As the holiday season fast approaches, cautious optimism may be returning to the hospitality industry – but the road to recovery is still a long one. With 47% of families saying they will be cancelling holiday get togethers, hospitality marketers will still be fighting an uphill battle to increase the level of bookings that are usually guaranteed by this time of year.
There are a few factors at play in this challenging time, but for every potential pitfall, there are also smart, data-driven strategies that can be implemented for brands looking to not only regain a foothold now, but also find success in the future.
The Tricky Timing
While budget and workforce are coming back for many large hospitality brands, the timing is far from ideal. Even under normal circumstances, major spending in Q4 is too late in the game for holiday bookings, which tend to be made in Q3. There is also a matter of cost, with Q4 being the most expensive time to secure advertising, a factor that needs to be considered in tandem with the general spike in costs associated with an election year.
How Hospitality Marketers Should React
Even though a major comeback in 2020 is an unlikely scenario for hospitality brands, research from Analytic Partners’ latest ROI Genome demonstrates that it is still a smart time to invest in marketing, rather than pull back. The economy may be uncertain, but 60% of brands saw ROI improvement during the last recession, and brands who increased media investment during challenging times realized a 17% growth in incremental sales. Overall, our data found that brands that reduce their media spend in 2020 by $50MM will on average stand to lose $130MM in revenue in 2020 alone. Now that budgets are bouncing back, smart spending is critical through Q4 and beyond.
Invest in Brand Equity and Reset Across Channels
During a time when regulations vary not only state by state, but even county by county, any national media messaging execution needs to be applicable to all consumers. Themes of safety, cleanliness, resilience and trust are a smart bet, but should be wrapped up into a larger message of brand equity. In fact, messaging that focuses on the values of a brand outperform product, promotion or functionality messaging 80% of the time, and when that equity messaging is focused on a “mega brand”, it can generate a halo effect that positively impacts all of the sub-brands within it.
National planning is key, but now is also a critical time to plan on a regional level. Hyper-targeted online advertising based on geolocation, in additional to broader brand equity messaging, is a wise decision. This is indicative of the overall need for hospitality marketers to take a hard look at their media mix and understand what the sales impact is by channel. All media has omnichannel impact, but the mix can and should vary based on KPIs and consumer behavior. For example, online bookings are driven by both online and offline tactics, meaning that online advertising is not the only tactic that should be considered when looking to increase bookings. Our ROI Genome research has shown that in some recent cases, over half of website traffic was actually driven by TV.
Plan for Multiple Potential Outcomes
If there is anything the past several months have demonstrated, it is that we cannot predict the future – however, we can be prepared for multiple possible outcomes. Hospitality marketers should not be throwing out the data of the past as the world settles into the new normal. Rather, they should be using historical data as a foundation for future success through scenario planning and forecasting.
Building scenarios that incorporate established facts and known cause-and-effect relationships can still allow for unknowns, but those unknowns should be grounded in data and realistic assumptions about change in the industry. When considering a scenario planning framework, every smart strategy should take into account three things: measurements of success, performance drivers and key considerations, including critical business dynamics. The key to scenario planning is to accurately identify relationships between performance and business drivers (including marketing and non-marketing, internal and external) and leverage that knowledge to map out not a single forecast, but a range of possible futures.
Marketers Can’t Outsmart the Future, but They Can Prepare for It
The impending holiday travel season offers a wealth of new opportunities for hospitality brands, alongside both new and old challenges. In order to make the most of it, the best strategies will be rooted in data-driven thinking and a unified measurement approach powered by commercial mix modeling – a framework that can provide both strategic and tactical results. Marketers who are attuned to the importance of brand equity messaging, willing to be flexibly in their media mix, and lay a foundation for scenario planning will not only weather the storm that has been 2020 thus far, but also come out on the other side with a plan to find even greater success in the future.