Mobile Marketing & Distribution Strategy in Hospitality - By Max Starkov
Back in September 2001, HeBS presented an article titled “Wireless in Travel and Hospitality: Hype or Necessity.” Today, just as in 2001, the media hype on anything mobile has not eased up. Hoteliers are rightfully confused as to what is the real impact of the mobile Internet, and is the importance of the mobile distribution channel in hospitality.
Published: 17 Aug 2009
Back in September 2001, HeBS presented an article titled “Wireless in Travel and Hospitality: Hype or Necessity.” Today, just as in 2001, the media hype on anything mobile has not eased up. Hoteliers are rightfully confused as to what is the real impact of the mobile Internet, and is the importance of the mobile distribution channel in hospitality.
Eight years later, we would like to revisit the analysis and recommendations we made back in 2001, offer an update on industry best practices, and provide hoteliers with an action plan on mobile marketing and mobile channel distribution.
How Big is the Mobile Marketplace?
The mobile Internet has already become a reality: 3G (broadband wireless services) is the standard wireless technology, G4 is already being offered in the U.S., and smart phones like iPhone, BlackBerry, Treo, LG, etc. have become part of everyday life.
Mobile devices have truly become ubiquitous and mobile users expect instant access to information and an Internet experience that rivals the one via traditional PCs and laptops. A significant number of cell phone subscribers have access to the mobile Internet and use some kind of data service: texting, email, web browsing, etc.
Worldwide mobile communications usage has increased dramatically since 2001:
What is the situation in the U.S.?
The number of mobile phone lines has already surpassed the number of land lines in the U.S. More than 90 percent of U.S. population has a mobile device of some sort.
US Mobile Phone Subscribers 2008-2013
US Mobile Phone Subscribers in 2008 were 270.3 millions with a 88.9% penetration
US Mobile Phone Subscribers in 2009 were 280.8 millions with a 91.4% penetration
US Mobile Phone Subscribers in 2010 will be 291.2 millions with a 93.9% penetration
US Mobile Phone Subscribers in 2011will be 298.4 millions with a 95.2% penetration
US Mobile Phone Subscribers in 2012 will be 302.0 millions with a 96.1% penetration
US Mobile Phone Subscribers in 2013 will be 308.7 millions with a 96.7% penetration
eMarketer May 2009
New research from EyeforTravel shows the average number of Americans who browsed the Internet via their mobile device grew by 61% in 2008 vs. 2007.
Why should Hoteliers care?
The promise of "immediate, anywhere and anytime" Internet access, instant information and transaction capability, location-based services and personalization are the key advantages of the mobile Internet.
A recent Nielsen Mobile poll found that in 2008 only 9.2 million US mobile subscribers purchased goods or services with their handset. Yet, mobile customers are becoming at ease with the idea of m-commerce.
How serious is the demand for mobile services in the travel space? A recent report by PhoCusWright projects mobile bookings to reach $160 million in 2010 alone. Sixty-seven percent of travelers and 77% of frequent business travelers with Web-enabled mobile devices have already used their devices to find local services (e.g. lodging) and attractions.
Another poll by Harris Interactive, conducted April-May 2009, shows that 71% of US adults felt that it was safe to make a purchase via a mobile phone. Forty-three percent of respondents are willing to purchase hotel rooms and 40% tickets for travel via their mobile devices.
In other words, hotel guests—past, current and potential—are increasingly becoming mobile-ready, and hoteliers have to respond adequately to this growing demand for mobile services. This is the reason why all major hotel brands, travel suppliers and OTAs have mobile internet initiatives in place, including mobile brand websites, mobile applications, including iPhone aps, m-CRM and mobile marketing.
