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Hotels Digital Marketing Trends Research

  1. Hotels & Travel Digital Marketing Trends Schieber Research, January 2017
  2. Introduction • Technological advancements continue to change the hotel industry, causing the traveler’s path to purchase to rely heavily on digital means throughout the exploration, research, booking, traveling and departing process. • The most relevant technology trend is the rise in smartphone penetration, which enables competitors to offer a seamless, omni-channel experience for the traveler’s journey and create significant service innovation. Another trend is that of “big data” which – when analyzed properly – can offer personalized experiences to the consumers. • The penetration of artificial intelligence and bots in self service, is also beginning to increase.
  3. Introduction • The purpose of this presentation is to present the major industry and consumer trends affecting the hotel industry, specifically with respect to the digital evolution and online booking. • Main subjects covered on this presentation: 1. Competitive landscape 2. Consumer and industry trends 3. Competitor strategies and innovations
  4. The Travel Booking Landscape • The traveler’s journey has become a digital journey, across countries and generations. • Accommodation booking via mobile apps is also on the rise.
  5. The Travel Booking Landscape • The online booking trend is relevant to all generations; but apparently, mobile apps are more relevant to Millennials than to Generation X consumers and to boomers. • Mobile constituted 11% of digital accommodation booking among Millennials, compared to 7% among Gen-X consumers and 4.5% of Boomers.
  6. The Travel Booking Landscape • OTAs - Online Travel Agencies such as Expedia and Priceline, and hybrid / aggregator sites such as TripAdvisor, have been competing hotels to drive accommodation booking. Increasingly, they are also offering other elements of the trip, such as flights, car rentals and restaurant reservations. Search engines, led by Google, pose an additional challenge to the industry’s traditional players. Source: IHG Commercial Strategy presentation, September 2016 • Price plays an important factor in consumers’ decisions whether to make a reservation via an OTA or directly through the hotel website. Rates are not the only determinant of value, though: perks, loyalty benefits and extras all play a part in the consumers’ reservation decision.
  7. The Travel Booking Landscape • Apartment rentals, led by Airbnb, are based on the promise of “traveling like a local”, competing with hotels not only in terms of channels / commissions – but also in terms of experience / business model. • A vacation rental is an alternative lodging option to hotels accommodation that involves the short-term rental of myriad properties, such as apartments, farm stays, private homes, cabins, beach houses, villas, cottages, or chalets, to travelers and tourists. These units are offered on a nightly, weekly, or a monthly basis. • According to the Global Vacation Rental Market 2015-2019 report conducted by Research and Markets, the Vacation Rental market is believed to be worth $100 billion, with the U.S. accounting for 25% of that. • The report further expects the global vacation rental market to be worth $170 billion by 2019.
  8. The Travel Booking Landscape • Airbnb is the leading player in the market and has seen a significant surge in its valuation. • According to Airbnb, since its founding in 2008, 140 million guests have arrived at Airbnb listings, including nearly 80 million in 2016, up from 40 million in 2015. • Millennials account for about 60% of all guests who have ever booked on Airbnb, and has grown more than 120% in the past year. Seniors are the fastest-growing host demographic, and senior women consistently are the best-rated hosts on Airbnb. • Airbnb does not disclose its financial performance, but revenues were estimated at $250 million in 2013, and reports suggest that the company ended 2015 with nearly $900 million in revenues. • Airbnb is yet to make profits. It is estimated to have ended 2015 with $150 million in operating losses.
  9. The Travel Booking Landscape • Some of the biggest players in the travel industry have entered the apartment rental market. • Choice Hotels launched a vacation rental business working strictly with vacation rental management companies rather than with individual property owners. • Priceline Group said that vacation rentals will be an important source of growth. The category already accounts for almost half of Priceline’s property roster thanks largely to, which Priceline’s business launched in 2014. • In 2015, Expedia acquired HomeAway for $3.9 billion • Onefinestay, founded in 2009, was acquired in April 2016 by AccorHotels for $170 million. Hospitality service Onefinestay provides temporary travel accommodation using high-end, luxury apartments. It targets high class client segment. HomeAway’s proposition
  10. The Traveler’s Journey • Source: Schieber Research Understanding the Path to Purchase and the triggers affecting each stage Reviews, Social Media Content, Ads, Search and Social Reviews Content Reviews, Cross Services, Concierge Aps and Social Reviews Staying Websites OTAs Reviews TRAVELER‘S JOURNEY
  11. The Traveler’s Journey | Pre-Travel • The pre-travel stage can be triggered by an ad, social media content or the consumer’s own search. It tends to be a stressful stage, during which the consumer searches information and reviews on destinations and service providers. Online reviews, and aggregation of content / comparisons, are crucial at this stage. Today, reviews and comparisons are offered by hotels as well as by third party websites, as hotels identify that the consumer will research the various options any way. • Note that, the entire travel might stem from content (including through social media) or loyalty offering rather than the traveler’s initial decision to go on a trip; as this creates opportunities for travel companies, it is important to remember to establish a long-lasting connection throughout the consumer journey. • Sometimes, these activities take place on several devices, starting on one device and proceeding on another – and so, transparent shift between channels should be taken into consideration, usually through log-in (with your email, social media identity or membership card).
