A common question heard from hoteliers and management groups is how do we compare to other businesses our size when it comes to digital? Although there are unique metrics that only travel and hospitality businesses care about, benchmarking against a competitive set is a common quest for leadership teams across every industry.
Benchmarking, digital or otherwise, starts with knowing your business well enough to know how sought-after goals can be gained by manipulating various levers and drivers, and by determining which levers are the most impactful so that business leaders can quickly gain clarity and know where to focus to gain on opportunities or fix gaps from a few key performance indicators (KPIs) instead of measuring everything and becoming bogged down in reams of data and a complicated process to source, clean and present tracking metrics over time.
Getting digital benchmarking (much more than website statistics) right will take time and investment, however when done right it can be systemic and drive the best decisions for the business. Proper digital benchmarking will also take a great deal of work on underlying systems and technology. Digital benchmarking is a core business practice that everyone needs to care about, and like all benchmarking, will rely on KPIs.
Businesses should use their own KPIs to benchmark themselves against three to five competitive, comparable businesses using publically available industry data or by signing up for a service that provides benchmarking capabilities.
In digital, the landscape is constantly shifting. For the organization to remain on the leading edge, its business opportunities, benchmarking and optimizing need to become daily practice. This is a daunting task for businesses that have been accustomed to fixed margins and annual planning cycles.
For success in digital, companies should develop the capability to gain strategic and market alignment. This means seeing where the market is today, looking out 12 months to 24 months, and putting the right people, processes, systems and partners in place to enable and empower business managers to take calculated risks, empower their staffs, partners and even customers to optimize initiatives that reach and surpass objectives to maintain alignment.
Invariably, the leadership conversation around gaining digital alignment leads back to the primary benchmarking question: How do we know if we are competitive?
Keeping up with the Digital Joneses
What makes a digitally centered business different from the business you may have operated in the past (or today)?
At the heart of it, a digitally centered business is always seeking to improve its results by deploying technology that enables its people to be more capable of (and faster at) meeting the demands of a new potential customer. The focus is on using data to drive internal alignment across functions to capture desired market growth.
In digitally centered travel and hospitality businesses, we see market dynamics that make functional silos impractical at best. Marketing, sales, revenue management, distribution and operations must all share information on a daily basis and move closer together so the business can stay aligned with the way customers wish to interact with it.
Benchmarking provides insight into what is working and what is not, where you have opportunities to move forward incrementally or with bold leaps in the direction the market is moving.
Developing a Benchmarking Plan
There are a number of limitations and options for travel and hospitality businesses considering benchmarking as a regular practice. Companies that see success quickly often start by developing a plan that includes education before beginning any benchmarking process. A cross-functional approach is beneficial as each business leader can see how what they do is dependent on others in the organization and how their levers are impacted by the success or failure of initiatives that they may not own. This realization helps break down territorial boundaries and barriers to success. Stakeholders at the table when digital benchmarking is being planned include team members from all disciplines: marketing, revenue management, sales, distribution, operations, IT, finance, HR and the executive suite. Top-level KPIs should be assigned individual C-level owners, while the action required to move the needle may be assigned to people outside of that owner’s functional area of responsibility.
The real key is that you must have a strategic framework for your benchmarking prior to investing effort and before deciding which partners or systems are needed.
Where to Get Data and Analysis
STR Global and PWC remain mainstays for hoteliers to turn to in an effort to better understand RevPAR, occupancy and other critical business drivers, but there is an overwhelming amount of data that goes beyond the scope provided by these two companies, especially in the area of digital marketing, e-commerce and conversion.
Businesses who have invested in a site analytics toolset such as Google Analytics or Omniture often think that they have everything they need to do digital benchmarking. This is not the case. While these are great tool sets, there can be no question that toolsets like ComScore, Nielsen, Compete and Quantcast provide a more complete 360-degree view of how audiences are interacting with other sites in your competitive set. The drawback to the Web analytic suites and competitive tool sets is that without engaging professional services, they do not provide specific benchmarking for travel and hospitality businesses.
