Lost Bookings Where Are You?

Marriott, Choice or IHG — who’s better?  The answer depends on what you’re measuring.   Compete investigated the extent to which these three hotel chains are capturing bookings vs. losing out to the competition.   We compared these three chains because they are industry leading brands, and collectively have properties ranging from economy and limited service, all the way to luxury and full service. First we measured overall site traffic and booking rates for the three hotels in question.

The chart below shows that Marriott had the most traffic across its family of brands with more than 4 million unique visitors in December.   Choice and IHG drove less traffic to their portfolio of sites, with just under 3 million visitors in the same month.   However, IHG converted the largest percentage of that traffic into bookings, just ahead of Marriot (right axis).   Both hotels converted about 9% of the heads into beds, in December.

You might think that Choice was the weakest performer of the three (lower volume, lowest booking rate).  However, that isn’t the end of the story.  Based on our second measure, Choice is doing better than the competition"¦

The second measure is lost bookings, or the percent of traffic that shopped for rooms at these hotels but ended up booking elsewhere.  Someone shopping for a hotel room has three choices:  shop and book at the same hotel, shop one hotel but book at another, or shop and decide not to book anywhere. The consumers who shop but book at another hotel are considered "˜lost bookers’.   Lost bookers, equate to missed revenue opportunities, and damage the ROI on things like: advertising, loyalty programs, email outreach, search and pricing strategies, and site design.

Compete found that IHG had the highest share of lost bookers (second chart).   One in ten IHG shoppers booked a hotel room with a competitive hotel supplier. Choice, on the other hand, performed the best among the three, with only 7% of their shoppers booking at a competitor site.  The lost bookings analyses here include booking with any other hotel supplier, not just booking at one of the other two brands.

So it’s a good news bad news story for IHG, they convert the most shoppers, but also lose the greatest share of bookers to the competition.  However, the fact that they have the highest booking rate and the highest lost booking rate indicates that they are successful at attracting truly in-market visitors.

The next question becomes, where did the lost bookers book?  Given that IHG had the largest share of lost bookings among the three; Compete identified the top five hotels that captured IHG lost bookers.  Hilton was the biggest beneficiary of IHG’s wayward shoppers; capturing 37% of IHG’s lost bookers.  In other words, for every 100k bookers IHG had in December, another 37k could have been IHG bookers, but instead booked on Hilton.

Knowing who the real competition is and benchmarking against it will help these hotel chains understand how to minimize lost revenue from lost bookings.  The next step for IHG, or any hotel chain, is to identify how to maximize the revenue from booking-ready consumers already on their site.   The first step in that process is identifying how the share of defecting visitors that actually booked elsewhere has evolved over time, and within the context of the market and rivals.  These are the prospects that are the most important to preserve.  Next is revealing where defectors booked and why.

For example, are defectors more brand loyal or more price sensitive?  Does defection improve as you start new campaigns?  When does defection worsen as your competition offers new or enhances deals?   To what extent does your site design influence defection?  Are defectors booking on your target rival sites, or elsewhere?  Do traffic source strategies impact booking success.

About JackieODowd:
Jackie is a marketing consultant for Compete with over 10 years client service and consulting experience in automotive, travel and youth marketing. Jackie holds a Master’s from Northwestern University in Integrated Marketing Communications and has been part of the Compete team for longer than she can remember. When she isn’t writing for Compete, Jackie spends her time running around after her kids, sampling organic wines and pondering life’s questions like…’can I throw this away without anyone noticing?’ You can connect with Jackie on LinkedIn or Twitter.