  12. The Traveler’s Journey | Pre-Travel • At this stage, the leading resource for the consumers’ research is the OTA website. This provides OTAs with an opportunity to offer value to consumers and drive reservations. This also means that, in order to become the first stop for consumers, hotels should provide content, information and reviews that influence the decision process. Leading Resources for Destination Selection Source: ComScore 2016
  13. The Traveler’s Journey | Pre-Travel • Travel costs are the top influencing parameter of the trip destination choice. Factors Influencing Travelers’ Destination Decisions Source: ComScore 2016
  14. The Traveler’s Journey | Pre-Travel • TripAdvisor offers a Best of 2016 section with information regarding attractions and locations which were given the highest grades by travelers, to encourage and inspire travel.
  15. The Traveler’s Journey | Pre-Travel search results include a meter on top which tells travelers if the destination is a top choice with fellow travelers on their selected dates. • Expedia operates a blog for travel-related issues under the name “view finder”. • The blogs offers “stories” which can be sorted by different categories. • Expedia’s YouTube channel offers travel-related videos. • The videos are sorted according to different categories: One Day in an Amazing City, Popular Destinations, Expedia Travel Destinations divided to different regions and Travel Blog | Expedia Viewfinder.
  16. The Traveler’s Journey | The Trip • During the trip: the trip itself drives new needs, such as check-in, room service and check- out, but also cross-services and products such as event tickets, entertainment and dining. Competitors are responding to such demands by launching / acquiring services such as online restaurant reservations, attraction reservation etc. • Other trends – such as self service, mobile service, content sharing on social media, research and personalization – are also relevant to this stage. W Hotels chain joined forces with Snapchat to reach Millennials and encourage social media sharing. In October 2015 the chain launched a sponsored geofilter campaign that allowed users to overlay phrases like “Wish you were here” and “Current Situation” on top of images taken at W properties.
  17. The Traveler’s Journey | Post-Travel • Post-Travel – consumers are encouraged to leave a feedback and reviews, post pictures and recommend services to their friends. Competitors are turning to CRM in order to drive repeating purchases, via email marketing, referral programs and loyalty programs. • Companies use the data received by the consumers to offer personalized solutions, and encourage trips. Shared content is also used to inspire friends’ travels. • Agoda has created an online “community” of like- minded land divers to share their superior tourism experiences via social/video channels like WeChat, Youku and Weibo.
  18. Competitor Strategies Pricing & Loyalty Whole Trip Planning Reviews and content Professional services
  19. Competitor Strategies Pricing & Loyalty Pricing pays a major part in deciding on where to book, and competitors use several price-related tactics, including: Best price guarantee; bid / reverse bid; last minute deals; and price alerts. Source: IHG Commercial Strategy presentation, September 2016 • IHG promotes “Your Rate” pricing
  20. Competitor Strategies Pricing & Loyalty KAYAK offers travelers to receive flight & hotel prices alerts by email Priceline focuses on a “Best Price” proposition
  21. Competitor Strategies Pricing & Loyalty Hotels are using different strategies and tactics in order to win the battle against the OTAs, including loyalty, pricing, perks and service. A TV ad by Hilton under the name “Stop Clicking Around”, encourages viewers to book directly through Hilton, promising the lowest prices available. • Some hotels offer additional ancillary services and rewards for direct bookers, such as a welcome foot massage, or a free scuba lesson for guests who book direct.
  22. Competitor Strategies Pricing & Loyalty Hilton offers a loyalty program under the name Hilton HHonors. Members of the program can also earn HHonors Points for staying, traveling, shopping, and/or dining at the Hilton. The chain offers 4 different levels of membership: Blue, Silver, Gold and Diamond, determined according to the number of stays / nights in Hilton properties and providing different benefits. According to Hilton’s CEO ,Christopher Nassetta, since the launch of Hilton HHonors rates, membership enrollments have increased significantly. In the second quarter for 2016, Hilton added 2.4 million new members and its share of occupancy by members was nearly 56 percent in the second quarter, up more than 400 basis points year-over year. The Hilton HHonors app accounts for 23 percent of Hilton’s direct web traffic and app downloads are up 66 percent year over year. Source: Hilton Worldwide, Q2 2016 Earnings Conference Call
  23. Competitor Strategies Pricing & Loyalty • Best Western launched in 2016 a new digital platform,, which enables the chain to offer a discount rate to the Best Western loyalty members, typically reflecting a 10% discount. IHG offers IHG® Rewards Club Select Credit Card which benefits its owners with bonus points for spending during their stays. The bonus points can then be redeemed for free nights and discounts.
  24. Competitor Strategies Pricing & Loyalty • IHG Rewards Club has almost 94 million members, making it the largest hotel loyalty program. • IHG® Rewards Club Credit Card offers: “Annual Free Night Worldwide, Earn 5 points per $1 spent when you stay at our hotels, Earn 2 points per $1 spent on purchases at gas stations, grocery stores, and restaurants, Earn 1 point for every $1 spent on all other purchases, Automatic 10% point rebate, Platinum Elite Status”