A word of caution: the mobile Internet is not a wireless access to the conventional Internet. The mobile Internet does not merely duplicate the traditional Web. Many retailers and travel companies who literally "translated" their conventional websites for the wireless world failed to achieve any significant usage and conversions. Why? The mobile Internet adheres to different rules than the conventional Internet. Mobile users have even shorter attention span. They have even less time and are always on the go. Slower speed, yet to be perfected mobile browsers, small displays, limited data-input capability (e.g. type keywords in a search), multi-step booking and information retrieval process are some of the limiting factors.
The Future is Already here: Location-Based Mobile Services (LBS)
Location plus personalized services are not only the essence of the mobile Internet, but the very definition of what travel is all about.
Location-based services (LBS) are based on the unique ability of the mobile Internet device to determine its exact location by using GPS and then use that knowledge to perform functions, provide information, suggest activity, check out for friends in the neighborhood, etc. customized to the concrete physical location.
eMarketer estimates that there were 63 million location-based service (LBS) users worldwide in 2008, and expects this number to reach 486 million in 2012:
In 2008 there were 61.3 users the % change was 224.1%
In 2009 there were 134 users the % change was 118.8%
In 2010 there will be 215.3 users the % change will be 60.7%
In 2011 there will be 329 users the % change will be 52.8%
In 2012 there will be 486 users the % change will be 47.7%
Ultimately, the location-based services’ success is closely tied to addressing the existing significant privacy concerns. CTIA, the international mobile industry organization, has already issued guidelines addressing user notice and user consent.
Location-based services have already greatly improved the travel consumer experience. These mobile services are expanding in use and popularity among travelers who expect to receive services such as mapping, navigation services, city guides, etc. upon arriving at the destination.
For example, a traveler approaching New York City and using LBS can obtain information on the city's main tourist attractions, Broadway shows, ticket availability, new and unscheduled events, hotel information and promotions, and plan or adjust existing travel plans, as well as make reservations via the mobile device. Furthermore, if they are browsing the Village in Manhattan, they can easily search for the nearest Italian or sushi restaurant, review customer reviews, and then select a place, and make an instant reservation.
LBS also allows guests at large hotels, beach and golf resorts to be notified for new and unscheduled performances, dining promotions, cancellation of events, and new special offers (2-for-1 seafood buffet, 25% off day trips; $50 off spa treatments, etc). These services will not only provide useful information to hotel guests, but allows good hotel marketers to sell auxiliary services and do ad-hoc promotions.
In addition to these “conventional” services, new type of LBS are already here: services like buddy beacons and friend finders help travelers and pub hoppers alike to hook up with friends who happen to be at the travel destination or in the neighborhood.
Location-based services are poised to become a great marketing tool in the hands of pro-active DMOs, resorts, hotel and restaurant chains, and tourist vendors.
What Should Hoteliers Do?
What are the "killer" applications for the hospitality space? What are the mobile services that will allow hoteliers take full advantage of the exploding mobile channel? Over a third of travel companies will be investing in mobile this year (EyeForTravel).
Here at HeBS we believe that the following mobile Internet services and applications will make the biggest impact in hospitality over the next few years.
Mobile Hotel Websites
Imagine trying to squeeze your wide-screen hotel website designed to fit screen resolutions at 1280x1024 pixels and above on the tiny screen of a mobile device. Our analysis shows that more than 90% of mobile users access the hotel website via mobile devices with screen sizes of 320 x 480 pixels. Accessing a “conventional” website via a mobile device, even the latest iPhone, often results in undesirable user experience, inability to find the information users need, and predictable outcome: abandoned websites and reservations.
To solve this issue, hoteliers should provide a mobile website specially designed to provide excellent user experience in a mobile environment.
Mobile users demand mobile sites that download fast, textual content that is short and concise with no fluff, minimalistic visual content, navigation that is straight to the point, short descriptions of hotel amenities and services, exact location, maps and directions, toll-free phone for reservations, and an easy-to-use simple booking engine.
