The Role of Social Media in the Hotel Industry
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Fred Deschamps discusses two key focus areas for revenue generation: rate optimization and social media. Rate optimization involves determining the optimal prices and room allocation to maximize bookings and revenue given factors like demand, capacity, and price elasticity. Lessons learned are that systems help avoid dilutive pricing but education is also important, and the quality of inputs impacts outputs. Social media continues to explode in users and fragmentation, and is increasingly influential on travel decisions, suggesting the need for a real-time, location-aware approach integrating social media data into rate optimization.
The Role of Social Media in the Hotel Industry
- 1. Fred Deschamps vice president, global revenue generation
- 2. Top 2 focus areas right now Rate optimization Social media 2
- 3. Rate optimization 3
- 4. The old problem given these rates, what is the optimal mix? capacity bookings days before arrival zero 4
- 5. Hotel are rarely full 64.0 63.0 63.1 62.8 62.0 60.0 59.8 59.9 60.0 58.0 57.6 56.0 54.0 54.6 52.0 50.0 5
- 6. Price transparency challenges segmentation @ travel management business travel companies search engines referral engines brand.com leisure travel online travel agencies 6
- 7. The new problem given this elasticity, what is the optimal price? revenue bookings price 7
- 8. Price-based revenue optimization Market Response Competitive Demand Forecasting Model Modeling • Demand Patterns • Customer Segmentation • Competitor prices and • Seasonality and Booking Pace • Price Elasticity Modeling availability • Special Events and External • Promotional Effects • Market Reference Price Factors Constraints Price • Capacity • Network effects Optimization • Business Rules Price Recommendations 8
- 9. Lessons learned • System cures dilutive pricing practices • Education is as important as a smart system • Output only as good as input 9
- 10. Social media 10
- 11. continues to explode 901M users worldwide Every 60 seconds, over 695,000 status updates Over 8 million unique visitors each month 200M tweets per day Every 1.6 seconds a new account is created 11
- 12. Continues to fragment • 30 segments at least, with dozens of providers 12
- 13. Increasingly influential social media users…. • change their travel plans ~ 50% of the time – hotels changed most often • report on their experience ~ 40% of the time –perpetuate the influence cycle Source: L2 Think Tank and Buddy Media, “Digital IQ Index: Hotels, March 22, 2012 13
- 14. a 3-step approach LISTEN TALK ENGAGE 14
- 15. next gen rate optimization? • if growth/fragmentation continues • if mobile continues • if content remains public Social media location real-time situation elasticity real-time rate optimization 15
- 16. Social media PRICE ELASTICITY Rate optimization 16