In one of his most recent blog posts for HOTELS, CHMWarnick CEO Chad Crandell asked the central question of the hotel industry’s campaign to reclaim direct bookings from online travel agencies: How do you know you’re winning?
There are many data points to track in order to answer that question, but the ones hotel brands point to don’t tell the whole story.
In a year where the biggest companies are advertising their loyalty programs and direct-booking discounts, surely their ranks of rewards members are growing. But is engagement with those programs rising, as well? How many of these new members enjoying discounted rates would be booking with you anyway?
Hotels might be able to retake some share of their bookings back from OTAs, but how do all their total costs for that direct booking—marketing fees, costs to administer the loyalty club, and the percentage off the top line they give away in the discount—compare to the OTA’s commission?
Revenue managers can look back at their recent bookings and compare the net ADR of their direct bookings to their OTA-sourced business. But the truly valuable calculation for setting the right loyalty strategy would be one that looks forward and finds the optimal price. For that, nothing works better than lost-business data.
The two principal metrics I mean when I talk about lost-business data are web shopping regrets and denials. The former measures how many times a consumer shops your direct channel, finds a rate for a booking date, and passes. The latter measures how many people are turned away after trying to book because their preferred room type is unavailable or the whole property is sold out.
When hotels combine their historical information with data on how much consumers have researched their room offerings without buying, they can get the true picture of their unconstrained demand. More importantly, lost-business data help properties test their pricing strategies and their guests’ price sensitivity.
Test whether that discount of 10% or more is driving more conversions from “look” to “book” on your hotel’s brand.com site. If it isn’t, you could probably get enough loyalty-club business with a lower-value offer, and you wouldn’t waste time and threaten your ADR to chase too few incremental customers.
Brands and their owners will need to keep experimenting with their loyalty pricing to strike the right balance, because consumer enthusiasm for members-only discounts will likely persist for a while. Leveraging lost-business data will be their best strategy for finding what they seek.
Contributed by Patrick Bosworth, DUETTO, San Francisco