|Hotel Online Marketing Budget Disconnect.|
By Vikram Singh
Friday, 23rd August 2013
A perpetual case of bringing a knife to a gunfight -
'Nice try kid, but it looks like you brought a knife to a gunfight', this line from Indiana Jones and the Kingdom of the Crystal Skull pretty much sums up the hotel industry’s current state of perpetual online defeat.
It’s 2013. Pretty much everyone — even folks living under rocks — have had some sort of exposure to online marketing. Enter hotels, still wildly under-spending on what is going to bring them the best outcome.
Here is a typical hotel marketing budget:
To really put it into perspective for you, here is an amazing fact. In a recent conversation with a “Brand” looking to break into the European market, they assigned $800 (not a typo), yes 800 US Dollars as their online marketing budget! Which is like a 100 pounds! (Ok…I might be exaggerating just a bit about the exchange rate… but not the other part.)
- Branding: $5,000
- Print: “Could we please spend a several thousand dollars on print…I know you saw the video on YouTube about paper. OMG, it was so awesome!”
- Time wasted on branding “discussions”: $50,000
- Website: $5,000
- Time wasted on website “discussions”: $100,000
- “Social Media”: $1,000
- Online Marketing: $500/month
Think about how short your arms are going to be when you have a pathetic monthly online marketing investment and then start competing for online market share in high-volume traffic cities like London and Paris, NYC and Miami, Hong Kong and Singapore, etc.
When you venture for market share online, you have to do more than buy your own brand name terms. You are also competing with these guys:
1. OTA’s (AKA, we put our marketing dollars where revenue is.)
2. Competitor hotels – Other hotels in your location(s)
3. Online Review Websites – Tripadvisor, etc., who are not diversifying their advertising revenues and also actively selling rooms.
Every evil can be traced down to its root cause. In my industry experience, working for hotels and managing a marketing agency, I have located the hotel’s source of conflict, misery and defeat. It is the budget.
What’s the right budget then? It differs from city to city. Here is a top-level guideline.
Minimum Media Buy and Online Marketing Budgets
1. Major Metropolitan Cities (NYC, London, Singapore): 18K/month
2. Secondary Cities (Austin, Edinburg, Nice): 10K/month
3. If your hotel is located in a smaller town. that brings the budget into the 1-5K range, because you are mostly focusing on brand name searches and low-volume, location-based keywords.
Hotels must reevaluate their budgeting philosophies. Bringing a low-budget knife to a high-tech online marketing gunfight is going to severely hurt your revenue.
The hospitality and travel industry today is in need of a major rethink of the way it operates and markets itself online. Working as an online revenue strategist for the hospitality and travel industry for over a decade, I have seen a lot of opportunity for improvement.
My mission is to educate and inspire players in the hospitality and travel industry to make things better. When I speak to clients and seminar audiences, my goal is to be a catalyst for change. I spend my time identifying problems, deciphering analytics, and transforming hotel assets for some of the biggest global hotel investment funds. I invite you to learn more about my experience and my ideas on my blog and or by attending one of my speaking engagements.
I am always looking for opportunities to make a positive impact on the industry that I love. Let me know if you’re ready to hear more or join the cause.