A Practical Guide to the Internet
as a Hospitality Marketing Tool
[ by Paul R. Edwards ]
That the Internet offers a unique set of marketing opportunities is undeniable. Exactly how to go about taking advantage of this situation is less clear. This article addresses the key issues facing those of us involved in hospitality Internet marketing, based on lessons drawn from my own experience as an hotelier. I have also highlighted future challenges, and suggested ways in which you might prepare for these.
I first started marketing my small Scottish hotel on the Internet in 1996, and have never looked back. Having increased my turnover by 300% in 30 months I see no end to the possibilities that the Internet offers. Starting with a single Web site, we are now listed, linked and cross-referenced with a wide range of directories and other portals, through which we enjoy excellent scores with the search engines. In addition to this, we regularly run auctions, online competitions and special e-mail promotions. As a result of our efforts our Internet exposure has grown exponentially, and I am now looking forward to consolidating this position even further.
To say that developments in Internet hospitality technology have "moved the goalposts" of marketing strategy is an understatement-without stretching the analogy too far there's a whole new stadium and part of it exists in somewhere called cyberspace. The ever-present danger when dealing with the rapidly changing world of high technology is to get caught up in the medium and forget the message. For the small business there is sometimes no escaping the jargon, and in forming relationships with a web development company, the independent hotelier will have to get "Internet savvy". For the larger organisation, where there is a competitive need for a more sophisticated Web presence, the elements of this added functionality need to be understood and these organisations must be capable of deploying and utilising them effectively. In this article the focus is on establishing a set of practical guidelines to help you cut through the hype so that the potential return on investment from these new technologies might be fully realised.
Marketing is "the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals" (Bennett, 1995). When considering the dynamics of doing business, the whole concept of hospitality marketing has been radically changed, especially in defining how "satisfactory" exchanges take place. The old model of hospitality marketing involved relatively simple static properties: Promotional literature, relatively fixed pricing and distribution channels, and little if any post-sales customer contact.
The new, and more exciting, model involves interaction with the customer from the very start and a much more complex set of expectations. No longer is the quality and appeal of a brochure the determining factor in the decision to proceed to the next step in a possible transaction. Some of the "new" customers expect to be able to browse through a content-rich set of information, pursue questions about specific needs or interests (even tailor the information to personal requirements), check availability, make a reservation and even change it on demand. Others feel more comfortable using the electronic information for reference purposes and then being able to effortlessly proceed on a person-to-person basis using more traditional forms of communication.
How, when, and why the Internet customer books hotel accommodation is another fascinating subject. Last-minute booking, auctions, collective buying, and supplier bargaining have all added more power to the consumer. In my experience, I have managed to make February an outstanding month, by simply auctioning rooms that would have otherwise remained empty. Offering value added packages at seemingly 'bargain prices' allows hotels to make incremental sales and fill empty rooms, thus addressing the age old problem of seasonality. There suddenly becomes a new price where consumers become interested in buying absolutely anything at anytime. The fascinating thing with auctions is that in times of high demand, premium rates can be achieved, and the hotel no longer needs to sell at discounted rates. Auction sites in the US now account for 10% of e-commerce and this figure is set to increase. Dell Computers now have a dedicated auction site where they sell refurbished computers via auction. I often wonder how long it will be before I can go to the Hilton site and bid for a room there.
This increase in complexity from the point of view of a single transaction is only half the story-the new conventional wisdom is that customer relationships should be viewed as ongoing, over a complete lifetime, rather than on a reservation-to-reservation basis. There are very definite implications of such a shift when considering return on investment from marketing expenditures, not to mention the ways in which relationships are built. The only common element between to two models is in the delivery of the product-thankfully standards of hospitality service remain the backbone of continued success.
What approach is best for your business, how much will it cost and how do you actually increase profit through the investment? Anyone involved in Internet hospitality marketing is at some stage of attempting to answer these questions. A recent research paper concluded that:
"Major hotel groups with significant investments in Web technology still find it difficult to quantify return on investment (ROI) and appear not to be fully exploiting the strategic potential of the Web i.e. efforts are concentrated on information and sales. Only about a fifth of the major chains offer real-time processing of online transactions. Most hospitality managers do not envisage that the Web will replace personal interaction with guests and partners-merely enhance it". [Gilbert et al, 1999].
