Should your hotel participate in the cyber sales frenzy?
Exploring the pros & cons of hotel participation in holiday shopping sales
Hoteliers constantly grapple with the question of how to attract and retain guests. As technology continues to reshape the way we travel and make reservations, one recurring dilemma emerges each year: should you participate in the frenzied world of cyber sales?
As travelers continue to expect increasingly enticing hotel offers amidst Black Friday and Cyber Monday sales, hoteliers must choose whether putting up their own offers will be the right choice for their business. Join us as we explore the history of travel in cyber sales and the factors every hotelier should consider when deciding if holiday cyber sales are a worthy endeavor.
The history of travel in cyber sales
Travel became a part of Cyber Monday and other online sales events in the early 2010s. While the concept of Cyber Monday itself was officially coined in 2005 by the National Retail Federation to promote online shopping for retail products, it took a few years for the travel industry to fully embrace the trend.
One of the notable early adopters in the travel industry was Expedia, a leading online travel agency (OTA). Expedia started its Cyber Monday sales campaign in the early 2010s, offering discounts and travel deals on flights, hotels, and vacation packages. This move by Expedia marked a significant moment when travel became a prominent category in Cyber Monday and Black Friday sales.
As Expedia's Cyber Monday campaign gained popularity, other hotels, airlines, and OTAs recognized the potential benefits of participating in these sales events. Over time, more travel providers began offering special promotions, discounts, and deals during the Cyber Monday and Black Friday shopping period to attract travelers looking for bargains.
Since then, participating in these online events has become a common practice in the travel industry, and many travelers now expect to find travel-related deals and discounts as part of their holiday shopping experience.
What to consider before participating in cyber sales
Before deciding whether to take part in Black Friday and Cyber Monday sales, hoteliers must evaluate how these sales could affect their businesses. Let’s explore some of the most important factors to consider.
Seasonal relevance. Evaluate whether your property is in or out of season during these sales events. Offering notable discounts during what is usually your off season may attract more potential guests and boost occupancy.
Revenue displacement. Think about the impact that offering discounted rates could have on your overall revenue. Discounts may attract more bookings, but they can also negatively impact ADR and potentially displace bookings at retail rates, especially if you are currently in season or going to be in the first quarter.
Conversions vs. actualization. Analyze how many of the reservations generated during these promotions actually materialize into consumed room nights. A high conversion rate is essential to ensuring that the effort and discounts provided result in real revenue.
OTA impact. Decide whether you want to offer discounted rates or participate in the OTA sales campaigns. You will want to consider the influence of OTAs on your bookings and whether or not you are willing to offer additional discounts on already high commission fees. Participating in these sales may lead to a spike in bookings through OTAs, which, in turn, also impacts your direct channel revenue.
Email marketing metrics. Monitor your email unsubscribe rate and open rate during the sales period. Is it higher or lower than normal campaigns? Sending numerous emails related to the event could lead to audience fatigue and cause you to lose subscribers and miss out on future sales. If you do participate in a sales campaign, ensure you have the right communication cadence and don’t jeopardize diminishing your email subscriber database.
FOMO: The pressure to participate
FOMO can be a powerful motivator, and hoteliers often grapple with it when deciding whether cyber sales are right for their business strategy. Consider whether you have felt pressured to participate by any of the following sources.
competitive pressure
The pressure to participate in cyber sales, such as Black Friday or Cyber Monday can often stem from a fear of falling behind in the competitive landscape. As a hotelier, you may find yourself wondering whether you should join the fray simply because every other hotel in your area is doing so. It's a valid concern, considering that potential guests are bombarded with promotional emails, advertisements, and enticing offers from various properties.
However, before succumbing to competitive pressure, take a step back and assess whether the concept aligns with your property's goals and strategies. Think about the unique selling propositions of your hotel. Are you positioned as a luxury destination, a budget-friendly option, or a family-friendly resort? Your property's identity should guide your decision on whether to participate and the type of offers you should promote.
Measuring success
The prospect of increasing booking rates during cyber sales is certainly alluring, but it’s important to question whether the noise and competition during these events will be conducive to your hotel’s success. The sheer saturation of deals and promotions during this period can make it challenging to stand out in the digital marketplace.
To evaluate whether these sales events are a good fit for your hotel, you must define clear metrics for success. It’s not merely about attracting bookings. It’s about attracting the right bookings and the right guests that align with your hotel’s brand and revenue goals. Assess whether the revenue generated during these sales events compensates for any potential drawbacks, such as reduced ADR due to discounts.
Consider segmenting your target audience and tailoring your promotions to specific traveler personas and segments. This can help you differentiate your offers and make them more appealing to the right guests. Moreover, analyzing past data and trends can provide valuable insights into whether Cyber Monday and Black Friday sales have been successful for your hotel in the past.
Following OTAs
Online travel agencies (OTAs) like Expedia have a long history of participating in Cyber Monday and Black Friday sales, often with attractive offers that can draw in a significant volume of bookings. This track record might lead you to believe that you should follow suit, assuming that their approach aligns with your hotel's objectives.
However, it’s not uncommon for a hotel's goals and strategies to differ from those of OTAs. OTAs often focus on maximizing booking volume, even if it means lower margins, while hotels may have different priorities, such as increasing direct bookings or maintaining a certain ADR. Figure out whether participating in these sales events fits seamlessly with your commercial strategy goals.
