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June 2007

Marketing for Masters

Here is one of Sandy Soule's most popular conference presentations, adapted for the newsletter.

Easy as XYB: The New Marketing Alphabet for Savvy  Innkeepers
Statistics: travel and the Web
Triggers for travel
Baby boomers: the anti-geezer
Niche travel
What you need to know about websites
So what’s the take-away?
What is Web 2.0?
The next generation in travel technology
Final thoughts

Statistics: travel and the Web
The Internet has made the world a smaller place, and perhaps no category has felt that impact as much as the travel industry. Some 83% of people who travel are Web savvy, compared with 71% of the general public, and by 2010, about 9 in 10 travelers will conduct their search and trip planning via the Internet. Source: Forrester Research

As of the end of 2006, 56 million U.S. households (74%) were connected to the Web via high-speed lines. That's up significantly from 2005's 43.9 million households and more than double 2003's 26 million. What's more, broadband penetration is soon expected to surpass 90%, with an estimated 81 million U.S. homes connecting via high-speed connections by 2008. Source: Magna Global

This year, for the first time, online travel bookings in the U.S. will surpass offline bookings. In 2007, eMarketer estimates that 41 million U.S. households will book travel online, representing 53% of all U.S. online households. Source: PhocusWright

In 2006, an estimated 37 million households booked travel online, which is 50% of the total online households in the U.S. In 2010, this figure is expected to exceed 55% of online households in the U.S. Source: eMarketer

Are you using your reviews to improve your inn? 30% of American travelers who do travel research online read reviews written by other travelers. Of people who book hotels online, 30% change their hotel plans because of travelers’ comments. 41% of U.S. online leisure travelers use some form of online social tool in their travel research efforts. Source: Forrester

Reviews = Revenue. Consumer generated content (CGC) influences over $10 billion a year in online travel. With consumers finding CGC more credible than they do professional reviews or information from travel companies, CGC has emerged as a critical source of travel information. Source: Compete, Inc.

Who are our potential guests? Gen X and Gen Y comprise approximately 150 million Americans, born 1964 and later. Baby Boomers are approximately 77 million Americans, born 1946-1964. Generations X and Y are totally wired; they were the first tech-savvy generation. They are also totally stressed out: many are working couples (with or without children), and some have more money than they have time.

A 2007 study reports that people age 18-24 grew up with everyday cell phone awareness. For those ages 25-34, cell phone usage infiltrated their everyday life as teens and young adults. The adult adopters, age 35+, were not exposed cell phones until adulthood; many of them have a cell phone but have limited interest in emerging technologies. Source: comScore Networks

One-third of Internet users, either with a laptop computer, a personal digital assistant (PDA), or cell phone, search the Internet or checked email using WiFi broadband or cell phone networks. Over 70% of wireless users check email on the typical day. Source: Pew Internet & American Life Project Survey, Dec. 2006

Triggers for travel
Women survey respondents want vacations that include relaxation from daily routines. 96% want vacations that “create memories.” Source: Roper Public Affairs Survey for Meredith Corporation

Nearly 50% of respondents in another study agreed that “daily housekeeping service” was the biggest perk about being away from home. Source: Destination Hotels & Resorts. Security is still an issue for women travelers.

Consumers lack time, not money, for travel: Consumers are negative about having enough time to take a pleasure trip, with that index falling almost 6%. On a more positive note, consumers reported more positive perceptions about the affordability of pleasure travel, with that index increasing 10%. Source: TIA Study

Lifestyle pressure equals last-minute bookings: 30% of consumers said they can’t plan more than seven days in advance; 13% said this is because of finances, and 27% believe they can find better travel deals by waiting. When taking a short-notice vacation, 70% said that they stay three nights or less. What do they buy at the last minute? 59% buy hotel rooms on short notice, followed by airline tickets (36%) and rental cars (35%). Source: Priceline

More discretionary income for travel: Americans currently spend less on food and other nondurable goods than they did in 1960, when half their income went to these purchases. They're spending a smaller percentage of their income on energy, too; the average household now spends 5.5% of its income on energy; it was 8% in 1981. What Americans are spending more on is services -- and that's where travel comes in.

Affluent Americans spend more time on the Internet. According to a study on affluence and online activity by JupiterResearch, Americans with annual household income over $100,000 spend a median of 17 hours a week online, compared with 14 hours for everyone else.

A survey of wealthy consumers reached households with a minimum net worth of over $1 million. Over 40% use the Internet to plan travel and make reservations online. Younger consumers under 50, and those with higher incomes/net worth, show a stronger tendency to buy online. Source: Luxury Institute

Baby boomers: the anti-geezer
Boomers consist of 108 million people over the age of 45. They account for 70% of the U.S. net worth ($9 trillion). They don’t want to be labeled. For them, it’s never too late to learn, and they like educational and self-improvement opportunities. Multi-generational travel is also becoming more popular. Although they’re no geezers, they require some adjustments such as better lighting and grab-bars!

The boomer generation is here to stay: the 50-64 age group will grow by 50% in 15 years; the 65-plus population will grow 32%. The traditionally coveted 18-40 Gen-X and Gen-Y populations will grow only 3%.

