The final installment in the series provides a guide to manage the costs of customer acquisition and assess multiple sources of business to help a hotel find its Optimal Business Mix.
ROCKVILLE, MD. (PRWEB) JUNE 21, 2018
Kalibri Labs, the next-generation revenue strategy and hotel benchmarking company, just released the final segment in the three-part special report, Demystifying the Digital Marketplace: Spotlight on the Hospitality Industry. Sponsored by the American Hotel and Lodging Association, the American Hotel & Lodging Educational Foundation, the HSMAI Foundation, the Asian American Hotel Owners Association, the Hospitality Asset Managers Association, the Hospitality Financial and Technology Professionals, and the IHG Owners Association, Part III is a guide to hotels for taking action. Applying the macro view of the digital marketplace from Part I and the hotel performance data in Part II, Part III features common challenges displayed in case study format, and offers insight and guidance for hoteliers to navigate through the rapidly changing digital marketplace. The final installment in the series provides a guide to manage the costs of customer acquisition and assess multiple sources of business to help a hotel find its Optimal Business Mix. It calls attention to the impact of wholesale commissions, the benefits of a base of loyal recurring guests and the profit advantages that accrue by understanding the cost of acquisition in a hotel market.
Part III highlights the wide range of channels through which hotels receive their business and the differing net revenue values that each channel generates. The report highlights that determining a hotel’s optimal business mix is consequential and it is imperative to find a healthy balance of business at the lowest cost possible. This report offers hoteliers several different analyses to apply to their own situations. Some examples are: Flow-through Analysis, Lifetime Value Analysis, as well as an Ancillary Spend Analysis.
1. The Flow-Through Analysis dissects the amount of contribution to profit down to a gross operating profit (GOP) level on a per room night basis for the different channels used by travelers. For example, the per room night GOP from direct channels, Voice and Brand.com, is significantly higher than that from third-parties.
2. The Lifetime Value Analysis builds on the concept of examining the value of recurring guests, sometimes called “lifetime value.” This refers to the overall value that a guest brings based on repeat stays over a certain period. Typically, loyalty members booking through direct sources contribute significantly higher profit contribution than the cost of finding new non-recurring guests to book through third parties.
3. The Ancillary Spend Analysis looks at the additional dollars spent on property beyond room revenue. This analysis proves different types of guests tend to spend varying amounts in food and beverage or other revenue centers in the hotel. The study found that loyalty guests who book directly tend to spend more, in food and beverage and other revenue centers, than guests coming from third party sources.
As the costs of guest acquisition continue to rise at a rate faster than guest-paid revenue, it is important to understand the different levels of profit contribution driven by different guests coming through the various booking channels.
Additionally, Part III examines ways to evaluate the efficacy of sales and marketing budget deployment. Keeping in mind that the sole purpose of this investment is to generate increased revenue, a Sales and Marketing Efficiency Analysis centers around understanding the return on that investment. It calculates how much Net Revenue is generated for every dollar spent in sales and marketing to account for spending on sales, advertising as well as initiatives like social media and trade shows.
Hoteliers can find more success when they understand the demand in the market and the costs to acquire that business. In the expensive and complex world of hotel distribution, understanding the dynamics of the market demand by channel and rate category along with transparency into the costs of acquisition is essential in achieving the best performance possible, as reflected in the hotel’s Optimal Business Mix. This success carries over into more direct relationships with a hotel’s customer base, ensuring a better experience overall for the consumer, a worthy objective for every hotelier.
To download the full volume of Demystifying the Digital Marketplace, visit https://www.kalibrilabs.com/demystifying-the-digital-marketplace/
ABOUT KALIBRI LABS
Kalibri Labs evaluates and predicts revenue performance with its cloud-based revenue strategy platform, next-generation industry benchmarking and analytical reports. The Kalibri Labs database, updated monthly, is comprised of guest stay records, including cost of sales and detailed source of business information from over 31,000 hotels dating back more than 5 years to give an expansive view of the U.S. hotel industry.
The Kalibri Labs team is a seasoned group of executives with deep hospitality industry experience and a passion to sustain the hotel industry’s financial health in a highly challenging and dynamic digital marketplace.
For more information, please visit KalibriLabs.com.