An Expert take on creating the ultimate hotel tech stack – interview with Netaffinity

The article below marks the start of a content partnership with our friends at Netaffinity

Netaffinity provides state of the art booking engine solutions for the hospitality industry. Their unique and holistic approach encompasses integration of upselling, metasearch and conversion tools that deliver a booking engine that really increases conversions.

In this first interview, we are exploring questions around the requirements for a booking engine, how online direct reservations may depend on MetaSearch and how to approach digital marketing strategies that lead to actual conversions and bookings on your website.

The interview was held between William Cotter, CEO of Netaffinity and Oliver Geldner, CTO & Partner at Taktikon.

Who we are: We believe in creating harmonious third party relationships

Oliver: Taktikon are forever curious about hotel technology game-changers that help hotels become more efficient and crucially, more profitable. It was during this evolving journey on which we met the team at Net Affinity, and were thoroughly impressed with their mindset and approach to hotel website and reservation technology. This, paired with their holistic approach, which includes digital marketing, impressed us and we strived to create a common platform on which to share each other’s perspectives. Thus, this series of interviews was born!

William: The hospitality industry is so dynamic and ever-changing – especially when you consider its associated distribution landscape, which itself is complex and fast-paced. When we first met the Taktikon team, we were hugely impressed with their expertise and passion, which stems from their ambition to help hotels navigate the complexity of modern markets, pricing and technology. Drawing on their international experience and extensive network, Taktikon are skilled at identifying new opportunities for their customers by taking full advantage of the latest trends and dynamics within the revenue and distribution landscape.

So, let’s get into it. Firstly, what are the key attributes that make a brilliant booking engine?

Oliver: When helping our customers select the right booking engine, we tend to focus on three main areas:

• Ease of navigation and conversion rates of customers
• Integration in relation to current workflows and marketing processes
• Flexibility to accommodate and grow the client’s product offering beyond mere lodging products

While our primary focus is on conversions and an easy navigation logic, we know that making things easy for hoteliers requires a lot of work. In an ideal world, customers like to “shop around”. The added complexity of a perishable product like a hotel room, which is priced dynamically, can make delaying the final booking decision complex for the business owner and their technology. A brilliant booking engine provider understands that customers do not follow a linear path from date selection to room selection and rate selection. They need to allow for idling, updates and changes in the buying process by efficiently using partner systems in a way that makes the booking process seemingly effortless.

William: A great booking engine should enable users with an experience that is flexible and adaptive to their needs. This means mobile adaptive technology is crucial, especially when you consider 77% of hotel bookers are now viewing hotels on mobile! Make sure you’re providing a coherent mobile experience or you will end up losing potential conversions.

Your booking engine should also help to enhance your customer’s experience and can help to develop their relationship with your hotel. How? By going beyond just dates and rate selection. Use imagery to ignite emotion; make sure you’re providing all the right information on amenities per room type; enable your guests to easily personalise their stay with enhancements and relevant add-ons. There is a lot you can do to satisfy the needs of your potential guests via your booking engine.

Perhaps you have a booking engine already – what are the signs you might need to change providers?

Oliver: The key sign you may need to change your booking engine provider is a lack of functionality or performance. To determine whether or not this is the case, ask yourself the following questions:
– Are your website conversions decreasing over time? Is your share of direct bookings being overshadowed by OTA volumes?
– Are you struggling to get the range of your packages to market through connecting your digital marketing with your point of sale?
– Are many of your website visitors leaving your pages prior to conversion within your booking engine?

It’s important to understand that hoteliers face two separate competitive markets. The first is the product market where they compete for a customer’s attention with other hotels and service suppliers. The second is the distribution market where they compete with other distribution platforms for a customer’s online reservation. This almost schizophrenic equation requires hoteliers to keep up with ever-changing developments made by large distribution partners to their distribution platforms. The goal for hoteliers is to keep their own booking engine technology as up to date as possible so that they are at least always on par with competitive distribution platforms.

William: If you are experiencing a drop in conversions, it needs to be investigated, pay attention to drops in your average booking value and average length of stay. Ask yourself, is your current booking engine provider giving you the right data (correct, intelligent data) that’s enabling you to make informed decisions on what to sell, how to sell it and who to sell it to?

Your booking engine should also be powerful enough to meet your business demands, generate revenue and save time for your reservations team. To do this, it needs to have additional functionality that will cater for different kinds of bookings – for example, it should have corporate and wedding modules, it should enable gift voucher purchases.

Overall, your booking engine user journey should be easy, it should not be complex! Consider how payment gateways are integrated, and how your user experience could be refined to better suit the needs of your guests. Carefully evaluating these things will help you decide whether you have the technology you need, or whether you may need to look elsewhere.

What are the challenges and solutions in relation to how your booking engine relates to the other key parts of your tech stack?

