How to raise your ADR over the next 3 years

 – By Jeremiah Magone

ADR used to live under the rule of GDP.

No more.

No more are hotels tied to the whims of the economy.

“We’re living in a new world,” explained our moderator, Dana Cariss, at HSMAI’s September 4^th ‘Looking forward. The Factors Impacting Hospitality Revenues in 2015’ presentation.  And in this new world, we’re free.

Our marketing has given us control over fate.

But with power comes responsibility.  Because, as the Economist projects, more than 43% of hotel reservations will made online next year…

Which means: your hotel’s ultimate success or failure is also largely determined by how well you adapt you marketing to the digital era.

Our panel

Dana Cariss – Moderator –

“The mirror for your brand is what a guest gets when they type your name into the search bar.”

James Seidman – Senior Hospitality Consultant –

“Look at where the booking came from not just the ROI for a campaign.”

Mariana Mechoso Safer – Hotel Digital Marketing Expert –

“Achieve the highest revenues by reaching guests at each stage in their buying cycle.”

Bruce Baltin – Hospitality Consultant –

“We can’t see a situation where supply outgrows demand… We’re not just above average. We’re above 2007 revenue peak!”

The industry is speeding ahead

In fact, even as the economy has recovered slowly over the last 5 years, hotels have used their newfound marketing advantage to improve revenues tremendously.

• 50 of the nation’s 55 markets are above 2007 peak in RevPAR.
• Every one of the markets is above long-term goals.
• Luxury chains have come back quickest. And they’re more valuable than ever…
• Mid-size and economy hotels have also made a great rebound.

Here’s a tasty national forecast from PKF to sink your teeth into:

It’s clear to see – the good times are here. And that means, with so much tension between a limited supply and a growing demand, this is your chance to drive rates… and watch profits soar.

Think about what that’ll do for your hotel over the long run:

• You’ll be able to afford the property and service improvements you need to gain a distinct quality advantage
• More revenue means you’ll be able to do more marketing, and have an even better revenue picture as a result
• Higher profitability leads to bigger bonuses and other employee perks
• And of course, you’ll get the credit

The road to ADR growth

“Marketing sophistication has gone through the roof,” began Mariana Mechoso Safer of HeBS Digital.

Not only has that given you the ability to reach more people and more segments than ever before… now, you’re able to give your brand a sense of immediacy and connection that never even existed 10 years ago.

But that’s a double-edged sword.

It all comes down to your decision on marketing.  Because, just like any competitive environment, a cutting-edge advantage for some… also means a huge dis-advantage for others.

Especially for hotels that haven’t figured out:

• Who to focus their marketing on
• What strikes a chord with that audience
• Or when to launch their campaigns for greatest effect

Unfortunately, this has left many with no way to attract guests but through rate cutting… even though that makes things hard for the rest of us.

Times have changed

Our moderator, Dana Cariss, reminds us that on the internet, “We’re totally interlinked with the rest of the world. That means that if you aren’t growing and changing, you’re standing still.”

That’s why marketing that worked in 2004 simply doesn’t cut it anymore.

Competition has intensified.  And online Travel Agencies (OTAs) have flooded the market, pushing national name brands to 7^th place or lower on search engines.

As a result, many hotels have simply gotten lost in the crowd… further losing their control over ADR…

Your opportunity

Of course, you might not notice that loss of control in the next few years.  As they say, “A rising tide lifts all boats.”

But what about in the next 5 – 7 years? What then?  Will you be happy to have to depend on the OTAs for the majority of your bookings from here on out?

Of course not.

That’s why, if your goal is long-term growth – not just short-term gains – the next 3 years is your opportunity to shine.

You have the chance to:

1. Out ranks the OTAs
2. Establish real control over ADR
3. And position your brand for a larger market share over the long-term

And it’s easier than you might think.

In just a moment I’ll show you how to gain these competitive advantages, while everyone else is sitting on the sidelines enjoying the view, but first we have to survey the dangers in this new marketing terrain in-order to set out in the right direction.

Downward market pressure

From a business or leisure traveler’s point of view, the intense level of market competition has been great.  Anyone can now find the absolute lowest room rate in seconds with one simple search.

They find the price they like. They tell themselves that room quality doesn’t matter that much. “After all, I’m not going to be spending much time there.” And make their reservation without another thought.

But for y0u, this heightened degree of price transparency is a constant drain on your control over ADR.

That’s why it’s important to realize, as the internet becomes the main way people plan their business or vacation travels, if you’re not staying in front of your prospective guests online – you’re stuck taking whatever the OTAs dish out… for a commission, of course.

