ROAD TO RECOVERY THE - A recovery guide for hoteliers in the wake of COVID-19 - Koddi
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THE ROAD TO RECOVERY A recovery guide for hoteliers in the wake of COVID-19
TABLE OF CONTENTS
INTRODUCTION.. ..................................................................................................................................................................................................................... 1
TIMELINE FOR RECOVERY..................................................................................................................................................................................................... 2
ASSESSING SIGNS OF RECOVERY.................................................................................................................................................................................4
DEFINING GOALS.. .................................................................................................................................................................................................................. 5
CHANNEL PRIORITIZATION..................................................................................................................................................................................................8
METASEARCH................................................................................................................................................................................................................... 10
SPONSORED PLACEMENTS.......................................................................................................................................................................................... 10
PAID SEARCH................................................................................................................................................................................................................... 10
DISPLAY.. ........................................................................................................................................................................................................................... 10
SOCIAL............................................................................................................................................................................................................................... 11
HOTEL DEMAND TRENDS BY PROPERTY TYPE............................................................................................................................................................... 12
HOTEL CLICK VOLUME BY STAR RATING................................................................................................................................................................... 14
HOTEL CLICK VOLUME BY ADVANCED BOOKING WINDOW................................................................................................................................ 15
REGIONAL DEMAND INSIGHTS.......................................................................................................................................................................................... 16
THE UNITED STATES........................................................................................................................................................................................................ 18
EUROPE............................................................................................................................................................................................................................. 19
ASIA-PACIFIC.................................................................................................................................................................................................................. 20
CHINA................................................................................................................................................................................................................................ 21
RECOVERY MARKETING CHECKLIST................................................................................................................................................................................24
ABOUT KODDI.. ......................................................................................................................................................................................................................25
The COVID-19 pandemic has upended countless industries, with
travel and hospitality having the unenviable distinction of being
one of the hardest hit. And yet, as an industry, travel has always
proven resilient in the face of unprecedented global crises.
THERE IS A PATH
While every hotelier’s experience during this pandemic has been
unique, all have faced cancellations and dramatic reductions in
FOR RECOVERY demand, causing many to reduce or suspend advertising activity.
Already, brands are looking to the coming weeks and months and
AND DATA CAN they’re planning recovery efforts, even as questions still linger.
BRING IT TO Although none of us have a crystal ball that can determine exactly
LIGHT
when and where travel will rebound, we’re confident that there is a
path for recovery and that data can help bring it to light. As recov-
ery unfolds, one of the first questions asked will be “When should I
start marketing again?” We’ve put together the following guide to
help you redefine your marketing strategy, goals, and advertising
plans for recovery mode.
1
When it comes to this pandemic, timing is everything—and it’s also
one of the most difficult-to-predict elements of recovery, given the
varying degrees of action being taken around the world. But for
hotel marketers, especially global brands, reigniting and bolstering
WHEN IT campaigns will likely begin in the regions where COVID-19 hit
earliest or recovery efforts are further along.
COMES TO THIS
PANDEMIC,
The earlier that you start showing that you are there for your
customers during their time of need, the more likely it is that they
TIMING IS
will keep you in their consideration set as the demand for travel
increases. For properties that have remained staffed throughout
EVERYTHING
the crisis and are ready to receive travelers immediately, earlier
revival of marketing efforts will make sense. On the other hand,
those hotels that have furloughed employees or temporarily closed
should ensure that they’ve properly reinstated and ramped-up
operations before reactivating their marketing campaigns.
3
DOMESTIC VS. INTERNATIONAL TRAVEL
We expect to see short distance domestic travel (largely driven
by road trips) pick up first, followed by longer distance domestic
travel. Longer distance domestic travel and international travel,
ASSESSING SIGNS
both of which typically require airfare, will likely take longer to
recover due to ongoing restrictions and quarantine measures which
will remain in effect for an extended duration.
OF RECOVERY
LEISURE VS. BUSINESS TRAVEL
As you begin to look toward recovery, it is important to We anticipate domestic shorter distance leisure travel to rebound first,
capitalize on demand as quickly as you see it. With daily followed by business travel.
shifts in trend data and opportunities, you’ll want to
carefully assess when the market conditions look
PROPERTY AND DESTINATION TYPE
right for your business.
