roc 2015: customer segmentation - … enables hotels to set prices and promotions based on customer...
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Customer Segmentation:
Leverage Emerging Fencing
Techniques to Optimize
Revenue Performance
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Josh Belkin
Sr Director, Global Retail Merchandising
Hotels.com
3
Fencing enables hotels to set prices and promotions based on
customer segments
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Public rates
Fenced
rates
Purchase
device
1
Customer
origin/
location
2
Customer
loyalty
3
Other
observable
traits
4
Fenced rates for valuable customers
while still protecting public rates
Customer segments for fenced rates can
be defined by several traits
• Domestic vs.
international customers
vs. local customers
• Booking on desktop vs.
mobile device
• Any other valuable
segmentation traits
• Loyalty program
members vs. email
subscribers vs. others
Fenced
customers
Public
customers
Fencing is important as prices and discounts are key to influence
hotel buying decision of customers
5
4%
12%
13%
14%
20%
21%
23%
26%
29%
29%
30%
32%
61%
63%
Loyalty membership
Hotel star rating
Hotel brand
Previous experience
Location of Hotel Property
Hotel size
Recent renovation
Price
Restaurants in the hotel
Positive hotel reviews
Recommendations from friends/family
Special offer/discount
Amenities
Hotel pictures
Factors influencing last hotel decision for hotel stayers
Question: “What factor influenced your last hotel decision? Select all that apply”
Source: Phocuswright (Dis)Loyalty and the US Leisure Traveler
Price is the top factor
influencing hotel booking
decision
~ 60% of customers
said Price influenced their
hotel decision
Special
offers/discounts also has a large role in
influencing decision
Purchase device fencing: target mobile customers who book last
minute
6
20%
47%
80%
53%
Mobile Desktop
0-1 days
1+ days
2015 Advance booking window for domestic US travel
1
~ 1 in 2 mobile customers
book same day/day before
their trip
1 in 4 hotel room nights
are booked on a mobile
device (and increasing!)
Source: Hotels.com data
5.5%
40.7%
-2.2%
Mobile Desktop/
Laptop
Overall
Source: eMarketer, April 2014, October 2014
2015 Forecasted YoY growth in US digital travel sales
Customer origin fencing: target international travelers while
protecting domestic pricing
7
100
90
80
Jul
’14
CAD
GBP
EUR
May
’15
Mar
’15
Jan
’15
Nov
’14
Sep
’14
GBP, EUR and CAD/USD exchange rate (Index, July 2014=100)
73%
27%
8%
13%
6%
19%
13%
42%International
customers
1-2 mo < 1 mo 2-3 mo 3+ mo
Domestic
customers
2015 Booking window (months) for US hotels
27%
1.8
3.0
+1.2 days International
Customers
Domestic
customers
2015 Length of stay (days) in US hotels
2
International customers book
earlier and stay longer
Source: Hotels.com data
Source: Hotels.com data
Foreign exchange rates
can impact demand patterns
120
100
80
60 Int’l -> US
US->US
Mar
’15
Jan
’15
Nov
’14
Sep
’14
Jul
’14
US Hotels Growth rate (Indexed to July 2014 = 100)
Source: Hotels.com data
58%
US Loyalty traveler population (M) and program
membership (% of segment)
Customer loyalty fencing: target loyalty program members who
travel and comparison shop frequently
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• 1 in 2 hotel stayers and 1 in 3 OTA
shoppers are loyalty members
• Loyalty participation increases with trip
frequency so they are more likely frequent
travelers
• Loyalty members are more likely to shop
across multiple websites than non loyalty
members
• 61% of elite program members said they’d
check multiple websites to get a good deal
OTA shoppers
55M
18M
(33%)
Hotel Stayers
118M
56M
(47%)
Loyalty members
Non-members
Source: Phocuswright (Dis)Loyalty and the US Leisure Traveler
42%
41%
61%
36%
41%
25%Elite
Entry level/
Mid-tier
No hotel
loyalty
Strongly agree
Slightly agree Slightly disagree
Neutral/Unsure Strongly disagree
Source: Phocuswright (Dis)Loyalty and the US Leisure Traveler
Online shopping behavior by loyalty status
“When planning travel, I always check multiple
websites to make sure I am getting a good deal”
The loyalty traveler population is
vast and they travel frequently
Loyalty members are savvy
travelers looking for best deals
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Linda Gulrajani, CRME
VP, Revenue Strategy & Distribution
Marcus Hotels & Resorts Member of HSMAI’s Revenue Management Advisory Board
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Scenario 1: Branded Strategy (Hilton)
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Tracking: Through the Clairvoyix and Hilton.com
Success:
Booked $27k in revenue
The second “one day left” email out performed the first email
Fence & Method: $79 rate with a calendar that had the dates with that rate available highlighted (had other rates
available for all dates)
Sent out one email campaign that was bookable for 7 days and covered a 6 week booking window and then sent another one when there was only one day left with the same offer.