But there’s good news in all of this

I’m going to show you an opportunity that only a small percentage of hotels are taking advantage of…

It’s something that levels the playing field… makes your brand stand out from the OTAs – and improve your bottom line as a result.

We all know how important Social Media, video and email marketing has become these days.  But I have to ask: How many are doing it well?

Gaining a Social Media edge

If you want to take control over ADR… and become an indispensable asset to your organization as a result – you need to be among the few who know what they’re doing when it comes to marketing.  That means staying in front of your prospective guests wherever they are.

With tens of millions of people spending more and more time on Facebook, Twitter, YouTube and other social sites, these are the cost effective channels that make it easy for you to:

1. Increase your fan base
2. Brand your presence
3. Improve your customer service
4. And run a wide variety of time sensitive campaigns

But here’s the thing…

That means that while more and more people are turning to the internet for help with planning their trips, only a small fraction of businesses are taking the time to striking up a meaningful conversation.

If you’ve seen Hilton’s #HiltonSuggest campaign on Twitter recently you understand how important that conversation is.

This is a campaign they’ve set up to simply listen for questions or issues people have during their travels – and provide useful recommendations.

If you’re on the road looking for a good diner, Hilton’s staff suggests one of their favorites just off the highway.

If you’re staying with them and you mention you’re having problems with your room’s AC, they’ll call the front desk and alert them to the problem.

Simply put, this is a program based on the principal that people will remember every kind word and deed the next time they need a hotel.

It’s a simple line of thinking: Someone went out of their way to help you at the right time and in the right place. They made your life easier. And that’s why they also deserve your business.

Again, this type of market engagement can either be an extreme advantage or disadvantage to your hotel – depending on which side of the equation you’re on.

On one side, it can mean that you’re using Social Media marketing to out-fox the OTAs and give yourself the market exposure you need.  You’re setting yourself up to raise ADR on a consistent basis, extending your brand’s reach and taking control of next month’s revenues.

On the other, it means you’re getting lost at the bottom of page 2 on Google, even for your own brand name.  You’re relying more and more on OTA’s for the majority of next month’s bookings… and feeling the freefall of rate transparency.

It’s time to break away from the pack

If you haven’t figured out where you want to be on Social Media yet, that’s fine.  Change isn’t for everyone… and you’ll probably still see an increase in revenues in the short-term…

But if you want to take advantage of this historic moment in revenue growth to gain control of your ADR in a permanent way, this report will give you all the insights you need to:

• Quickly determine the best ad spending ratios, initiatives and marketing channels. Without understanding this you risk spending too much time and money EVEN WHILE suffering lack-luster results.
• Know what kind of marketing works and what doesn’t during each phase of your customer’s buying journey. Once you see this you’ll have the roadmap you need to build all your future marketing initiatives.
• Know, for certain, what ad spending is giving you the best returns with 1 simple ‘financial intelligence’ tool. Get this and you’ll have proof for every ad spending decision you make.
• Understand how to put the pieces of the marketing puzzle together to generate a 43% lift in customer purchase intent.  If there’s more than 1 other hotel in your area, this advantage most likely makes you the winner.
• Implement one commonsense solution that increases your conversion rate by 30% – 40% on any campaign you run. Not only does this solution help to get your customers across the finish line, it only takes 24 – 48 hours to implement.

And I’ll also show you an approach that will put you in front of more than a Billion viewers.  Not only will you be seen by more people, research proves this approach is the best way to grab people’s attention during that all important ‘dreaming phase’.

3,171% ROI – a case study of multi-channel marketing

“We’re totally interlinked at this time with the rest of the world” – Dana Cariss of Destination Hotels & Resorts.

I know I said this earlier, but it bears repeating because this is the fundamental key to understanding our new era of marketing.

Those who have embraces this truth have smartly combine Social Media, SEO, paid search, email and content marketing to produce amazing results.

A perfect example of this is the Triumph Hotels Cyber Monday Campaign case study.

During this campaign 50 NYC hotels used multiple initiatives all at once, including:

• A limited-time offer
• Email promotions
• Online travel consumer deal alerts
• Facebook promoted posts
• Website promotion sliders
• And other online media

The result of this Campaign was an amazing 3,171% ROI on ad spending!

Booking was up 51% year over year… not to mention an increase of 77% in revenue!

Not bad, right?

Wouldn’t it be great to show your industry friends results like this at your hotel?

This is exactly the kind of campaign you need to capture a larger portion of the market… to set the stage for progressive rate increases in the future… and come out on top of the competition.

