IN-DEPTH: How can independent small and medium sized hotels differentiate their image and offerings today?

Published: 03 May 2011

IN-DEPTH: How can independent small and medium sized hotels differentiate their image and offerings today?

By Ritesh Gupta

Small luxury hotels pride themselves on taking excellent care of guests.

That same care must be taken in all marketing messages to nurture each relationship, says Madigan Pratt, MD, Madigan Pratt & Associates.

Pratt, who is scheduled to speak at the forthcoming Online Marketing Strategies for Travel 2011 Conference, to be held in Miami (June 7-8), spoke to EyeforTravel’s Ritesh Gupta about what doesn’t lead to differentiation, peronsalisation and lot more.

What do you think are the most critical issues today for independent small and medium sized travel brands to differentiate their image and offerings?

Madigan Pratt:

The sheer amount of noise in the marketplace and clamor for traveller’s attention is deafening. The depth and breadth of this - alleged - past recession has led to an unprecedented number of ways to scream "SALE!" With so much focus on discounting there never has been a greater need for a hotel to truly differentiate itself from competition. Differentiation requires a clear, benefit-oriented marketing positioning communicated in everything a hotel says and does.

Positioning is a fundamental marketing concept, but far too many hotels don't have one. Instead they rely on beautiful, dreamy photography laced with elaborate technological pyrotechnics that sell sun, sea, sand, spa and smiling faces.

This doesn't lead to differentiation - it leads to consumer confusion - the last thing a hotel needs. Take a look at the websites for the top 25 Caribbean hotels according to Travel+Leisure Magazine. Try and identify the brand promise or the benefit each hotel offers that not only makes it different from but better than competition. The results may surprise you.

Differentiation is difficult, especially in the hectic times we are living in today. That is why it is perhaps the perfect time for hoteliers to step back, take a seriously unbiased view at what they are saying across all media and ask:

• Do I have a clear positioning?
• Will my target market really see me as different from competition?
• Will they perceive me as better?
• Is the benefit I am offering motivating?
• Is the benefit truly unique?

Hopefully the answers are a resounding yes. If it is, great. If not, then the time spent developing a point of differentiation will be well worth it. Your marketing will be more impactful.

How are travel companies missing out on personalisation? In one of your blog posting regarding CRM, it’s been mentioned that one should ensure that the Internet strategy is in order and there is a need to build and maintain a high quality database of prospects and guests. A section of the industry believes that website, email and mobile channels remain largely untapped in terms of personalisation. What’s your viewpoint regarding the same?

Madigan Pratt:

In How to Win Friends and Influence People Dale Carnegie wrote, "Remember that a person's name is to that person the sweetest and most important sound in any language." It is just as true today as when Mr. Carnegie first wrote it back in 1936.

But personalisation goes far beyond simply communicating with customers and prospects by name. Hoteliers need to understand who is in their database and provide them with information each individual finds relevant. Consumers need to feel as though the hotel knows them, understands them and is talking directly to them. That's how strong relationships are built and that's how hotels can increase the percentage of profitable direct business it receives.

To do this effectively a hotel needs a robust marketing oriented database that can be segmented so individual messages can be custom tailored to specific audiences. Building a relationship with someone means you are addressing them as if you know them. Hotels need to approach customers differently from prospects. A repeat visitor needs a different message than a first time guest. Sending snowbound specials to someone living in Florida shows them that you do not know (or care) who they are.

Beyond having a good marketing database hotels need someone with strong direct marketing skills to make personalisation and relationship marketing come alive.

Personalisation and true one-to-one marketing is a largely untapped area and can provide small and mid size hotels a significant advantage over competition. Building a strong relationship with guests and prospects will provide a much greater ROI than simply sending "email blasts" to a subscriber base.

A part of 1:1 experience is understanding how at different points of a brand relationship, different channels play better role at different times. How can independent small and medium sized hotels leverage this into their strategy?

