Mobile 'Metrics' Impact On Revenue Management

By Michaela Papenhoff Managing Director, h2c | January 27, 2013

Mobile measures and key performance indicators (KPIs) - "mobile metrics" - are the basis for hoteliers to take decisions for adjusting and proving mobile strategy. Mobile phones are expected to surpass PCs for Internet access in about 2 years' time from now. Corporate offices of hotel chains and revenue managers and GMs on hotel level must be aware of benchmarks for conversion rates, traffic and devices being used by guests while competing with indirect 3rd party distribution channels for the fastest growing "channel" that is mobile. Selling opportunities provided via mobile devices must be carefully analyzed. Last-minute deals require thorough evaluation so that pricing strategies are not jeopardized.

The Mobile Facts

According to h2c's research, mobile traffic in 2012 for hotel chain's own websites represents between 10-20% of total website traffic (includes smartphones and tablets) while only 1-3 % of overall website revenue is generated via mobile devices – in average equally split between smartphones and iPads. Tablets are the main driver of mobile traffic before smartphones.

Mobile requires more attention than most of the smaller to mid-sized hotel chains and individual hotels are dedicating today. Determining KPIs and controlling them via business intelligence tools is a prerequisite for implementing a successful mobile strategy. Hoteliers seek to better understand customer data provided by reporting tools such as Google Analytics, combine the data with their own in-house reporting, and correlate it with social media findings to intensify and improve the communication with its customers who are increasingly using their smartphones for the search and shop process.

PhoCusWright research presented in 2012 finds business travelers use more travel provider websites/apps (42%) while leisure travelers use more Online Travel Agency (OTA) websites/apps (45%) on their mobile phones. Mobile websites are used 3 times more often than apps when it comes to shopping for a hotel room or a flight. 10% of business travelers using a mobile phone have actually reserved a hotel room or flight via the app while 21% said they had used mobile websites for booking. For leisure travelers, the number was lower with only 6% who used apps for making a booking and 17% using a mobile website. Nielsen reports that 95% of all mobile traffic for travel-related content comes from native mobile apps with Google Maps accounting for 78% of all time spent in the travel category in June 2012.

The most discussed issue of increasingly receiving last-minute bookings via mobile devices can destroy some revenue manager's strategic approach when not managed carefully. Hoteliers are seeing 30-60% of their mobile bookings made within 24 hours prior to arrival. A BookitNow! and zanox study recently conducted confirms that 62.3% of mobile bookings have been processed on day of arrival. Another study by JustBookit found that more than half of the mobile hotel bookings (53%) were made during working hours between noon and 6pm while the majority of guests stay for one night (83.8%) and only 16.2% stay more than 1 night. Some hoteliers consider the "Spontaneous" booker as a new business segment that can be reached by offering last-minute deals via mobile apps of the new market entries such as HotelTonight and traditional OTAs alike. Other hoteliers consider the new model as a disruption of their revenue management strategy educating customers to book late for the best deal while the strategy has always been to convince guests to book rather early.

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Human Resources: An Era of Transition

Traditionally, the human resource department administers five key areas within a hotel operation - compliance, compensation and benefits, organizational dynamics, selection and retention, and training and development. However, HR professionals are also presently involved in culture-building activities, as well as implementing new employee on-boarding practices and engagement initiatives. As a result, HR professionals have been elevated to senior leadership status, creating value and profit within their organization. Still, they continue to face some intractable issues, including a shrinking talent pool and the need to recruit top-notch employees who are empowered to provide outstanding customer service. In order to attract top-tier talent, one option is to take advantage of recruitment opportunities offered through colleges and universities, especially if they have a hospitality major. This pool of prospective employees is likely to be better educated and more enthusiastic than walk-in hires. Also, once hired, there could be additional training and development opportunities that stem from an association with a college or university. Continuing education courses, business conferences, seminars and online instruction - all can be a valuable source of employee development opportunities. In addition to meeting recruitment demands in the present, HR professionals must also be forward-thinking, anticipating the skills that will be needed in the future to meet guest expectations. One such skill that is becoming increasingly valued is “resilience”, the ability to “go with the flow” and not become overwhelmed by the disruptive influences  of change and reinvention. In an era of transition—new technologies, expanding markets, consolidation of brands and businesses, and modifications in people's values and lifestyles - the capacity to remain flexible, nimble and resilient is a valuable skill to possess. The March Hotel Business Review will examine some of the strategies that HR professionals are employing to ensure that their hotel operations continue to thrive.