3 reasons why valuable data, not cheap deals, is the secret to hotels’ pandemic recovery

As restrictions start to ease in many countries and the local and drive-to markets start to warm up, hoteliers could be forgiven for running bargain deals to secure those elusive heads in beds. But that’s the last thing they should be doing.

The digital transformation of many sectors, including hospitality, has been hastened by the pandemic and technologies such as contactless check-in are being rolled out by both chain and independent hotels. At the same time, it is common knowledge that data can provide straightforward insights about a business and intelligence-driven initiatives are producing hard results in certain well-known organizations.

However, developing a data-driven culture in hotels outwith the major groups has proven to be rather difficult to achieve. We are not alone.

In a survey of 85 Fortune 1000 executives by NewVantage Partners, 92% said that the “principal challenge to becoming data-driven” is people, business processes, and culture. Fewer than half of the companies surveyed reported having success in the last year with key metrics such as driving innovation with data, competing on data and analytics, managing data as a business asset, forging a data culture or - yes you guessed it - creating a data-driven organization.

With both budgets and resources having been diminished over the last year like never before, hotels are operating with a skeleton team. Making smart and cost-effective decisions to capture demand has never been more critical. That’s where having the right attitude toward the use of data, combined with easy access to verified, real-time intelligence comes in – and why it is this, rather than any cheap deals, that will be the key to welcoming more guests through hotel doors.

As Agoda’s Senior Regional Director for Partner Development Andrew Smith, highlighted in a webinar hosted earlier in the year by Fornova’s CEO, Dori Stein: “We can’t just continue to reduce prices, or it becomes a race to the bottom. Hotels need to look at more ways to increase their online presence, so customers are seeing them and increase their potential to convert.”

3 reasons why hotels need intelligence-driven tactics at the heart of their recovery strategy:

1. Personalization: Having an in-depth understanding of who your target guests are, where they are and what motivated them to book will be critical in securing sustained growth and winning greater market share. Gathering as much data about each guest is crucial and enables revenue, distribution, and marketing teams to not only understand what they expect from the hotel but the activities they will be seeking out during their stay. Armed with this information hotels can segment audiences and create tailored campaigns and deals that will be more effective in attracting guests.

Compass Hospitality Group is one of the hotel chains to be on the front foot in aggressively leveraging tools to increase its personalized approach through PPC, metasearch and OTA campaigns.

More than this though, hotels are seeing a return to more traditional and personal booking methods with bookings being made over the phone and live chat seeing exponential growth. A hotel group that has been quick to capitalize on this demand is Minor Hotels, which has expanded its call center team and scaled up its use of live chat and social media messaging service.

Taking the time to understand your guests and aligning your revenue, distribution and marketing approach accordingly will create a powerful framework to sustain occupancy and increase ADR.

1. Channel optimization: Every dollar counts as hotels start their journey to recovery. Distribution managers must ensure every channel is working hard for them and delivering results, or else. Therefore, tracking in real-time how each channel is performing is crucial. For example, how much does it actually cost to advertise on Google inviting direct bookings, and how does it compare with OTA commissions, both in terms of cost but also effectiveness? Are the metasearch bids optimized based on the hotel’s revenue margins? Also vitally important is being able to easily identify and address rate parity issues (from being undercut by OTAs and wholesalers to tax calculation errors or broken connectivity). Rate disparity affects online visibility - as a property with inconsistent pricing will be pushed out of the top results page on all search and meta engines - and of course the greater a hotel’s visibility, the greater the chances of securing bookings.

2. Competitive and dynamic pricing: With demand soaring as lockdown restrictions start to relax, there is little need anymore for hotels to reduce rates. On the contrary, hotels should try to maximize revenue by monitoring the rates of their comp set in all feeder markets and set their pricing accordingly, so they are winning guests without leaving money on the table. The ever-changing nature of these times means that static rates should be a thing of the past. Of course, all hotels do not have the tech stack needed to be making pricing changes every minute based on demand, as the airlines do. However, revenue managers should make every effort to track their comp set, including vacation rentals, using the best competitive intelligence software they can afford, and continuously adjust their prices to stay ahead of the rest.

While package deals with tour operators and fixed-rate block-selling to wholesalers and bed banks will always be part of the distribution and marketing mix, it is the data behind these and all other strategic decisions that will make the real difference. Only by understanding what the real cost and impact of every decision is, will hotels be able to successfully build a sustainable revenue strategy that optimizes both net RevPAR and ultimately GOPPAR.

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