Marketing, demand and never-ending digital change: how should hotels respond?

Digital marketing is changing with lightning speed, and it’s a struggle for hotels to keep up. Yet with the growing necessity for accommodation providers to have a robust direct booking strategy, catching up and building momentum can seem a mammoth task. So how can hotels leverage digital tools and tap into new trends to stay relevant and drive bookings?

With the evolving nature of marketing, innovations in technology, and AI pervading many aspects of life – hotels need to develop a marketing approach that reaches multiple guest touchpoints, yet targets the right type of traveller. We’ve arrived at a place where driving direct business and increasing revenue goes well beyond blanket advertising and emails accompanied by a simple website.

Hotels currently use an average of 20 different digital tools in their tech stack, and this is only predicted to rise. But what's the best way to address all the changes in the digital landscape to maximise revenue and bookings?

At a Hospitality Discussion event in September 2024, Travel Market Life gathered over 20 hoteliers and industry experts to delve into five core industry issues, which are available through a five-part podcast series. In the fourth episode, we look at the changes to digital marketing strategies due to evolving technologies, regulations, and trends.

Google and the rise of AI in hospitality

For years, Google has dominated the search engine market, but recent developments, including the rise of AI, are shaking things up. AI-powered tools like ChatGPT are transforming how people search for and process information, and this is having a ripple effect across industries, including hospitality.

“Google is genuinely scared of AI,” said David Ohandjanian, Director of UP Hotel Agency. “The generation that's coming up is used to using this as a tool. So maybe the question for us is: how can we use it in our businesses as a tool?”

Google has responded to the rise of AI-powered tools by integrating AI into its own services. One example is the Search Generative Experience, a feature that summarises information at the top of search results. Hotels need to adapt to this by ensuring their websites are rich with content, such as guides or top 10 lists, to improve visibility in these AI-generated summaries. By creating deeper, more useful content, hotels can increase their chances of appearing in AI-driven search results, particularly for trip planning.

“It comes down to basic marketing,” Ohandjanian said. “You need really good, useful content, and content that can be found, that’s coded properly on your website.”

Google’s Performance Max for Travel is another AI tool specifically tailored for the travel industry. It allows hotels to run ads that target specific audiences based on their behaviour, such as those who have recently booked a flight or are looking for accommodation in a certain area. "Single hotel and smaller hotel groups or chains can actually find it quite cost prohibitive to do more branding or outreach," Ohandjanian explained. "Google’s Performance Max for Travel looks at people's behaviour. It looks at people who have booked your hotel already, and then uses its wonderful AI wizardry to show ads to similar people. You can do that at a very low cost and get top of the line exposure."

However, it’s important not to rely on Google’s default ad creation tools, as they often produce subpar results. Hotels should ensure that their ad assets – images, videos, and text – are optimised and relevant. Working with an agency or an in-house team to craft engaging ads make a big difference.

The Impact of the Digital Markets Act (DMA)

While AI is shaping search experiences, regulations like the Digital Markets Act (DMA) are also affecting how hotels appear in search results, particularly in Europe. This EU legislation targets major players like Google, requiring them to ensure a fairer playing field by preventing them from favouring their own services in search results. For hotels, this means that listings on Google Maps or Google’s hotel booking feed may no longer dominate the search results, giving independent websites a better chance to be seen.

Although this regulation doesn’t yet directly impact UK-based searches, it does affect travellers from Europe who are searching for UK hotels. Hotels that previously benefited from good Google results may have already noticed a drop in traffic from European markets.

“Hotels are suffering from this because they're getting 30% less organic traffic,” Ohandjanian said. “They're not being found in these maps, they're not being found in the hotel listings.” This highlights the importance of being proactive with content and SEO strategies to maintain visibility. "Maximise the content on your website – make your website the richest source of content," Ohandjanian advised. "Think about content in terms of questions, as well as keywords, because voice search will become more and more prevalent."