The exciting news is that there are a few options to digitally benchmark against similar types of hotels via blind comparisons in which you can select the attributes that describe your property. Some have been in the market for a while, focused primarily on RevPAR and occupancy, while others are nascent solutions that provide elements that lead to true digital marketing and e-commerce benchmarking insights.
To do benchmarking right, you need to have a presentation layer (geek-speak for dashboard) that allows for data from a variety of sources to be combined and normalized and then displayed in a meaningful set of easy-to-read reports.
If you are not currently engaging in some type of third-party digital benchmarking, you are already behind the curve.
Digital Benchmarking in the Context of Property Management
Brands and ownership groups can provide huge value in the benchmarking space, but are not always the perfect solution. This is a place where certain brands can and do differentiate. However, investment groups or hoteliers don’t often pick brand flags based on benchmarking capabilities, so there is an opportunity for third-party solution providers to fill the gap.
Many branded properties try to use their brand’s benchmarking metrics and find that it provides ill-suited comparable properties. For instance, if a hotelier under brand XYZ has a property that sits on a highway between Peoria, Ill., and St. Louis, Mo., with 150 rooms and 80 percent occupancy with a RevPAR of $123.50, can you search brand XYZ and find even one solid comparable property?
OTAs and Google provide best practice data that can be used to construct ad hoc benchmarking models. However, as with many aggregated information sources, these data kings do not reveal the necessary detail required to conduct ongoing benchmarking and optimization at the property level.
Agencies claim to provide benchmarking for hoteliers. Be careful here as some of the data you want to collect is hard for many agencies to access. This is especially true for classic media agencies. Remember: digital benchmarking is a cross-functional exercise that requires representation from revenue management, marketing, sales, operations and the executive suite. Most media agencies are only visible to or accessible by the marketing team.
If you choose to use an agency, select a hotel-specific agency versus a media agency; specifically you want to look for a business that has worked to develop back-end connections with you, your partners, your brand(s), the media space, your booking engines, the social infrastructure, your Web analytics, etc. (basically be able to aggregate all the various items we mention in this column). This group is very limited, however Vizergy and Duetto Research are both making strides in the right direction here.
If you are an independent property your ability to accurately benchmark may be further limited, as you may not have access or budget to the appropriate kinds of data tools and investments to be able to gather benchmarking. As an independent property you must focus on benchmarking, you have more flexibility than many branded properties but you may lack access to some of the data and resources that they have. You can and should overcome this via a methodical adherence to KPI-based digital benchmarking and find the budget to use a tool set, agency or vendor partner who makes it easier for you.
Other hotels turn to industry organizations like HSMAI (Hotel Sales and Marketing Association International), which publishes relevant statistics and holds conferences where debate and discussions occur on the topic. HSMAI has recently launched a CHDM, a certification for digital marketing, and this can prepare your marketing teams for a benchmarking practice.
Some turn to digital industry groups, many of which are prohibitively expensive for most hoteliers and ownership groups. If you have a local Internet marketing group, we encourage you to join it and learn. Again the data you gather here may be limited to marketing and marketing services and won’t be hotel specific, however the cross-industry education especially about bleeding edge will be useful in your informal benchmarking, recruitment of staff, education and best practices.
While educational, the data revealed through events or courses in not considered benchmarking as it is rarely actionable, repeatable or meets the tests provided here.
Just like many hotels turn to STR Global (or the like) to benchmark on RevPAR, we recommend finding a similar digital solution that provides the same level of visibility, insight and action. Digital benchmarking is a long cycle investment in people, processes, systems and partners. Hoteliers that benchmark in digital with third parties – and especially those that have invested in a solution that allows for digital benchmarking versus comparable hotels – find themselves with better business results than those that have yet to invest.
David Atkins is a regular columnist for Hospitality Upgrade and has worked in leadership positions on the client side for McDonald's, Microsoft and Expedia among others. He was awarded a 2014 Top 25 Minds in Hospitality Sales and Marketing by HSMAI, and cited as top speaker on the subject area by Jetsetter for 2013. John Atkins also serves on HSMAI’s Digital Marketing Council and is an expert in digital publishing and product management. Both John and David can be reached at info@digitaldnainfusion.com.
