How can you keep booking acquisition costs at a profitable level?

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The amount of money you spend to attract each guest making a booking has a direct impact on the profitability of your hotel. To keep profit at an optimal level, the cost of booking acquisition must be carefully managed and the distribution process strategically optimised.

With the addition of new distribution channels, such as online travel agents (OTAs), managing the cost of customer acquisition becomes a trickier prospect. Read on for four ways that you can work with your hotel marketing agency and maximise your use of your hotel internet booking engine to keep booking acquisition costs at a profitable level.

Think mobile first

If you don’t have a hotel marketing agency on board, or your current agency hasn’t prioritised a mobile first mindset and balanced this with a revenue management focus, it’s time to have a conversation. Mobile is the most important trend in digital marketing and absolutely vital to distribution. More travellers than ever before are researching travel plans from mobile devices. With mobile internet use growing, this is trend will only get bigger.

However, the cost of optimising for mobile, including the investment needed to create a mobile responsive version of your hotel internet booking engine, can and should raise a red flag when considering the profitability of booking acquisition. Conversion on mobile devices is still lower than that of desktops, making it harder to stay profitable. Some experts suggest the best strategy to keep booking acquisition costs at an acceptable level is to use a mobile app to facilitate room reservation and easy booking.

Use loyalty programs to generate repeat bookings

You can offset the initial cost of booking acquisition with the use of hotel loyalty programmes. Use a rewards scheme to turn new customers into repeat guests and the cost of acquisition is then offset against several stays. Engendering loyalty means those guests may also book direct next time in order to earn the loyalty reward rather than via an OTA. In this way, a loyalty program can turn those new customers into high-value guests by driving direct booking increases.

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The loyalty program rewards don’t have to be costly – offering perks not available elsewhere which don’t have an impact on profitably makes this an even more attractive option. Early check ins or late checkouts for example can be enough to convince the guest to book directly and benefit from the loyalty program when they are otherwise agnostic about whether they use your own direct channels or more costly (to you) OTAs.

Consider channel management

Effective channel management is vital to keep booking acquisition costs at an acceptable and profitable level. A variety of distribution channels, optimised to suit the nature of your hotel and its customers, is imperative. Knowing which channels perform best for each hotel is the first step. You’ll also need to set targets and determine what the cost of acquisition for each channel is. Request data such as the cost per conversion from pay per click advertising from your hotel marketing agency to build a complete picture. From there, you can assign a spend per channel and test your channel mix until you find the sweet spot for your booking acquisition costs goals.

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