Social Media ROI And Why Your Hotel May Be Focusing On The Wrong Return

Aug 23, 12 | 12:06 am

By Matt Bitzer

As a hotelier, you rely on many different tools to sell your product: professional photography for marketing collateral, training programs for the sales team, advertising in traditional media, wining and dining potential clients, emarketing and even business cards. They all come at a price. Whether it's at the property level or supplied by the brand, someone has to pay for the tools that are essential to marketing and selling your hotel. So what is the ROI on those tools? If you've never bothered to calculate the return, why not?

Most likely you've never bothered because it's difficult to measure the ROI on things like photography, sales training and social media, but that doesn't mean there's no return on those investments. Instead of always focusing on the direct financial return on those investments, consider the other value those tools bring to your business.  These might be things such as:

• Gaining insights into customer sentiment
• Receiving feedback about your product
• Encouraging happy customers
• Diffusing angry customers
• Offering customers another channel with which to communicate with your hotel
• Improved rankings in search engines
• Improved rankings in TripAdvisor
• Assisted Conversions (see below)
• The billboard effect and branding

How do you calculate the ROI on business cards?

What always strikes me as odd and somewhat hypocritical is that many hoteliers will automatically include in their annual marketing budgets items of such nebulous ROI as business cards, printed brochures, training and traditional advertising; however, when told to budget for social media marketing suddenly the alarm bells ring, red flags go up, and the familiar scrutiny over this channel's dubious ROI suddenly rears its ugly head. Why do the hackles go up and the purse strings tighten at the mention of Twitter, Facebook and Google+?

When was the last time you questioned the ROI on business cards that you purchased for your team? Surely you know the return on investment for your hotel's photography. Were you able to isolate the ROI on that out-of-state training seminar your sales team attended? What kind of return were you able to measure from that investment?

Clearly there must be value in these investments; otherwise it's just wasteful spending for no better reason than because "it's just where hotels have always spent money." But when was the last time anyone questioned why you were spending $10,000 a year on printed brochures of your meeting space? Has it ever happened? Although the cost may be scrutinized and negotiated, my experience is that hotels see that kind of collateral (as well as many of the other aforementioned expenses) as a necessary cost of doing business as a hotel. The ROI is never questioned, even if it should be. What if every potential client that receives your $10,000 printed brochures dumps it in the trash after their thorough site visit of your hotel? It seems to me that $10,000 would be better spent elsewhere.

Why do we invest in tools that have an unknown ROI?

Most travelers--and I would hope by now, most hoteliers--would agree that professional hotel photography is a crucial component of a hotel's success in marketing itself both online and offline. Not only can we draw from our own personal experiences (I know I head straight for the photo gallery when researching various accommodations), but most hotel website analytics will point to the photo gallery page as one of the most visited pages of a hotel's website.

So how do you attribute a return on that investment? Good photography isn't cheap, so why do hotel's put money aside for it when the ROI is unknown? One possible estimate would be to say that X% of visitors that booked a room also visited the photo gallery page. It still doesn't give you an exact ROI though. Instead, it tells you that photography is important to visitors, but it doesn't tell you by how much. Of that X% that checked out your gallery before booking a room, how many would still have booked if your hotel had no photos? You don't know an exact number, but all signs point to photography being a marketing component that is important to your potential guests. Even if you assume that $1 million in revenue was generated from visitors who also access your photo gallery, you can't possibly attribute all that revenue to the effects of the photos. What if those visitors entered through your email campaign? Certainly some of that $1 million in revenue would be attributed to the ROI of the email campaign as well as the photography.

The point is, it's difficult to attribute exact ROI figures to certain necessary items like quality hotel photography or training for your sales team, despite the fact that both are crucial to the hotel's overall sales process.

It's just the way we've always done things

I get it. Social media is unfamiliar territory for many hoteliers. Business cards, printed brochures and photography are old stand-bys--tried and true friends that have been around since the day Statler first met Waldorf. Hotels have continued to invest in those tools because it's what they've always done as part of their sales process. It worked last year, so it'll work this year. ...at least, you assume it will.

When it comes to ROI for many sales and marketing investments you simply need to guess or make a guesstimate or make an educated guess, but in the end it's still a big question mark. It's just like when you purchase a billboard ad and the ad agency assures you an average of 500,000 cars pass by that billboard each month. That's great, but how many people are really looking at the billboard? Then, how many of those people actually took action after seeing that billboard? Do you ask guests at your hotel: "so did you hear about us from our billboard ad?" If not, you should...if you care about the true ROI of that ad.

But billboards are simple. Their purpose is clear. A business advertises, consumers read and consumers consume. Social media, on the other hand, can be used to benefit businesses in so many different ways that many hoteliers become overwhelmed by this open-ended channel and lack of a singular purpose. As a result, they become wary of social media's effectiveness and ultimately pull the plug, or never start at all.

Those who cannot remember the past are condemned to repeat it

We've seen echoes of this trepidation towards new technologies and communication tools throughout the hospitality industry's past. For example, when the hospitality industry was just starting to get its feet wet on the web, there were many hoteliers that rejected building websites due to cost or because it didn't seem like a viable booking channel at the time. Or, in cases where they did have a website they may have heard about this crazy new thing called "search engine optimization," but dismissed it as another vial of snake oil cleverly marketed by those dastardly SEO companies. Looking down the barrel of hindsight we get great examples of opportunites missed.

In the end, this hesitation paved the way for the OTAs to dominate the online travel world. Their websites were designed well, provided better usability to customers and were properly optimized for the search engines. In addition, they enhanced their online visibility through paid advertising. The OTAs had embraced these online tools that many hoteliers and major hotel brands had rejected. As a result, many hotels websites are still trying to catch up to this day. As philosopher George Santayana cautioned in his famous quote in the subtitle above, the hospitality industry needs to learn from these past mistakes and realize that social media is not a passing fad. While the tools of social media may change drastically (Myspace who?), the core concept of word-of-mouth marketing will continue to be one of the most trusted marketing channels available. Hotels can't afford to be late adopters in such a competitive arena anymore.

There's more… continue reading the complete article "Social Media ROI And Why Your Hotel May Be Focusing On The Wrong Return" on BlueMagnetInteractive

Matt Bitzer — Blue Magnet Interactive

Matt is the co-founder and overlord of Blue Magnet Interactive. From his humble origins as Marketing Manager for a small hotel online marketing agency to his rise to power at the head of ecommerce for two flagship Hilton properties in the Washington DC area, Matt's entire career resides at the nexus of hospitality and ecommerce. As Managing Partner of Blue Magnet, Matt is responsible for internal operations, training, marketing and business development. But for Matt, Blue Magnet is more than just another marketing agency. It's a passion--a labor of love built from the ground up. It's evident in the way his eyes glisten at the mere mention of web analytics, or the way his heart flutters every time Google announces a new product. You hear the excitement in his voice as he trains his team on new online strategies, and you can see the pride beaming from his smile upon every successful new website launch. For Matt, it's easy to get up and go to work everyday because he loves what he does, enjoys the clients he serves and believes in the people who are part of his talented team.