From a marketing perspective, the Web offers a much greater degree of interactivity than other communication media and effectively "levels the playing field" for all participants. Internet technology has changed all the marketing rules in favour of smaller companies--consumers can leapfrog the brand. This is a breakthrough for small, independent operators who don't always have the marketing budget. However, brands can still expect to do well because they have the resources to exploit the medium.
As an independent hotelier myself, I took the exceptional step of building my own Internet development company, literally in the back yard. We are now a leading Internet service provider (ISP) specialising in hospitality, but not everyone can go to these extremes! So, on a practical basis, how do you approach hospitality marketing given this new paradigm and the plethora of underlying technical concepts involved? Here are a few basic guidelines to follow:
It is essential that in selecting software and services to support hospitality marketing initiatives that they conform to the most widely accepted standards.
Perhaps the single most important "enabling" technology, related to the Internet boom, was the introduction of a standard way of displaying information. A whole range of developments have extended and enhanced the facilities originally made available, the most important class of which transformed the Internet from being essentially a one-way, "read-only" medium to being fully interactive.
The latest stage of development of the Internet Revolution seems to be heading full-circle back to the early days of mainframe hosts, as PCs are becoming terminals to Internet-hosted application software. This has only been made possible as bottlenecks caused by outdated telecommunications infrastructure are removed, resulting in significant increases in data transfer speeds or "bandwidth". Instead of simply pulling up static pages of information, what you see on your computer screen can now be dynamically generated, depending on selections or choices you make. Online transactions such as real-time reservation systems would not be possible without these developments.
From an independent hoteliers' point of view, it is always interesting to hear what the property management system (PMS) software companies have to say about the future and how their service delivery is changing to offer real time reservations. Microsoft's Dot Net strategy clearly outlines their plan to deliver applications over the web, and many believe that the need for expensive PCs may soon be coming to an end. However the future is not yet clear where PMS software is concerned. My own hotel's PMS has consistently failed to deliver any real time reservations module, and my investment in a high speed leased line has so far only resulted in emails being answered at the 'speed of thought', rather than ay interaction between the customer and our room inventory. My hotel is connected 24 hours a day to the Web, yet my reservation team still have to input Internet bookings manually. I have therefore taken to running a trial of US made software that has full integration with Internet distribution systems such as industry leader World Res. My reservations team dream of the day when they can allocate rooms and my customers can 'surf on in' and book them without any help. To the larger hotel chain this represents the opportunity to achieve massive reductions in human resource requirements.
At the most basic level, however tempting it might be, avoid delivering functionality that requires the user to have the very latest browser or special additional software in order to view it. If you must have a "wiz-bang" site, then at least offer a low-tech alternative.
In the United States, the Hospitality Industry Technology Integration Standards (HITIS) initiative of the American Hotel and Motel Association (AH&MA) and the OpenTravel Alliance (OTA) reached an agreement on June 20 of this year to develop and maintain standards technically relevant to their industries. OTA, which began in May 1999, now has over 125 members representing influential names in all sectors of the travel industry, including air, car rental, hotel, travel agencies, technology providers and related suppliers. The Alliance is comprised of five working groups air, car, hotel, leisure supplier, and non-supplier together with an interoperability committee to coordinate their efforts. OTA defined its open messages with extensible Mark-up Language (XML), which makes it possible to exchange business data seamlessly among different systems, companies, and industries over the World Wide Web.
A number of the major players in the travel and tourism industries have formed consortiums to share the costs (and rewards) of being first to market with the latest technologies. Each of these groups has had to specify their own approach to information interchange and we have yet to see whether those opting for proprietary systems will falter in the long run. If history is taken into account, then the lessons learned by Apple (Macintosh) and IBM (PS/2), not to mention Sony (Betacam), should be warning enough to those management software providers choosing "closed" systems.
Internet users represent a significant proportion of the world hospitality customer base, but not all of it-Internet marketing must compliment ongoing forms of traditional marketing.
With the boom in global telecommunications almost anyone can access the Internet from anywhere in the world, yet the overall user base remains at less than 10 per cent of world population. The encouraging aspect for the hospitality industry here is that the Internet user community represents a much higher proportion of the world hospitality customer base than it does of world population-Internet users have the disposable income to afford holidays and travel and any almost every business will have at least access to if not a presence on the Web.
