Why "Backyard and Bundle" is the Path Forward for Hotel Marketers

I put together a piece a couple weeks ago as part of this HospitalityNet panel to help hotel marketers think about their "Post-Crisis Marketing Action Plan." And, while I'd recommend that you read the advice from the entire panel, one idea keeps coming back to me, which is the need to think "Backyard and Bundle" as you plan for your market's recovery.

The piece on HospitalityNet explains:

Think "Backyard and Bundle." While it's possible that the economy might come roaring back, given the larger economic effects and potential for lingering concern on the part of guests, it's also likely that they may want to stay closer to home, have less to spend, or simply want to keep a little money in their pocket for the next big shock to the system. There's a clear downside to discounting your product. But you should also think about offering packages or promotions that allow guests to get the most bang for their buck, especially with drive and local customers.

Focus on value-adds in your promotions and offers that help you hold rate, but show clear benefit to the guest. And target those first to the people for whom your property is closest to home.

It's also likely that guests will want to spend time with their families and friends, many of whom they've been forced to isolate away from throughout this crisis. Consider offers that encourage and reward multi-generational travel, girlfriends' getaways, etc. And it will be time to test geo-targeted mobile offers to increase share of wallet for folks already in market once they're traveling again.

As travel begins to resume, that increasingly seems like the right approach. Here's why I think "Backyard and Bundle" continues to work as you plan for the future of your hotel or group.

Air Travel Will Take Longer to Recover than Drive Market Business

The single biggest factor is that air travel to your destination is going to take longer to recover than drive will. Some experts suggest that it's will be five years before air travel return to pre-crisis levels and that Covid-19 represents "an existential threat to airport business." That seems overly pessimistic to me — we’re still seeing people book cruises(!!!), for Pete's sake, which seems much higher risk than air travel. But, it's undoubtedly true that air is taking a big hit and that travelers may fear — or lack the money — to fly for quite a while after the recovery gets started.

Consumers May Fear Risks of Air Travel and Want to Stay Closer to Home

As I noted the other day on Tim Peter & Associates’ Covid-19 Resources Page, guests need assurances of health, financial and emotional security before they'll be ready to travel again. Getting in a car and driving a couple hours from home is less risky and less costly than flying. So, it certainly suggests that drive market business will return much faster than air once the economy starts to recover. 

Travelers May Not Have the Money to Fly

New research from McKinsey shows that “half of Americans reduced their household spending in the past two weeks. [week ending May 10]” Over 70% expected to decrease their spending on domestic and international flights. And even if they can afford to fly, many consumers are being careful with where they spend that income. McKinsey also shows that more than half of all consumers feel they “…have to be very careful with how [they] spend [their] money. To be fair, travel as a category gets hammered in the study. Overall demand is going to be lower for some time to come. But that simply underscores the need for travel options that represent a good value for those consumers both willing and able to travel. 

Government Restrictions May Limit Air Travel

Even if your guests have income and interest in travel, government actions seem likely to play a role too. For instance, Israel’s plan to restart its economy shows them opening hotels and restaurants in Phase 3 of its efforts and loosening air travel restrictions in Phase 4. Given that there's a two-week pause between each phase if Covid-19 cases spike, air travel can't even begin to rebound until hotels have been back in business for, at minimum, a couple weeks. Other countries look like they’re planning to follow similar paths as they restart their economies and attempt to get travel back in business. You obviously don't want to wait for air to return to get your fair share of whatever travel demand exists — and you can’t afford to lose out on two-plus weeks of potential revenue.

How to Make "Backyard and Bundle" Work Best for Your Hotel

There are three key ideas for putting a "Backyard and Bundle" approach to work for your hotel. 

1. Sell Your Destination First

For starters, you want to sell your destination first. Data from Within.co's Retail Pulse https://go.within.co/retail-pulse/ and Morning Brew show that overall consumer internet use is skyrocketing. Travel is starting to see similar patterns in a number of markets too. It's understandable that guests will want to start exploring the world around them once they feel it's safe to do so. And that means that you can't afford to be late to the party here. Your content and your website need to answer guest questions and sell the destination in an appealing, persuasive way.