Our expectations show a gradual rebound by property type with economy and
roadside properties as the first movers, followed by more rural areas. Urban hotels will
Koddi has organized recovery signals into likely be the last to rebound to pre-COVID levels.
five main categories, which will help aid .
reactivation decisions:
LOYAL VS. NEW CUSTOMERS
A safe and clean environment will be key for many travelers during recovery, and loyal travelers
will likely stick to the brands they trust. Brands that can assure customers with safe and clean
stays will gain new loyalty members.
SHORT VS. LONG BOOKING WINDOWS
Shorter booking windows have carried demand in the United States, largely due to shifts in travel demand,
with roadside hotels and economy hotels faring comparatively well amid the pandemic. In Europe, longer
booking windows have better-retained demand - possibly due to stricter travel restrictions early on in the
crisis (even for essential workers). We anticipate these trends holding true in the beginning stages of recovery.
4
Knowing that recovery will most certainly happen For many brands, winning long-term means getting
in phases and that each business will be affected customers back into their properties as soon as
differently depending on their property set, how they safely can, even if the return on ad spend
each media channel is leveraged and to what (ROAS) is historically lower. Driving occupancy once
extent could vary widely depending on the strategy. conditions allow can have downstream impacts in
There is no one-size-fits-all recovery strategy. improving hotels’ ability to rehire essential workers
when staffs have been reduced and to build back
Are you only willing to reinvest if you can do so at service offerings for food & beverage, spas and
the same profitability level that you were optimized other ancillary services. Additionally, each safe stay THERE IS NO
against pre-pandemic? Or, are you willing to accept can help reinforce health & safety measures and
lower returns in order to drive near-term business? any improvements to sanitation practices, helping
to build consumer confidence.
ONE-SIZE-FITS-
ALL RECOVERY
For some brands, getting customers re-engaged,
even at a near-break-even cost, will be well worth For this reason, we’re already seeing some travel
the effort. This is particularly true for full-service brands ramp up activity in APAC regions where
hotels with restaurants, spas, and other ancillary
offerings. But it isn’t true for everyone.
COVID-19’s peak is thought to have passed.
STRATEGY
Deciding on the right channel mix for your business will
A luxury hotel in Las Vegas, for example, will likely be about striking the right balance between volume/
make the majority of its revenue from food & efficiency and incrementality. Are you looking to
beverage - not room nights - which makes driving maximize direct bookings within existing demand?
additional bookings (even at a higher cost) much Or are you looking to drive incremental demand by
more attractive. For a hotel where room nights are shifting share away from your competitors? From
the primary source of revenue, mitigating the cost there, we can determine the best combination
per booking becomes much more important. of activations that aligns with your budget and
reinforces business objectives.
6
CHANNEL MATRIX
BOOKINGS
Metasearch
Paid Search
Sponsored Placements
Facebook Travel Ads (Retargeting)
(Meta)
Display (Retargeting) Sponsored Placements
Facebook Travel Ads
(OTA)
(Prospecting)
Display
(Prospecting)
INCREMENTALITY
Higher Booking Volume Higher Incrementality
As an example, if your main objective is to maximize booking In the next section, we’ll walk through how to best leverage
volume and drive occupancy, you might launch with a blend- each channel as well as the key trends we’re seeing from a
ed approach that incorporates lower-funnel tactics like meta- demand standpoint. Leveraging these insights and deploying
search to increase the direct booking mix, coupled with more optimization strategies that are unique to your business will
aggressive mid-funnel tactics, like sponsored placements to be critical in making the most of every dollar invested against
drive incremental bookings. That way, you’re operating across your business goals.
the booking funnel to both capitalize on existing demand and
shift share away from competitors.
7In “Assessing Signs of Recovery,” we established that re-
OFFLINE + DIGITAL BRANDING
covery will likely happen in stages - with certain regions
reactivating sooner than others and notable differences
in recovery timelines for different property types, differ-
ent booking windows and different travel types (e.g., do- GENERICS, PROSPECTING, PAID SOCIAL
mestic vs international).
When it comes to re-engaging travelers through ad- SPONSORED PLACEMENTS
ity
vertising, Koddi recommends a funnel-based reactiva-
ior
tion strategy, beginning at the bottom of the funnel in
Pr
ion
channels like affiliate marketing or metasearch, which METASEARCH +
RETARGETING
at
can capture immediate demand and get sales flowing.
tiv
From there, you can reignite business and begin to work
Ac
your way up the funnel to activities like retargeting and BRAND SEM+
AFFILIATE
branded display and TV at the top of the funnel.
We recommend metasearch to be one of the first channels
to be reactivated. Nearly all top metasearch publishers have
introduced adjustments to the auction dynamic that have
significantly reduced the associated costs and maximized
the projected return for metasearch ads.
