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Smart Pricing Strategies During the Path to Purchase

by Ed Watkins, Contributing Editor |

For leisure travelers in particular, the trip planning process most likely starts with a decision on a destination: beach or mountain, domestic or international, urban or off the beaten path. The path to purchasing a vacation is often a lengthy one—up to seven weeks or longer, according to some research—in which consumers consider a number of factors before making a decision.

Of course, a big part of the decision is price, including the price of accommodations. Therefore, it’s important hotel marketers and revenue managers insert themselves and their hotels into these deliberations wherever possible and be prepared with service, amenity and above all, pricing options that can turn lookers into bookers without moving on to another set of websites.

The Path Goes Through the OTAs

New research from Expedia Media Solutions breaks down the factors included in travelers’ online path to purchase, and it seems all roads lead through online travel agencies. Travel planners most often visit OTA websites during the planning process, followed by travel information sites such as TripAdvisor and then accommodations sites (viewed 17% of the time).

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While recommendations from friends and family typically have the biggest influence on destination decisions, OTAs also play a strong role in the process. It’s imperative, then, that hotels be represented on OTA sites to be part of the selection process.

When it comes to making a final decision on where to vacation, cost is the most important consideration for many consumers. Beyond that, however, hotel selection is the next most important factor in a decision. And nearly one-third of vacation planners consider hotel options as paramount to their destination decisions.

This fact gives leverage to revenue managers who are prepared with smart pricing strategies that can convince consumers to end their searches and book.

Turning the Tide

Online advertising is one way to reach and influence decision-making during the travel planning process. According to the Expedia study, 27% of consumers in the U.S. and 38% of Canadians say advertising has swayed their destination decisions. The more targeted and action-oriented the message, the more likely a hotel or hotel company is likely to spur a consumer to book.

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Timing is critical, too. The data shows while advertising can influence travel decisions throughout the purchase cycle, it is most effective in the early stages of booking path, when many consumers are still scratching their heads to determine what kind of vacation to take and where to go.

If a consumer lands on your site, it must have a deal for them to justify booking on the site. It could be freebies: breakfast, parking, Wi-Fi, something else that is cost-effective for the hotel but provides a high perceived value to the guest.

Hotel brand companies such as Marriott International, Hilton, IHG and others have spent a lot of marketing dollars and other resources in the past year to promote rate discounts to loyalty-club members who book directly. As a result, every hotel website a consumer lands on should immediately and clearly outline what discounts are available and how to make them happen, i.e., joining the loyalty program, as long as the consumer books on the site.

Red Lion Hotels has taken this approach one step further through an alliance with Expedia. The chain offers its Hello Rewards member room rates to consumers who book on Expedia sites. Under the program, bookers can also sign up for the chain’s Hello Rewards program directly on Expedia sites. They also get the benefits associated with the loyalty programs associated with the OTAs.

Another pitfall for DORMs are the last-minute booking sites, such as HotelTonight. Many wise consumers have come to the conclusion that they get the best hotel rates if they wait to book until the week or day before a trip starts. Hotel websites and marketing materials need to emphasize that the best deals—and perhaps freebies and amenities—can be had by booking rooms further out from arrival date.

It seems unlikely anything will change consumers almost primal urge to visit scores of websites before they believe they’ve found the best hotel deal possible. Yet, smart pricing strategies and marketing messages can convince them to make a decision. DORMs must be ready at those moments with the deals that will stop lookers in their tracks and lead them to book a room.

Thanks to members of Duetto’s Customer Success and Solution Engineering teams for input on this topic.

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Ed Watkins, Contributing Editor

Ed Watkins, Contributing Editor

Contributing editor at Duetto
Ed has been covering the hotel industry for more than 40 years. He was editor-in-chief of Lodging Hospitality from 1980 to 2012. He then joined Hotel News Now as an Editor at Large, until his retirement at the end of 2014. Ed still contributes to several publications and is a member of the advisory boards for the hotels schools at Michigan State and Penn State.
Ed Watkins, Contributing Editor

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Ed Watkins, Contributing Editor

Ed has been covering the hotel industry for more than 40 years. He was editor-in-chief of Lodging Hospitality from 1980 to 2012. He then joined Hotel News Now as an Editor at Large, until his retirement at the end of 2014. Ed still contributes to several publications and is a member of the advisory boards for the hotels schools at Michigan State and Penn State.