This being the case, fellow hoteliers often remind me that the Internet is not the only solution. Traditional marketing and marketing support can and should complement electronic services. Brochures and advertising should reference your Web site and surfers should be able to download or request a brochure. For those potential customers with special needs or who distrust the security of making booking over the Internet, real people need to be available to speak with them over the telephone. Many companies from all types of industry are moving "first response" services to highly efficient third-party call centres, which are open 24 hours. In many cases, it is sufficiently reassuring to callers that their inquiry has been recorded and will be answered, even if the information is not immediately available.
Treat the surfer with the same quality of service that you would a guest.
The Internet is open 24 hours a day, 7 days a week; it never sleeps. The expectation is that information needs will be met and a path provided to take some sort of action. Disappointment with the experience on your Web site is immediately reflected on the quality of service provided by the establishment or company the site belongs to. At a very minimum, Web sites must be fast enough to be useful and always be available. It's not necessary to become an expert in Web site design to address the speed issue, just test the site from a modem-based home computer.
For the larger organisation however, the availability issue actually involves the need for a credible back-up plan. The vast majority of computer users, even those in large companies who have support personnel, do not have adequate disaster recovery strategies for their regular computer operations. Insurance of this type costs money as whoever hosts your site needs to maintain a second "mirror" site, which may never be used, but may cost as much to stand ready as your main site. As the trend towards outsourcing more and more "front line" applications continues, the importance of a sound back-up and recovery strategy will become greater and the cost-justification easier.
So now that you have made sure your "electronic concierge" is ready for action, what kinds of information will be available? The Web has a huge potential to be a strategic information centre for the hotel industry. Here are some of the features that can be included online (adapted from Gilbert et al, 1999):
General Information
· Electronic Brochure
· Corporate information (press releases, financial reports, company history,
company milestones, product and service information)
· Online directory of contacts · Property information (facilities, amenities,
transport services, attractions, travel directions, etc)
· What's new · Virtual hotel tour as an experience of "walking through" the
hotel property with 360 degree pictures
· Live Web camera allowing users to view busy public areas.
· Special Promotions
· Language localisation selection by browser Features relating to reservations
· Online reservation form
· Real-time processing via Inventory Management System
· Online reservation retrieval
Features relating to reservations
· Online cancellation
· Create/modify profile
· E-mail reservation
· Last minute deals Other features
Other features
· Loyalty programme
· Restricted frequent guest area
· Exclusive e-mail address
· Web/printed newsletter
· Address Web visitor by name
· Frequently-asked questions (FAQs)
· Quality feedback form
· Meeting/conference planning PDF files
· Currency converter service
· Weather reports
· Information on local businesses
· News and current affairs
· Links to travel partners and other Web sites
· Employee area with job application form, policies, procedures, results,
etc
· Alumni area where previous employees can meet and catch up on latest developments
Build a service, not a Web site, by focussing on building relationships with customers
Since the late 1980s, a new perspective on Hospitality Marketing has emerged, variously termed as loyalty marketing, wrap-around marketing, customer partnering, symbiotic marketing and interactive marketing. Widespread adoption of the principles involved have led to the acceptance of the term relationship marketing (RM) to describe the new paradigm, defined as:
"…a customer centred approach whereby a firm seeks long term business relationships with prospective and existing customers" (Evans & Laskin, 1994)"
At the core of RM practice is the need to reorient thinking from merely attracting customers to retaining them. It is between 5 and 10 times as expensive to win a new customer, as it is to retain an existing one. Current computer technologies are ideally suited to the implementation of RM, with the compilation of a database of information about existing and prospective customers as the key.Internet RM is more of an "attitude" than a policy and as such should be reflected in the "look-and-feel" of your electronic presence. Why people are travelling is more important than the destination and the hotel, and they must enjoy the experience of planning the trip. Ideally, every item or feature on your site should respond with customized information and lead the consumer to a new experience. Ultimately, the technology behind personalization will allow Internet marketers to sell the right thing, to the right person, at the right time and for the right value.
Using every opportunity to both inform and collect information from your customer base will result in the development of significant marketing knowledge that will become increasing valuable over time.