9METASEARCH SPONSORED PLACEMENTS | ON OTAs Metasearch will be the earliest indicator of recovery trends. Offering demand, Sponsored placements with online travel agencies (OTAs) present anoth- impression, and conversion data, Metasearch is critical in gauging the pulse er opportunity to steal share from competitors. Unlike metasearch spon- of recovery and where and how prospective travelers are actively looking to sored placements, however, these ads drive indirect bookings. Because book your hotels. Continuously analyzing key data points (advanced booking these bookings occur directly with the OTA, there is limited disruption to windows, length of stays, and geographic data) will help you to stay ahead the booking process for users, which can lead to higher conversion rates. of immediate demand trends and opportunities. Bearing in mind that recov- Similar to sponsored placements for metasearch, these ad placements are ery will be gradual and will differ region by region and country by country, bid particularly well suited for need areas or top-performing properties that modifiers will be an important tool to push your brand into the right areas and merit additional investment. Some of the more popular opportunities for pull back from inefficient investments. OTA sponsored placements are with Expedia and Agoda. SPONSORED PLACEMENTS | ON METASEARCH PAID SEARCH While typical metasearch ads help push your ad to the top slot for a par- As Metasearch demand ramps back up, search demand will follow. Brand- ticular property, sponsored placements push your property to the top of the ed search terms with a high ROI are always valuable, but during this re- page for destination-based search results. This would mean that when a user covery period, non-branded search will also be an effective lever to drive searches for hotels in New York, your property would be pushed to the top of incremental revenue and shift share from qualified in-market demand. With the search results with your website as the only available booking option. CPCs at historically low levels and decreased competition, re-entering paid sponsored placements are particularly helpful for directing focus to key need search early on could yield short-term efficiencies. areas (e.g., at-risk properties with comparatively low demand), or for zero- ing in on pockets of opportunity that can sustain additional investment (e.g., high-performing properties like extended stay or roadside hotels, where your DISPLAY click share and impression share is high and efficiency has remained strong Display advertising can fast track awareness quickly, delivering hotel’s im- for traditional ad placements). 10
agery and messaging to your desired audience. One of the biggest benefits of using display advertising is the ability to influence each stage of the marketing funnel. It’s important to consider the changes in your audience’s needs and pain points. For this reason, creative etiquette will become imperative for a smooth reactiva- tion of this channel. Brand safety controls should be checked closely to prevent ads from showing on sites with virus-related or otherwise undesirable content. SOCIAL | FACEBOOK TRAVEL ADS The same principles for display apply to social. Because users can comment directly on paid social ads, there is heightened risk of negative consumer senti- ment. As a result, striking the right tone will be very important as travel recovers. Take care to pressure test any previous copy, as it is possible that your messaging pre-COVID could appear overly “salesy” or insensitive if shared today. Koddi recommends going live on Facebook Travel Ads with both retargeting and prospecting campaigns. With site traffic down significantly, retargeting audienc- es will naturally take some time to replenish and return to typical levels. Going live with a blended model that targets users across retargeting and prospecting (broad audiences) can ensure that you are both growing your audience pool with qualified site traffic and driving conversion with a holistic marketing approach. 11
Hotel demand has varied greatly for different property types. Throughout
the pandemic, hotels with lower star ratings (typically roadside properties)
have retained much higher demand - often for very short stay lengths.
We can also see demand for these types of properties recovering at a
faster rate than more luxurious brands. Despite this trend, there are still
win opportunities for hotels in all major market segments.
1313HOTEL CLICK VOLUME BY STAR RATING
Demand is picking up for 4 star hotels the fastest, but all property
types are seeing significant WoW increases in demand. While
INTRODUCTION demand for 5 star hotels is picking up at a slower rate, there
are still opportunity segments where these hotels can succeed,
especially by targeting booking windows 2-30 days out.
14HOTEL CLICK VOLUME BY
ADVANCED BOOKING WINDOW
VOLUME BY BOOKING WINDOW VOLUME BY BOOKING WINDOW VOLUME BY BOOKING WINDOW
1 + 2 star hotels 3 star hotels 4 + 5 star hotels
INTRODUCTION
For 1-2 star hotels, we can see demand shifting to The major differences for 3 star hotels compared to Luxury properties have strong demand across most
booking windows further in the future, especially in more economical properties is that demand remains booking windows, despite having a slower increase in
booking windows 2-30 days out. steady for short-term booking windows and for overall demand compared to other property types.
bookings 2-90 days.
