LIFT & SHIFT How Hotels and Vacation Rentals Neglected the Direct Channel and How to Get It Back

WHITE PAPER DEC 2016

BY JASON RING, NAVIS NATIONAL SYSTEM CONSULTANT

1 What is Lift & Shift?

If I asked you in which channel you invest the largest share of your budget and focus, what would you say? During the last decade, we’ve seen a substantial shift toward the digital channel receiving increasing amounts of dollars and energy—as much as 75% of some marketing budgets. Does this speak to you?

It wasn’t long ago that everyone predicted the death of print or direct mail, but as the digital space became more crowded, the pendulum started to swing back that way. We’ve been watching this happen with the voice channel for the past several years now, and the data is compelling. As travelers become more savvy and seek customized, high-touch experiences, shifting some resources back to the voice channel might position you to capitalize on a growing trend.

“Lift and shift” is how we talk about the process of reviewing your marketing and sales channels. When the data points to a channel with untapped potential, you’ve got to lift it up; when that channel drives revenue growth or reduces costs, you shift resources toward it.

Introduction

2 A Quick History Lesson

2002-2009Websites & Search Engine Optimization (SEO) Take Center Stage

• Hotels and vacation rentals are encouraged to sell as much inventory as possible online.• Google touts the value of analytics and the ability to track every transaction, making marketing easy!• Website bookings promoted as the most lucrative. Why? Because they don’t require an agent, trading

pricey human capital for the reusability of a website. (What we don’t know, yet, is that websites cannot sell experiences the way a human can.)

2007First iPhone Released – A Cultural Shift

• As a culture, we start to communicate via text instead of voice.• It is assumed that “all things digital” is the Holy Grail in marketing and in life. For hospitality, this shift

promises to lower one of our biggest cost drivers: labor. 2011 Siri Introduced

• Despite low initial adoption rates, Apple’s introduction of a Siri product marks that the world is not entirely text driven. Voice matters.

2012 iPhone 5 Release (This is a game changer!)

• The world migrates to mobile because devices like the iPhone 5 are fast and easier to use.• Consumers quit buying desktops PCs and rely almost entirely on laptops and mobile devices.

2015Mobilegeddon

• Google rolls out an algorithm that gives priority to mobile-friendly websites.• The world has gone mobile! For search, for messaging, and for calls (land lines are a thing of the past).

2016Siri Adoption

• More than 50% of all iPhone users use voice recognition such as Siri. • Cultural norms are shifting. Texting and driving is a no-no, but everyone is on the go. • Siri solves part of the problem. Clickable phone numbers and click-to-call solve the other part. • We are returning to a “voice-driven” culture!

A Quick History LessonTo better understand where we are in the hospitality industry, we must first understand where we’ve been. Key technology developments during the last 15 years have shifted our perceptions about where and how we get reservations, and which ones are most lucrative. Stay tuned, because this history will help us understand more about how industry and culture evolved simultaneously.

3 LIFT: Rising to the Top Again

Lift (v):

To evaluate and optimize channel performance

Shift (v):

To move business away from high-cost channels to more lucrative channels

Lift is all about digging into channel performance and optimizing those that are underperforming or are too costly. Most hotels and vacation rentals will say right away that OTAs are eating up their profits and distribution has become too costly, and yet accommodations give more and more inventory to OTAs who, in turn, gobble up more market share. Without evaluating more profitable channels for opportunities, the trend will only continue in this direction, filling properties with an unsustainable mix of low-value business.

Why Voice Matters

Strangely enough, as technology has become more widespread and our culture has moved toward text communication, we’ve actually seen an increase in consumer use of the voice channel. A June 2015 BIA/Kelsey report predicts that calls to businesses from smartphones will reach 162 billion by 2019, more than double the 77 billion calls generated last year.

Among the many reasons travelers are going to the phones is that they do not want to enter credit card information into mobile websites; they’d rather call. (Should you need proof, mobile payments and mobile wallets are only used by 18% of North Americans on a regular basis, and these are theoretically more secure than entering a credit card number into a mobile website using a random Wi-Fi network.) While this may shift over the coming years with the advent of new, more secure technology, this also is the area of least concern.

More importantly, travelers are also on the move, and on the move means moving in and out of search and voice—sometimes Siri, more often a phone call. At some point in the process—whether during search or payment—travelers either need to be hands-free, require more information than they can adequately get on a mobile search, or desire more security. Voice is the answer. For simple commodities, such as socks or pizzas, mobile purchases can work, but for experiences, consumers go to the phones.

This is good news for the hospitality industry if it’s handled well. Why? Because voice reservations not only bring in higher nightly rates and offer the opportunity for upselling, they can also be less costly to achieve when you have the right technology. Win-win.

LIFT: Rising to the Top Again

The proof is in the pudding. For NAVIS clients who have added unique phone numbers to their mobile websites, call-volume increases have led to revenue gains of as much as 147%.

The bottom line is that if you don’t make it easy for guests to call you from their mobile phone, you’re missing out on substantial revenue. And if you don’t manage your offline channels in general, you don’t have a clear picture of overall demand and conversion.

Rather than tapping into voice channel potential, the accommodations industry has been lured by Google analytics and digital agencies to invest only in that which is trackable without realizing that the voice channel is, in fact, trackable. As a result, many hotels and vacation rental managers have inappropriately cast the voice channel aside.

OTAs have made massive inroads, taking 15-20% of already heavily discounted rates. Headlines such as: How OTAs Are Eating Hotel Business (2014) and OTAs Continue to Steal MarketShare (2015) are all too common. The latter of these articles notes that between 2011 and 2014, OTA share increased as much as 108% for hotels.

