Chaos. For hoteliers, the word denotes not the elegant mathematical theory that's become a buzzword in high finance but rather the old-fashioned, general disarray they face as they struggle to remain competitive in an era when the tricks and tools of marketing are changing at warp speed.
It's been just a few short years since social media took the Internet age to another level, imposing on marketers a new and constantly growing list of questions that go far beyond whether or how to use Facebook or Twitter.
"We're in a really interesting period of upheaval and chaos within the interface between travel suppliers and travelers," said Douglas Quinby, senior director of research at PhoCusWright and author of that group's new report, "Social Media in Travel: Traffic & Activity."
Coincidentally, PhoCusWright released its report this month, just as Apple began selling the iPad, the tablet computer widely hailed as a paradigm-shifter in the worlds of entertainment, publishing, advertising and marketing.
"If you think about it, 10, 15 years ago you pretty much had the travel supplier, the traveler and the travel agent in the middle, maybe also the tour operator," Quinby said. "Then came the Internet, and you know that whole story.
"But we are now in a world where the traveler can not only choose from virtually unlimited websites but can also interact with and source content from other travelers on their networks. They can interact with suppliers and intermediaries through entirely new ways: through their iPhones and, as of today, through iPads."
These new touch points, he said, "are beckoning fundamental change in how suppliers get the word out and how travelers are going to be making decisions about where they are going and where they are going to spend their money."
As if that weren't challenging enough, the flood of new technology and the accompanying questions it raises are arriving at a time when travel companies and hoteliers, working with recession-trimmed staffs, are scurrying -- not only to implement new programs to retain loyal customers but also to lure back travelers who hit the sidelines during the recent downturn and build relationships with young travelers who represent their next generation of customers.
"It is clear that the opportunities within social media for hotels and brands are almost limitless," said Dave Godsman, vice president of global Web services for Starwood Hotels and Resorts.
"And the challenge we have to face over the coming years is to determine how to best harness the power of this medium to make meaningful connections with a new generation of guests."
Whether or not hotel companies are successfully navigating the new technologies to meet those challenges is a matter of opinion. But what most experts do agree on is that to win the new-age marketing game, companies have to learn not just how to play but how to use the information the new technologies offer to make themselves relevant and more targeted in their outreach.
For instance, Starwood recently acknowledged it is testing a new guest program that is based on a customer's long-term earning and spending potential, not necessarily on loyalty. Though few details have been released, Starwood admitted it is going after some of its competitors' top customers.
"The currency of the decade is information -- not data, information," said Lalia Rach, divisional dean at New York University's hospitality school. "We're overwhelmed with data. It's taking that data and analyzing it and being able to use it meaningfully. Twitter is a technology, and it allows you to engage your client differently, but what we're talking about is: Can you analyze the information and determine the value of your client? How will you market to them? How will you treat them on property?
"That really is the essence of what would be a strategy based on information."
According to the PhoCusWright report, social network use has quickly become a significant part of travel shopping: The number of unique visitors to social travel sites grew 45% in the last half of 2009. And 30% of travelers who used the Internet to plan or book leisure travel reported soliciting trip-planning advice from social networks. (Click on chart for larger view.)
At the big hotel companies, the social media overload is keeping marketing departments busy.
InterContinental Hotels Group says it now has a full-time social media staff that constantly scours the Internet for new sites and applications that could become the next Facebook or Twitter. Additionally, the team works with hotels around the world, training staff to do everything from responding to review sites to employing social media for promotions and guest outreach.
Likewise, Starwood said it recently created a cross-discipline task force that meets regularly to discuss the social media space and how they can play in it to publicize their brands, foster customer loyalty and better understand their customers.
Eric Pearson, chief marketing officer for IHG in the Americas, said the changing technologies create a convergence of sorts between traditional marketing channels. The key to using the technology to a hotel company's advantage, he said, is to avoid clutter. For instance, overwhelming consumers with tweets for the sake of tweeting will just encourage followers to drop off.
"Consumers are giving you approval to communicate with them, so you have to make sure the message is relevant," Pearson said. "That's the challenge, and that's why the things we have done have been very targeted."
On a companywide basis, he said, one of the more successful campaigns was December's "Tweet Away" contest, which offered rewards and points to program members who persuaded friends to follow IHG. When all was said and done, he said, the company had 7,000 followers.
"The more you forwarded, the more chance you had of winning," he said. "It was pretty successful. You end up getting a small following of people that almost become brand advocates."
Quinby said individual properties have also become quite aggressive, citing as an example a holiday program by the MGM Grand in Las Vegas to "Tweet Your Sins."
The followers voted on the best "sin," and the winner received a free room night.
Beyond such campaigns, however, the new technology enables individual hotels and chain brands to hone in on Web surfers and their activities and target ads based on their Web inquiries. For example, Pearson said, IHG can track a consumer's movements from its site to Google and other sites to see what terms someone is searching. Then, for example, when the information being sought is about Aruba, IHG can make sure the searcher gets ads about properties there.
The new normal
"We call it 'the new normal,'?" Pearson said. "In the old days, you had normal marketing and 30-second spots. ... Today, we have to be a lot more forensic, a lot more precise. ... You and your neighbor get completely different messages based on your profile."
At IHG, Pearson said marketing budgets have increasingly been shifting toward new media. Today, the budget is basically split 50/50, compared with 60/40 just two years ago.
