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For Hotels, Social Media is the "Second Wave" to Foster Loyalty and Generate Revenue

By Bernard Perrine, CEO & Co-Founder, SocialCentiv

When it comes to generating revenue through social media, hoteliers are facing a combination of bad news and good news.
The bad news: Change is happening in this arena, and quickly - which presents challenges for managers and executives.
Like it or not, hotel brands and properties alike are getting reputations online via reviews from previous guests. Various studies have demonstrated that hotels that ignore these reviews can wind up under performing against rivals that respond appropriately to what folks are saying about them online.

The good news is that change and challenges bring opportunity.
To be sure, the first wave of the Internet has been ugly for hoteliers. It brought online travel agencies such as Expedia and Hotels.com, which seemingly turned hotels into commodities by making comparison shopping simple - and charged commissions for the privilege.
Fortunately, a second online wave is building for the travel industry through social networking. On sites like Facebook and Twitter, leisure travelers tell the world - including hotels - everything they are thinking and feeling about vacations past and future. Savvy brands are using this information to personalize their offerings, improve their understanding of individual guests' likes and dislikes, and forge in travelers the most valuable trait a customer can have: loyalty.
This article will examine the issues that cyberspace presents to hotels and will detail changes that brands and properties alike must make on the social media front to cope. Finally, it will detail challenges that the emerging world of social networking presents to hoteliers, along with ways of dealing with those obstacles.

Is your brand ready for the second wave?
What's Evolving, What's Not
Though the Internet and social media have brought big differences in people's behavior, certain elements of the human condition remain as they always were. This is especially true in travel.
Just as their parents and grandparents did 50 years ago, today's leisure travelers turn first to people they trust for information about future trips: their friends and family. This is in keeping with a broader, age-old pattern of consumer behavior. While different studies produce slightly different numbers, it seems fair to say that when making buying decisions, somewhere north of 70 percent of the population factors in the views of people they know, regardless of the product or service at issue.

What is different from a half-century ago is the methods that travelers use in garnering others' opinions.
A 2010 survey commissioned by Sheraton found 64 percent of people were using social media to make travel plans. For those between the ages of 25 and 34, that number reached 76 percent. Separate studies have reached similar conclusions. One inquiry found 52 percent of people changed travel plans after doing research on social media. Hence the challenge.
Between reviews on sites like TripAdvisor, price comparisons on online travel agencies, and rumors and gossip on random message boards, more and more elements of every property's business are online for anyone to see. And travelers both see it and act on it - something that can affect hotels' financial performances.

On average, consumers visit an online travel agency's web site 12 times, request 7.5 pages per visit and spend almost five minutes per page, according to a 2011 study from the Center for Hospitality Research at Cornell University's School for Hotel Administration.
The online reviews and data that consumers check out have a significant influence on where they stay during trips and how much they are willing to pay for them. For instance, Travelocity data have demonstrated that if a hotel increases its review scores by one point on a five-point scale - say, from 3.3 to 4.3 - that property can boost its price by 11.2 percent and maintain the same odds of having the consumer choose it, according to Cornell research. That one-point boost in a review score increases the hotel's odds of being selected by 14.2 percent, Cornell research shows.
To paraphrase the author Robin Crow, hotels and the travel industry alike have a choice: evolve or die.

How Properties, Brands Must Change
Broadly speaking, hoteliers must make three modifications to their business models.
Monitoring and Responding
A single negative review on YouTube, Twitter or Facebook can cost a business around 30 customers, a Convergys study has found. It is thus imperative for hotel properties and brands to have programs in place to keep tabs on what people are saying in cyberspace and take action when appropriate. Research shows consumers gravitate to hotels that respond to online feedback and often stay away from those that don't.
Properties that answer more than half of social reviews grew their occupancy rates by 6.4 percentage points, or more than twice the rate of hotels that mostly shunned online chatter, according to one study released in early 2015. The hospitality industry as a whole grew 4.3 percent over that same time frame.
Speed is a big factor in engaging successfully with consumers in cyberspace, the study found. Properties that answered feedback in less than a day had average occupancy rates of 52.3 percent, which was 12.8 percent higher than their brethren that took more than two days, researchers reported.
Using Social to Build Loyalty

While it's vital for hotels to keep an ear to the ground about online critiques, leaders in the field are taking the next step and using social sites to form lasting relationships with clients. As Blue Magnet Interactive has pointed out, hotels typically concern themselves with the actions that travelers perform leading up to the point where they book rooms - and ignore most everything else.
While understandable, that mindset results in missed opportunities, both before and after consumers' trips have taken place. Encouraging previous guests to share photos, videos and stories of their vacations through social media can help spur travel ideas with their friends, Blue Magnet notes.
Hotels can accentuate this positive development, such as by suggesting that satisfied customers post on popular platforms like Twitter, along with holding contests to reward the best social media shares by guests and collecting customers' email addresses, the agency says. Taking this notion a step further, hotels should join relevant social communities or, if none exist, create them outright.
Ideally, the marketing group's efforts at building customer fidelity through social media should work in conjunction with any loyalty programs the brand may have in place. The social media group can, for instance, help customize travelers' experiences by checking people's online comments to see what given individuals want out of a trip and what the property can do to help them achieve their goals. This sort of research should happen only with the traveler's express blessing ahead of time, of course - "personalization with permission," as PwC puts it.