Key consumer trends in the UK market

Recent trends in consumer behaviour have also shifted how hotels should approach marketing. In a recent survey, Travelzoo found that 91% of their audience were planning to take two or more leisure breaks this year. “Member sentiment is really positive,” said Nick Hurley, Head of Sales (Hotels) at Travelzoo. “But although demand is there, we’ve quickly discovered that if we don't get the offering spot on, then it’s difficult to take demand and convert it into a booking.”

In particular, this research show five significant trends are emerging:

1. Experience-led stays: Consumers are looking for more than just a place to sleep. They want experiential trips that include attractions, guided tours, or tasting menus. Hotels that incorporate these elements into their packages, even at a higher price, are seeing a significant increase in bookings. “For a Cornish hotel we work with, adding tickets to The Lost Gardens of Heligan and a Cornish cream tea increased their sales by 516%,” Hurley said. “Just having that inclusion made a huge difference.”

1. Inclusive packages: With the cost-of-living crisis affecting many, consumers are leaning towards packages that offer more value upfront, such as half-board stays that include dinner, breakfast, and afternoon tea. This approach allows guests to manage their spending more effectively and ensures that they are getting the best value for money.

1. Longer stays: The average length of hotel stays is increasing. What was once a quick overnight trip is now stretching to two or more nights, even in cities like London, which traditionally catered to shorter visits. Hotels should consider offering longer stay packages at discounted rates to capitalise on this trend. “We incentivise longer stays at Travelzoo,” Hurley explained. “Anecdotally, on the packages we put together where there's a two or three night cross-sell at an incentivised rate, at least half of consumers will go for that two or three night stay.”

1. Local markets: The geographic focus of travellers has shifted. While hotels previously targeted guests from further afield, there’s now a growing emphasis on attracting visitors from within a two to three-hour driving radius. This means that hotels can focus their marketing efforts on local regions and even centralise their offerings to appeal to nearby guests. “Looking at one of our best-selling London packages – currently half of the bookings come from the counties directly surrounding the city,” Hurley said. “And 25% of the bookings come from people in central London itself.”

1. Price and value: Unsurprisingly, price is a major factor for travellers when booking. Offering good value for money has always been essential, but in the current climate, it’s more important than ever. “Price and value has only ever been the top priority for about 55% of our audience,” Hurley said. “The latest survey shows that 81% of our members say it’s the most important factor. That’s a huge jump.”

Distribution - concern over rate stacking

Effective distribution is crucial for maximising bookings and managing costs. However, the increasing overlap between sales, marketing, and revenue management can make it challenging to keep everything aligned. Hotels need to ensure that all departments are working together to control rates and avoid discrepancies across booking platforms.

One area of concern is rate stacking, particularly with online travel agencies (OTAs) like Booking.com. Hotels may find themselves paying high commissions due to hidden fees from loyalty programmes like Booking’s Genius scheme, which can increase costs without hotels realising it. “With all the fees factored in, you could end up with a 40% fee for a booking,” Vineeth Purushothaman from White Sky Hospitality said. “If you're looking at the true cost of sale for a channel, you may find that it's actually very expensive.” It’s essential for hoteliers to keep track of all their distribution channels and carefully monitor where their rates are being advertised.

Additionally, emerging technologies offer new ways for hotels to bypass traditional channels, reducing costs while maintaining visibility. By staying up to date with these tools and working closely with their teams, hotels can better manage their distribution strategies and keep costs under control.

“If you want lower costs of sale, lower commissions, and better negotiating power, you need to know where your rates are going,” Purushothaman said. “It starts with having sales, marketing, revenue, and distribution working in alignment. Controlling costs can be a long winded road, but it can be done. It requires great organisational structures and systems that talk to each other.”

In a complex landscape shaped by AI, changing consumer behaviour, and new regulations, hotels must stay nimble and be persistently proactive. By leveraging the latest tools, understanding key consumer trends, and ensuring teams are aligned, hotels can maximise their revenue and remain competitive in a fast-evolving market.

Ryan Haynes
Director | Lead Consultant
Haynes MarComs Ltd