Perhaps the most shocking thing about the OTAs successes at increasing business: 60% of guests are calling before booking on an OTA, according to Google, but properties aren’t capturing the business during these calls.

There’s a huge opportunity margin for direct business via voice. With a little focus and investment in your reservations team, you can capture and convert more bookings.

*Source: NAVIS Analytics

4 How to LIFT

A popular Manhattan hotel recently came to NAVIS sharing a not-uncommon concern that 50% of their business was going to OTAs. A huge, costly problem. However, digging deeper, we discovered that they weren’t answering the phones on Sundays. If your most profitable channels are not continuously available, OTAs will get the business. If the phone number on your mobile site isn’t click-to-call, a guest can’t easily make a reservation. If you’re not answering the phones, a guest can’t make a reservation. Plain and simple.

In our 24/7 culture and these competitive times, around-the-clock reservations coverage is beyond essential—it’s critical. This can include outsourcing calls to cover overflow during peak periods or during periods when it might not make financial sense to have staff on site.

Following this, reservations staff should be given the respect of being adequately trained to do their jobs with the greatest success. Part and parcel to this is providing technology solutions that enable them to close the reservation sale with ease. An added benefit: by using this same technology, it is easy to see when agents aren’t performing and strategize a solution.

Download the NAVIS eBook “Transforming Reservations Inquiries to Profitable Sales” for an in-depth exploration of this topic.

How to LIFTIn order to lift, lodging providers must elevate the performance of their voice channel. Instead of viewing it as the “assist” or an opportunity to serve, look at every phone call as an opportunity to close. Google reported at the 2016 Hotel Data Conference that 60% of guests call in the metasearch phase and a whopping 70% call during the property website research phase. Each and every one of these is an opportunity to not only provide guest service but to also make it worth the guest’s while to book directly on the spot via phone. What does it require? The right coverage, training, and technology.

5 SHIFT: Make MoreMoney for Less Money

SHIFT: Make More Money for Less Money

When your reservation team is optimized, you can shift away from low-margin channels, pulling away from wholesalers and putting an end to yielding down rates and filling the house with bad business.

What does this look like?

• When those research phone calls come in during the metasearch and website stages of the booking funnel but the potential guest isn’t ready to book, prepared agents can follow up properly, sending them photos, creating a relationship, collecting their email for follow-up, and tracking engagement. Technology today makes this simple.

• When the calls come in while visiting an OTA—remember, Google tells us this number is trending to upwards of 60%—agents can respond with appropriately adjusted rates. It is surprising the number of properties that will tell a guest they aren’t able to match an OTA rate or offer an incentive to book directly, and it’s a giant mistake not to. Not only does the property lose money on the commission, but the OTA then owns the guest, which reduces the opportunity for long-term, repeat-guest revenue. Not to mention the frustration the guest feels talking to that agent.

• In general, your website should encourage calling. This means making sure that your phone number is working, visible, and clickable. Click-to-call capabilities ensure the ability to track mobile search-to-voice reservations and their impact on revenue. NAVIS clients that track mobile calls have seen substantive volume increases over the past three years—from 64% to as much as 105%. This is consistent with industry forecasts that click-to-call volume will more than double within the next four years.

Source: NAVIS Analytics

ConclusionThe mobile phone used to be a phone that could do some searching. Now it’s a search device that can do some calling. Good news for the hospitality market since we still haven’t figured out how to sell experiences online very well. Without knowing and tailoring the online experience based on information about the guest (first time, repeat, long-stay, family-stay, drive market), experiential selling online remains out of reach.

By phone, however, these questions can be asked and recorded and used again to improve the selling experience and the guest relationship. If you show genuine interest in their needs, they will feel a stronger connection to you and your brand. In the end, genuine human connection will always win out over technology alone. Giving your potential guests information that is tailored to their specific situation is an ideal first step in showing that you are interested in their needs.

Most hotels and vacation rental managers will say, “Oh yes, of course, we’re tracking our marketing,” but if you’re not tracking offline (voice), you’re not really tracking your marketing. The voice channel is essential throughout the sales funnel, and overlooking it contributes to filling the house with low-value business.

The shift toward more valuable business requires acknowledging:

1. Smartphone use for research and booking is driving phone calls.

2. The opportunity for direct voice reservations is available through existing demand (OTAs and web), but training is required.

3. Additional opportunities exist to increase direct bookings through efforts such as click-to-call.

Successfully “lifting and shifting” business to your direct voice channel increases daily rate, increases loyalty, decreases commissions, and increases control of guest data—all of which have long-term, bottom-line impact.

Are you using these strategies and tools to engage your guests in the most effective way?

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NAVIS is the #1 reservation sales and marketing platform for the hospitality industry. Because we believe tech-nology should make you money, not cost you money, we developed our game-changing Revenue Performance Platform™ to transform teams into revenue makers, enabling them to drive, capture and convert more direct bookings. We deliver actionable guest insights so departments can seamlessly sell and market together. The result is always a dramatic increase in direct sales and profit. We guarantee it.

Founded in 1987, NAVIS is a privately held company with headquarters in Bend, Ore., and a growing East Coast office in Orlando, Fla.

For a complimentary assessment of your own direct channel health and distribution mix, please visit www.TheNavisWay.com.

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About NAVIS

SOURCES:1. Almost 40% of US Smartphone Users Use Voice Recognition. Parks Associates. Jan 2016. 2. Calls to Businesses from Smartphones Will Reach 162 Billion by 2019. BIA/Kelsey. June 2015. 3. How Mobile Payments Will Grow in 2016. Fortune. October 2015.4. Study: OTAs Continue to Steal Market Share. HotelNewsNow.com. July 2015.5. 2016 Hotel Data Conference. STR & Hotels News Now. Sept 2016.