Oliver: We find the most frequent challenge hotels encounter is having to evaluate too many options and alternatives for connectivity (through the PMS, RMS, Channel Manager) to create a manageable process for their rate distribution via a booking engine.

For example, PMS providers are doing very fine work in the initial setup of rate plans and connection to the channel manager. Often, rate strategies and business logics will change develop over the lifespan of an operation, requiring adjustment to the rate logic in the PMS. Therefore, challenges may occur in relation to adjustments within the channel management tool. If possible, your booking engine should either connect directly to the PMS, or your channel manager should be flexible enough to adjust rate mapping very easily. Keep a copy of your current rate mapping to hand.

When you are putting your tech stack together, it is vital to decide where the “master” functions reside – for example, does all rate control happen in your revenue system, PMS or your channel manager?

Your booking engine should be the primary portal for your direct bookings. Make sure your provider gives you the option to integrate sales conversion tools to help maximize the number of visitors turning into actual buyers. Make sure your booking engine also allows for inclusion of non-lodging products (vouchers, activities) as these do of course generate additional sales.

William: A challenge you may face as a hotelier is perhaps having the urge to look for a “quick fix” and find a one stop shop for your BKE, PMS & CM. While this might save you a bit of time in the short term, it will potentially end up losing you revenue in the long term. The solution is to take an adequate amount of time to research the market and do a thorough review of what’s out there. Many hotel technology companies are experts in one of the three systems, but not one of them is an expert in all three.

Do yourself a service and find the experts in booking engines, channel managers or PMS. Build your tech stack using the best of each. It will be the kindest course of action where your long term revenue goals are concerned.

Moving on to meta search. How can meta search enhance a hotel’s book direct strategy?

Oliver: Meta channels are a vital tool for hotels. When your distribution partner (OTA) can capture reservation inquiries from search platforms to their booking page instead of yours, you are competing for a customer’s attention. Follow the “funnel” process logic: your customer goes from being interested and curious about a destination to wanting to book your hotel, but they’ve been conducting their travel and rate shopping on a meta channel. They have compared your location, services and rates with other hotels and have chosen your business. If you’re not present at this point of distribution on the meta channel, that customer’s business will go through an OTA at a premium cost to you. You’ll get the reservation – but with a much lower profit margin.

William: If you’re not present on meta channels, and yet the customer is familiar with you via your marketing, not only do you run the risk of obtaining the booking at a far higher commission level through an OTA – if your customer engages with the OTAs meta connectivity, you now also run the risk of losing the booking completely. If your potential customer engages with an OTA, this OTA will now be showing them your competitors – one of which may have a better amenity or price than you.

What meta channels should a hotel be using, and why?
Oliver: As a rule, one can apply the “low hanging fruit” principle. Every hotel should always be listed on the free and paid listing of Google Travel/Trips. These listings show historically the highest conversion ratio and the business model is  cost-per-acquisition (CPA) – meaning you only pay for conversions, not for traffic.

Meta search engines allowing for CPA-models versus Cost per click (CPC) should always be preferred to ones only offering CPC. You should look closely at your source markets and choose the right search engine depending on whether you’re looking at “top of funnel” exposure or “bottom of funnel” conversion. Meta channels can help with both, but you still need to separate business generating channels (such as Google, Tripadvisor, Kayak) from lead generating channels (such as Momondo, Trivago).

William: In relation to the Irish market, Google Hotel Ads is the only real player and it’s essential for hotels to be using this.

How should hotels go about including meta search as part of their overall marketing budget and strategy?

Oliver: We strongly believe that meta channels should be viewed as a distribution cost, in the same way your OTA commissions are. It’s quite easy to break down the income contribution of any channel to your overall profit and loss calculations.

This requires you to track the contribution of revenues from your various channels evaluate the cost of each channel. Excel can do wonders here! Simply break down the generated income versus the cost and you’ll have a cost/profit index for all your channels. In the same way hotels have different market segments with varying levels of profitability, you should have an overview of your direct/digital marketing channels and their profitability.

Once you have tracked these indicators over a period of time, you will know which channels are worth investing in and you plan for increasing/decreasing spend according to your demand periods. Once you know the mix of sources for all your online reservations, you can start making strategic efforts to focus on decreasing your distribution cost during high demand periods or attracting more business through increased marketing spending in low demand periods.

William: With Google Hotel Ads, you only pay when a booking is made. Their traffic bids are based on a ‘commission.’ This commission is determined by the level of competition in your particular ‘space’. Google Hotel Ads should be treated as another revenue channel. You need to feature your most competitive rates and treat it as an integrated part of your book direct strategy. Keep an eye on your rates on the Google Hotel Ads platform. It’s important to be aware and careful so that wholesale re-sellers are not undercutting you. When it comes to your GHA campaign budgets, the ideal situation is to leave them uncapped – let them run without a budget if you see they are delivering bookings at a low CPA.