Over 70% of boomers have high-speed Internet access at home and use it to: seek out information (92%); stay in touch with friends and family (95%); shop online (73%). Source: ThirdAge Inc. and JWT BOOM

Baby boomer travel trends: Boomers, many of whom have been working slavishly for a few decades, are starting to take it easy. Even those who keep working will be logging fewer hours and taking longer vacations. These areas benefit:

  • Spas and all-inclusive resorts: A favorite with boomer travelers no longer willing to rough it.
  • Cruises: The cruise industry continues to adapt to accommodate niche markets, and active and inquisitive boomers will be their best customers. Cruising combines several important elements for boomer travel — safety, variety, affordability and a bit of pampering.
  • Niche travel: American culture is anything but monolithic, and nowhere is this clearer than in our travel preferences; after all, one man's Six Flags is another's Indian ashram.
  • Green travel: With 2007 predicted to be the warmest year in history, green travel will become more of a real force. Travelers will be renting hybrid cars, picking eco-friendly destinations and choosing zero-impact packages.
  • Connoisseur travel: Connoisseurship has become a new hobby for many Americans; the perfect and most obvious example is the explosion of wine tourism over the past 10 years. “Connoisseur travelers" prefer to spend their vacations enjoying their chosen enthusiasm, whether it be wine, jewelry, artwork, historical artifacts, antiques, food, language, architecture, etc.” The Independent Traveler

Intergenerational travel has become a huge market as the baby boomers age. According to the TIA, “30% of traveling grannies have taken at least one trip with a grandchild.” Industry consultants show that almost 60% of kids ages 6-17 would really like to vacation with their grandparents. Source: Yesawich, Pepperdine, Brown & Russell

Niche travel
Eat to live or live to eat? 27 million Americans have made culinary activities a part of their travels within the last three years. Of the 160 million U.S. residents who travel for leisure, about 1 in 6 have recently taken a food tour, enrolled in a cooking class, toured a winery or otherwise participated in culinary activities as part of a vacation, according to the study. Source: TIA & Gourmet Magazine, 2007

Eco-travel on the rise: 65% of American surveyed state it would somewhat impact their decision to stay at a hotel if they knew the hotel was using solar or wind energy as power supplements. 63% state they would pay a little more to rent a hybrid vehicle or stay at a “green” hotel. 52% state they would be willing to donate a small portion of their vacation budget to help save the environment. 51% feel the tourism industry in the United States is not environmentally friendly. Source: MarketTool’s Zoomerang’s for Orbitz

Of those surveyed, 38% have stayed at an environmentally friendly hotel, and 9% seek them out. The most important qualities in a “green” hotel, they say, are: conserving energy, water, and using recycled paper. 34% would pay more 5%-20% more to stay at an environmentally friendly hotel. 78% decline to have their sheets and towels changed. 66% think that traveling environmentally friendly makes a difference. 24% believe that air travel should be avoided, when possible, to help preserve the environment; 26% would pay a 5%-10% premium. Only 3% have purchased carbon credits. Source: TripAdvisor

10 travel trends for 2007- Peter Yesawich

  1. Leisure travel continues to outpace business travel.
  2. Family travel continues to grow faster than all other leisure travel.
  3. Travel suppliers will raise fares/rates, as demand grows, capacity is strained, and operating costs escalate.
  4. Internet dominates the travel-planning/booking process, while online reservations continues its growth.
  5. Comparison shopping of suppliers’ fares and rates becomes increasing common.
  6. Continued expansion of “lifestyle” hotel brands for the Gen X & Y travelers (the Millennials).
  7. “Inclusive pricing” will grow to include commercial hotels seeking to provide road warriors with good basic value: comfortable bed, working desk, breakfast, high-speed Internet, and reward points.
  8. Spa-going continues growth as consumers seek to reduce stress.
  9. The cruise industry will continue to enjoy remarkable growth.
  10. The new “.travel” Internet domain will continue to grow in popularity.

What you need to know about websites
You've only got five seconds: NextStage studies show that people respond to daily, non-critical information within 10-15 seconds of first receiving that information.

  • Attraction stage (1-5 seconds): Used to decide if the information "catches your eye." Some studies indicate this interval is actually at the millisecond level. People are evaluating only if they want to explore that information further; responses are highly subjective.
  • Engagement phase (4-7 seconds): Can you understand the material well enough to continue the effort of internalizing the information? The website has to transition from "being pretty" to "being useful.” If so, it has engaged your attention.
  • Action-ability phase (8-10 seconds): Here’s when you decide your response to the website. This phase can stretch to 10 or even 15 seconds of engagement before you decide on your next step. Do you make a reservation now? Email or call for information? Discuss with your travel partner? You’re taking action of some kind.

Video is the now big thing: At the end of 2006, 58% of Americans with Internet access had streamed some form of video content online. The demographic of the typical video streamer skews younger, and is more likely to have higher income and be highly educated. Source: Ipsos Insight, 2007

Simplicity sells: “Your customer interface -- the service that walks the talk of your brand -- will always be at least as important as whatever product your company sells. This is true no matter whether you're in ad sales or something more arcane -- service and simplicity is what keeps customers (guests!) happy.” Compare Southwest's site and American Airlines' site. What do these two convey about the relative service experience that any consumer might expect? The point is that intuitive simplicity at the point of research and purchase in Web design IS good customer service.