The economy and budget limitations are no longer an excuse for not having mobile-ready hotel site. Designing and building a “starter” hotel mobile site can be fairly inexpensive: from $495 for a 4-page starter site to $1250 for a 10-page mini-site. Many of our clients have some type of m-commerce sites: from mobile-ready starter sites and more comprehensive mini-sites to full -blown m-commerce sites for our multi-property hotel clients.
A recent Internet Retailer survey found that 7% of online retailers already had an m-commerce site in late 2008. Having a mobile hotel site, due to the nature of location-based and in many cases impulse-driven services hospitality provides, has become a priority, indeed.
Here are the typical hotel mobile site features being implemented today:
Multi-property hotel companies and brands: automatic detection of mobile browser access, search and book hotels by location, book special offers, interactive maps and directions to the property, area attractions information, reward program login for quick reservations and account information, Omniture or other enterprise analytical tool to track traffic and conversions, special 1-800 numbers to track mobile phone reservations, etc.
Single property hotels and resorts can start with simple 4 to 10 page mobile mini-site, featuring code allowing the mobile device to automatically detect the mobile site, hotel’s contact information (email and phone number), reservation information with link to the mobile version of the booking engine or a simple reservation request form, main services and amenities, information addressing the main customer segments, interactive map and directions to the property. HeBS tracks traffic and conversions via Omniture and uses a special 1-800 phone functionality to track mobile site calls and conversions.
Case Study:
Browsing on hotel mobile websites is becoming more and more popular among mobile customers (number of mobile site visits January-July 2009):
Regional midscale hotel brand: 79,500
Multi-property resort company: 22,279
Regional multi-property hotel company: 14,379
Boutique Hotel in San Diego, CA: 4,286
Full-service hotel in Seattle: 1,891
Luxury Spa resort in Florida: 9,917
Mobile Booking Functionality
Enabling reservations via the hotel mobile site is another very important, though complicated issue. Today all major hotel brands’ mobile sites have booking capabilities. Independent hotels and resorts are usually at the mercy of their third-party PMS or booking engine vendors. Unfortunately only a handful of these vendors have developed mobile booking capabilities, most recently SynXis and InnLink.
To facilitate mobile reservations due to the mobile devices' limited functionality for data input, secure customer profiles need to be stored either via the hotel mobile site, the mobile booking engine vendor, or subscription to specialized m-commerce digital wallet services. For example, for the major hotel brands, the reward program guest ID number should be sufficient to pull up all customer data and preferences needed for a hotel booking. The property selection, arrival date, number of roomnights and number of rooms, all selected from easy to use drop-down lists and calendars, should be the only missing parameters.
Independent hotels and resorts can either use a mobile engine from their third-party booking engine vendor, or for the time being use a simple reservation request form. Today either way is correct, since the majority of mobile reservations for independent hotels and resorts come from the mobile site’s toll-free telephone number. HeBS’ research shows that as much as 8 out of 10 mobile reservations come via the special 1-800 from the hotel mobile site, and only 2 are “true” mobile reservations.
Case study:
Multi-Property Hotel Company: Bookings via the mobile booking engine and the special toll-free reservations number, January-July 2009
Number of room nights booked by mobile booking engine 161 with 650 from mobile toll free phone total 811
Number of room nights booked by mobile booking engine 270 with 1080 from mobile toll free phone total 1350
The revenue from the mobile booking engine $32,100 and from the mobile toll-free phone 128,400 total $160,500
During the same period, the mobile site had a total of 78,953 mobile visitors i.e. the conversion rate was approximately 1%.
Naturally, as mobile reservations become wide spread and the comfort factor increases, hotel mobile sites have to offer mobile booking functionality.
M-CRM and Customer Service
M-CRM or mobile CRM will rule the mobile Internet. Customer relationship management (CRM) and mobile services were meant for each other: mobile devices are constantly present, always on and usually used by only one person. Hence the need to use the mobile space to provide intelligent, unobtrusive and highly personalized services convinces customers that this is their service. Custom-tailored services and offerings, based on knowing your customers, matching customer preferences, and predictive behavioral techniques are only part of personalizing the customer service in this space.
