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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The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.