Social Media and Hotel Revenue Management: time to reflect
Social Media: Problems and Potential
2018 is a fascinating juncture for revenue managers to address the issue of social media. Recent years have seen the use of platforms like Facebook, Twitter and Instagram become a norm for communicative transactions between many businesses and customers.
Customers increasingly use the experiences of others across social media platforms to inform their decision making, in what has been described as ‘electronic word of mouth’.
Recent research has consistently shown that online reviews and social media can change consumers’ initial travel plans. Feedback can be instant and widely disseminated: a customer can tweet a review of their experience before they have finished their dessert, or before their suitcases have left the lobby.
Likewise, businesses can engage and react with customers faster than ever: they can respond to complaints, promote brand awareness, attempt to drive direct sales through engagement with customers via social media platforms.
At the same time, the gloss is fading a little from the perceived unequivocal benefits of social media. Whilst it was once heralded as a panacea for any customer-focussed business, events such as the Cambridge Analytica scandal and the decision of Wetherspoons to abandon the use of all social media platforms, suggests that now is an appropriate time for revenue managers to take a more objective and evidence-based approach to the use of social media and its specific effect on revenue management.
After all, if it does not improve hotel revenue, is it worth the resources that are used maintaining an active social media presence? Is it time to re-evaluate what we think we know about social media?
Social Media and Hotel Revenue Management
The challenge for hotel revenue managers is to calculate exactly where social media adds value to the pricing strategy and what is the exact return on investment for resources allocated to social media engagement.
Whilst the technological engagement of customers is an evolving landscape, objective analysis of the impacts can be like shooting a moving target.
Studies do indicate that reputational increase does lead to an increased RevPAR, occupancy and ADR (average daily rate)
Therefore, revenue managers must be concerned with increasing online reputation in order to drive revenue improvement as part of the broader strategy: increasing an average 3 star review to a 4 star review has been shown to add double digit percentage increases to the ADR.
Social media can be a potent tool for managing reputation, but the wrong strategy can be costly and the internet is awash with ‘social media fails’ where businesses have gone viral for the wrong reasons: social media is not without risks.
As discussed in a previous blog, driving direct sales can also add to revenue by removing commissions to OTAs, but it can only work as part of a broader strategy.
There is little to be gained by driving customers directly to a poorly maintained website. Social media strategies should support existing revenue management strategies, not seek to replace them.
Strategies for effective use of social media
Revenue managers can advise businesses on how to integrate social media use with pricing strategies for maximum impact and strategic synergies. Some general strategies that are widely held to be successful are:
• Aim for the broadest appeal. Avoid divisive subjects like politics and commenting on controversial news items: reputation can go down as well as up.
• Do not over post. Limit the amount of promotional posts and aim for impact over quantity of content.
• Consistency. Post on a schedule and be consistent and plan the posts to leverage events and seasonal factors.
• Engage with current customers. Getting current customers to follow you can improve repeat business.
Social media is no longer simply another form of advertising or public relations, but offers the chance to support revenue management strategies with a strategic focus on driving sales and increasing revenue.
If you want to know more about how to use social media to improve revenue management, bespoke training courses are available, as well as outsourced revenue management. If you would like to get in touch, Octopus Revenue are here to help.
Research Sources
‘The impact of Social Media on lodging performance’
‘Social Media and its growing importance to Revenue Management’
‘The influence of Social Media on Revenue Management in Hotels’