I expect social media to play a greater role in building traveler fidelity over time. Part of the issue, as Accenture has noted (via Cornell) is that every hotel brand has loyalty programs, which has largely nullified the advantage that given properties and chains once got from them.
Marry Online Outreach with Revenue Management.

As a property starts to reap the benefits of social media, the next step is joining that effort with an evolving phenomenon in the industry called "revenue management." Revenue management is the art and science of maximizing sales growth, historically by predicting demand to get the most out of a property's room inventory and prices.

As a 2011 article in the Journal of Revenue and Pricing Management noted, revenue management has often been criticized as having a short-term focus, notably in boosting sales during slow periods or otherwise difficult economic times. Wringing the most revenue out of every guest's stay can also run counter to the notion of building long-term relationships with a property's best clientele, who want treatment in line with labels such as being a "gold" or "platinum" customer.
As the idea of revenue management has expanded to encompass a property's long-term financial results, it has become increasingly important that employees heading up pricing and inventory work closely with the people charged with helping spur demand through social media and marketing. As the Journal piece notes, this relationship can, and should, be in effect on multiple fronts.
Wyndham, for instance, built a micro-site aimed at female clientele, which has become a valuable tool for getting feedback on what women want and need when they travel. Wyndham in turn used that input to develop the right pricing and travel packages for that group of customers, according to the Journal.

Where Potholes Lie Ahead
To be sure, monitoring and customer outreach on social media can present a host of new opportunities to hotel brands and properties. But with every blessing can come challenges - and social is no different. Hoteliers typically face two issues tied to putting time, money and effort into social networking.

Measuring ROI
This problem is not limited to the hotel industry. Cornell researchers have noted that one study found only about one in eight respondents could track direct revenue impacts from doing work on sites like Facebook, Twitter or LinkedIn. Unfortunately, this is not necessarily a problem with easy answers, especially in the travel industry. That's because many of the benefits from strong social media work can be long-term, not to mention somewhat amorphous and thus hard to measure.
If, say, a property discovers housekeeping issues in its rooms through social monitoring, fixes the problems and sees occupancy and revenue rise, how does one tie the positive results directly to the social media work?

This is why up-front planning and goal-setting are such an important part of any social media effort. What business objectives are at stake? How might social media work help achieve those goals? And what metrics are appropriate for measuring success? The answers will depend be unique to each brand and property. But it's vital to ask them ahead of time to possibly avoid disappointment on the back end. If the C-suite believes a social effort failed to pay for itself, it will be hard to get them to approve a budget for more work in that area.

Making sense of unstructured data. The more information that a social listening campaign gathers, the harder it can be to effectively analyze that information, draw conclusions from it and thus make better business decisions. That's partly because the social realm contains so much "noise," or chatter, unrelated to a hotel brand's business objectives. Compounding that problem is that information from social sites rarely comes in an organized form, called "structured" data, where an analyst can pop the information into a spreadsheet and make sense of it. That in turn can make it harder to present coherent results from social monitoring to executives - and simply serves as another reason for them to nix pleas for bigger budgets. For these reasons, it often makes sense to use third-party tools and outside vendors for many social-related tasks.
HootSuite, for instance, provides a software-based service for managing and monitoring multiple accounts across a number of social networks. Google Analytics and Sprout Social offer competing versions.

Another tool, TrustYou, sorts through travelers' reviews and other disorganized opinions from various forums, and then scores and ranks them so brands can gauge how consumers' viewpoints about them are changing. The analytics company SAS has an offering along the same lines, along with revenue management tools, among other things. Of course, hotels should also stay abreast of customer ratings about their properties on sites like TripAdvisor.

At the End of the Day: Opportunity
With challenges and change in clear site, social media, combined with analytics tools, provides hotels an opportunity to build value for travelers in a way they could never have dreamed of achieving even 10 years ago.

Social media can help properties and brands deliver personalized experiences - a value that goes way beyond price. Social media marketing is another field entirely that I haven't touched on. Consumers turn to social media every day looking for ideas and advice, clearly expressing their intent with phrases like "I want" or "I need."

As a public forum, Twitter is especially good at offering up consumers specifically looking for travel advice. Software is available to comb Twitter looking for relevant Tweets based on key words and geographic location, and serve them up to a hotel, with a chance to reply in real-time with a discount or offer.

While you'll find several tools on the market that can help, SocialCentiv is one of the more proven tools packaged with analytics and an impressive ROI. So between review sites, marketing and making sense of the data, brands and properties alike need the right talent aboard to deal with the ebbs and flows of social networking. And since the social realm long ago became too big and complex for any single individual to get his or her arms around, farming out tasks to outside experts can be a smart way to go.

The world is changing. Is your business ready?


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