In the past weeks with my clients and hotel friends we have conducted an analysis to see which channels attract the best quality business. The results make complete sense.
30 high end (min. $400/night or above) leisure hotels shared their results with my company dCommerce, including both branded and independent properties from Asia, Maldives, UAE, Malta and the United Kingdom.
What we were looking for?
The aim of this analysis was to identify the sources of best quality business as defined by:
- Highest transaction value
- Highest chance of repeat business
- Lowest cancellation rates
- Highest spend during stay
- Direct bookings via personal correspondence
By far, the best results came from personal emailing and phone calls. Over 24 out of 30 luxury hotels measured over 60% above average transaction values from personal correspondence and guests in this segment spent the most on F&B (Food and Beverage) and spa treatments during their stay.
With close to 0% cancellation rate and above 40% repeat stay the results clearly show that the most valuable channel for the participating luxury hotels was personal sales.
It’s time to rethink the “value” of cheap hotel marketing technology and find ways to make good old personal correspondence a part of your sales process / funnel again. These results show that genuine human interaction supports the purchase decision very well.
Most customers got in touch with specific requests or else to get a lower price and once their requirements had been granted they typically paid in two business days. Once again, above 60% over the average transaction values.
As an additional observation we noticed that hotels with higher rates attract more customers to get in touch personally over phone or email and the less likely they will make reservations via website booking engines or OTAs.
- Direct bookings via website booking engine
While generating more volume than personal sales, the average transaction value from this channel were on average 40% less. With above 28% higher cancellation rate, over 50% less probability of repeat stays and far less F&B income from guests arriving via website booking engines.
Do not forget the costs of booking engine business: commission, PPC spend, as well the time and cost of staff managing campaigns. If done right, generating transactions through the booking engine can drive good quality business but it can be costly and clearly not as valuable as personal sales.
In our analysis the average cost of getting booking engine reservations was above 13% of revenue including commissions, advertising cost, software subscriptions and cost of staff. The cost of business not significantly less than that acquired from OTAs.
OTAs still generate the highest volume of business in hospitality and play a major part in hotel marketing. Commonly, guests discover hotels on OTAs then proceed to the website if they wish to know more about the property.
Surprisingly the average OTAs business is not any worse than bookings from website booking engines. From our research, transaction values were slightly (15%) higher, cancellation rates similar, but the chance of repeat stay was minimal.
I hope you and your hotel can benefit from these findings. For any questions on the results, please contact me at daniel [at] dcommerce.org