You need to specify what information is most relevant and then consider how to collect and utilise it. Here, it is worth mentioning the strengths and weaknesses of electronic mail (e-mail). E-mail correspondence is less effective for customer acquisition, but more successful for retaining customers and building loyalty. Research further indicates that e-mail correspondence in HTML (with logos, graphics, etc.) is preferred over straight text, and that e-messages should be clear and concise, offer hyperlinks, and encourage pass-along to other consumers. Once you have a good database of your customers' email addresses, you can design and implement an effective email marketing strategy. Questions that need to be addressed might be as follows: How should email responses be handled? Is the information of high enough quality to properly target market segments? How would customers subscribe and un-subscribe to the list? How would the database of customer details be updated after Internet mailings? It is no longer acceptable to do mass mailing using your traditional email program. Instead you should be enlisting the support of a company to help you manage your mailing lists.
Pay attention to "best practices" in design and promotion of Internet-based tools
Is your Web site design consistent, simple and straightforward enough to make it effective? As already mentioned, the importance of making sure there is there a mechanism in place for continuing dialogue with site users, as well as a means for measuring the success of the interaction cannot be stressed too highly. The latest tools for Web management provide highly detailed analyses of how visitors interact with a site. In combination with subscription information, requests and responses to feedback forms, a carefully devised performance measurement and improvement policy can make a significant difference to the success of a site. Don't worry about surfers who look at the web site but don't book, because reservations are not the end game. Monitor your "look-and-feel" regularly across the Internet to maintain consistency and find discrepancies on web pages. Avoid price comparison and tailor packages for target markets; be inventive, in terms of marginal costing, the Web offers one of the least expensive ways of testing new promotions. A good experience on you web site will not only build consumer trust, but will also allow you to develop an online community. Discussion forums where customers can leave testimonials, exchange comments or ask questions of sales staff are an excellent way of generating feedback, which you can respond to and generate more business.
Finally, and perhaps most importantly, make use of the wide range of tools and probably some expert help to ensure you site is properly listed with the search engines. No matter how good your site is, it won't produce the returns if nobody knows its there. Ask your Web development company the following questions:
· How Many Visitors are coming to the site?
· Which Web site did the visitor come from?
· Which country are they from?
· Which particular pages did they visit?
· What were the top search engines used?
· What were the top keywords used?
I am often asked about search engines and how important they are to the overall Internet strategy. For the independent hotel, they can certainly deliver valuable traffic, but there are no standards for hotels that I know of. Every site is different. Some may naturally attract more traffic from search engines than others. Personally, I think having 30 to 50 percent of your traffic from search engines is fine. More than that amount, and you are probably too dependent on search engines. Less than that, and you can probably do better. The main thing to remember is not to be baffled by numbers. As far as search engines are concerned, the top 10 deliver about 90% of all the 'eyeballs', so don't waste your time on the other 2000 that simply don't matter. The search engine monitors tell us that Yahoo delivers nearly 60% of all search engine traffic and is undisputed leader. Due to its popularity it is difficult to get listed on Yahoo, but the rewards are obviously high if you do, and it's a really good place to start. Check with your web company.
Continuously improve the scope and quality of new technology utilisation
In conclusion, success in integrating new technologies into your overall Internet hospitality marketing strategy requires a bold forward-thinking approach tempered with well-proven management and marketing techniques. The pace with which truly remarkable changes are taking place is both exciting and foreboding. The key is not to get overawed with the technical details; in a relatively short time the concept of sending electronic mail has become accepted by those who never thought they would use such a facility. Many of the features of doing business described in this article will become equally commonplace in the hospitality industry relatively quickly. As with all aspects of a healthy well-managed business, your electronic presence needs to be continuously improved. The medium itself offers a rich reference source for information on what your competitors and others in the industry around the world are doing-you can keep right up to date without leaving your desk. The hospitality sector has always led the way in service excellence, so it should be no surprise to see the "best practice" examples of customer relationship management, content-rich Web sites and e-commerce coming from those of you in the industry reading this article right now.
References
Peter D. Bennett (Ed.) (1995), Dictionary of Marketing Terms, 2d edition, American Marketing Association.
Butler Group (1996), Business on the Web Management Guide: Strategies and Techniques, Butler Group, June.