But to get results like this – on a consistent basis – you have to first go back and take a look at your spending intelligence.

How do I know my budget is going to good use?

David Ogilvy once famously said, “I know I waste half of my ad budget but I don’t know which half.”

Thankfully we’re getting closer to an answer.  But to do that, you have to find a way to track where your guests’ buying intent really comes from.

I know that can be difficult… especially when you’ve got so many different initiatives and platforms in play… and all at the same time…

But there is one simple, automated solution you can use to make everything clear.

I’ll tell you what that is in a moment, but first let’s make sure your covering your budgeting fundamentals by aiming your campaign in the right direction.

To do that, there are 3 key ideas you need get for marketing in 2015.

1. Different travelers do research across different touch points and devices.
2. The purchase decision is broken down into 3 stages: dreaming, research and decision making.  And,
3. Different social media outlets should be used to target each stage of the purchase decision.

These ideas, together, serve to give you a better understanding of your customers’ path to purchase and guide your marketing efforts.

How well you do this is incredibly important, James Seidman tells us, because the impression you make on your guests at each stage is really just “one step in part of a longer journey.”

That means that marketing isn’t just an investment for bookings, today.  Your marketing is hopefully just the beginning of a long and profitable relationship with your prospective guests.

That’s why James says that brands who do their marketing well, early on, won’t be focusing on acquisition campaigns in the coming years – they’re going to be building loyalty programs and adding to their lists of lifetime customers.

Engaging your customer’s path to purchase

As a demonstration of how you can use these 3 concepts, let’s imagine you want to market to a young mother with a 2-year old son as she starts searching dreaming of taking a nice vacation.

Here’s how you would focus your marketing channels to match each of the touch points along her buying journey.

During the dreaming stage

Focus on Social Media, Mommy Blogs and Videos

While doing research

Make sure you show up during online searches by doing better SEO content AND using paid listings

When she’s close to a decision

Stay in touch with Email, paid display, remarketing and user-created automatic reminders (like scratch pad)

All together these initiatives should look like this:

Initiatives support one another by re-enforce your brand presence and fueling lead generation efforts for later stages in the buying cycle

This is the ‘big picture’ of how your initiatives should work together to move your prospect along in her decision making journey.

Through these marketing actions you’ll be able to inspire her and reach the average 21.6 touch points – over an average of 24 days – needed to bring her to a buying decision.

Most importantly, you’re building a systematic funnel.  That means you’ll be able to reach more and more people in a more progressive and persuasive way.

In turn this lets you raise your average room rates in the short AND long term.  Gives people cause to sit up and take notice.  And gets you’re halfway to understanding what kind of marketing works for you.

But there’s one more important point.

The mobile world

As I mentioned earlier, with so many initiatives on the table at one time… across so many different touch points… and devices… it’s hard to determine what’s really the most effective.

And that can be a big hassle.  Especially when you have to show the justification for all of your spending.

So how can you make sense of it all?

Here’s one study by Google to give you a good start…

But beside the issue of compatibility, there’s an important difference in behavior that takes place as people switch between their PCs and mobile devices.  And you need to be aware this if you really want to know your ROI on things like Social Media or Email marketing…

As people move from their PC to mobile during the course of their planning, they’re much more likely to call you rather than to make the reservation online.  They’ve already got the phone in their hand, after all.

So how can you accurately measure response?

That’s where call tracking comes into play.

Call tracking gives you the complete revenue picture

Call tracking helps you avoid the temptation to turn off marketing channels that don’t seem to be working, even if they are.

This chart below from the NAVIS call tracking case study shows you just how easy it is to misunderstand the effectiveness of Social media, Email and display advertising if you don’t have hard data in hand.

This is essential to your over-all strategy because once you have this, not only will you be able to make the right decisions to improve revenue – no one will question those decisions ever again.  That creates stronger stakeholder buy in and, with more support – better results.

Imagine if you could only see the 56% of your marketing response?

Think about it.  Without call tracking you might be missing over $2 Million of your revenue picture! And you might even be tempted to cut initiatives like; Email, Social Media or other Online Media and lose over $277K in revenue as a result.

Superior revenue tracking leads to an improved revenue picture by giving you the vital insights you need to determine what’s working – and what’s not. Without that you’re practically flying blind.

Let’s take a moment to review

We’ve talked about marketing as a way to establish a meaning, long-term relationship with your guests.

I’ve shown you how to understand the challenges and opportunities in the modern marketing environment.

We’ve gotten to know how our guests plan their trips and seen how we can maximize revenues by matching our marketing to each phase of that journey.

