedia or Tripadvisor instead of booking direct. In fact, three out of four travelers will book through an OTA because it offers a large inventory of hotels, competitive prices, and reviews. On average a consumer will visit 38 different sites before making a reservation of any kind.
Hotels have an uphill battle to break through the noise for a customer's attention.

We also found that travelers have a natural tendency to talk about their trips afterwards with family and friends. They give reports of their activities, accommodations, entertainment, dining, and what went well and what did not. These conversations go beyond just in­person. Consumers use mobile apps like Snapchat, Instagram, and Facebook to capture moments in real time, and to share with millions of on the Internet.

Get to the Customer First (Through what they do last)

To win back direct customers, hotels need to influence travelers before they reach online travel sites, through word­of­mouth campaigns that target the end of a guest trips. Whether a peer­to­peer, referral, or a word­of mouth campaign, the results are one in the same. They are Participatory Marketing™ strategies turn customers into advocates for the brand. Hotels can insert themselves in these organic yet predictable post­trip conversations, and give customers a reason to become an ambassador to tell the next person about their stay. A campaign targeting the end of one's journey pushes a hotel through the noise, and jumps ahead of OTAS to top of mind, before the travel planning journey even begins.

An Untapped Opportunity

Peer­to­peer marketing has been proven successful across industries, from startups to nonprofits. For example, Dropbox, the popular cloud storage startup, relied on a two­sided referral program to grow its user base. For each new customer that signed up through the program, they received a free service while ambassadors were awarded kickbacks. Dropbox grew from 100,000 to 4 million users in just 15 months. The ALS "Ice Bucket Challenge" was also an overnight sensation in 2014. It employed user generated videos posted on Facebook and its tagging feature to select and pass on the challenge to its next participants. The challenge garnered 2.4 million videos on Facebook, and 10 billion views from 440 million users. Despite its clear successes in various
industries, hotels have yet to take advantage of Participatory Marketing™ in its own campaigns.

Hotels have overlooked this propensity: Every traveler shares their experience with family and friends after a trip. But by recognizing this habit, and formalizing a system for how customers can be rewarded for sharing the brand, hotels have a new and unique marketing channel to engage with existing and potential guests. And with every use of social media, each endorsement is amplified to reach beyond physical proximity and across time.

Be compelling and worth sharing

At the heart of every successful peer­to­peer campaign is a social object, a compelling entity or experience worth sharing. For example, imagine if guests could give to family and friends complimentary perks, like room upgrades or buffet breakfasts if they booked directly. Alternatively, hotels can promote experiential social objects like exclusive excursions and events. For example, Hotels can offer unique and local tours of a city, or a employ a digital scavenger hunt around the property, whereby guests can unlock rewards with each photo taken at landmark.

Along with an attractive social object, there are several other important elements to consider such as incentives that motivate customers, distribution mechanisms and channels to spread the word, as well as social and gasification components that perpetuates a campaign .

Join us in the next few weeks as we examine, translate and design a digital Participatory Marketing™ solution for hotels. At the end, we hope to provide our readers with a compelling and tangible framework and product that can be used as a jumping­off point for their own campaigns.

* Calculation based on L2 Inc Report https://www.l2inc.com/research/luxury­hotels­mobile> for 2016 online travel sales estimate.







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