Planning the perfect cyber sale
So, you’ve decided to get in on the cyber fun! But how do you do it? What factors come together to make a successful cyber campaign for hospitality businesses?
Keep the following ideas in mind as you begin to outline your sales strategy.
1. Defining your unique offer.
When planning your cyber sales strategy, the first step is to determine what makes your offer unique. Will you primarily focus on offering discounts, or will you include value-added incentives? While discounts can be a strong motivator for price-conscious travelers, value-added perks can set your offer apart from the competition. Consider adding complimentary breakfast, spa treatments, room upgrades, or other enticing extras that align with your hotel's brand and appeal to your target audience.
To make this decision, it's crucial to understand your guests' preferences and what would resonate most with them. For instance, a luxury hotel might emphasize high-end amenities like spa treatments, while a family-friendly resort could emphasize perks such as free activities for children.
2. Rules and limitations
To manage demand and protect your revenue, consider implementing rules and limitations for your cyber sales. Blackout dates can help ensure that your most profitable periods remain unaffected, and non-refundable rate plans can deter last-minute cancellations. Also, focus on room types and length of stay fencing in your offer to move increase room type utilization and to help improve profitability.
These rules should align with your revenue management strategy and avoid potential revenue displacement. While offering discounts can attract more bookings, remember to strike a balance to avoid diluting your ADR during peak periods.
3. Target audience
Determine whether you want to make your promotions exclusive to specific audiences, such as loyalty program members. Offering exclusive deals to loyal guests can reinforce their commitment to your brand and reward their loyalty. It's also an opportunity to collect valuable data and feedback from this select group.
However, think about the potential impact on customer segments outside of the chosen audience as well. Ensure that your exclusivity doesn't alienate other potential guests who may be interested in your cyber offers. Beware of trade down, review your pace and understand if you want to send offer(s) to all of your audience or those without future reservations during the booking window.
4. Measurement metrics
Define KPIs to measure the success of your campaign. These metrics should align with your overarching goals. Common KPIs for Cyber Monday and Black Friday sales campaigns include:
Number of bookings. Measure the quantity of bookings generated during the promotional period.
Revenue generated. Calculate the total revenue generated as a result of the campaign, factoring in both the volume of bookings and the associated revenue per booking.
ROI. Evaluate the effectiveness of your marketing spend by comparing the cost of running the campaign to the revenue generated.
Customer acquisition. Track the number of new customers acquired during the promotion to assess the campaign's ability to expand your customer base.
Displacement. Was the campaign successful in generating the right revenue?
Cancellation rates. The revenue on the books; did we keep it?
Email open & unsubscribe rates. Review the actual performance of the email(s) send. Did your customers open the email, and if they did, did they unsubscribe on the first email? Were there multiple email communications sent?
5. Promotion duration
Determine the timeframe for your Cyber Monday or Black Friday promotion. Your choice may vary from a flash sale lasting a couple hours to the entire month of November to a few specific dates around Black Friday and Cyber Monday.
The duration should align with your goals and your property's capacity to deliver on the promises made in the promotion. A flash sale can create a sense of urgency, while a longer promotion may allow for a broader reach and greater anticipation.
6. Direct channel Vs. OTA
Decide whether you'll exclusively focus on your hotel's direct channel, such as your website and booking engine, or if you'll include OTAs in your promotions. Each approach has its benefits and drawbacks.
Focusing on the direct channel may help reduce distribution costs and increase the share of revenue that goes directly to your hotel. However, if you don’t include the OTAs and your promotion is a public rate, you could be out of parity with the OTAs and lose positioning on their sites. So, if you do choose to include the OTAs, it can extend your reach to a wider audience, albeit at the cost of higher commissions.
7. Communication cadence
Plan the frequency and timing of your marketing communication. Craft compelling and consistent messaging to engage your audience effectively. Communication should not only convey your offer but also highlight the unique value your hotel provides during these sales.
Try utilizing various channels such as email marketing, social media, and your website to reach different segments of your target audience. Develop a content calendar to ensure that your messaging is well-timed and coordinated across all platforms.
8. Making an impact
Beyond capturing attention, your marketing strategy should communicate the unique value your hotel offers during cyber sales events. Highlight what sets your property apart from the competition, whether it's your location, amenities, exceptional service, or guest experiences. Use storytelling and visual content to create an emotional connection with potential guests and leave a lasting impression.
The decision to participate in a cyber sale requires a careful evaluation of your hotel’s unique situation. Are you under competitive pressure? Does a cyber sale align with your marketing strategies? How could a sale potentially impact your revenue? While outside pressures can often be the strongest motivators, your choice should be based purely on your hotel's goals and objectives.
If you do choose to participate, take the time to define a well-thought-out strategy that includes everything from unique offers to effective communication. Ultimately, the success of any travel-based cyber campaign will depend on your hotel’s ability to strike the right balance between enticing offers and sound business practices.
At Dragonfly Strategists, we understand the delicate balance between an enticing sales strategy and safe business practices. Our experts are prepared to help you find that balance and eliminate unnecessary stress this holiday season.
Let’s navigate the holiday’s together!
Contact us today for expert guidance.