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By Kevin Groome on February 15, 2011

The Virtuous Cycle in Hospitality Marketing

Working as much as we do with hotels and restaurants, it has been encouraging over the past six months or so to see the signs of economic rebound.

Group business bumped up first; then we saw occupancy rates rise, as hotels across all our systems started seeing enthusiastic responses to special offers and deals.

Now, it appears that demand has risen sufficiently to inspire a renewed sense of confidence. Hotels are getting firmer about their pricing; online travel agencies (OTAs) are seeing their distribution deals subjected to more severe scrutiny, and local property managers are looking in a more urgent way for the right balance of occupancy and profitability.

All of this points to an industry in which recession economics have given way to a healthier and (I would argue) a more traditional approach to the business.

But the more things stay the same, the more they change—and the past few years have left us with a permanently changed marketing environment. Search has become an essential element in the marketing mix, one that cannot be left, even for a day, to run on auto-pilot. Discounting and couponing sites are soaking their way into consumer habits, confronting local marketers with a daily battle to maintain their target gross margins and market share. And of course, the OTAs have stepped between brands and customers in a way that makes the idea of “disintermediation” (remember that old term from the mid-1990s?), seem pretty darn quaint.

What does this all mean for local marketers, long term? It’s too soon even to hazard a guess. The pendulum that has historically swung between promotion and brand marketing may be permanently lodged in promotion mode – or it may not. Internet-based media types may entirely displace traditional media – or they may not. Marketing budgets may rise in response to more heated competition, or they may fall in response to the commoditization of all media. Experts do not agree on these vital matters; and honest experts admit that they have no reliable crystal ball.

What we at Pica9 can do is report on the trends we see from our vantage point—on the ground, if you will, where hundreds of thousands of local marketers are working to grow their businesses in these often-tumultuous times.

Here’s what we see.
Hospitality creative is more and more about connecting to the specific customer, and selling a localized message. In a random survey of 112 locally generated print ads in the hospitality sector, we found that users on our systems replaced the brand-supplied headline with their own localized headline 62% of the time. This is up from 38% in a similar survey conducted in 2007 – before the worst of our economic times had begun.

What kinds of localization do we see? It’s encouraging. We are finding ads designed to connect the local property to the needs of specific business groups, chambers of commerce—even travelling sports teams. Hotel managers are producing on-property collateral to connect to local events—thereby weaving their brand into the customers experience at a given point in time. And we are seeing the language of body copy (which our users often adopted from the brand without revision in earlier years), now subjected to wholesale rewrites, as property managers add local substance to the promise of the brand.

Localized photography use is up in hospitality– way up. The Flickr generation is upon us, and it is clear that user-supplied photography is beginning to compete with brand-supplied imagery much more than in 2007. Twice as much, in fact – up from 34% four years ago to just more than 71% today.

Now, a user-supplied hero photograph may not sound like rocket science here in 2011. But what strikes me (as an erstwhile creative director) is not simply the frequency with which local photography is being used, but the consistently high quality of those images. What this means is that local properties are investing in local shoots—and then maximizing the reusability of those images across as many media types and as many campaigns as they possible can.

Hmmm. Smells like really smart marketing to me.

Offers are getting baked into the marketing workflow. Anybody with a multi-decade history in the hospitality business remembers just how hard it was to get a local property offer approved by revenue management. It often took days; it sometimes took weeks; and there was always the possibility that an ingenious local offer would get lost in the black hole of email and (gasp!) fax approvals.

Not so today. Instead, we see a trend toward integrating local offers into an ever broader array of communication vehicles and marketing channels, both online and offline. At the same time, we see brands and franchise management companies seeking out ways to streamline the revenue management approval process—if you will, to “stage the intelligence” of revenue management, and to more seamlessly share best practices in localized offers and discounts, in the effort to both guide and gain insights from local marketers at the same time.

Now, I have often been accused of being irrationally optimistic (it’s hard to be an entrepreneur and a software developer without that small seed of insanity). But in all of these trends there is a gradual, persistent improvement in marketing practices, driven by what I have come to see as a virtuous cycle of learning. The brand empowers the field with intelligent templates and a system that enforces best practices. Local marketers leverage these tools and add their own insights and innovations at the local level. And the brand listens in to what is working and what is not, and tailors the messaging and templates, to make the next round of innovation even more powerful.

It’s been a long time coming—and of course, we have a long way to go before we fully realize this vision. But the encouraging news is that it’s happening—and some part of the proof of that success comes for me from this simple fact:

From the time that I first began working in the hotel business (as a teenager in the late 1970s), I’ve always been told that hospitality is one of the first industries in and last industries out of recession. But this time around, it looks like hospitality is actually helping to lead the way. Could the virtuous cycle be in part responsible for that? I certainly think there’s evidence to support such a view.

* Survey results drawn from a collection of randomly selected restaurant, hotel, cruise, and destination ads published between September 1 and November 30, 2010. Ads included both system-generated (65%) and manually published (35%) documents. Data on local versus brand-supplied content based on system-generated ads only.


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Published by Kevin Groome February 15, 2011
Kevin Groome