Evans, J.R. and Laskin, R.L. (1994), "The relationship marketing process: a conceptualisation and application", Industrial Marketing Management, Vol. 23, pp. 439-52.
Gilbert, D.C., Powell-Perry, J. and Widijoso, S. (1999), "Approaches by hotels to the use of the Internet as a relationship marketing tool", Journal of Marketing Practice: Applied Marketing Science, Vol. 5 No. 1, pp 21-38.
Logical/Datatec (2000), The abc of e - your guide to cutting through the e-business hype, www.logical.com, June
Paul R Edwards MA STA Managing Director, Cali Net Limited - Marketing Director, Dunalastair Hotel - has been involved in marketing since he owned and operated his own promotions business at St. Andrews University. After graduating with an MA in International Politics, Paul co-founded Cali Net to provide Internet marketing services for his contacts in the Scottish hospitality industry. His strengths within this industry come from his time managing Dunalastair Hotel in Perthshire; Paul's Internet marketing has been instrumental in bringing Dunalastair to the forefront of Scottish hotels. Paul is very interested in product development and is continuously driving Cali Net into new hospitality-related niche markets.
Selective Glossary of Terminology
Application Service Provider (ASP) - An application service provider is a third-party entity that manages and distributes software-based services and solutions to customers across a wide area network, typically the Internet, from a central data centre. In essence, ASPs are a way for companies to outsource some or almost all aspects of their information technology needs, e.g. accounts, payroll, and reservations.
Bandwidth - How much information you can send through a data connection. Usually measured in bits-per-second. A full page of English text is about 16,000 bits. A fast modem can move about 15,000 bits in one second. Full-motion full-screen video would require roughly 10,000,000 bits-per-second, depending on compression.
Cyberspace - Term originated by author William Gibson in his novel Neuromancer the word Cyberspace is currently used to describe the whole range of information resources available through computer networks.
Domain name - The unique name that identifies an Internet site. Domain Names always have 2 or more parts, separated by dots. The part on the left is the most specific, and the part on the right is the most general. A given machine may have more than one Domain Name but a given Domain Name points to only one machine. For example, the domain names: matisse.net mail.matisse.net and workshop.matisse.net can all refer to the same machine, but each domain name can refer to no more than one machine.
Mirror site - Generally speaking, "to mirror" is to maintain an exact copy of something. Probably the most common use of the term on the Internet refers to "mirror sites" which are Web sites that maintain exact copies of material originated at another location, usually in order to provide more widespread access to the resource.
Portal - Usually used as a marketing term to described a Web site that is or is intended to be the first place people see when using the Web. Typically a "Portal site" has a catalogue of Web sites, a search engine, or both. A portal site may also offer email and other service to entice people to use that site as their main "point of entry" (hence "portal") to the Web.
Search engine - On the Internet, a search engine has three parts: (1) A spider (also called a "crawler" or a "bot") that goes to every page or representative pages on every Web site that wants to be searchable and reads it, using hypertext links on each page to discover and read a site's other pages (2) A program that creates a huge index (sometimes called a "catalogue") from the pages that have been read (3) A program that receives your search request, compares it to the entries in the index, and returns results to you. An alternative to using a search engine is to explore a structured directory of topics. Yahoo, which also lets you use its search engine, is the most widely used directory on the Web. A number of Web portal sites offer both the search engine and directory approaches to finding information.
Web site - A Web site is a related collection of World Wide Web files that includes a beginning file called a home page. A company or an individual tells you how to get to their Web site by giving you the address of their home page. From the home page, you can get to all the other pages on their site.
Internet Resources for Hospitality Marketing
PricewaterhouseCoopers Lodging Research
-http://www.lodgingresearch.com
HotelMarketing.com
- http://www.hotelmarketing.com
Hospitality Sales & Marketing Association International
(HSMAI)
- http://www.hsmai.org
The Marketing Manager's Plain English Internet Glossary
- http://www.jaderiver.com
Top 100 Hospitality Sites
- http://www.restaurantreport.com
UNLV Hospitality Marketing Links
- http://www.unlv.edu/Tourism/Hospitality_Marketing_Links.html
World Hospitality
- http://www.worldhospitality.com
Hotels in the uk - my experimental site a very interesting project
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