Here are only some of the m-CRM and customer service initiatives, already in use by many of the major U.S. airlines, and some of the hotel brands:
When conceptualizing and delivering m-CRM, hoteliers have to tackle serious issues like data security, privacy concerns, how to make services and applications non-invasive, and solicit customer opt-in and consent.
M-Lists: Opt-in Customer Mobile Text List Creation
Text messaging is huge and growing. In 2008 over a trillion text messages were sent worldwide, and in average, there were 357 texts vs. 204 phone calls/per month per cell phone subscriber.
Unlike email marketing, which is free and unregulated (except the toothless CAN SPAM Act of 2003) and susceptible to massive abuses in the form of unsolicited spam, mobile text marketing has to overcome two very serious obstacles:
Therefore it is not an easy task for the hotel to create a fully opt-in list of existing guests and potential customers’ cell phone numbers (m-list) who have provided the hotel with explicit consent to receive special promotions or event announcements via their mobile devices.
How to create and expand the hotel m-list? Here are some techniques and approaches to solicit opt-ins for the hotel m-list, all of which require a very carefully thought-out solicitation of the mobile user‘s consent:
Mobile Advertising
eMarketer projects that mobile advertising will rise from $648 million in 2008 to $3.3 billion in 2013. This year alone marketers will spend $760 in mobile advertising (+17.3%) and almost a billion dollars in 2010 ($995 million or an increase of 30.9% vs. 2009). Forrester projects mobile marketing to grow from 2009 through 2014 with a CAGR (compound annual growth rate) of 27%, second only to the growth rates projected in social media.
What are these mobile marketing formats that are of particular interest for hoteliers?
In our view there are 4 areas of interest for hoteliers:
LBS-based advertising is a “hot” new area where m-marketers are already testing interesting initiatives to promote businesses to travelers based on their physical location. LBS-based advertising includes a wide range of marketing formats and options that have one thing in common: advertising is tailor-made to fit the concrete GPS location of the mobile user at any given time. Examples include offering discount coupons for the closest Starbucks, to special pre-fixe dining at a nearby restaurant, to banners for businesses based in the vicinity.
Imagine the impact LBS-based advertising could have in hospitality, which is location-based itself: from “beaming” deals for hotels at the next exit to travelers on the interstate, to offering 2 for 1 drinks at the hotel bar to hotel guests or passers-by or $50 off all massages for walk-in guests to come to the hotel spa within the next hour. For example, HotelPal, a new app for iPhone takes your physical location via GPS and then shows you all the hotels in your vicinity, including rates and special offers, as well as provides booking capability.
There are two approaches for mobile text marketing: to the hotel’s own opt-in m-list, or to “rented” m-lists. Similar to email marketing to the hotel own email list, the preferred and recommended approach is marketing to the hotel’s own op-in m-list. Once the hotel addresses the privacy and customer consent issues as discussed in the previous chapters, and generates an m-list of opt-in cell phone subscribers, the next logical step is to conceptualize the text campaigns and decide on their frequency. Providing real value and building expectation should be the underlying consideration.
Text marketing to “rented” m-lists is not considered best practices, similar to renting email lists. With rented m-lists there is an additional aggravating factor, which is the extra sensitivity of mobile users about privacy issues.
Here are sample text marketing campaigns:
This includes proven advertising formats from the non-mobile Internet world: sponsored mobile search listings (e.g. Google mobile ads) and mobile banners.
Due to space constraints, creating short, but appealing marketing messages is a challenge with both the search and display formats. On the other hand, hoteliers have to be prepared to accept low conversion rates and inadequate campaign tracking technology. Both website analytical tools like Omniture, ad delivery and tracking technology vendors like DoubleClick and its DART are in the process of deploying mobile campaign and conversion tracking technology.
