In the meetings & events space, digital marketing is simply not used efficiently and one can argue that it has never been used efficiently when it comes to supporting the sale of meeting rooms, event spaces, and services related to the M&E sector. The biggest bottleneck has been, and still is, that customers cannot transact for meetings and events services online. As a customer, you still need to ask manually and wait for the response to two crucial questions that have long since been automated in other travel and hospitality verticals:
"Is this venue available at the time of my event?" and "All together, how much does it cost?"
This kind of opaqueness is long gone from other segments of the hospitality industry. Imagine, if you still needed to get a manual response to these questions when booking a hotel room. It takes you back to a pre-internet age, if your life or memory even stretch that far back. However this old fashioned process is still the reality for the vast majority of meeting room and event space bookings today.
Why have things not evolved in this segment? It's a good question and there are plenty of answers depending on whom you ask. Here are few aspects that have had an effect why M&E development has been left behind the general evolution of travel technology and development of sales processes in the hospitality sector.
1. Meetings & Events is a secondary business line for hoteliers
First of all, M&E is by and large the secondary business line for most venues and particularly for hotels where meeting space and F&B sales can represent modest percentages of total turnover, even if they are often a significant driver of bedroom sales. Hotels cover a major part of the hospitality sector and this means, that M&E development has never entered the "limelight" from a resources perspective. Hoteliers are often primarily focussed on the accommodation side of the business as the largest slice of revenue. After room revenue comes ancillary revenue, M&E amongst it. The side-effects are that there are few companies globally offering modern services or products related to M&E sales. The biggest interest is oriented towards accommodation and this is reflected in the number of 3rd party service providers. In a nutshell, nobody really had the time and resources to focus on M&E sector because the big bucks are in accommodation. .
2. The speed of technological progress on the accommodation side
Technological development has come thick and fast on the accommodation side of the industry and this has made a big impact to the hotel sector's bottom line. Digitalisation of hotel bedroom sales has helped increased the addressable demand market significantly with minimal investment and in a relatively short time period. In the nineties and early noughties, the profit margins were quite close to the traditional distribution side margins and business boomed as suddenly the customer base for most European venues increased. But as the industry matured, particularly after 9/11, the OTA's, CRS's, meta channels, revenue tools, etc. started to take and increasingly large share of the booking. Today, when 2/3 or more of accommodation demand in major cities comes through online distribution channels, the accommodation business is fiercely competitive and all the focus is on keeping up with the competition; margins are low which means accommodation has really become a volume business. When one blends in external factors such as the rising cost of labour in many markets, it's clear that twenty years back the profit margins on bedroom sales were much healthier than today.
3. Hotels' tech infrastructure is built to support room sales and operational processes
It's only natural that technology infrastructure and processes are aligned to focus on accommodation sales as they make up the largest slice of the revenue mix for most venues. Also, accommodation travel tech has gone through a lightning fast development not leaving enough time for meetings and events to keep up. Whatever the reasoning, it's clear that M&E tech infrastructure is far behind that for bedrooms. To sell meetings and events facilities and services efficiently, you need integrations and today's typical hotel tech infrastructure often does not support this interoperability by default. For hoteliers, this means a lot of integration and "coding" to adapt current hotel and sales systems to be suitable for effective meetings and events sales. This is often expensive and projects are often long and cumbersome from a tech and human resource perspective. With this in mind, it's understandable that hoteliers have postponed the sales development of their secondary business line, meetings and events.
However, the status quo is already being challenged. The hotel software landscape has become more integration friendly for various reasons. Tough competition and low margins on hotel room sales at a time when the industry is at a cyclical peak in Europe has made hoteliers to look at new business lines to improve profitability. There is now more time for hotels to focus on meetings and events and the technology ecosystem is better equipped to deliver online sales of M&E.
Once you have meeting rooms setup for online sales - and by "online sales" we mean that you have meeting rooms or event spaces with live availability, dynamic prices and even online payment enabled - you are probably wondering how to develop coherent marketing to support this new channel?
Replicate tactics from accommodation side of the business
For a while now, hoteliers have been on a crusade against OTA's to take back control of their own hotel room sales. In practice, hotels are trying to draw as much business back to their direct channels as possible in order to:
- avoid commission payments and improve profit margins,
- to get the customer information for themselves in order to be able to build up Customer Lifetime Value (CLTV),
- to decrease their dependability on 3rd party channels. So basically to manage risk!
All this makes common sense and a plethora of marketing communication channels and tactics have been used globally to drive direct bookings. There is already plenty of evidence of proven techniques to drive direct traffic and bookings to a hotel's proprietary channels. For example conversion rate optimisation (CRO) and Google Adwords are just a few established ways to drive more direct business to the hotel. With CRO you can increase the number of bookings you receive from the traffic you already get. This is an important aspect of the business but often overlooked from an operations perspective. Google Adwords is a well know tool to drive more direct traffic to the hotel's own website and it's all about finding the perfect sweet spot for Cost-per-Acquisition (CPA). Savvier hoteliers also take into account Customer-Aqcuisition-Costs (CAC) and CLTV. This means that a hotel might be prepared to pay a bit more for the booking if it knows that the CLTV is likely to be high. In this blog, we're going to scrutinise Google Adwords performance from a hotel room vs. meeting room perspective to see what lessons can be learned.
Google Adwords: hotel room bookings vs. meeting room bookings
If you're a hotelier you most likely use Google Adwords to drive direct traffic and hotel room bookings. Also, you probably have an acceptable CPA in mind that you regard as a viable threshold that you're willing to pay on average for a single hotel room booking. Keeping in mind that the profit margin in accommodation business is modest, let's look at an example of a € 30 threshold. So you're willing to capture direct bookings with a cost of € 30 per booking or lower. Anything above this threshold and you're paying too much for the booking. Let's not include CLTV calculations or what commission rate you pay to OTA's assuming that the customer would have booked the hotel room from an OTA without the need for you to advertise on Google.
