Articles by "Tracy Dong"
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By: Tracy Dong, Senior Advisor, IDeaS Advisory Services

The hotel guest of today is very different compared with twelve months ago. There is the obvious widespread appearance of masks and social distancing practices, but also where these guests have travelled from is more likely to be far closer to home than before.

COVID-19 and government-mandated travel restrictions have resulted in demand from key international and business segments disappearing for hotels. While hotels are unlikely to see a surge in demand from international markets anytime soon, there are signs of occupancy growth across the Asia-Pacific (APAC) region occurring from domestic sources. According to STR, the APAC hotel industry has reported performance improvements from 2020 occupancy and RevPAR lows, due to strengthening demand from domestic sources.

However, not all hotels have been able to immediately benefit from this rise in domestic travel, particularly those in markets where domestic demand itself is limited. While some markets like Australia have preexisting domestic travel markets, this cannot be said for destinations like Singapore or Bali that largely cater to international guests.

For example, prior to COVID-19, overall domestic demand (which was mainly staycation business over weekend periods) contributed less than 10 percent of Singapore hotels’ total revenue. So even if a hotel in Singapore can take a major share of that market, if domestic demand is not grown overall, the available pool of guests is limited and unlikely to significantly drive a hotel’s recovery.

Given the short-term importance of domestic travel markets to the hotel sector, what can Indonesian hotels across the region be doing to attract and cater to more domestic guests?

Lessons from China

While no two markets are exactly alike and each destination will have a different path to recovery, there are clear trends from the Chinese market as to how their domestic travel market rebounded in 2020. Pleasingly, all segments of domestic travel, including leisure and business, rebounded.

According to research conducted by McKinsey & Company, China witnessed sustained growth from both domestic leisure and domestic business travel segments over the middle of 2020. The percentage of research respondents who took domestic short-distance trips increased from 19 percent to 31 percent from May to August, and business travel increased from two percent to 25 percent over the same period.

Leverage partnerships and tailor promotions

Hoteliers operating in markets that do not have a large base of domestic demand to capture should work closely with partners, including tourism bodies, to stimulate overall interest in domestic travel. The recent travel voucher campaign in South Australia is a good example of a campaign that was leveraged by local hoteliers to drive incremental accommodation nights. The booking window for the campaign was approximately six weeks and with demand heavily skewed towards weekends (Saturday nights were exempt from the campaign).

What the post-campaign analysis showed was that for the Adelaide market, Saturday nights still showed an increase in demand irrespective of the campaign being in market. However, during the campaign period shoulder dates such as Sunday, Friday and Thursday night saw an influx in demand and to a lesser degree midweek. These tourism board initiatives and subsidised promotional campaigns, such as that which the Singapore Tourism Board is running with their Discovery Vouchers, can help drive overall interest in domestic travel that hotels can try to attract for their properties.

Domestic versus international guests

For hotels in the APAC region, domestic demand is likely to predominantly be for the leisure market and weekend-driven. As a result of travel being closer to home, long-term planning will shift, and hoteliers will witness a significant reduction in booking lead time as well the influx of shorter trips.

The channels through which domestic travelers will book can differ from international guests. Domestic guests that may be more familiar with the destination and range of properties in the market will more likely have more knowledge and book directly with a hotel. This differs compared with a new international customer who is not as familiar with the destination and will often research, compare and book with an OTA.

It should be noted as well that local domestic guests may be more interested in short ‘getaways’ to relax as part of a staycation experience. Whereas an international traveler may be more interested in a fully immersive experience that offers insights into their foreign destination.

Domestic demand building tactics

To attract demand from domestic markets, hoteliers need to rethink their market segments and guest personas. By understanding the motivations of hotel bookings under each guest persona, along with the expectations of their guests, hoteliers have a better chance of attracting demand from domestic sources and converting this into repeat business.

Hotels must get creative with their offerings if they are to grow their business through attracting new segments of domestic guests which did not exist before. For example, a hotel located in the center of a major city which primarily catered to business travelers might create a pet-friendly staycation package including dog grooming and day spa passes for pet owners. Also, hotels should consider new ways to leverage unused event spaces within their property to build ‘work from hotel’ packages.

To increase the confidence of domestic guests staying out-of-home, hotels need to clearly publicise their cleaning and hygiene protocols to guests, including via email in the lead-up to a guest’s arrival. Hotels should also provide contactless check-in procedures and be properly staffed to handle front desk needs quickly and avoid lines and overcrowding.

As hotels compete to attract local demand, its connection with the local community will become even more important to differentiate a hotel’s brand. Hoteliers may extend booking to include unique tours of lesser-known aspects of their city so guests can experience something different with their staycation. Or, a hotel may create an Instagram-able picnic or glamping set up for guests in a decking area that overlooks a river or significant landmark. These offerings will present social media opportunities that build positive online promotion for a hotel, making the property ‘visible’ and attractive for potential domestic guests.

As domestic travel increases across the APAC region, opportunities exist for hotels to position themselves to their local market with safe, creative offerings to grow occupancy and revenues. Through understanding market trends and targeting domestic guests with the right promotion and the right message at the right price, hotels will be best placed to begin their own local recovery.

For more information on how your hotel can attract and manage domestic demand, 
please visit: www.ideas.com


Rethinking OTAs in an Uncertain Market

Date: October 15, 2020 Author: Hotelierindo Archived

Written by – Tracy Dong, Senior Advisor, Asia Pacific region at IDeaS Revenue Solutions
For many hoteliers, online travel agencies (OTAs) are an accepted part of a distribution strategy due to their marketing power and high customer traffic. However, today’s costs for acquiring guests are significant, and in some cases, OTAs may be hurting your hotel more than they are helping.