Onto digital marketing – how should hotels approach their digital marketing strategy in relation to cost?

Oliver: Digital marketing and its related cost should be a part of your overall distribution budgets, the same way commissions are. Each campaign should have a clearly determined target (number of clicks/shares/conversion) and eventually even revenue targets, so as to create a benchmark. These benchmarks are primarily geared at establishing a trend over time. For hoteliers who would consider this overwhelming, I strongly recommend starting with a channel profitability ratio and then begin including more cost components over time.

William: This depends on the specific goals of your hotel – are you solely rooms focussed? Do you ave other revenue generating outlets like weddings/a bars/a restaurant? All activity and spend within a digital marketing strategy can be efficiently tracked and traced, so every penny is accounted for. Don’t think of it as a cost – think of it as an investment. Talk to your providers and allow them to show you what sort of budgets are needed to compete in the right areas.

Google and Facebook as examples are so monetised now that competition to show your property is getting tougher. Ask your provider to work with you on strategies and remember not to focus on the initial cost, rather the return on investment. Engaging with experts will provide room for open discussions and activity based on experience on what works/what doesn’t work. It will also enable your hotel to increase spend in certain areas that are performing and to pull back on areas that aren’t. Take guidance from the data that your Digital Specialist is providing and decide your budget this way rather than an initial barrier cost.

Is a clear rate strategy the key to a successful digital marketing campaign? If so, why?
Oliver: Yes, it is. Once a client has decided on your product (room, hotel, dinner), the only thing that will drive the reservation to your channel is an equal or better rate on your website compared to your distribution competitors. That is why it is important to take a moment and reflect on your pricing strategy.  For example – why do my products show up at lower rates on an OTA even though I have a powerful Channel Manager and my PMS is the source of all rates?

OTAs constantly create new incentives to attract customers to book your product on their page. All of these programs require your approval, but we often find the sheer volume of rate and promotion plans in every single OTA can be quite overwhelming. Add to this that different OTAs run different promotions at different times, and you’ll see how and why there are rates “seeping” into the market which you might not even be aware of. Central steering, documentation, rates and discounts from your hotel is so important. It will make sure you are not out/underbidding your own products with a competitive channel, and will also support your decision to join yet another promotion or not.

William: Yes it is – but so is having a seamless user journey. Promoting your rate/offer on social media is great, but what then?

Does the guest land straight onto a link to your booking engine? Is this jump too quick from awareness to prices? You need a landing page as an interim step which will allow your guest the chance to warm up to your offer with the ability to expand on inclusions in the rate, more appealing imagery and more detail on what’s being offered. From the landing page, there needs to be a clear step to your website. It will be important to make sure all of these steps promote the same message, use the same wording and images, to make it as obvious as possible that this is the same rate plan your customers saw advertised.

You should also ensure there is availability loaded against the rate you are promoting. If you’re promoting a rate digitally, run through the user journey multiple times yourself to make sure it is as seamless as possible and that the final product can be found and booked easily.

How does having a fully optimised website and booking engine enable hotels to transform their website visitors into customers?
Oliver: For me, the primary factors that will have customers turn into buyers include the following: trust in your service, product, price/value and your actual rate.

A fully optimized website will allow all of your products to be accessible in a way that does not overwhelm the booking process. Your content should be easy to see and find. A great booking engine embedded in a great website will provide space for customers to access all the different kinds of information they need and will still create a smooth reservation process.

One of the more frequent challenges we encounter is the assumption that all customers go through the exact same process to inform themselves, select a product and complete their reservation. However, like customers navigating their local supermarket differently, a fully optimised website will account for different kinds of shoppers. It is the customers that cannot find what they are looking for or have no interest in our products that leave a website without making a reservation. Offering a wider range of “easier” services like gift vouchers, activities, day visits, etc will also give some customers  a helping hand – they might be interested in your hotel but haven’t committed to a date or time yet.

William: An optimised website is such an important asset. It is your shop window. Try and make it as visual as possible with a focus on images/video, on an easy-to-use platform that navigates seamlessly from offer to booking engine.

Once they land in your booking engine, your guests should be able to easily filter relevant information like room types, packages and promotions, and to easily see available dates in a calendar view. All of this builds up towards a conversion.

Don’t leave room for distraction. Give guests as much relevant information in one area as possible and avoid creating something that requires too much scrolling or has too many pop ups. One or two messages of encouragement are okay – as long as it is in keeping with the user journey. The goal of your website is to make guests want to book. The goal of your booking engine to enable them to do so quickly and easily.

(C) Taktikon Hotels AB, Netaffinity PLC, Dec 2021