You know that this works to some extent for hotel room sales so why would you not do the same for meeting room sales? The most obvious reasons are:
- you cannot really measure the CPA as there are too many steps, systems and processes between the customer clicking on your ad and actually holding the event. In a typical example there might be your Adwords, Google Analytics, CRM/CRS/CMS, PMS, and POS. In this scenario, it would be too complex to track CPA or it might even be impossible.
- Because there is so much complexity and friction between the Ad click and actual event taking place, the conversion percentage is criminally low! The industry average on conversion from RFP-to-confirmed booking is around 10 % whereas for hotel room booking it is around 90 % (roughly 10 % is cancelled from the hotel room bookings on direct channels).
With low conversion levels and no clear way to measure actions, it's no wonder that Adwords is not used for meeting room sales. But now that these obstacles are being overcome, whether you use MeetingPackage Booking Engine or your own proprietary solutions, let's take a look at the viability of Adwords once again. From the below table you can see an example comparison of hotel room vs. meeting room.
First of all, an average meeting room booking yields a higher price of sale than a bedroom, and typically has much better profit margins. Most hotels never sell as many meeting rooms as bedrooms, but your unit economics are most likely better with meetings & events sales. There are no OTAs, metasearch sites, mid-layers, etc. taking a piece of the pie before you get the booking. So, why would you want another OTA ecosystem for meetings & events. Better to capture the sales yourself while you still can? Also, the competition is almost non-existent compared to hotel bedroom booking. This means that you don't need to pay as much for M&E ads as for accommodation related keywords because the search volume is roughly 1/10 of the hotel room related search volume (even though, the CPC is higher than in hotel room side). Together, this means that you pay less for the advertisement while you get better conversion on more valuable bookings. We've also noticed that the customer lifetime value is higher in meetings & events compared to accommodation. So if you capture a new customer and exceed their customer experience expectations you will most likely get returning customers that have a longer lifecycle and the value of each booking is higher compared to the accommodation side of the business.
As conversion and tracking metrics are not an obstacle anymore, with better margins you have more room to manoeuvre when it comes to optimising your Adwords campaign. This means that you can increase your media budget because from a single meeting room booking you get more revenue than from hotel room booking. This leaves some slack in hotels' Adwords campaign which you might come in handy, especially as this is relatively new vertical in the online advertising space. Also, the search budget on typical keywords relating to meeting room bookings is roughly 1/10 of the equivalent amount of accommodation related keywords, or even less in some destinations. Cost-per-click (CPC) is often higher than accommodation related CPC's but then again the search volume is lower and competition is moderate that at the end you won't need such a huge budget and may not even need one that is proportionate (relative to your business mix) to your accommodation related spend.
What do I need to do to get this up & running?
You can't manage what you don't measure. With the MeetingPackage Booking Engine the only thing you need to do is to provide us your Universal Analytics ID and we get your analytics and measurement set-up in few minutes. Then you can see everything from Ad click until to the actual event date and the total revenue associated to the event. So you can validate your ROAS from Adwords relating to meeting rooms sales.
With other solutions you at least need to setup custom dimensions to your analytics and also amend (or install) your data-layer so you can see vital information to get your Adwords working in optimal way, i.e. you can see what kind of booking it is (instant booking, booking request, or enquiry), what products are purchased and in what time interval. You need to also setup two different conversion points, one for the initial purchase/enquiry and one for the actual event date. With MeetingPackage you can see everything from our venue management software (and from your google analytics) and when you use some other systems we can integrate the relevant data into those systems. We have a REST API interface to all of our data so the question is, can your system handle integrations?
The next step is to setup your Adwords campaign and if you use a 3rd party service provider to handle your Adwords then just let them know that this type of integration is now possible. They should know what to do and if they don't, then you might want to think about your choice of Adwords agency partner. Here are few tips for Adwords::
- For english speaking markets "meeting room + city/area" works well. That is a common pattern that people search meeting rooms with clear intent to book. Also, in most locations there is not too much competition unless you use e.g. "meeting rooms london" where you might need to pay up to €20 per click at peak times.
- Concentrate on your Adwords quality score. So ad copy, url, landing page content need to be aligned with the keyword you want to use for the ad.
- Use re-marketing. More time and research is often spent booking a meeting space as it is usually more expensive than an accommodation only booking.
- Good thing is that customers search and act like consumers when it comes to meeting room bookings but they use company money for the purchase. So price sensitivity is often not as significant as for individual accommodation bookings but otherwise the customer behaviour is quite similar.
- Remember to localise your ads and landing page. We noticed that about 90 % of searches and also bookings are done with local language within whatever country you're located. A large chunk of bookings come from within a local geography. E.g. assistants in Greater London make meeting room bookings in London.
The great thing is that now you can see from Adwords how much CPA and ROAS is for "meeting room", "conference room", "venue", etc. Meetings & Events related search campaigns. So you can easily start optimising against different goals. For the first time you can let Adwords' AI to optimise against actual confirmed events and not just "enquiry is sent". At this point, you're basically using Adwords in a similar way to how you use it for hotel room sales.
On the next blog, we're going to look at how you can cross-sell and up-sell with Re-marketing tactics. This is something that has not been possible in the past. Imagine if you can offer additional meetings and events related items to your customers personally tailored for their individual need as a display advert at the time when they are most likely to be purchasing additional services associated to their event(s). In short, we'll be showing you a totally new way of reaching your customer with offers when they need them.
If you have any questions relating to marketing your venue's services, don't hesitate to contact us. We're more than happy to discuss the new opportunities that are open to you in greater depth.