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Hotels

Striking a Balance Between Selling on Price and Advancing Your Brand

It is no surprise that many potential guests base their travel bookings on price alone.  In this highly competitive marketplace, price can be a true differentiator, but it can also cause friction for hoteliers who are looking to enhance their brands with new innovations.

For example, with the rise of mobility, there has been an increase in mobile apps that are geared towards providing last-minute bookings at the right price.  Of course, these mobile apps help hoteliers fill rooms that may be vacant, but it could also contribute to compromising a hotel’s brand.

Most forward-thinking hospitality providers know that these mobile apps and other online travel agencies (OTA) fill a major void when it comes to helping with guest lead generation.  However, the challenge is that many OTAs and mobile apps have the potential to erode a hotelier’s profit margins and one cannot rely on price as the dominating factor for the brand.

“Hoteliers struggle to find a balance between selling on price and differentiating the brand based on key innovations,” said Tobias Bray, Innovation Strategist at NetLink Resource Group. “The key is being able to create brand loyalty that will last even if a hotel is not the most cost-effective option available on the web or on a mobile app.”

As we have highlighted before, it is all too easy for hoteliers to fall into the trap of viewing guests and customers as being ‘transactions.’  We believe that the world of data that is available at any hotelier’s fingertips provides unique ways for influencing potential guests in ways that extend way beyond price alone.

Selling on price certainly works when developing last minute deals in partnership with OTAs and new mobile apps.  Filling up surplus rooms at any given time is a good thing.  Though by focusing on price alone, many hoteliers are missing out on the opportunity to establish long-term brand loyalty that will supersede price – and innovation can be the driver of this effort.

Using Data Analytics to Win and Keep Hospitality Guests

We are living in an era where ‘big data’ is driving key decisions and programs for multiple business sectors and even the federal government.  Thanks to new innovations for managing large volumes of data, as well as advances in algorithms and analytics, we are able to gain a complete snapshot of customers and end users.

The hospitality sector is also leading this new analytical approach for differentiating their guest offerings by mining into a deep well of data. Gary Loveman, President, Chairman and CEO of Caesars Entertainment, recently gave the keynote address at HITEC 2012 and discussed how smart customer data analytics drives the success of Caesars’ Total Rewards guest loyalty program.

Loveman said that competing on price alone for online booking engines is a losing bet for hotels. To help Caesars differentiate itself from other hospitality companies, he launched the Total Rewards program in 1998 using data collected on guest behavior to determine the potential value that a guest could be worth to the company. Although it’s important to give great service to all guests, it’s even more important to determine the potential value each guest could be worth to the company.

For example, it might not make sense to spend more on incentives for a customer who visits a casino only once, versus one who comes back again and again. The data analysis methods used in Total Rewards, though, pick up on more subtle cues to determine which customer would make the better investment.

Once Caesars decides to lure a guest, the Total Rewards program is designed to make that task easier by offering rewards that are actually useful to that particular customer.

In addition, offering benefits right away makes Total Rewards more attractive to customers because they will actually see a benefit from signing up. Total Rewards also uses its collected data to tailor offers to individual high-value customers, increasing the chance that they will sign up.

Gary Loveman clearly understands that data analytics can give a full picture on hotel guests. Thanks to his vision, the Total Rewards program has already yielded benefits to Caesars. In fact, over the 2000-2011 period, revenue per available room increased 20 percent, and the company outperformed the competition with +25 percent regional market wins per unit and +28 percent local market wins per unit.