And we’ve discovered the financial intelligence tools you need to help you understand where you’re marketing is being most effective.

Now it’s time to stand out from the crowd and make your presence felt.

It’s time to show up in front of your prospective guests whenever they jump on the internet with a question… and make sure they don’t turn to the OTAs for answers.

How to control your revenue

“Search rules revenue distribution”, says Mariana, referring to a recent study that projects: 50% of hotel revenues will come through search engines in 2015.

With that in mind, she says it’s imperative you set 20% – 25% of your advertising budget aside for SEO and display marketing – because being on the first page isn’t enough to get noticed anymore.

You have to be on top.  And in a variety of ways.

To do that, first make sure you’re #1 for your brand name.

The first 3 positions on Google Search enjoy 62% of all traffic, according to a study by the internet marketing company, Chitika.

Your ranking impacts revenues in 2 ways:

1. Reputation management is critical to your over-all success.  Dana explains, “The mirror for your brand is what a guest gets when they type your name into the search bar.”   You’re not the only one online talking about your hotel, and some guests can be incredibly critical.  That means that unless you’re doing your best to address negative comments – there’s no telling what damage they can do.
2. Hotels that show up on top in organic AND paid search results benefit from an increase of 43% in customer purchase intent says Mariana, quoting a Google statistic.  As I mentioned earlier, that’s a big bump.  And it’s probably enough to put you over the top.  This is probably why you can see nearly $2 Million in revenues through Search Engine Marketing (SEM) on the spreadsheet above.

So you see, not only do the first place results on Google win an unfair amount of traffic, ranking also raises the perceived value of your brand in your customers’ eyes and helps you avoid bad PR.

Each one of these improvements in the sales funnel is critical to raising your ADR.

Second, look at the keywords that assist your funnel during your guests’; dream, planning and decision making phases

To do that, go back to your buyer’s path to purchase and make sure to touch on keywords like:

• {Your city} + hotel
• Hotel near + {famous local attraction}
• Hotel with + {type of amenity}

Then, think through the same steps for your business guests as well.

The net effect

Over-all Mariana urges you to, “Create quality content that will help you get quality organic traffic along with your local search listings.”  She also notes that, “Paid search should be 20% – 25% of your online budget.”

This will help you be the first brand to reach your prospective guests at each of their key touch points… to be the first one to get your message across… and build your perceived value in their minds.

Not only will this help you build, categorize and drive your email list for later on, you’re going to be making it a lot easier for your prospective guests to come to a buying decision.  That’s being helpful.  And that’s what good marketing is really all about.

Make sure everyone sees you

And here’s the approach you can use to bring in a ton of extra traffic.  YouTube.

Many large brand names are already using this to reach their guests.  And for good reason.

Not only will video help you reach more people with your message, it gives you a more emotional, lasting effect.

After all, letting your mind drift to imagine exotic destinations and luxurious accommodations is exactly what the ‘dreaming phase’ is all about.  So why not give your prospective guests what they want?

Click on the image at the right to see one of my all-time favorite experiential promotions.

Google’s research backs the effectiveness of video marketing:

Establishing the future of your brand

Dana reminds us how important brand presence is in this day and age by asking, “Most everyone is intimately familiar with key performance indicators. But how many spend time looking at brand position? How guests find us? How they think about us?”

These are the details that our guests are intimately familiar with when they do their research, but for some reason we tend to overlook these details with ROI focused marketing.  And that’s a missed opportunity.

Because unless you do good research on how your audience really sees you, you won’t be able to:

• Actively find and inspire your target audience
• Speak their language
• Resolve complaints and improve your service standards as a result
• Establish report and encourage repeat business

Investing in marketing isn’t just about creating more bookings today, as I said earlier.  It’s about business building – because everything you learn through your marketing process is going to then give you the vital insights you need to raise ADR and improve your revenue in the long run.

That’s why it’s so important to know how your customers search – and build a sales funnel that takes control over what they find when they do.

Harness the power of cause and effect

“Online marketing impacts occupancy,” says Bruce Baltin.

That also means your marketing budget puts you in control over who sees you… and how, giving you a big advantage over all the other hotels fighting for attention on 3^rd party websites.

That’s why Mariana recommends following Starwood hotels’ lead with 4% of room revenues going towards marketing.

Of that, she describes the best mix as:

• 75% towards online advertising
• and 25% to print

“After all,” Mariana says, “There are so many people online that it just makes sense.”

With the current budgeting cycle drawing to a close, now is the time to consider the following:

Challenges –

• 51% of leisure and 63% of business travelers expect big brands to be on top of search engines.