Like IHG's "Tweet Away" campaign, social media is also becoming a centerpiece of hotel loyalty programs.
At Starwood, Godsman said, Starwood Preferred Guest members "are highly active social media participants, with 50% indicating frequent involvement. And those particular members book and stay more frequently. In fact, [Starwood Preferred Guest] members engaged in social networks are nearly 20% more likely to book a Starwood hotel than other SPG members."
Fear of fickle fads
One of the biggest challenges companies face when navigating new-age marketing channels is anticipating how long technologies and social-media sites will stay relevant. It wasn't that long ago, after all, that MySpace was the social media site. It was soon overshadowed by Facebook, but as older generations flock to Facebook, Rach said, the under-30 crowd is seeking alternatives. (Click on chart for larger view.)
Scott Rosenberger, principal of tourism, hospitality and leisure at Deloitte, recalled, "I've sat in recent months with several executives and felt like there is skepticism. They are asking, 'Is that an area where there is a return on investment or just another fad?'?"
Skepticism or not, Rosenberger said, companies have to think about Generations X and Y, because "their set of experiences is completely different. You can look at it with skepticism, but you can't discount it. So, generally, our recommendation is to test, test, test."
The PhoCusWright report underscores how quickly things can change and consolidate.
For example, TripAdvisor, one of the sites at the forefront of the social media revolution in the travel space, still dominates. But the report reveals that online travel agencies have become the largest producer of online reviews. In the first half of 2008, traveler-review sites accounted for 51% of traveler reviews, while OTAs accounted for 47%. In the second half of 2009, OTAs accounted for 74% of all traveler reviews.
And clearly, new mobile devices and applications are emerging as disruptive technologies that are quickly changing the marketing landscape.
"I have a very strong feeling that the iPhone and iPad are heralding a new era," Quinby said. "They're kind of like putting the sheets on the bed of innovation. Everything is there. Now we've all got to go sleep in it. We've all got to step out and produce the applications and innovations that are going to have an impact on how travelers interact, how they make decisions."
Location-based services are also at the forefront of the next era of social media, Quinby predicted.
"The ability to influence and engage with the travelers while they are on their trip is very powerful," he said. "The big suppliers, the OTAs, they've got to go down that path ... of servicing you en route."
At the end of the day, however, one thing companies, particularly the hospitality industry, cannot lose sight of is the personal touch.
At IHG, Pearson said that is part of the company's social-media training, to remind hotels that every customer has to be both tweeted and treated well.
Deloitte's Rosenberger said: "What I am seeing are things like headquarter-based loyalty programs administered locally with a blending of the property doing a personal outreach, an email, a phone call or a short note. It may not sound like a big deal ... but to a person who travels a lot, a bottle of water and a two-line personal note can actually mean something."
PhoCusWright tracks travelers' online habits
Some key findings of the PhoCusWright report "Social Media in Travel: Traffic & Activity":
Influence and size
Social media use among travelers continues to grow faster than the travel industry itself. Unique monthly visitors to social travel sites rose 34% between the first half of 2008 and the last half of 2009, to 15.9 million. This represents year-over-year growth of more than 30% in the first half of 2009 and 45% in the second half of 2009. By comparison, U.S. travel gross bookings declined 16% in 2009.
Use of social networks for travel-related purposes is significant: 30% of travelers who use social networks report soliciting trip-planning advice from their networks. However, use of social networks to source specific travel information and follow specific travel companies or brands is far less common. Only 16% of travelers who participate in a social network say they have used it to source information while traveling, and just 7% report following or friending a travel company on a social network or Twitter.
Social network use is a significant part of travel shopping behavior. The percentage of visitors to hotel websites, airline websites and online travel agencies who have also visited sites in the social travel category increased steadily in 2009, and more than eight in 10 OTA and hotel website visitors also visited social networks in the same month in 2009.
The online social travel arena is dominated by traveler review sites, which accounted for more than three-quarters of all unique visitor traffic to the total social travel category from 2008 through 2009. Average monthly unique visitors to traveler review sites grew from nearly 9 million in the first half of 2008 to more than 13.1 million in the second half of 2009. Each of the other social travel subcategories (social travel guides and travel blogs) generate less than one-quarter of the traffic to traveler review sites.
Nearly half of all online travelers ages 35 to 64 have participated in a social network, as have 29% of seniors.
Within the social travel category, traveler review sites generate the vast majority of immediate referrals to hotel sites, OTAs and airline sites; however, the conversion rates differ. Though OTAs attract the most referrals, they convert significantly less than do referrals to hotels and airlines.
OTA shoppers who visit hotel review pages in OTAs are twice as likely to convert. On average, 8% of unique visitors to OTAs purchased travel from an OTA in 2008 and 2009, but 15% and 16% of all unique visitors to OTA hotel review pages purchased travel from an OTA in 2008 and 2009.
Immediate referrals from general social networks, primarily Facebook, have surged in 2009 along with the popularity of the online social network. While more immediate referrals came from MySpace to OTAs and hotels in the first half of 2008, Facebook delivered 11 times more referrals than MySpace in December 2009.
Conversion rates on immediate referrals from Facebook far exceeded those from traveler review sites to both hotels and OTAs. The conversion rate on Facebook referrals to hotel suppliers was consistently above 6% for most of 2009, higher than conversion rates on all referrals and even from Google. -- J.C.