In today’s competitive hospitality market, static room categories are becoming obsolete. A new, innovative approach is revolutionizing how accommodations are sold and marketed: dynamic inventory. This strategy allows you to market the same unit under different names, prices, and availabilities to different customers, potentially increasing revenues by 20% on average for any accommodation business.
Understanding Digital Marketing in Hospitality
Before diving deeper, let's clarify what we mean by "digital marketing." The term encompasses various channels, including Google AdWords, social media content creation, website design, SEO, database engagements through newsletters, and even digital billboards. Each of these channels requires different skills, activities, and offers varying returns on investment (ROI). Therefore, it’s crucial to understand that not all digital marketing is the same, and strategies need to be tailored accordingly.
The Evolution of Marketing: Beyond Digital
Marketing has always been about reaching and engaging the target audience through various channels. Whether digital or not, an integrated marketing approach is essential for the effectiveness of any campaign. Integrated marketing manages various channels in the most effective way to reach your targets. Therefore, relying solely on the term "digital" can be misleading. It's about how you holistically approach your campaign that truly matters.
Channel Considerations in Hospitality
In hospitality, different digital channels can serve vastly different purposes. Consider the entire suite of Google Ad channels, social media platforms, streaming platforms like Twitch, marketplaces, applications, publishers and destination sites, customer data platforms for direct marketing, or even new AI chatbot interfaces. Each of these channels present unique opportunities and challenges, and choosing the right mix is crucial.
For example, social media marketing can be particularly effective when the role of the content creator evolves into a modern-day digital concierge. This digital concierge doesn’t just post about the hotel’s amenities but actively engages with potential guests by sharing local experiences, insider tips, and cultural highlights—essentially acting as the front person of your brand, but in the digital space. This approach not only enhances guest engagement but also strengthens the connection between the hotel and its surrounding environment, making the guest’s stay a more integrated experience.
The Importance of Context in Marketing Strategies
Before discussing best practices, it’s important to consider your business context. According to the Cynefin Framework, best practices work well in clear contexts where cause and effect are straightforward. In complicated or complex business environments, these practices might not yield the expected results. Since marketing often involves unclear cause-and-effect relationships, understanding your specific business situation is critical.
A Strategic Marketing Approach
Understanding the market is the first step before jumping into segmentation, positioning, product development, and campaign management. Often, businesses leap into action, doing what has always been done or copying a best practice not suited to their context. This can lead to suboptimal results, so a careful, strategic approach is necessary.
What Are You Really Selling?
You might think you are selling a good night’s sleep or an experience, but this perception can differ greatly from how your customers view it. Their needs and purchase behavior change depending on why, with whom, and how long they are traveling. Recognizing these differences is crucial in tailoring your offerings to meet various guest profiles.
The Shortcomings of Static Inventory
Unfortunately, many hotels continue to sell, price, and manage guest expectations using simplified room categories, regardless of the travel profile. This leads to guest dissatisfaction, as seen in the frequent complaints in reviews. After all, what is a standard room when there is no standard guest?
Leveraging Dynamic Inventory Management
Feature-based and Dynamic Inventory addresses these issues by capturing more emotional trigger points of any real estate-based experience. This approach enriches your inventory with new data structures and points, making it highly effective for AI-driven applications.
Static vs. Dynamic Inventory
Static inventory means a physical room is tied to one category, and it is priced, forecasted, and sold based on that category. Dynamic inventory decouples the physical room from a fixed category, allowing the same room to be sold in multiple ways at different price points, availabilities, and target groups.
Transforming Your Marketing Mix
This new approach allows you to change your entire marketing mix. You can offer hyper-personalized booking experiences, differentiated distribution and contracting, novel automations, smart room assignments, attribute-based pricing, and revenue management. Additionally, micro-targeted guest engagement becomes possible.
Creating Virtual Products
Dynamic inventory enables the creation of virtual products tailored to specific customer needs. For example, you can create family combinations or market a room as dog-friendly. Simultaneously, those same units can be sold as a different product or as a standardized category.
Emotionalizing Room Products
One effective application is emotionalizing your room products to drive more upsell revenue and conversions. Research with the University of Furtwangen showed that customers viewing standard room images focused on the price, whereas those seeing emotional images focused on additional information.
Replacing Booking Engines with Sales Engines
To fully capitalize on these concepts, hotels should replace traditional booking engines with sales engines. A sales engine shows relevant products according to the travel profile, avoiding the paradox of choice and ensuring more profit, direct business, and better guest reviews.
Achieving Micro and Hyper Segmentation
Micro and hyper segmentation can greatly enhance your visibility. Meta offers tools to create customer data points for running targeted campaigns. Similarly, Google keywords can be fine-tuned for different travel profiles, rather than just competing for basic keywords that everyone else is buying.
Transforming Your Distribution Strategy
Dynamic inventory allows you to tailor your distribution strategy in a controlled and differentiated manner. For example, if Booking.com requires comparable products with large availability, you can provide that. If Airbnb prefers family and long-stay products, you can tailor offerings to meet those needs.
Building Brand Equity
Ultimately, your marketing goal should be to build brand equity, improve your reputation and market share, and increase your digital brand presence. With a feature-based, dynamic inventory concept, you can pivot your total marketing performance.
Real-World Success Stories (download examples here)
For instance, Citizentral, a small property in Valencia, dramatically increased its direct booking ratio to 22% and saw a 14% rise in ADR by switching to a dynamic inventory approach.
Similarly, the Cornell Inn in Massachusetts enhanced its brand visibility and direct sales by adopting this strategy, all while retaining its individuality.
Conclusion
As Luminara Q'vix from the Crystal Retreat in the Orion Nebula famously said, "To market standardized room inventory demands deep pockets and scale. Marketing dynamic inventory makes you stand out, no matter the size or budget!" This forward-thinking approach to marketing real estate-based guest experiences, coupled with a modern, digitally-savvy concierge, could be the key to standing out in a crowded market, regardless of the size or resources of your property.
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