Travel, Tourism & Hospitality - The Challenges of Online Marketing, Tracking, & Measuring ROI

The travel industry is quickly recognizing that building a web site with a reservation booking engine is simply not enough. The Web is one of the most powerful marketing vehicles known to travel, tourism and hospitality entities. In a new report just released from 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 some serious challenges in terms of tracking and measuring ROI.

For starters, prospective travelers tend to begin their online research significantly far in advance of when they actually book their travel. For online travel advertisers, this could mean nearly a month before true conversion rates and ROI can be measured. The travel resource web site TripAdvisor has just completed a study which highlights this residual effect. Their data shows that 30 days after a consumer’s initial visit 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 significantly distort ROI measurements.

Measuring ROI is a consistent thorn in the online travel industry’s side. According to most industry insiders, online measurements alone can’t wholly measure the impact the Internet. Many travel sites are taken a number of considerations into account when trying to gauge Internet ROI. “We assess the extent of this new media in terms of penetration, information dissemination, sales & promotions, and purchases through our partners’ products,” says Lily Shum, Regional Director, DiscoverHongKong.com. “In the total marketing mix, [the Internet] is the most cost efficient media, especially when it is used for direct marketing,” states Shum.

Part of this problem is the ability to track purchases or reservations that were initiated on the Web but completed off-line. FAR&WIDE Travel Corp, a travel company specializing in complex travel solutions provider, has solved this problem in a number of ways. They assign all Web initiatives unique source codes and telephone numbers. When a consumer calls in, trained FAR&WIDE 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 has implemented a source coding system, but since oftentimes they are not the organization booking the stay, they have trained their front office staff to ask guests at the time of 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,” admits 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 email addresses for future promotional marketing purposes. Web sites like TripAdvisor and DiscoverHongKong let users build profiles which help both the consumer and the site in future interactions.

Another way of tracking Internet initiatives is to look for cause and effect. FAR&WIDE does monthly “match backs” in their database, comparing their master promotional database against their email marketing promotional file. If there is a significant response by those emailed, but the response is not directed to the Web, FAR&WIDE still attributes those sales to their email initiatives. DiscoverHongKong.com lets its wholesalers know what Internet promotions are running and on what sites and then asks for feedback on bookings based on those promotions.

Simple site traffic analysis can also reveal information that can help impact the ROI of a travel web site. Take the case of the Westchester County Office of Tourism. Its web site has a section for weddings/events, and in it they dedication a portion to the county’s castles, listing each with a brief description and catering information. To the Office’s surprise, by analyzing the site traffic logs, they saw that the castle listings had become one of the most popular portions of the web site.

In Q1 2002, visits to this section made it the 20th most popular page on the entire site, so much so that 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 to see more historical background on the castles. As a result of this feedback, the Office of Tourism is now in the process of enriching the castle descriptions. It is too early to measure the direct economic impact of this change, but the Office is hopeful: less than 2 weddings per month would generate nearly $500,000 in revenue.

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? The Manhattan East Suite Hotels has built their web site to try to simulate the reservation process as much as possible, offering upgrade options when a particular room category is selected?which is also good for business: 17% of reservations made on the site are at upgrade/upsell price. If a room category is not available 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 although many travel web sites have not yet employed the use of live help, some are considering it for the future.

A different challenge facing the travel industry is that while it’s quite large, it’s also very diverse - from small, independent travel agencies to large conglomerates; from small destination marketing offices (DMOs) to large convention and visitors bureaus (CVBs); from single location inns to chain hotels?and no one application or marketing solution can be used across the board.

The Maryland Association of DMOs’ approach is actually a carry-over from off-line marketing: co-op ad buying. Twelve of the 25 state DMOs have 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 each month, one of the 12 DMOs has a full banner on the page. Given the shared cost of the buy and the number of visitors generated, one DMO, Discover Harford, has generated visitors for as little as $0.05 each.

Other travel entities also rely heavily on partner relationships to help market and generate sales. The Reservation Company, a travel and entertainment booking company, has developed an intricate affiliate program called “Priority Partners” to help generate sales. The program offers generous commissions - sometimes as high as 50% plus “Revenue For Life” (paying affiliates for referred bookings even if the visitor books directly through The Reservation Company site). For travel agent affiliates, The Reservation Company developed a proprietary “Travel Agent Console,” through which travel agents can book and manage multiple itineraries for their own clients. Hotel vendors have their own section, too: The Reservation Company has developed a competitive hotel grid, comparing hotel rates.

This affiliate program has become so popular (at 14,000 members currently), that The Reservation Company has begun to hold seminars in major cities to help educate potential and existing affiliates on getting the most out of their affiliate account. According to company president, Dave Pederson, the key to the success of their affiliate program lies in “taking great pains to take good care of and retain affiliates.” Learning from mistakes of past Internet endeavors, The Reservation Company 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. Says Pederson, “A lot of this is just good common business sense.”

Operating a web site with common sense is certainly a step in the right direction, but it is obvious that the travel, tourism and hospitality industries have to work hard at overcoming the other unique obstacles and challenges that doing business online poses.

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