Circos Brand Karma

Official Blog of Circos

Swing Travelers

with 4 comments

Like swing voters, swing travelers could hold the key to your hotel beating this economy.

Most hoteliers’ performance is measured not only by absolute revenue, but also market share.  Swing travelers can make all the difference in market share.

Let me use a simple example to illustrate the importance of swing travelers.  Let’s say there are 10 travelers making a reservation today and 2 hotels in your city, yours and your competitor’s, and normally you’d get 5 travelers each.  That means you and your competitor each have 50% market share.

If your hotel wins 1 traveler from the other hotel, then your market share would be 60% and your competitor at 40%.  That’s a 20% difference in your favor.  Now let’s calculate RevPAR.  Assume that both hotels have 10 rooms, all travelers stay 1 night, and the ADR for is $100/night.  Your hotel would achieve a $60 RevPAR vs. your competitor’s $40 RevPAR.  In fact, for your competitor to achieve the same RevPAR as you they would have to increase their ADR by 50% — to $150/night to achieve the same RevPAR as yours just to make up for the loss of 1 swing traveler.

Now, let’s suppose that your competitor manages to attract 1 new customer to the market, the market share would be 6/11 vs. 5/11, which is 55% vs. 45% in your favor.  To achieve the same RevPAR as you they’d still have to raise their ADR to $120/night vs. your $100/night.  In fact, your competitor would have to attract 3 new customers to the 1 that you swung over originally to win market share back.  In other words, in this simple example your competitor would have to grow the market by 30% (increase the number of travelers from 10 to 13) as a result of 1 swing traveler, in order to win against your hotel.

No wonder brands like Holiday Inn and Hyatt are not slowing down to win share despite the downturn.

How many swing travelers are there?  According to loyalty research and consulting firm, Colloquy, the total number of memberships from US travelers in hotel loyalty programs increased 26% to 161.9M memberships from 2007 to 2008.  This increase happened despite a sharp drop in demand in the second half of 2008.  While I believe first-ever loyalty memberships might account for some of that increase, the remainder comes from travelers that registered for their 2nd, 3rd… nth membership, making them swing travelers.  And remember, this is just amongst the segment already considered to be most loyal.

Carroll Rheem, Director of Research at PhoCusWright, recently said,

“The era of transparency ushered in by the Internet evangelizes faith in content, not faith in brands.  Companies need to understand the Long Tail of travelers and how its disloyal constituents make decisions: they don’t care about miles or points, can easily find another flight and don’t need a hotel flag to tell them what their experience is going to be like.”

Swing travelers are looking for stay experiences that fit their personal needs.  Because most hotels are using pricing as a strategy, impressive discounts are now the norm, not the exception.  What swing travelers are looking for then are the differentiators that give them the value they seek within a comparable price range.  Do you know what your differentiators are and are you communicating them loudly and clearly where travelers are researching where to stay?

Just for fun, I pretended to be a swing traveler looking for “hotels san francisco” on Google to see the ads that come up from hotel suppliers (I excluded the OTAs because they all uniformly tout discounts).  Removing identifiable info, below is the text of the first 8 hotelier ads I found:

  1. There’s more to enjoy! Book unique offer. Instant Service 800-XXX-XXXX
  2. Official Site. Book Now for Great Rates & Our Exclusive Packages!
  3. Official Site. [brand name] San Francisco Hotel. Book Online.
  4. Stay at [brand name] in San Francisco. Best rates online. Book online now!
  5. Boutique [brand name] Hotel in Downtown San Francisco. Book online now!
  6. Book a luxury hotel in the heart of San Francisco & enjoy access to all
  7. Why pay high prices downtown? Free hot breakfast & airport shuttle!
  8. San Francisco. Great locations. Free internet & breakfast bar.

What’s remarkable to me is that half of them (1-4) are virtually indistinguishable because they don’t offer anything meaningful other than to let the consumer know they can book online.  But the fact is these ads come from 3 different hotel suppliers (2 and 3 are different brands from the same hotel management company).  The other half offers some differentiation, but boutique and luxury are much less specific than free breakfast, free internet, and free airport shuttle.  Incidentally, 7 & 8 are actually from the same brand, 7 is an individual property where 8 is the brand ad.

I don’t think swing travelers would be convinced by the non-specific ads.  The way consumers think about the total price isn’t just the room, but all the costs associated with a stay.  Breakfast, internet, and transportation all make the value greater because it means less additional money out of a traveler’s pocket.  In recognizing their short attention span, those ads clearly communicate the differentiations that really matter in a direct and concrete way.

A swing traveler would almost always follow-up by reading reviews about the quality of the breakfast, the speed and reliability of the internet, and the timeliness of the airport shuttle.  Hence communicating the differentiations is only half of it, hoteliers need to make sure they’re backed up by solid reviews from previous guests.  Or alternatively, communicate in these ads what their guests have already complimented them on.

We’ve looked at one channel to win the swing traveler’s attention, and hopefully, their business.  But there are other ways.  The biggest paradigm shift that hoteliers must undergo is to market to and win the swing travelers one at a time by focusing on their specific needs.  Massive blocks of reservations and contracts with corporate clients, both fundamental business drivers in the past, are becoming increasingly rare and don’t deliver like they used to.  Like the swing voters that determined many elections in the past… swing travelers will be the group that determines who wins in many markets.


Written by Morris

July 5, 2009 at 2:54 pm

4 Responses

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  1. You have a good point about swing travelers. I think we should really consider how much research goes into booking trips these days things to the web. I just found a site that claims to search EVERY travel site for prices – and from testing it out I believe it’s true. One can only wonder what travel will be like in the future because of developments on the web.

    Jimmy Rogers

    November 6, 2009 at 5:32 am

  2. I know this is off the subject but I found this blog by searching on Bing for hotel marketing. How did you optimize your website to score so high in the search engine results?

    Teresa Smith

    January 6, 2010 at 7:27 pm

  3. Hello hun, great blog! I really appreciate this blog post.. I was wondering about this for a long time now. This cleared a lot up for me! Do you have a rss feed that I can add?

    Makeup DIY

    February 5, 2010 at 6:38 am

  4. I was looking for travel and flight tips this was great

    Flight Deals

    March 24, 2010 at 3:52 pm

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