Bad Web experience impacts retail shopping: 41% of consumers in 2006 said a frustrating online experience would make them less likely to shop at that retailer's physical store. Survey results also found that if the online customer experience is improved, people will buy more. It’s the same for your guests.

Not everyone is the same. Quicker clicker uppers: these people want to click it, see it, book it and be done! You’ll need strong positioning, including online reservations on major directories like BedandBreakfast.com as well as OTAS like Expedia and hotels.com. Click crazies: this group loves to click through and compare a zillion sites. They take their time but will choose based on quality Web design and photos plus strong reviews. YOU NEED TO GET RESERVATIONS FROM BOTH GROUPS!

How do they search? Travelers on average visit travel sites 35 times over 90 days before they book. Consumers actively turn to search before buying travel; an average of 10 travel queries occur before purchase. Destination search activity is critical. Consumers don’t always know what they want; this is a great opportunity to introduce your brand. Online hotel bookers are active comparison shoppers. Source: Yahoo! Search Marketing

So what’s the take-away?
Gen X & Y: To get reservations from these travelers, we need to be as wired as they are. Many of them are too rushed to click through to multiple websites to check availability; they want to visit a single travel site, enter their dates, and get a list of places where they can make an instant, confirmed reservation.

Once these guests arrive at your inn, they want (and will pay for): WiFi Internet access; uxury amenities and guest-oriented pampering, like spa services; handsome, uncluttered décor.

Baby Boomers: Many are quite similar to the younger generation. They can effectively be reached through niche marketing trends (green travel, multi-generational travel, food and experiential travel). They are more interested in comfort (including good lighting, handrails, etc) than luxury.

What is Web 2.0?
Web 2.0 is about data abstraction. It takes broadband for granted, especially video. It’s all about connections (between people, sites, buyers and sellers). It puts people first and is about allowing people to manipulate data, not just retrieve it. Web 2.0 is about doing stuff on the Web that can't done in any other medium.

What does Web 2.0 mean to us? Embrace social networking, don’t fight it. Actively promote reviews of your inn. You’ll have more reservations, and you’ll have a better inn! Encourage guests to upload photos and videos of your B&B, and stay in touch with them via email newsletters and blogs.

Web 2.0 is people power: Time Magazine selects "you" as the Person of the Year in 2006; Ad Age selects "the consumer" as the Agency of the Year. The ascent of consumers as controllers of their media environment is apparent -- 30% of frequent social networkers trust their peers' opinions when making a major purchase decision, but only 10% trust an advertisement. Sources: BIGresearch 2007, JupiterResearch

The next generation in travel technology
“Consumers have changed from just searching for the lowest price to finding the best experience.” Philip Wolf, PhocusWright

Travel 1.0 was about price, which drove online adoption. Travel 2.0 is about complete transparency, peer collaboration and speed. Consider the “long tail scenario:” embrace the sum of your niches; your reputation is more important than marketing budget; a good product can cut through the fog; and the customer experience and message should be in sync.

Travel 3.0 is about sales. Travel 3.0 sites will harness the proven capability of dynamic packaging to enrich buyer choice and so build sales, value and margin. Powerful search tools will let buyers comparison-shop amongst a huge variety of travel components and products that best match their individual preferences - and they’ll be able to select, book and pay, all online and on one site. Source: HyperTech Solutions UK

Final thoughts
According to PriceWaterHouseCooper’s Hospitality Division, hotel surcharges and hidden fees have produced revenues of $1.6 billion in 2006, almost triple the number in 2003. Samples: early check-in fee; baggage-holding fee; housekeeping fee; ice and bottled water charges; in-room safe surcharge; Internet service; phone/fax service. Guests receive all this and much more without the fees at a B&B!

Conversion is the key website metric: With most inns reporting 80%-90% of reservations coming via the Internet, keep a strong Web marketing presence via onward distribution, Internet directories, and a good website with GREAT photography. Make video a priority for the coming year.

Although the Internet is the 1,000-pound marketing gorilla, don’t miss out on the other marketing opportunities that come along every day to generate new and repeat business, from media opportunities to community involvement to retail channels.

Your goal may be to get heads in beds—but you’re selling an experience, the fulfillment of a dream--whether it’s a romantic escape, a reunion of family or friends, or a safe haven for the harried road warrior. Message the value, exceed expectations.

Points to remember

  • Embrace your inner geek: High-tech is as important as high-touch.
  • Keep a sharp eye on the hotel sector: They have learned from us and are pushing ahead rapidly.
  • Maintain the high ground: The B&B star shines most brightly in the area of personal service and hospitality.

This Month's Sponsor

Internet Intensives

BedandBreakfast.com, RezOvation and Expedia, Inc. are hitting the road to bring you current and comprehensive information about Internet marketing, online reservations, yield management, and property management software.

Click here to see upcoming Intensives and more information.

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