Mobile applications or “apps” have exploded in popularity with the introduction of the first iPhone. Apple boasts over 50,000 applications (both free and paid) that people can download via the iPhone Apps Store. BlackBerry has a similar apps storefront with a growing number of apps.
From interactive maps, to Frommer’s and Lonely Planet travel guides, restaurant and hotel reviews, to flight status, personal tours and currency exchange calculators, there are apps for practically everything.
A number of hotel brands have launched their own apps. For example, Omni Hotels’ new free iPhone application enables iPhone or iPod touch users to book hotel rooms, search rates and reservations and receive special offers directly through the app. The app gives full access to Omni's mobile site, and includes features like mobile check-in and loyalty account sign-in.
Here are just some of the intriguing downloadable apps:
Interactive contests
Mobile apps are good branding tools, though few hotel companies can afford the expense. Application development costs vary, but can start from as low as $25,000 for an app people would want to download.
Conclusion
When HeBS released the article “Wireless in Travel and Hospitality: Hype or Necessity?” in September 2001, no one could foresee how big the mobile channel would become. Luckily many of our predictions materialized, some beyond our most optimistic expectations.
The mobile Internet is already here. Mobile marketing allows hoteliers to take advantage of a unique marketing and distribution medium where mobile services, marketing messages or applications are delivered via a very personal device (e.g. your cell phone or smart phone). This creates an additional responsibility for m-marketers to “thread carefully” and adhere strictly to best practices and standards due to extra sensitivity about privacy issues of mobile users and wireless carriers alike.
Travelers are already using their mobile devices to plan and book travel and hotels. Even mobile sites of small, single properties are being visited by thousands of mobile customers. Some travel and hotel companies are already taking advantage of the growing mobile traveler population and generating incremental revenues from their mobile sites, marketing and apps.
What can hoteliers do in the remaining months of 2009? Hoteliers’ excellent first step is to create a mobile site, which by default is the “gravitational” center of all future marketing efforts: from text messaging and Google mobile ads to mobile sweepstakes and applications. As discussed in the article, budget limitations are no longer an excuse for not having an inexpensive mobile-ready hotel site.
Launching Google Mobile ads as part of a comprehensive search marketing strategy is another natural step. In the mean time, start soliciting sign-ups to the mobile opt-in list (m-list) on the website, via hotel email marketing campaigns, through social media initiatives and interactive sweepstakes and contests.
What should hoteliers plan for 2010 and beyond? Location-based services, m-CRM and mobile apps are initiatives in need of careful planning, sophisticated technology, and better economic environment.
Consider seeking advice from a mobile-ready, full-service hotel marketing and direct online channel strategy firm to actively help you take advantage of the mobile channel one step at a time. Learn which mobile marketing formats make most sense for your hotel, how to implement latest trends and best practices in your mobile Internet marketing efforts so you can realize respectable ROI and incremental revenue growth.
About the Author and HeBS:
Max Starkov is Chief eBusiness Strategist at Hospitality eBusiness Strategies (HeBS). HeBS is an award-winning, full-service Internet marketing and Direct Online Channel Strategy firm, strictly dedicated to the hospitality and travel verticals. Having pioneered many of the "best practices" in hotel Internet marketing and direct online distribution, HeBS specializes in helping hoteliers profit from the direct online channel and transform their websites into the hotel’s chief and most-effective distribution channel, establish interactive relationships with their customers, and significantly increase direct online bookings and ROIs. Visit us online at www.hospitalityebusiness.com
A diverse client portfolio of over 500 top tier major hotel brands, luxury and boutique hotel brands, resorts and casinos, hotel management companies, franchisees, independents, and CVBs has sought and successfully taken advantage of HeBS’ hospitality Internet marketing expertise. Contact HeBS consultants at (212)752-8186 or info@hospitalityebusiness.com.
Max wil also be speaking at the Mobile Strategies for the Travel Industry conference taklking place this September 16-17 in Chicago http://events.eyefortravel.com/tdsusa/mobile-travel/