While 2022 seems to be going very well for most hotels, we can say that many were wrong (including us!) about how the post-covid recovery would play out.
The financial pragmatism that followed the crisis resulted in an overly conservative pespective that allowed OTAs to capture more market share. The Direct/Indirect ratios have thus returned to historically high levels, while the increase in revenue generated on direct channels has indeed increased sharply. Commissions have simply evolved faster!
In the end, those who did well were the hotels that stayed open and were not afraid to invest significantly in this flourishing market.
It is therefore hard to know what 2023 will look like, especially since:
- The outlook remains uncertain: economic crisis, war in Ukraine, energy problems.
- Inflation implies an increase in expenses, and a potential drop in profitability.
- An increase in average hotel prices is expected in 2023, with stagnating occupancy rates.
In this situation, it is therefore difficult to prepare your marketing & digital budget for your hotel. But fear not! The Influence Society Strategy team has some insight to get you started.
- CAPEX is back!
As things remain very favorable in the short term, it is again time to think about investing in the long term. Thus, CAPEX expenditure will be on the rise in the first half of 2023 (or even as soon as the last quarter of 2022). Website redesigns, new CRM tools, implementation of a loyalty program... the start of the year is likely to be busy.
- Really think about your brand
Hotels will once again insist on their positioning and differentiation to justify their average price increases. All budgets that support their identity, story, or content will increase. Skilled help is more difficult to find in this niche, so call on your network or the Influence Society collective if you need a hand.
- Continue to control your fixed costs
Fixed costs must represent a small part of your marketing & digital expenses. You probably recruited in 2022, and that's a good thing, but be careful not to overcommit. At the same time, you have to play even more with your variable charges: you can adapt them to seasonality at least, ideally to demand, but also to current events, as you already do for your rates. Do not be afraid of having to exceed the planned budgets if the context allows it. And if this is not possible, at least negotiate the flexibility to increase budgets during the year based on performance criteria.
- Finish breaking out of the Yield/Marketing silo
Ensure that marketing is a reflection of your pricing distribution strategies, and that yield is infused with marketing knowledge. This joint process can have real strength when it comes to stimulating demand. 2023 is therefore a good time to prepare tactical campaigns to cover the needs of your hotels in anticipation.
- Move away from the shortsightedness of ROAS
The increase in the average price should indirectly increase the cost of acquisition. It is therefore necessary to provide higher budgets than in previous years to obtain a similar number of customers. It is useless, then, for example, to invest only in your brand on Google Ads– you will lose market share.
Instead, prioritize all the actions which are in the middle of the conversion funnel and which are not already over-funded.
Bonus: if your average price increases and so does the acquisition cost, you should not be negatively impacted on the ROAS of your campaigns. Choose instead to analyze them with another metric, such as Cost Per Booking, which is more relevant to your analyzes and a better comparison with the last reference years.
- Choose your battle: new customers or new employees?
If, as in 2022, you anticipate recruitment problems and this risks impacting your operations (or even your ability to welcome more customers), invest in your employer brand as a priority. Secure budgets to acquire new candidates, and use digital channels to help you do so. This will be an opportunity to get your HR and marketing departments talking for more effective action. The acquisition cost for a new employee is certainly higher than for a customer, but you do not need to do this every year.
- Surround yourself with talent
Efficiency will remain a common factor in the budgets of the next two years. So choose partners who can bring you real added value and push them in your requests to always ensure their effectiveness. The annuity and forced commitment models have had their day, it’s time to move on to Membership.
The elements above are a first step in helping you build your marketing and digital budgets for 2023. Influence Society can fully support you and help you in establishing these budgets for next year.
And if you want to be sure to outperform your competitors, level up with the establishment of a Digital Forecast which, in addition to helping the validation of your budgets, can give you a framework of objectives to be achieved for the coming year. Contact me to find out more.
Head of Strategy @influencesociety