Thanks to bargain-hunting travelers and the growing use of the Internet for more than just airplane tickets, the online travel business is strengthening. Better still, the online outlook is brighter than that of the industry as a whole. In fact, Jupiter Media Metrix reports that travel advertising online has returned to 94 percent of its pre-Sept. 11 levels.
A Rose-Colored View
That’s great news for the majority of hospitality suppliers, but what does the resurgence mean for the luxury travel market? The rosy outlook has come through special deals and bargains for travelers that are creating a serious profit crunch for the luxury niche. In fact, Ernst & Young expects industry profits to tumble 18 percent to $18.4 billion this year, down from $22.5 million in 2000.
Yet it’s no surprise that price-slashing practices benefiting budget or mid-tier travel may not be appropriate for luxury travel. Marketing discounted rates whether online or offline won’t appeal to discerning luxury customers. And, sadly, should another catastrophic event occur, no amount of discount will ever get these customers back.
Still luxury marketers need to search beyond their short list for new customers. And, without a doubt, digital marketing is the way to go. Along with getting the word out to new prospects, digital marketing enables luxury marketers to strengthen their identities, too.
Luxury Demands Service
Throughout every point of the sales cycle, today’s sophisticated leisure and business travelers seek a combination of service and style that makes them feel pampered. Pampering is the hallmark of luxury providers—a trait that affords world-class reputation and market premiums. From most angles, these providers maintain a lofty status. Despite their reputation for cutting edge person-to-person service, these same providers lag behind the travel industry’s more competitive tiers when it comes to using the Internet.
Traditionally, luxury travel providers have viewed computerization as the antithesis of service and style, rendering online media an unacceptable marketing tool. However—with the current climate compounded by increased competition, rising operating costs, shortages in labor and the overall need to do more with less—digital media could not be a more potent tool if used correctly. In the case of luxury travel, technology can be used to strengthen the service encounter by improving delivery, consistency, reliability, accuracy and speed or efficiency. Is efficient and robust communication not a luxury? Marketers can gain rich knowledge by developing a new dialog with customers.
Debunk the Myths
1. Digital marketing is not a quick and dirty substitute for direct mail.
2. Digital marketing is not always the least costly solution, but acquisition rates for digital marketing reach 2.5 percent versus 1 percent for direct mail.
3. Digital marketing does not alienate consumers from the personal touch. In fact, it can help define the value-added service that differentiates a luxury brand.
4. Digital marketing does not necessarily require a vast pool of consumers. Highly targeting niche segments proves to be the most effective technique.
5. Digital marketing is not an all-or-nothing proposition. Digital services can and should be scaled and tailored to customer needs and preferences.
Success is in the Planning
Just like any serious marketing effort, working with digital marketing requires a plan that is in line with the key strategies of a property’s business model. Luxury travel marketers first need to take a step back and think about the goals of their traditional media, and apply those goals to their digital campaigns.
A luxury hotel, for instance, would not be advised to embark on a sweeping email blast or promote deep discounts through Internet advertising. Neither tactic would efficiently bring loyal customers, although a few stragglers may come calling once or twice.
The typical goal of a traditional luxury marketing campaign is to reinforce branding, to overwhelm potential customers with the “wow” factor. Nevertheless, the savviest luxury providers know that they must offer substance along with brand-enhancing messages. One Chicago hotel provides customers who have arranged in advance for limousine transportation from the airport with a ``limousine menu.`` Their order is delivered to their room upon check-in. These amenities can easily and effectively be brought into online marketing for a more robust digital experience. A convenience, such as a “limousine menu,” could be made available to customers through email or even on the property’s Web site.
Meanwhile, a Las Vegas resort chose to make the online booking experience easier for travelers who prefer human interaction, by adding voice call capability to their email communications and Web site.
Fortunately, marketers don’t need to realign the stars just because technology exists. Some of the most powerful upgrades include simply revamping online content to better outline valuable services provided or regrouping online content to reflect the convenience of an “online concierge.”
By Tim Stock and Marie Lena Tupot, scenarioDNA inc.