To this day, I am still surprised by the lengths hotels will go when creating a promotion or sales strategy. Often, they overlook where the bookings will transact and, even more importantly, what effect those transactions will ultimately have on property revenue and profit. This is because, all too often, the property spends more time developing the creative for the promotion than analyzing the data to support it. This can lead to “promotions” which result in the dilution of rates or worse, shifting bookings into less profitable channels.
Building Winning Campaigns on a Hotel Business Intelligence Foundation
Whether the hotel is building a campaign designed to create awareness or a campaign to bolster need periods, a thorough analysis of the data is a must. Careful analysis of the hotel’s own data will set all campaigns on the path to success. Combine this with precise monitoring after launching the campaign and the hotel can almost guarantee its campaigns will not only be successful but will also drive the right business to the right channel at the right time, the most basic definition of revenue management.
Regardless of the type of campaign planned, there are four steps which should be used every single time. They can be easily remembered using the word DARE, which stands for Determine, Analyze, Research and Evaluate. Here’s how it works:
- Determine the goal of the campaign. Is the campaign filling a need period? Is it creating awareness of the hotel? Are you launching a new feature or product? Understanding what the goal is will help the hotel determine what success looks like. A campaign designed to fill a need period might need to be pushed through more channels than an awareness campaign. However, regardless of the reason, every effort should be made to drive as many of the bookings from the campaign through direct channels whenever possible.
- Analyze the average length of stay for the hotel. Hotels often incorporate length of stay into promotions. Any length of stay promotions should always exceed the length of stay for the hotel during the time period being promoted. For instance, a “buy 2 get 1 night free” offer when a hotel typically has a three-night length of stay will result in cannibalization of rate and reduce revenue by a third on those bookings. Additionally, if the same campaign is promoted via the OTAs, profit is reduced as well. Making sure you understand this important metric not only for the hotel as a whole but by channel, day of week, season and even down to the market segment level will mean the difference between a campaign that adds incremental revenue to the hotel and a campaign that undermines the overall sales strategy and negatively impacts revenue performance.
- Research booking windows for the hotel. Booking windows vary by day of week, season, channel, and all the way down to individual rate plans. All campaigns should monitor these in order to prevent rate dilution and channel shifting. Discounted promotions should be offered outside typical booking windows in an attempt to drive advance bookings for the hotel. Value add promotions with minimal discount on rate can be promoted within the average booking window. As an example, if the booking window for the OTA channel is longer than the booking window of a hotel’s own website, a discount promotion offered via the OTAs might result in too many bookings in a very high cost channel. This would result in less revenue at a higher cost and reduce the number of rooms available for sale when the booking window for the most profitable channel (hotels’ proprietary website) kicks in. Understanding lead time allows the hotel to time campaigns for maximum revenue impact.
- Evaluate pace data to monitor your campaigns. Once the campaign is launched, monitor, monitor, monitor. Understanding how many bookings it is receiving but also from where will help the hotel measure the impact the campaign is having on both revenue and profit. Compare the performance to the same time last year to make sure the campaign is having a positive effect and not just share shifting business from higher rated categories into your promotion. Careful monitoring of performance will allow the hotel to make adjustments while there is still time to affect change.
Regardless of the reason for the promotion, every campaign should be built with the data in mind. Knowing where customers transact, when they transact, and how long they stay will help the hotel build campaigns to take advantage of the hotel’s most profitable channels.
All of the information ever needed is readily available. Using it to build better campaigns will position every campaign to be successful. Data is the pulse of the hoteland, used wisely, it leads to higher revenues and, more importantly, higher profits.