Hotels step up direct marketing tactics

Hotels have always had a 'one-to-one' relationship with customers - imagine the front desk clerk greeting patrons by name and the bellboy ushering them to their rooms.
That face-to-face relationship management has been complemented most often by conventional brand advertising, as well as a bit of direct marketing. But the latter - or more specifically, database marketing - has never held much draw with hoteliers. Pundits lamented the fact that it was not growing as fast as it should.

Hotels have always had a ‘one-to-one’ relationship with customers – imagine the front desk clerk greeting patrons by name and the bellboy ushering them to their rooms.

That face-to-face relationship management has been complemented most often by conventional brand advertising, as well as a bit of direct marketing. But the latter – or more specifically, database marketing – has never held much draw with hoteliers. Pundits lamented the fact that it was not growing as fast as it should.

That is, at least, until now. The post 9/11 world has dramatically shaped the hospitality industry, especially in the U.S. Boutique hotels have had to hawk bargain-priced rooms (which once came at a premium) via direct mail, offer prizes to travel agents, and advertise extensively in convention-trade magazines, in the hopes of attracting guests from any segment.

While the situation is less dire in Canada, our hospitality industry did experience a decline in 2001, suffering a 10% drop in hotel occupancy rates, according to the Hotel Association of Canada.

As a result, hoteliers are switching gears and revamping many marketing strategies. More focus is being diverted to efforts like direct marketing to their internal databases via postcards and, especially, e-mail – targeting customers with last-minute marketing campaigns or special promotions. They’ve found opportunities to customize and promote packages, and work with industry partners to add further value to the promotion and stand out from the crowd.

While database marketing may be key in today’s competitive market, nothing will ever replace the traditional ‘personal’ approach completely.

‘The one-to-one relationships at our hotels come from the general manager personally,’ says Allen Gelberg, director of sales and marketing, Vintage Inns, Niagara-on-the-Lake, Ont., adding that reservation confirmations, promotional pieces and invitations, created in-house, are usually written and signed by the hotel’s GM. ‘We’ve made a conscious effort to do that for the past three years, the main reason being because other hotels do not – they may do mass mailings but they’ve moved away from a highly personal approach.’

September 11, he says, has put even more of an emphasis on the various one-to-one marketing tactics. Vintage Inns uses its loyalty program, e-mail and the Web extensively, he says, to engage customers and conduct surveys and gather feedback for promotions. Recently it came up with a five-day package for under $1000 in response to customer demand via the Web and e-mail. When it wanted to bring corporate visitors back on a leisure basis, it instituted a promotion whereby the guest received a voucher for $75 to apply to a return visit.

Gelberg says while they’ve maintained databases in the past, it’s grown sophisticated enough now that they’ve closely integrated the technology with business operations – e-mail addresses, and other information, for example, are gathered upon every reservation. It has also built its database via some inventive online contests with partners like GlobeInvestor.com. ‘We are challenging ourselves from a marketing perspective to do something new every day,’ he says.

‘The database is key,’ says Tony Cousens, GM of Le Royal Meridien King Edward Hotel, which is targeting one million local customers for its loyalty database. ‘It still remains a challenge because of the different front office/computer systems that each hotel has – it’s difficult and costly for some hotels to maintain a system or software where all the pieces talk to one another, maintaining a clean, segmented database.’

The Toronto-based King Eddy, which has embarked on a $35-million renovation project that includes the refurbishment of three floors into ‘Art + Tech’ rooms, has partnered with American Express for a few database marketing initiatives.

In terms of its marketing strategy, the hotel has various target levels – consumer advertising in print (magazine and newspaper) and consumer relationship marketing through its recently enhanced loyalty program, Moments (whereby members can cash in for free stays, etc., or for airline points), as well as trade advertising. It recently launched ‘Guest Book,’ its commission and incentive program to travel agents, which offers a cash payment (rather than gifts or prizes) on fulfilled booking within a week or so of guests checking out. Payment is via personalized electronic payment card, which can be used for shopping or cash (at ATMs).

‘A lot of that corporate marketing is taken from head office and communicated to us,’ says Leilanni Santos, marketing communications co-ordinator, at the King Eddy. ‘However we have control over how it’s distributed locally in Toronto.’

On a local level, she says, the hotel has done a lot of direct marketing – beginning with examining its database to ensure the integrity of the data. It has since launched several direct mail pieces and moved aggressively into e-mail last summer, says Santos. ‘The ideal with e-mail is that you get an immediate response. It’s cost-effective, and you’re also giving the recipient the opportunity to say, ‘I don’t want to be on your database’.’

Part of the King Eddy’s recent revamp includes equipping the hotel with the proper tools and technology, like Internet and e-mail, says Cousens. The marketing team is also currently working with a partner to merge the databases into one interface to make it easier to use. Segments, such as entertainment, government, meetings, etc., will still be easily broken down within the database.

‘We want to grow this hotel and really get ourselves known, whether it be in the domestic or international market – so we have to be more creative in our marketing approach. That includes using things like database marketing and e-mail,’ he says.

As a result of the initiatives implemented so far, he adds, the hotel achieved better-than-forecast results in the last quarter of 2001 and the first quarter of this year, and it increased its market share to take over the second position in the Toronto market.

‘The hotel industry is not necessarily a leader in database marketing,’ says Dorothy Dowling, president and COO, mid-market hotel chain Travelodge Canada. ‘There are good systems to manage those customer relationships at the hotel level. But it’s very difficult for a chain to maintain a centralized database or to merge the two at the corporate level, because of the work and investment.’

‘In my experience, hotels have maintained one-to-one relationships mostly through loyalty programs,’ she says.

The 20-year-old Travelodge Miles loyalty program, for its part, allows guests to earn 10 Miles for every lodging dollar spent. Miles can be redeemed for free nights and gift certificates at Canadian retailers such as Home Depot, and Toys ‘R’ Us. The chain also recently announced a partnership with Hudson’s Bay Company that allows HBC Rewards members to earn 2,000 points per stay at Travelodge and Thriftlodge hotels across Canada. Another partnership with CIBC allows CIBC Entourage Business American Express customers to obtain preferred rates at Travelodge and Thriftlodge.

‘The core loyalty program rewards the customer and then we layer on seasonal promotions that target the shorter term corporate and leisure travelers,’ she says.

Loyalty members represent anywhere from 15% to 30% of its business – usually corporate travelers, many of whom stay 80 to 100 nights per year, says Dowling. (The Travelodge customer base is 70% corporate and 30% leisure.)

The hotel chain, which focuses its marketing approach around delivering value and service, has had record growth of 25% during the past year. While the company acquired 28 new franchisees in 2001, the record growth is attributed to the fact that hotel operators and consumers alike are increasingly attracted to well-recognized brands that offer security, quality and value.

‘The hotel business is quite different from other industries – the relationship we have is a very personal one,’ says Dowling. ‘While our customers do want information in terms of specials, discounts and programs, the true customer relationship is really one that exists with the front desk agent, and through loyalty programs.’ BJ