With 15 to 25 percent commission being charged on average for every OTA booking secured, these third-party costs directly impact the amount of revenue hotels can secure from each guest, which can in turn dampen profitability at a time when COVID-19 is impacting a hotel’s ability to generate revenue and every dollar counts. On top of that, many OTAs require a last-room-available guarantee for their channels, which results in hotels losing ultimate control on yielding of inventory.

When engaging with OTAs in this era of uncertainty, hoteliers must properly understand the value and costs associated with the third-party distribution platform. Any relationship weighted in favor of an OTA to the detriment of a hotel’s bottom line needs to be reviewed.

Attract more direct bookings
Given the cost associated with doing business with OTAs, hoteliers should explore all opportunities to grow bookings from alternative channels. Importantly, the most cost-effective online booking channel for a hotel remains its own website. But how can you maximise direct bookings through your website? The first step is increasing web traffic from potential guests and converting “lookers” into “bookers.”

In an effort to attract more website visitors and increase booking conversion rates from this channel, hoteliers need to understand those people who land on their website. What dates are they searching for? What is the purpose of their trip? Where do they search? Collecting this information provides data that can be used to develop targeted marketing campaigns that attract the right type of website visitor—those with a higher chance of becoming a guest.

Hotels can also increase direct bookings by retargeting past visitors and directing them to its own website. When researching a location, potential guests may visit a variety of travel websites and OTAs before deciding where to stay. Hotels need to keep their property on the top of the consumer’s mind and influence guests to book on the hotel’s website. Technology that offers tailored ads customised around visitor behavior or website activity can help achieve an estimated 10 percent return rate on website visits, increasing direct-booking opportunities.


Create a seamless online experience
Today, a greater share of a hotel’s marketing budget is dedicated to attracting more qualified traffic to their own website than ever before, but what if the actual architecture and content on your site prevent rather than enable the booking process? If a website’s booking process is not seamless and secure, guests will book elsewhere. Hoteliers need to ensure their website delivers an enhanced experience with user-friendly features that provide easy navigation and booking; otherwise, the work that went into attracting a potential guest will be for nothing.

Potential guests often visit a hotel’s website for more information on the property and to assess if the property will reflect the experiences they seek. If the hotel website isn’t focused around the needs of the consumer, such as explaining local attractions nearby, and having more photos, videos and reviews than an OTA, website visitors may quickly move on to another property. Hotels may not be able to compete with OTAs on the level of website traffic they generate, but they should beat them at showcasing their own property.

Today, health and safety are a traveller’s top concerns. Therefore, hotels should reassure their potential guests by highlighting the health and hygiene protocols or certifications upfront on their website. Meanwhile, independent hoteliers need to think about altering site content that appeals to the new targeted audiences. For example, promote staycation offers with various amended activities following social distancing orders. A hotel’s own website is the perfect channel to showcase their property’s personality and unique selling points.

Hotel websites should also incorporate user-generated content from social media, such as user ratings and reviews, to assure guests of the credibility and service standard of the hotel. Since over half of online bookers search online reviews before making reservations, it is critical to provide online reviews as a component of website content.

A hotel’s website must also be informative, multilingual and regionally customised—enabling customers to be assured of the credibility and service standards of the hotel. Optimising their website for viewing on-the-go with iPads, other tablet-sized devices and smartphone compatibility is an absolute must to meet the expectations of tech-savvy travellers ready to embark on their next experience.


Refocus marketing, reward loyaltyHotels often focus their marketing spend on acquiring new guests to broaden their customer base. However, by doing this, they can overlook a major revenue stream that can be engaged at a much lower cost—past guests. Email marketing allows hotels to communicate with their past guests at specific times throughout the customer journey, such as prior to arrival, during their stay and after checking out.

Additionally, hotels have valuable insights (and data) on their past guests, which means they can send specific messaging to these individuals (e.g., promote welcome-back packages, outline the hotel’s COVID-19 cleaning and safety protocols, and provide special offers and incentives that help generate ancillary revenue) to drive direct bookings and avoid having to rely on costly OTAs to support occupancy.

Hotels need to think beyond guest rooms and leverage their entire customer relationship management system database, including guests who have been to their restaurants or day spa. With rooms’ demand being depressed, hotels could consider leveraging their popular restaurants to drive web traffic. Total revenue management and profit optimisation are more important than ever, and hotels need to consider their whole property to maximise opportunities.


OTAs can still support your business goals
Hotels need to understand their true channel costs. Having reports on the cost of guest acquisition by channel partner can help hoteliers to negotiate better contracts with third-party OTAs, gaining flexibility in managing rate and availability parity. This information builds a basis for more profitable decisions in the short-term and more long-term channel-value-centric decisions.

It should also be stated that OTAs are not all bad. They can introduce hotels to an audience of potential guests a property might never have a chance of reaching—especially in lower demand periods like the industry is currently experiencing. Hoteliers heavily invested in OTAs to secure bookings might consider ways to use those platforms to better support future business. For example, to increase both new and return business, intelligent hoteliers are letting OTAs handle the initial capturing of guests and then implementing strategies and incentives that ensure those guests book future reservations directly with their hotel, eliminating ongoing third-party booking expenses.


Reduce third-party costs, maximise direct business

In today’s uncertain COVID-19 operating environment, every dollar counts. Any method to support growth in guest bookings should be explored, and every guest secured should be evaluated to determine their true worth. With costs associated with acquiring new guests through OTAs increasing, hotels need to consider their most effective booking channels and maximise direct bookings.

For more information on how your hotel can drive direct bookings in an uncertain market, please visit: http://www.ideas.com

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