Online Marketing in the Hospitality Industry E-MARKETING

-- R Venkatesh
Faculty Member,
IBS,
Chennai.
The author can be reached at
venky30_2000@yahoo.com

As a result of the global economic meltdown, the hospitality industry all over the world is currently under severe pressure to optimize return on investment. Here, the internet has come in handy and hotel websites and online hotel/travel booking portals are being geared up to drive business. Online marketing is becoming increasingly common and various strategies (like tactical promotions and offers) are being adopted to attract customers. Business class hotels are also taking the help of web search engines to direct the flow of traffic towards their websites. However, shortage of skilled staff is posing a significant challenge, and this is being addressed through methods like in-house training and better can we say: remuneration packages.

All over the world, the hospitality industry is facing a cri sis of sorts. This is not an unexpected development, given the current backdrop of global economic meltdown and frequent terrorist activities in different places. But the scale and magnitude of the slump have taken hoteliers by surprise. Several star hotels are increasingly feeling the pinch and those two or three tiers down are no less unfortunate. The occupancy rates of, not only the luxury hotels, but also the so-called business class hotels have been coming down; with the result that the hoteliers are compelled to look at ingenious ways of overcoming the downtrend. Quite in tune with the times, technology has come to the rescue, with hotel managements pressing into service opportunities available on the Internet. The objective everywhere is to optimize the return on spending and here, online marketing is seen as a cost-effective method of selling hotel space direct to the consumer.

Be that as it may, it has been noted by experts that many hotel websites are still in a rudimentary shape when it comes to relevant content, site structure, linkages, etc. From the point of view of guests, finding the website and knowing details regarding tariff, types of accommodation and accessibility from airports and railway stations assumes importance. It must be admitted that tourists and hotel guests are becoming increasingly more sophisticated and demanding these days, when compared to earlier times.

Several methods of improving revenues and reducing expenses have been suggested for mitigating the impact of the current crisis. Working closely with suppliers to procure local products, thus bringing down transportation, logistics and storage costs is one such method. Similarly, liaising with local associations and social clubs to organize events, conferences and charity gatherings is another. Apart from these, expanding the Public Relations (PR) footprint and the network of intermediaries like travel agents would also help. The impact of recession on the hospitality industry can be minimized by partnerships, co-marketing and through increased word-of-mouth publicity. The feedback of the visiting guests must be also monitored with a view to making the business get over the hump.

Hotel Websites: Vital in the Modern Era

Leveraging technology to beat the recession is being touted as imperative for the hotel and hospitality industry. This implies that the hotel websites are current and optimized for a good conversion rate. It must be possible for the internal staff to update the website content, news, offers and images with ease. Information on a host of aspects, like prices, offers, room types and bookings, should be made easy to navigate through. Also, the ability to offer visitors a `Best Price Guarantee' must be in evidence on the website. The visitors must feel assured that they are getting the best deal.

Online marketing brings better Return on Investment (ROI), claim the votaries of technology in the hospitality industry. This is not a myth anymore, but a fact. Search engines on the internet, specially focused on the hotel and hospitality sectors are now becoming common. For instance, a search engine, called RezTrip, states that it provides a booking solution for hotel websites by harnessing the power of the internet. RezTrip claims that its market-centric design results in better conversion ratios than other booking engines that are available to hotels today. It is claimed that RezTrip's look-to-book conversion ratio is 5%, as against the industry average of around 2%.

Innovative Features of Hotel Websites

Many subtle features are added to hotel websites to improve their appeal and promote online bookings. Some of the methods used by hotels to win customers are: attractive product images, conditional promotions and dynamic tariff packages. The search engine RezTrip offers seamless customization and integration with the hotels' website. Indeed, RezTrip points out that it continues to "pitch the hotel's room and ancillary products well after the visitor has left the hotel's website". It also rates high on `stickiness', i.e., the amount of time spent on a website or number of page views. Thanks to its approach, RezTrip is able to instill faith in the booking process and get the customer to confirm his/her hotel reservation online. The website's ability to close a transaction is vital, according to RezTrip.

It is amazing to note how this particular entity has forged a working relationship with hotels worldwide—from New York City to San Francisco, the Bahamas to India. The clients include: Paramount Hotel in New York's Times Square, Stratosphere Hotel in Las Vegas, and The Leela Palace Kempinski Hotels and Resorts in India.

When success attends their efforts, the search engine companies proclaim these with gusto. Ultimately, the overall occupancy level matters and the star hotels are bent on attracting the high-spending segments in order to augment revenues. There are two options: either hike the rates across the board or upgrade the business for catering to a more premium customer segment. In the former case, there is a risk of losing market share if the hotel increases rates beyond those of the competitors. In the latter option, one should be able to shift focus from the security of the low-margin group tour operator to the high-margin online travel agent. A greater share of the more lucrative transient leisure market must be targeted and this is relatively hard to accomplish. RezTrip gives the example of one of its clients, which was able to change its business strategy with the help of the booking service provided by it.