But don't go it alone. As noted in my HospitalityNet writing,

Partner with other local businesses — all of whom will also be looking to dig out — to create videos, content, and offers to help attract travelers to your destination. OTAs have invested heavily in content over the last few years. Don't let them reap the rewards. Instead, demonstrate directly why your destination is special and the right choice for guests venturing out again.

This will almost certainly work with folks a little further away too when they’re ready and able to travel. Again, from the HospitalityNet piece,

Of course, you don't want to think only of the "backyard and bundle" crowd. You also need to cast a wider net. This is a little bit "old school" or "Hospitality Marketing 101," but before guests can choose your hotel, they need to choose your destination.

My recent column for Hotel News Now takes this idea further, explaining why you need your digital presence to do the heavy lifting for your hotel in troubled times. OTAs and intermediaries like Google are investing in these efforts right now so that they're best positioned to capture interest and demand once it returns. They won that fight in 2001-2002. They won the fight in 2008-2009. How many times must we as an industry learn this lesson? We simply cannot allow OTAs to win this fight again.

2. Use Paid Search and Meta to Harvest Demand

Of course, your content only works if your guests see it. And that's why you must use paid search and meta to harvest demand that exists. Many of our clients are receiving ROI-positive bookings right now for future dates because they've continued to let their paid search and metasearch campaigns run. As I argued in HospitalityNet,

Keep meta and paid search running later… and right now.Meta and paid search spend automatically declines as demand declines. The single biggest problem at the moment it's that there's limited demand. Shutting off meta and paid search removes you from consideration among anyone even thinking of travel. Or those looking in advance of when they can travel again. It also may hurt your ranking relative to those who've consistently kept their media running even at the lower levels that match current demand. Waiting until the downturn ends might put you at a disadvantage to those who've kept the lights on during the current period… and takes you out of consideration of anyone who needs to travel right now.

The great thing about both paid and meta is that, if you run them properly, you're paying in exchange for booked revenue. Guests who book cover the cost of getting in front of a wider audience. And with ROI's currently running 8:1, 10:1 and greater, it provides you bookings at a far lower cost than OTA business. At this point, this approach ought to be automatic for hotel marketers. If you’re willing to pay Expedia or Booking.com 12%-15% or more for a reservation, you ought to be willing to pay at least that much for one that comes direct. 

3. Price Your Offering Properly — Use Up-selling and Cross-selling Wisely 

Again, expect that guests may have less to spend than normal. But instead of simply lowering rates — a race to zero that’s impossible to win — think about including value-adds in your offering. Make it easy for guests to see the value you’re offering relative to your competition — and easy for guests to choose your property. 

Data strongly suggests that guests split the money they’re willing to spend in market into two “wallets.” The first is the amount they’ll spend for the reservation; the second is what they’ll spend during the trip. Make sure you close the sale first; that is get the reservation. Then think in terms of appropriate up-sells and cross-sells to capture your fair share of in-market spend to improve your overall revenues during their stay. 

"Backyard and Bundle" Conclusion

It’s pretty clear that travel isn't coming back tomorrow. The best case scenario is that we’ll face a couple months of uncertainty at minimum before the overall travel picture clears up. But, demand is starting to return. And it seems increasingly likely that your first guests will come from local and drive markets.

Air will take some time to recover due to financial and emotional concerns from travelers and from government restrictions continuing for a longer period. Customers will choose to stay closer to home for reasons of safety and cost.

Your destination offers "backyard travelers" a way to get out of the house, explore a little, and earn a little relief during a troubled time. They'll choose your destination, and your property, if your content and your overarching digital presence helps answer their questions and fulfill their needs. Your local partners can and should provide additional resources to enrich that content - and the offers your provide your guests.

Build on your content with metasearch and paid search to affordably reach guests at time of need without relying heavily on OTAs. Adjust budgets where needed, but remember you'll likely have more money available than demand at the moment. Put your money to use the right way to gain the greatest benefit.

Travel will come back. Guests will come back. Your business will come back. The key is to focus on where you can find that demand and how you can convert that into revenue for your property. Right now, the data shows that they best way to do that is to think about your local and drive market guests and to put together offers that provide a great value for their limited travel budget. And that's why "Backyard and Bundle" offers you the right path to success as the travel recovery begins.

 A version of this article originally appeared on Tim Peter Thinks as "Why Hotel Marketers Must Think “Backyard and Bundle” When Demand Returns"