While volume is decreasing in booking windows 0-1 Hotels in this segment can look at booking windows
days out, this segment of the market is still much Hotels in this segment should continue to focus on within a week and 31-60 days to maximize their funds
larger than before the impact of COVID-19, increasing short-term booking windows, but they can also attract during the recovery phase.
from ~20% of volume to over 50%. users looking to book a stay over two months away.
Hotels in this segment should continue to target short-
term booking windows but begin ramping up efforts WEEK 17 WEEK 18 WEEK 19 WEEK 20
to capture travelers looking for booking windows of
2-30 days.
15Recovery in the travel space will happen geographically at the re-
gional, country, and point-of-interest levels. We are already seeing
the recovery in China and expect the APAC region to lead the way,
WE ARE followed by Europe and then the United States.
ALREADY Countries where COVID-19 struck hard more recently, will see later
SEEING
recoveries. Likewise, in large markets, like the U.S., we’re going to
see travel recovery staggered state-by-state, and even city-by-
RECOVERY
city, due to the vast variance in number of cases and local policies.
Again, the ramp-up of activity will, in all likelihood, follow a pattern
IN APAC similar to the regional turn-off of campaigns. Below is a summary
of the regional trends that we’ve seen in the first few months since
COVID-19 was declared a global pandemic.
17THE UNITED STATES
U.S. HOTEL SEARCHES We’re already seeing small signs of recovery in early May with WoW increases
7 Day Moving Average in hotel searches. The few pockets where we continue to see demand are for
same-day and next-day travel and for interstate and non-urban properties.
Beach destinations are also leading the rebound as local restrictions are
lifted .
2020 DEMAND INDEX
Pre + Post COVID-19
Demand for hotels in the U.S. remained at a normal level until late February.
On February 28th, the World Health Organization raised its risk assessment
of COVID-19 to “Very High,” and U.S. travel searches began to drop 10%
year-over-year. Around the same time, COVID-19 cases started to increase
JAN FEB MAR APR MAY JUN JULY AUG SEP OCT NOV DEC
in Washington, California, and New York.
PRE POST
Throughout March, as COVID-19 continued to spread, more and more cities The above recovery demand index shows the demand curve for the U.S.
and states started implementing shelter-in-place orders. With increased fear before COVID-19 and what is expected post-COVID-19. This is based on
and uncertainty, there was a dramatic drop in demand for travel. That decline the current market sentiment and the recovery curves that we are seeing in
continued into April, as more Southern states started seeing an increase in China and is subject to change.
cases, which led to an almost 85% drop YoY in hotel search volume.
18EUROPE
EUROPE HOTEL SEARCHES We are also seeing measurable gains in smaller markets, as Austria, Belgium,
7 Day Moving Average
Sweden and the Netherlands are seeing significant domestic growth. For
mid-May, Austria and the Netherlands are seeing the high WoW increases,
with Sweden not far behind.
EUROPE HOTEL SEARCHES
Large Markets
Demand for hotels in Europe remained at normal levels until mid-February.
The decline accelerated from early-March onward, as the virus spread
throughout Europe. Italy was noticeably impacted earlier than other
countries, around mid-to-late February. France, Germany, Spain, and the
United Kingdom began their steep declines from late-February onwards.
EUROPE HOTEL SEARCHES
The beginning of April saw an 80% decline in hotel searches. Countries Small Markets
such as Italy, France, and Spain declined as much as 90% YoY. In late April,
European countries began formulating strategies to ease the lockdown in
May. Governments in the Schengen area are announcing a gradual reopening
of businesses and borders by mid-June, possibly catalyzing an upward trend
in international travel. Still however, the most noticeable gains in the region
are for domestic searches, with France and Italy leading the way in WoW
increase for the middle of May among the “top 5” markets.
19ASIA-PACIFIC
APAC HOTEL SEARCHES
7 Day Moving Average
APAC started experiencing declines in late January when the “first wave”
of COVID-19 cases took place in Greater China (China, Hong Kong, and
Macau) and surrounding countries. Some APAC countries, such as India,
Indonesia, Australia, and Singapore, didn’t experience a drastic drop in
search volume until mid-March when the “second wave” of COVID-19 cases
started emerging.
Starting in late March, Greater China saw early signals of recovery in search
trends for domestic travel as the situation became contained. There also
was a general decline in cancelation rates, implying users’ higher intent to
travel compared to February. Entering May, demand continues to gradually
increase and now is seeing a 60% YoY decline, compared to an 85% YoY
decline in February.
