The difference between revenue per available room (RevPAR) and cost per acquisition or booking (CPA) has long been a difficult juggling act for hoteliers. It’s been made even more precarious over recent years with the growth of online travel agents and greater, global competition.
While reducing room prices can lead to more bookings, it’s not the only solution and if you want to increase revPAR this strategy can often be counterproductive. Try these tactics instead to increase your revPar in 2018:
Focusing on metasearch websites
There has been a shift from online travel agents to metasearch sites primarily because the latter has become a strong resource for the former. In the past, OTAs had the upper hand because they were the only kids on the block and could spend huge budgets to advertise on Google and other search engines.
The good news is that metasearch sites need hotels involved and that gives marketers more opportunity to increase revPAR. The other factor is that these sites are also driven by the user rather than solely by the OTAs.
Understanding how metasearch sites rank hotels is therefore important. The PPC model means that you normally have to balance the number of click throughs you get with the amount you have to pay. Sometimes it pays to pay more.
The other option is to have a widely popular hotel that organically ends up near the top of the listings. This is, of course, a long term strategy. Paying a higher bid price to feature higher will deliver immediate results but requires you to keep track of the ROI, particularly if you want to increase revPAR. A strong PPC strategy will also improve your access to OTAs and should help to further improve your ranking and attract more bookings.
Reducing high cancellation rates
A perennial problem for hotels is guests cancelling their bookings. Having more non-refundable reservations can help reduce this but many worry about getting on the wrong side of customers and getting bad reviews because of a policy that seems too draconian in the modern world of hotel booking. Using an add-on such as Life Happens which ensures a refund for a small fee can make a big difference and provide a virtual safety net that customers are looking for.
Digital Marketing Efforts
You can’t dismiss digital marketing and other efforts that can be undertaken to improve conversions and drive more direct bookings. Use personalised and data-driven marketing to target prospects based on their search behaviour.
Understanding your metrics here is important and can help boost your Average Daily Rate or ADR. For instance, if your customer is looking for particular services such as an onsite spa or swimming pool, then you can tailor your remarketing to nudge them towards your hotel rather than a competitor. The key to this is that the message needs to be targeted to the individual as much as possible rather than part of a catch all marketing strategy. In this case, you would be offering a hotel room with spa facilities.
All strategies have a cost per booking aspect which needs to be taken into account. At the end of the day, you need to be able to achieve a suitable net profit per booking after the cost of ppc activity or remarketing has been taken into account. Get it right and you should be able to boost revPAR in 2018.
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