Resort industry gets best practices study on internet marketing and distribution

A new study has been launched to examine “Best Practices on Internet Marketing and Distribution for Resorts,”. The report was initiated by the Hospitality Sales & Marketing Association International’s (HSMAI) Resort Marketing Special Interest Group.
According to the findings, many resorts are still at an early stage of adoption of Internet marketing; only about one-half of the participating resorts actively practice search engine optimization and many do not participate actively in third party online travel agency programs due to a perception that these sites specialize in rates well below their targets.  There is a corresponding lack of connection between most resort’s distribution strategy and their revenue management practices.

“It is clear after investigating this topic that when a resort moves its business from offline to online channels of distribution there is far more involved than just changing channels of distribution,” states Cindy Estis Green, director of the study and managing partner of The Estis Group.  “Working with online channels entails operational issues including customer service and reservations, direct sales, awareness and image campaigns, direct mail, special promotions, lead generation, and customer relationship management,” she adds.

The report benchmarked participating resorts in key Internet marketing metrics such as: total marketing spend as a percentage of total revenue; marketing efficiency; percentage of electronic channel revenue as a percentage of total revenue; percentage of e-marketing spend to total revenue; and direct web revenue per web marketing dollar spent.  Based upon these metrics, participants were categorized based upon their efficiency in marketing spend and Internet revenue volume.  The resulting categories were: experimenters, champions, novices, and “gotta get out of this box.”

Emerging from the study is a series of eight building blocks that establish a sound strategy for the 2005 online world.  The full report details each of the topics.
Website Planning: setting goals, planning, and designing a website.
Establishing Infrastructure: building the systems to support a website’s goals.
Building Traffic: search engine optimization, pay-per-click advertising, link strategies, email campaigns and stimulating group opportunities.
Dovetailing with Offline: websites (internal and external) and how they function without the interaction of sales and rooms operational teams such as reservation call centers, customer service, revenue management, and offline marketing.
Third Party Influence: considering third party intermediaries including wholesalers, search engines, meta-search engines, GDS vendors and affiliate marketers.
Closing the Loop with Customers: incorporating customer feedback regarding service, travel patterns and product preferences in an Internet marketing plan.
Keeping Score: a series of metrics to measure success and failure, tracking cost/benefit analyses, post-campaign analyses, etc.
Keeping Up with the Joneses: knowing what may be applicable in the 2-5 year time horizon in the areas of new technology, new communication methods and new distribution channels.

Among the findings are:

-      The Internet is a high intensity medium, unlike traditional advertising undertaken by many resorts.  The consumer receives a resort’s message because they choose to, so they have the potential to be 100% engaged when they are exposed to an online message.  There is a fundamental shift in the online space from “push” techniques where messages are pushed to consumers to a “pull” technique in which messages are selected by the consumers.  This change is crucial to understand as a marketer in order to take advantage of the new opportunities in a marketplace that is consumer-driven, not-supplier driven.  As mobile devices such as MP3 players, PDAs, and cell phones proliferate, this message is even clearer.

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-      Upon launching a website, each resort effectively enters the global arena.  Some of the global implications include addressing international issues such as language, relationships with international carriers, the role of third party intermediaries to penetrate emerging markets, and sourcing cost-effective means to raise resort awareness in markets with a high level of online travel research and booking.  Portfolio diversity applies to the customer base for opportunities to smooth seasonal patterns, to fill group holes and to compensate for markets during periods of economic fluctuation.

-      Leveling the playing field between chains and independents.  There is a resort’s customer base and then there is the universe of potential customers who have not yet been exposed to a resort’s name, no matter how well known the resort may be in its region or even in the United States.  Prior to the Internet’s usage by the consumer market, it was not practical to consider marketing to the wide audience of those unaware of a single brand name resort.  It is now, not only practical, but would be irresponsible for a marketing team to miss the opportunity to address this wider market.

-      This game is not won by getting more bookings through your website, but by getting more bookings.  Online distribution creates tremendously exciting opportunities to facilitate more revenue.  How this new revenue comes will vary by resort.  Each resort can use online utilities to support its business plan in different ways.  Some will gain more through retention, some will gain more through improved dispersal of information, some will create a machine that channels bookings through existing call centers, and some will rely on third parties for incremental business during need periods.  Some will win by higher yields through reductions in sales and advertising costs.  The possibilities and the combinations for success are extensive.

The report also generated a number of issues and misconceptions.  Among them are:

Optimizing a website when built and then waiting a year to do it again, not updating keywords regularly and having sites designed by one vendor and asking another to optimize.  Knowing how to program and design web pages is a totally different expertise than making those web pages generate high SE rankings.  While some do, not all advertising agencies, friends and/or relatives who may have tremendous graphics and/or computer skills also have the specialized skills needed for search marketing.  This skill is a core requirement of anyone hired to build a site.  Search engine optimization (SEO) needs to be done daily, weekly and monthly. Search engine algorithms change frequently and SEO is a specialty that requires constant research to stay current.

On Building Traffic, many say “most people coming to our site use our resort name to find it” and “those savvy enough to use the Internet will find us.”  There is $70 billion spent online by Americans for travel-related products.  The use of search engines to do Internet research for hotels by location only has been cited as being close to 100 times the number of searches done to find a hotel website directly.  The resort industry should be at the front of the line for this flow of traffic, especially since it is dominantly consumers looking for leisure travel options.  There are more and more cases of savvy independent hotels that have shifted their business to 50% through their website and much of it is new customers who never would have found them except through search engines.  It is not just old customers coming through a new channel, although this will certainly be a small part of it.

á      On Distribution Channel Management, many resorts have not realized they can control every channel that delivers business to them.  There are times when a lower rate is still better than no rate and times when it isn’t.  Each channel needs to be tracked accurately so its costs and its benefits can be weighed and a well thought out revenue management decision made.  Many resorts totally avoid online travel agencies because they think the rates have to be very low to be sold, and others never restrict their inventory in them. These agencies have a place.  They also do not only sell lowest rates. Online travel agencies are expanding their packaging and want a wide variety of properties.  Many online wholesalers also offer retail programs that are no different than the familiar retail travel agencies well known to resorts.  Avoiding them is like avoiding a category of travel agents.  Every resort can have dedicated 800 numbers that only appear online so their reservation office can accurately track inquiries that come via the web and book via the telephone.  Systems will need to be implemented to link the call to the booking.

The study was derived from interviews with 13 participating resort companies, representing a wide range of resort formats, including international hotel groups, independent mixed use/condo developments, and independent three- to five-star properties.
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