The hotel and travel industry is suffering from one of the most aggressive issues of online brand and reputation attack, which is rooted firmly around the value of hotel brands and search phrases.
This is seen within primary search results, where 80% or more of branded search traffic on keywords directly related to a hotel’s brand are stolen by directory and trip review sites such as Orbitz, Expedia, TripAdvisor, Priceline, Hotwire, Hotels.com, and TravelPost. There are dozens of smaller sites and sub-properties involved in this marketplace attrition model, high-lighting an ongoing and growing problem.
Needless to say, that this is a monumental issue.
If we want to apply real world numbers to this problem, we can establish a baseline value of traffic redirected by encroaching on branded terms by looking at the monthly unique traffic of the top travel sites dealing with hotels and comparing those numbers against the percentage of traffic originating from search engines.
The chart below list some of the top sites involved in leeching off organic traffic through brand related hotel terms:
What is the real cost?
The real cost is that over 13,500,000 monthly unique hotel and travel prospects are being aggressively lured into competing business models where they are price-shopped, sold alternative options, or left to simple confusion. If a hotel values an average visitor on a cost-per-click model of $1 to $5 per visitor, the total monthly traffic value being lost above is $13.5M to $67.5M per month.
Disruption of the sales funnel.
Consumers who are searching for a specific hotel name are either repeat customers or consumers who have been branded well enough that they enter the hotel by name. In either case, these are high-value prospects that are much further into the sales/conversion funnel and are actively looking to purchase.
The real value of a repeat customer (lifetime value)
The lifetime value of a repeat customer varies depending on the service are and the niche serviced by a hotel chain. If we extract a basic example:
- One evening stay $150
- Guest stays approximately six times per year.
- Guest remains with hotel chain for 5 years.
- $4500 Total lifetime value
In some instances, the value of a lifetime customer at a hotel is radically increased if we look at high-frequency business guests who may be staying in a hotel chain 100 to 200 evenings a year.
What happens when a prospect is lost to a search and review directory?
1- The consumer is presented with a discounted price to incent them into registering at the review site. At the hotel level, this causes an erosion of the profit margin as the review site keeps a percentage of the booking price, and it creates a loss of perception related to who really “owns” the guest. (I.E. if you book an evening at the Seattle Hilton through TripAdvisor, do you consider yourself a customer of one or both? Do you feel better knowing that you will receive twice the amount of “special offers” in your inbox the next day?)
2- The consumer is presented with competitive hotels in an effort to win the over. If they choose competitive accommodations, you have lost a repeat customer and the entitled lifetime value.
3- The consumer becomes confused by options and information overload, disregarding the original search intent to purchase and beginning a consideration phase at a later date.
This type of scenario is present in many other industries (automobile, local businesses, professional services.) This article only skims the surface of why hoteliers are constantly challenged by aggressive online marketing tactics. If you have questions or specific examples of this situation, please leave a comment below or contact us with additional information.