Target Customer Segment:
Past transient guests who don’t already have a reservation and did not book a negotiated rate.
Scenario 2: Resort Strategy
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Tracking: With a special rate code
Success:
Booked 1,030 rooms through this offer, which decreased the next “special offer” production significantly, saving us the commission and capturing them direct
Fence & Method: Email 48 hour sale promoting “book now and get the lowest rates of the year” sent out 1 week prior to
the Groupon/Travelzoo offer going out
Target Customer Segment:
Transient guests who have booked through a discount channel like Groupon, Travelzoo, etc. in the past that don’t have a future reservation (Very important to collect email addresses from these
guests).
Scenario 3: OTA Strategy
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Tracking: Reports provided by market managers
Success:
30% - 40% of the OTA bookings are coming from this channel
Improved placement on the site
This requires that a guest creates a login, but there are no other fences that prevent them from seeing the special pricing so is this really a fenced offer?
Fence & Method: Discount for members only
Target Customer Segment:
Fenced guests (or members) on OTAs
Kathleen Cullen, CRME
SVP, Revenue & Distribution
Commune Hotels & Resorts Chair of HSMAI’s Revenue Management Advisory Board
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Scenario 1: Goal: Fill Suite Occupancy without public discounting
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Tracking: Email Campaign Statistics, Rate Code Production and if bookable via a landing page on brand.com -
Google Analytics
Method:
Via Email Communication or private mailing with an invitation to stay in one of the remodeled luxury suites.
Fence: Pull qualified customer list from CRM
Targeted Customer Segment:
Guests with stays more than once and have paid an ADR range of $400-$2500.
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Scenario 2: Goal: Build occupancy base outside the 45 day booking
window.
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Tracking: OTA reports or set up a specific Rate Code to track all bookings.
Method:
Via OTA partners using Unique POS (ie: UK, Brazil, etc.)
Fence: Unique POS (Point of Sale) + include a cancel policy and/or MLOS restriction
Customer Segment:
OTA International Customers
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Example: Extranet Results
Scenario 3: Goal: Increase Website Conversions
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Tracking: Booking Engine Reporting + Partner Reporting
Method: Show LightBox to potential guest that has checked rates & avail but closes out booking engine.
Email trigger to potential guest that started to make their reservation but does not complete.
Fence: Guests that are within Shopping Cart Funnel
Customer Segment:
Direct Bookers
Abandonment
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Booking Engine Pop-up
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May Results # of Abandoned Carts 4,819
# of Guests we were able
to invite back
548
# of Reservations
Recovered
26
Reservation Value $ 502.72
Revenue $13,070.75 *
Cost $392.12
ROI $33:1
* 15% of Pre-Opening Website Revenue
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Scenario 4: Goal: Drive occupancy on select need dates
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Tracking: Paid Search Reports, Email results + Google Analytics
Method: Serve Paid Search Text and Display Advertising to shoppers with a Florida Zip Code
Dedicated Email Blast to Thompson Hotel’s email database with a Florida address
Load Florida Resident Rate to a Booking Engine Filter
Fence: Live in specific zip codes
Customer Segment:
Local Residents
Paid Search
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Email Blast
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Results April – June MTD, 2015
Room Nights 161
Reservations 71
LOS 2.3
ADR $253.13
Revenue $40,754.85
Cost $7,797.71
ROI $5:1
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