The Customer Acquisition Dance
Hotel owners and operators face a unique situation. The “heads in beds” mantra and dance to drive occupancy is top of mind but at what cost and what mix of demand channels? Customer acquisition is key to increase occupancy and run a successful hotel, but the costs of customer acquisition differ greatly by demand channel and must be kept low to zero to drive REVPAR and subsequent profit.
A recent whitepaper study conducted by The Hospitality Asset Managers Association found that while room revenue growth for independent hotels is growing by 23% the cost of acquiring new guests (the customer acquisition cost or CAC) also is rising by 23%. Even while room revenue is growing, costs are growing equally as quickly.
So how do hotel owners and hotel operators overcome the customer acquisition struggle? How can hoteliers drive direct bookings and repeat business? Keep reading to find out our best tips on customer acquisition tactics!
What is the right mix to drive down costs?
Maximize Marketing Channels:
Organized digital marketing efforts go a long way in overcoming the customer acquisition struggle. It’s important that certain marketing features are always on to ensure success and gain new customers.
- Search Engine Optimization: Make sure that your website is optimized for search engines. This means including specific keywords in website content that are probably searched often. This helps search engines pull your website up first when advertising to potential guests.
- Google Adwords: This is a paid marketing campaign that allows you to bid for Google to place your website at the top of search results based on certain search words and phrases. Learn more about this solution here.
- Social Media: Social media is an excellent, free tool to reach new guests and establish yourself as a leading hotel and property. According to a Facebook study, 79% of people have their phones with them all but two hours of the day. In order to reach more guests, become established on all the major social channels and post consistently.
Minimize Traditional OTA Usage:
While traditional Online Travel Agencies (OTAs) have historically been a historical way of increasing occupancy and gaining new guests; when used as a primary demand channel, they tend to hurt the hotel more than help, especially in terms of driving repeat business and lowering customer acquisition costs. Therefore, hotels pay a premium to advertise their rooms and rates on an Online Travel Agency. When a guest books through an OTA, hotels do not receive the guest data and are charged a percentage of the booking. This is because traditional OTAs keep the guest at the top of search funnel triggering commissions over and over to themselves and not that particular hotel.
While it may seem like a great distribution channel, OTAs cost hotels more and provide very little guest information compared to meta-search engines or direct bookings from the hotel website, booking engine, email marketing and retargeting programs.
Implement a Loyalty Program
Direct bookings make the difference. Loyalty programs encourage direct and repeat bookings. Establish a robust loyalty program so that your guests feel valued and important. Offer great incentives including both fast redemptions for global gift cards such as North American favorites, Amazon or Starbucks, as well as comprehensive redemption at over one million types of lodging globally. These rewards drive booking directly with your hotel and can easily include using free marketing tools such as social media and emails to promote the loyalty program to the past or future travelers. Looking for more information on loyalty programs? Learn more here.
Choose a Strategic CRS/ PMS Solution
Managing online distribution. Growing repeat business. Cutting operating expenses. These are typically the main goals and challenges hoteliers face with Central Reservation Systems (CRS/ PMS) solutions. Choose one that helps you meet these daily challenges with an easy-to-use interface and is well-connected to reduce labor, rate and inventory parity errors. Learn more about CRS solutions here.
Independent hoteliers and managers need to keep an eye on cost while also managing each demand channel to attract new customers and adopting strategies that maximize efficiency in the distribution channels and processes. In order to effectively acquire new customers, hoteliers should utilize digital marketing strategies, minimize the primary usage of OTAs, implement an excellent loyalty program and choose a reservation system that allows many connections and distribution options.