Promotions and packages are an integral part of any hotel organization’s plan to drive incremental revenue, but these need to be executed without diluting high-yield demand. To that end, making the most of promotional campaigns strongly depends on how the revenue-management, e-commerce and marketing teams work together.
Revenue-management specialists describe such a tactic as a balancing act where one needs to be spot-on with the conditions and the discount level. If the rate is just discounted without an appropriate fence, demand can be generated, but the consumer, who is willing to pay a higher price, would just pay the discounted price, and revenue opportunities would be lost. If the conditions set for the promotion are too strict or minimum-stay requirements too long, for example, insufficient demand could be generated, explained Stefan Wolf, senior vice president of revenue and distribution strategy, Onyx Hospitality Group, Bangkok, which has multiple brands, including Amari Colours & Rhythms.
In fact, an integrated assessment is vital to the success of any promotional campaign. Take, for example, promotions and packages planned in advance by identifying the seasonal trends and the demand levels in the market. “This is an approach that is derived from an integrated assessment by marketing, sales and revenue management, but there is very little scope for last-minute offers in this case,” said Karishma Singh, a revenue-management general manager with Taj Hotels Resorts and Palaces, New Delhi.
According to Wolf, the objectives of all constituents need to be better aligned. “While e-commerce might favor demand-driving promotions (deep discounts, few restrictions), marketing might concentrate on the brand-awareness building, and revenue management is more concerned with potential revenue dilution of high-yield business,” he said.
Ideally all three departments should work together to create an effective promotion. “Revenue management should determine the need period, marketing write the creative (text and images) and e-commerce distribute the content via banners and/or electronic mail,” Wolf added. “Together the price point and conditions should be agreed upon to achieve an optimized result.”
But all too often, according to Amit Kaushik, resort director of revenue management, Madinat Jumeirah, Dubai, there is a disconnect due to lack of communication and coordination. Marketing colleagues have expertise on branding, packaging and selling (both online and offline), while revenue management knows when to sell (lead periods) and how to sell (room type mix, market segments). “Unless both work in conjunction, there is a risk of failure,” Kaushik said.
Kaushik added the focus should be on working jointly with e-commerce and content experts in both digital brand marketing and hotel marketing to ensure optimum guest experience. “If we identify a gap in performance, we directly address the issue with the latter for direct action,” he said. “This might include amending the copy, changing some of the picture in order to make the content more engaging and, most important of all, reviewing the booking flow.”
Maxine Howe, director of sales and marketing, Langham Place, Mongkok, Hong Kong, said the revenue-management team and e-commerce work on pricing strategy on a daily basis. “When going into more details, the RM team would provide an overall structure on the pricing, and then e-business would design promotions and packages and distribute across different channels,” Howe said.
Howe added marketing also synchronizes revenue management’s business objectives and target customers and then provides insight on the channels for promotion and relevant collaterals to get the maximum ROI in revenue and branding. “We also ensure our operational team can deliver on the promotion,” Howe said.
Promotions and packages are also an important element of any hotel’s direct distribution strategy.
“The brand website is a very powerful medium for marketing our packages and promotions,” Singh said. “With web analytics we can determine the effectiveness of the engagement levels. Such analytics provide valuable data in understanding visitor behavior — for example, the number of unique visitors, page views, clicks and clickthrough ratios. This helps to develop meaningful and targeted campaigns.”
Other than planning, a cohesive effort is need to monitor the campaign, too. “We consistently monitor and evaluate the booking trends, identifying opportunities for course correction and are agile in our approach,” said Singh, referring to the significance of evaluating the purchase path of customers for various channels, including brand websites and call centers. For instance, e-commerce assesses the bounce rates in the booking funnel of the hotel website to see where customers are drifting away without completing a transaction. Also, technology today paves the way for retargeting target audience members that did not convert or visited another site looking for content related to their trip or similar query.
Wolf recommended that channel-specific lead time should be taken into consideration and conversion expectations should be set assuming it is a promotion covering brand website, OTAs and GDS. “Most important is the alignment of goals from e-commerce, marketing and revenue management to ensure the campaign delivers the envisioned results,” he said.
Apart from the length of the promotion, Wolf suggesed a minimum period before any adjustment should also be made. For example, a promotion shouldn’t be discontinued or changed after two days if the results are behind expectation. The impact on business, however, should be monitored so adjustments can be made after the minimum period if required.