Madigan Pratt:

The goal of 1:1 and CRM is to move people through the customer lifecycle. This starts with getting someone's attention, then letting them know why your hotel is different/better, getting them to stay with you, and then turning them into a loyal repeat guest and brand advocate. With increased loyalty will come more direct bookings.

Different media and channels need to be employed at different stages of the customer lifecycle. For example, advertising and public relations are excellent tools for creating awareness for a hotel and building a database of new prospects.

Research has also shown that Online Travel Agencies are an important channel (vehicle) for building awareness of a hotel as vacationers go about research destinations and resorts. In addition to building awareness, advantage of OTAs is they can immediately convert a "shopper" into a guest.

Once awareness has been created and an individual raises their hand asking for more information by signing up for a newsletter or contacting reservations a different set of tools are better suited for lead nurturing and conversion. Targeted emails with relevant offers, informative e-newsletters and Facebook exclusive offers are relationship building media that can deliver high revenue while making the guest feel valued.

Again this is where a quality marketing oriented database becomes invaluable. Use guest information and behavior to create appropriate messages throughout a relationship.

What do you recommend when it comes to a thorough examination of any customer base: their intent, motivations, demographics and psychographics, geography, media consumption, as well as transactions?

Madigan Pratt:

Larger and more sophisticated hotels and chains have the budgets that afford them the opportunity to overlay demographic, psychographic and behavioral information on their databases to get a more exact picture of their customers and prospects.

Most small hotels don’t have the financial resources required to go into such depth. There are still a number of actions small hotels can take to segment their database allowing them to target specific individuals with relevant messages.

The first thing most hotels should do is conduct an audit of the quality of the information being collected. There is a saying in database marketing, "garbage in, garbage out."

If reservations is not collecting complete and accurate customer information it won't be useful for segmentation or sending relevant information. If a hotel only collects email addresses without a first name when someone subscribes to a newsletter all the hotel can do is send non-personalised "email blasts."

At the minimum, there should be separate fields for salutation, first name, middle name, last name, address 1, address 2, city, state/province, zip/postal code, country, email, telephone number # (marked home, business or mobile).

If the database is housed in the PMS there should be a wealth of additional information that can be used for customer relationship marketing purposes. Relevant messages can be specifically targeted to repeat guests, first timers, high spenders, people who prefer luxury suites, summer guests, winter guests, repeat guest who haven't returned in over five years. The possibilities are limited only by the quality and quantity of the information gathered.

Hotels sometimes have several databases - customer data in the PMS and customer and prospect information in a newsletter database making effective relationship marketing difficult. Fortunately there are new, relatively inexpensive CRM software solutions on the market that can merge various databases into one. This is a major advance for small hotels allowing them to more effectively compete against larger hotels, the chains and even small hotels that do not take advantage of them.

The critical step to developing true one-to-one marketing communications is in organising analysing and segmenting the database. Many companies make the mistake of rushing through these strategic steps in order to implement the tactical portion of their marketing plan. How do you assess the situation?

Madigan Pratt:

The problem small to mid size-hotels have with implementing true one-to-one marketing communications comes from a lack of understanding of database and direct marketing.

This lack of knowledge is evident in far too many of the hotel newsletters we subscribe to. While many are beautifully designed from a graphic standpoint, few deliver finely segmented and relevant messages needed to build strong relationships, brand advocates and long-term sales. For the most part, they are simply "email blasts" to an unsegmented database of subscribers.

One-to-one marketing and all the knowledge, organisation and coordination needed to achieve it requires a great deal of strategic planning and manpower. Fortunately there are numerous case studies that show the return on investment is well worth the effort.

Online Marketing Strategies for Travel 2011 Conference

Madigan Pratt, MD, Madigan Pratt & Associates is scheduled to speak at the forthcoming Online Marketing Strategies for Travel 2011 Conference, to be held in Miami (June 7-8). For more information, click here

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