by Kurt Weinsheimer
Today, the hotel business landscape is transforming at a rapid pace. Massive online travel companies invest billions of dollars into online advertising to dominate digital distribution, which can make it daunting for hotels to even think about competing for direct digital demand. Other technology players like Google, Apple, Facebook and Amazon make headlines daily as they put forth new products that can transform an entire industry overnight – Apple with the iPhone, Amazon with Alexa, and perhaps as Facebook may do with DAT (Dynamic Ads for Travel). All this change is happening so quickly, it can be challenging for hotel executives to keep up.
While technology is the primary factor driving the change, there are also significant demographic shifts happening. According to the Pew Research Center, in the U.S., Millennials are on track to become the largest single generation ever in 2019 totaling 73 million people. They are just now starting to edge out the Baby Boomers, whose numbers are in decline. It’s also important to understand that we’re only now starting to the see an early Millennial vanguard reach the mid-career stage, and there are a lot more Millennials coming. Millennials will total 76 million in 2036, as boomers decline to 50 million. Millennial spending power combined with their diverging tastes from previous generations is already having an impact. Changing everything, from how we eat toast (with avocados on them of course!), to how we shop (from a phone, right?), and to how we book a hotel room (umm…last-minute through an app? How else is it done?).
This combination of significant demographic change, combined with vast technological disruption, is a powerful force that is reshaping industries around the world. So, what does this mean for the average hotelier? Sojern has thought deeply about these trends and identified the following four key areas that savvy hotel industry executives can tap into to transform disruption into a competitive advantage.
Trend #1: The shift in advertising from “Mad Men” to “Math Men”
For nearly 60 years advertising was created and controlled primarily by an elite group of people in New York City on Madison Avenue, who we now popularly refer to, after the success television series, as Mad Men. They focused on developing clever and catchy advertising for four mass marketing channels.
Today, it’s an understatement to say that in the worlds of advertising, the internet revolution has changed nearly everything. But it has. And nearly all of Madison Avenue’s Mad Men have now been replaced by data-science driven marketing or Math Men (and women, too).
Digital media now reigns supreme and the complexity of it is bewildering. Channels are diverse, ranging from millions of text-based search ads, to dynamic banners ads for desktop and mobile. And then there is an “alphabet soup” of acronyms for mobile and video formats that run on trendy social networks, news apps, and websites that even the most diligent and sophisticated person has trouble keeping up with.
Hotel owners, regardless of the size of your hotel, may want to get expert help. Also, keep in mind that if your marketing firm or agency doesn’t have 20 data scientists on staff, it may be beneficial to find one that does. Rest assured that the online travel agencies (OTA’s), which are arguably the great digital marketers the world has ever seen, are a great resource.
Trend #2: The rise of Facebook as a global marketing platform
Facebook today has a user base of nearly 2.3 billion people around the world. It’s the single largest media channel ever in the history of the entire world. Just for the sake of comparison, the largest Super Bowl television audience ever was in 2015 and had 114,400,000 viewers and it has declined slightly every year since. Now, the Super Bowl still reaches a lot of people, but it’s nothing when compared to how many people use Facebook. Also, if you drill down into television viewing numbers, 18- to 24-year-olds hardly watch traditional TV at all.
Having a lot of users isn’t the only reason that Facebook has become an online advertising juggernaut. The corporation that Mark Zuckerberg, the founder of Facebook, created is actually much larger than just Facebook. It also owns two other global juggernauts, Instagram and WhatsApp. Yes, Facebook owns them both. With access to user data across all of these apps, Facebook has developed deep expertise in online advertising that will rival, or maybe even surpass, their Silicon Valley neighbor Google.
As a baseline, you should utilize your Facebook page and Instagram feed as a way to maintain a relationship with your audience free of charge. Then to increase impact, the paid advertising opportunity on Facebook is hard to overstate. The combination of audience size and targeting options make it attractive to hotels of all sizes. Plus, Facebook has recently released tools and ad formats developed specifically for travel advertisers. Some savvy hotels, that appeal to a youthful demographic, have created visually rich interiors that are intentionally “Instagramable.” The goal is to encourage guests to take “selfies” inside the hotel and post them on Instagram, tagging the hotel in the photo.
Trend #3: Catering to Millennials and Evolving Customer Taste
We’ve all heard this before. Millennials, defined as people born between 1980 to 1996, are transforming nearly every aspect of daily life from how we cook, shop, eat, work, sleep, and travel. But, is this true? Yes, it is true.
Millennials’ media consumption habits differ from previous generations. Often referred to as digital natives, their reliance on digital and mobile media may be surprising for some. The most noticeable gap in media consumption between Millennials and previous generation is the popularity of YouTube. A media consumption study by Pew Research found that 94 percent of Millennials reported using YouTube with only 56 percent people over the age 50 reporting they use YouTube. Millennials watch less than 2 hours of TV per day and that number is declining every year. And, unsurprisingly spend more time on mobile apps and the mobile web and less time on a desktop than Gen Xers or Boomers. Hotels need marketing that runs “always on” and crosses digital channels seamlessly to keep up with these emerging consumers.
It’s often said that Millennials value experiences over material things, and research seems to back up this assumption as well. According to a Harris/Eventbrite poll in 2014, when it comes to spending habits, Millennials value “experiences” over material “things.” 78 percent of Millennials surveyed would choose to spend money on a desirable experience or event over buying something desirable. And 55 percent of millennials say they’re spending more on events and live experiences than ever before. If your hotel has a restaurant, infinity pool, or sits near a unique activity, let people know.
Trend #4: Managing the Complex Path to Purchase
Shopping for a hotel room is now an extremely complex affair. Information, ideas, and inspiration related to travel are everywhere. Today’s consumer switches between a variety of devices, websites, and apps when making a travel purchase. Research conducted by Sojern shows the number of sites and apps visited when making a travel purchase can range from 63 to as high as 735. This is up from an average of only 35 just a few years ago.
This means that hoteliers have a huge opportunity to capture their attention further up in the planning process, while people are still only dreaming about their next trip. Understanding the path to purchase in order to target your marketing is critical to digital marketing success.
The first step for hotels when addressing these trends is to first understand the size of the opportunity they present. It’s big and that’s exciting! This will help motivate you and your staff to positively embrace the change necessary to cater to the evolving needs of your customers. Remember, the sheer number of Millennials in the pipeline, and the technological change that we are witnessing is a massive engine of opportunity. And the impact on the travel industry has only begun. Expect the transformation to continue.