According to new research by Kalibri Labs, the cost of acquiring hotel customers through marketing and distribution channels is rising at twice the rate of hotel revenue growth. Online marketing expenditures and third-party commissions receive the most airtime when it comes to breaking down guest acquisition costs and proposing remedies, but there is more to achieving profitable bookings than reining in OTA costs.
A Hospitality Asset Managers Association (HAMA) report from August 2014 showed that from 2009 to 2012 guest acquisition costs increased at the same rate as revenue gains in the upper upscale and luxury hotel segments.
The report defined guest acquisition costs as:
“…the external costs of brand allocations (for marketing, advertising, major promotions, national and global sales offices and loyalty programs) and third party commissions (for group and transient bookings), as well as the internal costs of marketing and sales programs, including local marketing, sales staffing and other expenses, including reservations staff.” (Tnooz)
Consider the scope of local marketing, sales staffing and expenses, and reservations staff; internal costs are considerable.
More than simply increasing direct bookings, profitability in an era when guest acquisition costs have risen so sharply also depends on efficiently resourcing sales and marketing and reservations. Technology can dually support this effort by streamlining operations and increasing productivity—efficiency and effectiveness.
One seemingly simple yet sophisticated aspect of NAVIS’ Narrowcast technology has ramifications across both efficiency and effectiveness. Narrowcast captures guest data automatically as a reservations agent answers a voice, chat or other digital inquiry. This allows reps to bypass basic questions (name, geography) and helps establish a relationship because they are informed about the guest’s preferences and behavior.
Results: time saved, expanded potential to take more calls, conversion potential of existing call increased. Efficiency.
Leveraging solutions like Narrowcast helps agents to keep track of details such as dates of interest, preferences, activities the guest enjoys, and more. This level of insight can be referenced throughout the conversation, in follow-ups, and in the future when this same guest calls again. In addition to elevating guest service throughout the organization, this information serves as the basis for an outbound sales program. When agents have downtime, they can be tasked with making outbound calls to inquiries that went unbooked. Outbound programs of this type can increase revenue by as much as $4,000 per room, per year.
Results: Better guest service now and in the future, previously unproductive time now occupied for revenue-generating projects. Effectiveness.
Efficiency and effectiveness: more profitable direct channel management.
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