20CHINA
CHINA HOTEL SEARCHES CHINA’S RECOVERY CAN BE SEEN AS A
7 Day Moving Average
PREDICTION MODEL FOR THE US AND EUROPE
As the initial epicenter of the COVID-19 outbreak, China recovery patterns
could serve as a projection model for phased recovery around the world.
Modeling after the behavior we see in China, we have developed two potential
projection paths the European and US markets could take:
STANDARD RECOVERY AGGRESSIVE RECOVERY
The above chart* shows hotel demand in China overlaid with the number Similar to China, we see a lag in In this model, a similar lag pe-
of confirmed cases of COVID-19 in the country, as reported through Johns demand as the market stabiliz- riod persists through early May,
Hopkins University. Initially, China saw a huge drop in demand for hotels at es while COVID-19 cases across however, towards the tail-end
the end of January and through mid-February when confirmed COVID-19 the country reach their apex. As of the month, overall demand
cases grew exponentially. states begin lifting their shelter- sees a sharper spike. Perceiving
in-place orders, we anticipate a potential stronger shift in con-
As the curve for confirmed COVID-19 cases flattened in China, hotel a steady uplift through June, sumer behavior, demand could
demand started to increase. Some of this growth has been facilitated by eventually approaching pre- significantly outpace the stan-
new government measures opening up markets and reducing certain travel COVID levels headed into 2021. dard model during the second
restrictions. For now, the hotel demand in China is increasing for domestic half of the year, as a recover-
travel only, due to the restrictions on airlines flying internationally. However, ing market seeks travel options
this increase provides a positive outlook for the Chinese market that should post quarantine restrictions.
continue to improve as restrictions are lifted.
21 *Chart provided by Shiji Distribution Solutions for hotel demand in China overlaid with the number of confirmed cases of COVID-19 in the country as reported through Johns Hopkins University.It’s worth noting that these graphs are projections meant to show possible recovery curves based on the data we’re seeing in China and are
subject to change. For the latest trends and insights, visit our blog at https://koddi.com/blog/.
US PROJECTED RECOVERY CURVES EU PROJECTED RECOVERY CURVES
22NOW IS A
GOOD TIME TO While recovery in the travel industry is inevitable and, in some cas-
TAKE A STEP es, already beginning, it could be a long road back to previous
demand, ROAS, and occupancy rates. Now is a good time to take
BACK, REFINE a step back, refine operations, and evaluate opportunities through
a new lens.
OPERATIONS,
AND EVALUATE
We’re confident that the travel industry will recover, just as it has
from previous crises. The brands that position themselves wise-
OPPORTUNITIES
ly during this downturn have the opportunity to emerge stronger
than ever from this challenging time.
THROUGH A
NEW LENS.
23Provide all media partners with your reopening date to ensure visibility in search results
Remove or update your website messaging to indicate that your hotel is now open
RECOVERY
Update your local listings, if they are marked as closed:
Google My Business listing
MARKETING Bing Places
Yelp
CHECKLIST
Yext
Deactivate the TripAdvisor ‘business closed’ notification, if implemented
We’ve put together the following Revisit your marketing goals and how you will measure success
checklist to help you prepare for
reopening or reactivating certain Determine channel prioritization for reactivating your campaigns
marketing channels.
Refresh creative for your display and social ads with messaging focused on thoughtful service offerings
Review your paid search ad copy and callout extensions; update as needed
Update your Google Hotel Ads callout to reflect special messaging (e.g., Free Cancellation, Flexible Booking, etc.)
Familiarize yourself with new cleaning quality requirements outlined by online travel agencies
Document measures taken to comply with the CDC and operational guidelines provided by the World Health Organization
Create a COVID-19 FAQ page on your site to provide travelers with quick answers and potentially increase visibility in organic search results
Evaluate new opportunities to increase exposure for your hotel
24ABOUT KODDI Koddi is a provider of comprehensive marketing management software and services, powering advertising programs that drive measurable revenue growth to the best hospitality and travel brands in the world. Our award-winning SaaS platform, coupled with superlative customer service, provides a robust network for hospitality brands and online travel agencies to connect with consumers and generate more revenue through unified metasearch, social, and program- matic campaigns. Brands can consolidate and manage the entire purchase funnel and gain insights at each point to adjust and optimize campaigns across all channels. With Koddi’s help, marketers harness real-time intelligence to make informed decisions across their marketing and media activities and, ultimately, to fuel their growth. For more information, please visit https://www.koddi.com.
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