• People are incredibly adept at finding the best price through 3^rd party websites.

Opportunities –

• It’s never been easier to get connected with your guests than it is today.

• An overwhelming majority of leisure and business travelers are undecided about where they want to stay during the dreaming and planning phase.

• You’re able to tailor your content to what your guests want through-out their decision making process.  This gives you the opportunity to build the kind of relationships you need in-order to grow your business in the long-term.

• Very few of your competitors are using Social Media effectively.

• Video lets you emotionally engage more viewers right at the beginning of their buying journey.

• Call tracking gives you the marketing intelligence you need to maximize your marketing efforts.

• Quality SEO content and paid display is proven to make you the clear favorite.

• And everything you learn through your marketing, in-turn, improves your business model. That means you’re improving your overall value proposition.

Use these marketing advantages and not only will you be rewarded for your efforts this quarter, your brand is going to be in a better position in the future.  And that’s sets the stage for bigger and better things.

With San Diego’s environment of high demand and low supply, who knows what opportunities that may bring…?

Make the booking process easy and reap your rewards

The 1-click reservation system is one of the best technical solutions you can use to improve your conversion rates.

In fact, it’s been shown to increase conversions 30% – 40% in many kinds of campaigns.  And the reason for that is simple.

“Immediacy drives all of us,” explains Bruce Baltin.

“Eliminate frustrations and clearly the revenue results will be better.”

To do that, ask yourself: What if my guest only has 1 minute to check prices while waiting in line?… or 30 seconds in the elevator?…  Will they be able to easily complete the booking process?  Or if they’re really in a rush, will they be able to save their progress so they can pick up where they left off later on?

That’s the convenience the OTAs provide.  And that’s one of the reasons they’re doing so well.

So if you want to compete on that level, and save all of the lost business ‘bouncing’ off of your reservation page, you’d better make sure that ease of use is the hallmark of your webpage as well.

James Seidman gives the perfect example.

“Doing anything laborious deters almost everyone from wanting to do anything online. That’s why Google measures its effectiveness in milliseconds … that’s the kind of immediacy that people are used to nowadays and that’s why it would be wise for it to take no more than a couple of minutes, at most, to complete the booking process on one’s website.”

If you’ve ever had the unpleasant experience of having to enter all of your information again and again, I’m sure you can agree.

That’s why implementing the 1 or 2-click check-out system is a clear winner.

Your ongoing achievement

The good times are finally here. And it seems that the next 3 years are going to bring in revenues like never before.

As R. Mark Woodworth, President of PFK-HR concludes, “Based on previous research conducted by our firm, we know that hotel budgets, as well as PKF-HR’s forecasts, are most accurate during the current ‘sweet spot’ phase in the business cycle. All industry participants should have a high degree of confidence that the business environment will offer the potential for strong lodging industry performance in the next few years.”

That means bonuses, the ability to hire new staff and greater capital improvements are on the way!

But the reason PFK is projecting such optimistic 5% ADR growth with only 1% increase in occupancy in San Diego isn’t because GDP is improving so much, it’s because of the rapid growth and sophistication of online marketing.

People who don’t take advantage of these more insightful marketing channels or invest in better spending intelligence risk becoming lost in the crowd and vulnerable to downward rate pressures of 3^rd party websites.

On the other hand, if you get your marketing right, you can sit back while others complain because you’ll be in the position to; extend your reach, nurture your guests along the path to purchase and make their reservation experience as easy as one simple click.

Take a long-term ADR growth strategy

Major hotel brands are already using their marketing in this ‘sweet spot in hotel revenues’ to expand their market share.  That’s why it’s so important to move on the recommendations of this report before you finalize your marketing budget for next year.

Because those who don’t understand how to connect with the public, won’t grow. Those who don’t grow, don’t expand. Those who don’t expand, won’t have a competitive advantage in the future market.  And, unfortunately, without that advantage, the only option for those hotels will be to cut their rates and rely more and more on OTAs for business.

Wouldn’t it be better to invest in your marketing now and place yourself right at center stage?… especially at the beginning of such a historic growth streak?

If you do, you’ll reap the rewards.

And that’s more than just a nice bonus.  It’s also the heartfelt thanks of your owners and staff… the ability to take credit for how people think about your brand… for the extra referral and repeat business you get from long-term guests… and for your hotel’s ability to grow in the future – simply by following the recommendations in this report.

So go for it!

As Dana declared at the end of our presentation,

“2015 is our year!”

The Sweet Spot of Hotel Revenues special report was created by:

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Content Marketing – Website Conversion Optimization –

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