How to use Psychology in Hotel Marketing

  ·  6th October 2017

On Tuesday night this we week the members of the Hotel Marketing Association were treated to a superb evening on how psychology can be used in hotel marketing.

The Hotel Marketing Association hosted us in Le Méridien Hotel in Piccadilly. The talk was kicked off by Brian Reeves of GOPPAR Digital that discussed how the OTAs use psychology in hotel marketing to maximise the number of bookings through their platform. Brian was then followed by Dan Baker of Flight Centre and GM of Student Universe in the UK who referred to his own experience of growing the Student Universe platform and how data has formed a central part of their current marketing strategy.

Here are six key takeaways from the event that I implore you to explore. By understanding the techniques below it is hardly surprising that the OTAs are pulling away with market share and it is only through employing similar mechanisms that the scales have any chance of becoming balanced.

The Power Triangle

Create Urgency

Browsing through booking.com it is impossible to miss the plethora of urgency message that one comes up against. These messages include countdown timers, ‘today’ rates, the number of people currently booking the same deal and also the number of rooms left. All of this messaging is usually in red which has been shown to create a greater sense of urgency and panic in the users.

How can we do this as an independent? There is nothing to say that you can’t add timers of your own. One idea is to dynamically show the current user a specific book direct code and then start a timer in their browser session. Using just a few lines of code you will be able to create a similar feature to that of booking.com that might increase the CTR to your booking engine.

Generate FOMO (Fear of missing out)

We all suffer from it.. usually when my friends have gone off to the pub and I’m stuck on public transport. The OTAs use this psychological phenomenon by implementing messages about what other bookers have done in the last few hours (which also leads on to the next point about risk mitigation and trust)

A hotel might do this by adding a little story about what a guest did with their free “book direct” breakfast or what cocktail they ordered on the house when they booked direct. Also, using similar techniques such as telling the user how many other guests are viewing the website at any point in time will also create a similar effect.

Risk Mitigation

Naturally, when we’re parting with our money we need to have some level of trust in the service that is asking us for our credit card number. Booking.com place green messaging throughout the booking process to put the booker at ease. These messages include text like free cancellation, positive testimonials, no prepayment required. etc.

Green has been shown to put users at ease and is usually associated with success and things going well. Red, on the other hand, is usually alerts or when something goes wrong and create a sense of unease. By combining these two principles it is possible to create the urgency while simultaneously putting a guest at ease by telling them they’re in safe hands. Genius!

Hotel website will typically stick very close to brand colours so loud red or green messages are sometimes considered garish or distasteful. I would argue that there are certainly ways to implement these colours into your website’s colour palette, perhaps taking softer versions of the colour and placing both urgent and calming messages throughout the key conversion points of the website. Your booking call-to-action should never be far from a message saying that it is the best available rate or that they have free cancellation for example.

Other notable takeaways

Leverage third-party data

One of the unassailable advantages that the OTAs have over independents is their access to far larger and more diverse quantities of data. This means that their decisions are being more accurately guided and at a much faster rate. To create statistically significant results to split testing, one needs reasonably large data sets which, for an OTA, might take a day to acquire whereas a hotel might take months or years to gather a similar result.

This means that the independent is going to be forced to leverage third-party data if they are going to be able to compete in the data game. Whether this comes through designated third party data sources such as Qubit’s visitor cloud or a collective of different hotels pooling their data to gather user insights of significant volume that can then drive decisions.

Perceived Value and price parity

Price Parity seems fair right? If we were all completely rational and we saw the same price on both the OTA and the hotel website then we would perceive no difference in value. Unfortunately, we are not totally rational and despite the price being equal, the OTAs are usually comparing that price to the maximum price in the last 2-4 weeks so it looks like a significant discount. An example of this might be if your room rate for the night was £200. You website might reflect this, however, booking.com is like to say “50% Off, was £400, now £200”. Technically true if you compare it to your weekend rates but this is only creating perceived value through deception.

How do we combat this? It’s very tricky to do it ethically and without crossing the line of deception. Authorities are starting to catch on to these phenomenons and have gone about making cases against certain levels of deception but it is hard to comprehend a time that it will ever become a level playing field.

It is important to always make it clear that you have the best price on the internet, or that you match all prices from other channels while giving something extra as well.

No such thing as a marketing budget.

Dan Baker was explaining yesterday that the OTAs don’t actually have marketing budgets, they simply have a cost per acquisition. Sure, these numbers can have targets but if the conversion funnel produces bookings then OTAs will simply spend and spend and spend! Perhaps we need to start viewing our own direct channels like this?

It is essential that if we are engaging in direct marketing we are tracking our exact cost per acquisition. We can then compare this exact cost against the 20% cost of the OTAs and make informed budget decisions. If you’re achieving a better CPA than these other channels then there is no logical reason why one shouldn’t invest in more direct marketing.

Sadly it is the case that many hotel owners still see marketing as a fluffy expense and is usually the first budget to be cut when the going gets tough. If we can start taking a rational cost per acquisition approach, then the value of marketing will start to become a lot easier to understand and we can start making much more intelligent decisions about where to spend money.

I’ll leave this post with a couple of quick statistics.

  1. 52% of all visitors to your listing on an OTA will check out your own website, proving that the opportunity is there
  2. OTAs are spending 30-40% of their revenue on marketing whereas a hotel will only spend 6%. It is no wonder that the gap has grown so wide!