With innovative techniques in the field of computer graphics and web photos, hoteliers can now provide a virtual tour of their properties, so that visitors can get a clear picture of the interiors and exteriors of their hotels (Exhibit 1). The prospective guests can have reliable information about the rooms and rates, features and amenities. Online reservation and booking facility enables people to get things done smoothly. No doubt, organizations must plan proactively for gaining footage on the search engines. The search engines keep changing their rules often, and these have to be accommodated and adhered to. Again, hoteliers must catch up with the progress made by tour operators and other intermediate agencies in search engine optimization. What is more important is that hotel managements should secure repeat business through periodic newsletters, promotions and special schemes for regular customers. In this context, the significance of e-commerce cannot be overstressed.

Several strategies are commonly adopted by professionals in the hospitality industry to tackle the slump during certain times of the year. They offer tactical promotions for lean periods and place them right on the Booking Home Page. There are special offers, like "Stay on a Sunday and get 15% off on your entire stay" and maximize the long weekend with a "Say three nights and get the fourth night at 50% off."

Popularity of Business Class Hotels

Quite naturally, hotels nowadays advertise their wares with great zest. In this context, mention must be made about the business class hotels that have sprung up in large numbers across the world and in different states in India. Why are they becoming popular? It is not only because of the lower tariff, compared with 5-star hotels, but also on account of several ingenious methods adopted to attract customers. Most of them offer complimentary breakfast and 24 hour coffee service. One such hotel in Chennai, GRT Grand, has other hotels as part of its group, such as GRT Residency in Madurai and Kancheepuram, Temple Bay in Mamallapuram, and Sunway GRT Grand in Puducherry.

One finds on the website the words "Hospitality is in the DNA of GRT hotels…..choice of business executives or families on vacation". The CEO, in a message on the eve of the New Year, declared, "our staff demonstrates depth of knowledge, teamwork and strong management relationship….on the sales front too, we continue our winning spree in the Indian market….our efforts have resonated well with our customers and partners", thus imparting a positive note. Professionals feel that the hospitality industry as such will be able to hold its own against the tumult and turmoil of economic downturn and global recession.

Heritage Tourism

Heritage tourism is an area with great potential for the hospitality industry. However, poor infrastructure in many heritage sites, lack of quality cultural programs and inadequately trained guides come in the way of motivating people to visit such sites. Efforts are, however, being made by enterprising entrepreneurs to improve the situation. A promotional ad for the Neemrana group of heritage hotels proclaims: "One of India's youngest hotel chains has India's oldest properties! We don't let history become just a bygone. Neemrana Fort-Palace designed since 1464 to keep people out, was restored and refurbished in 1991 to welcome people in. Today, 15 historic Neemrana properties welcome you all over India. Each unique and incredible!" A screenshot of the Neemrana Hotels website home page is presented in Exhibit 2.

Shortage of Skilled Manpower

While all this is reassuring, it cannot be gainsaid that the industry as a whole is "witnessing ripple effects of economic slowdown." Here, many employers have reported a `dip in hiring intent' even though the IT and ITeS segments remain upbeat. In fact, subdued responses are coming from industry sources about job offers and these are attributed to cost-cutting measures that are the result of lower occupancy rates in hotels.

A mixed picture, neither rosy nor bleak, emerges from a survey. The employers prefer the flexibility of being able to add or remove staff from their payrolls, depending on business conditions. There is, however, a shortage of skilled workers. This is expected to impact the overall service levels across hotels everywhere. Even the advantage of low labor costs in India is no longer there due to the steady rise in salaries. Chefs can earn around Rs. 1.5 lakh per month working in restaurants overseas and on cruise liners. Hotels of every description feel the pinch since there is a migration of skilled professionals to countries abroad or to ships. Some hotels meet this challenge by grooming and training their own staff.

What about succor from the hotel management institutes? According to CRISIL Research, each year about 10,500 graduates come out of 25 Institutes of Hotel Management (IHMs) and 150 private institutes in India. Besides the 5-star hotels, those in the 3-star and 4-star categories also compete for this pool of graduates. The projection is that by 2011-12, at least 30,000 rooms will be added to the current stock and 54,000 employees will be required for the premium segment alone.

One hotel chain, Hyatt Hotels and Resorts South Asia, has implemented a three-pronged process for talent development, retention and skill enhancement through continuous training. This includes: measures to promote fair compensation benefits and recognition for consistent good work by employees. Training opportunities are provided to upgrade functional and leadership skills so that employees can take on a larger role.