The Challenges of Travel Marketing
The Web is one of the most powerful marketing vehicles known to travel, tourism and hospitality entities. According to Nielsen//NetRatings, the travel category was the fourth-largest Web advertiser in May 2002 with 5.4 billion purchased impressions, and eMarketer reported that 32 percent of U.S. travelers have used the Internet to book travel arrangements during 2002. Still, the travel category poses serious challenges in terms of tracking and measuring ROI.
For starters, prospective travelers tend to begin their online research far in advance of when they book their travel. For online travel advertisers, this could mean nearly a month before true conversion rates and ROI can be measured.
Travel resource Web site TripAdvisor just completed a study that highlights this residual effect. Its data show that 30 days after consumers' initial visits to a travel site, the cumulative conversion rates were five times higher than that of initial visit measurements. If ad campaigns are not trackable beyond their initial delivery, this delayed impact can distort ROI measurements.
Measuring ROI is a consistent thorn in the online travel industry's side. Most industry insiders say online measurements alone can't measure the Internet's effect. Many travel sites take several considerations into account when gauging Internet ROI.
"We assess the extent of this new media in terms of penetration, information dissemination, sales and promotions, and purchases through our partners' products," said Lily Shum, regional director at DiscoverHongKong.com. "In the total marketing mix, [the Internet] is the most cost-efficient media, especially when it is used for direct marketing."
Part of this problem is the ability to track purchases or reservations initiated online but completed offline.
Far&Wide Travel Corp., a company specializing in complex travel solutions, has solved this problem in a number of ways. It assigns all Web initiatives unique source codes and telephone numbers. When a consumer calls in, agents can identify the origin of the call by the number and they follow up with a request for the source code information.
Similarly, Manhattan East Suite Hotels implemented a source-coding system. But since it often is not the organization booking the stay, the company trained front-office staff to ask guests at check-in how they found out about the hotel and where they booked their reservation.
"This is a real-life challenge when it is a busy check-in time," said Jim Zito, Manhattan East's director of database systems.
A recent conference of the Association of Travel Marketing Executives explored other tracking and measurement solutions including putting surveys in hotel rooms, having on-site printable coupons and collecting e-mail addresses for future promotional marketing. Web sites like TripAdvisor and DiscoverHongKong let users build profiles that help the consumer and the site in future interactions.
Another way to track Internet initiatives is to look for cause and effect. Far&Wide does monthly "match backs" in its database, comparing the master promotional database against the e-mail marketing promotional file. If there is a significant response by those e-mailed, but the response is not directed to the Web, Far&Wide still attributes those sales to its e-mail initiatives. DiscoverHongKong lets its wholesalers know what Internet promotions are running and on what sites, then asks for feedback on bookings based on those promotions.
Simple site traffic analysis also can reveal information that can affect the ROI of a travel Web site. Take the case of the West-chester County (NY) Office of Tourism. Its Web site has a section for weddings/events, including information on the county's castles, listing each with a brief description and catering information. To the office's surprise, an analysis of site traffic logs showed that the castle listings had become one of the most popular portions of the Web site.
In the first quarter of this year, visits to this section made it the 20th-most-popular page on the site. As a result, the Web site was revised to feature the castles section prominently on the home page. Site visitors have provided feedback that in addition to the catering information, they would like more historical background on the castles. The Office of Tourism is enriching the castle descriptions.
The complexity of travel planning poses another challenge: Web sites don't think like people, who often have multiple, involved questions when planning their trips.
How to address these problems? Manhattan East Suite Hotels built its Web site to simulate the reservation process as much as possible, offering upgrade options when a particular room category is selected. This has been good for business: 17 percent of reservations made on the site are at upgrade/upsell price. If a room category is unavailable for the consumer, the site will continue to search room availability, even if it is a lower room category, to try to accommodate the traveler and ensure the sale.
Using focus groups to test a site's ability to perform for and answer consumers' questions is another way to improve the consumer's experience. And though many travel Web sites have not yet employed the use of live help, some are considering it.
A different challenge facing the travel industry is that it's very diverse, and no one application or marketing solution can be used across the board.
The approach of the Maryland Association of Destination Marketing Offices is taken from offline marketing: co-op ad buying. Twelve of the 25 state DMOs banded together as a region and, with subsidies from the state of Maryland, cooperatively purchased online advertising on WashingtonPost.com.
The buy includes tile placements on the Maryland page within the Travel section, and one of the 12 DMOs has a full banner on the page each month. Given the shared cost of the buy and the number of visitors generated, one DMO, Discover Harford, has generated visitors for as little as 5 cents each.
Other travel entities also rely heavily on partner relationships to market and generate sales. The Reservation Co., a travel and entertainment booking company, has developed an intricate affiliate program called "Priority Partners" to help generate sales.
It offers generous commissions, sometimes as high as 50 percent plus "Revenue for Life" (paying affiliates for referred bookings even if the visitor books directly through The Reservation Co. site). For travel agent affiliates, The Reservation Co. developed a proprietary console through which travel agents can book and manage multiple itineraries for their own clients. Hotel vendors have their own section, too.
This affiliate program has become so popular (14,000 members) that The Reservation Co. has begun to hold seminars in major cities to educate potential and existing affiliates on getting the most out of their affiliate account.
Company president Dave Pederson said the key to the success of the affiliate program lies in "taking great pains to take good care of and retain affiliates." Learning from mistakes of past Internet endeavors, The Reservation Co. founding partners, all software engineers, built their affiliate program management software themselves, making it very user-friendly and closely monitoring the technology for broken links and lost affiliate ID codes.
"A lot of this is just good common business sense," he said.