Newsletter - May 14, 2002

DIGITAL MARKETING IN THE LUXURY TRAVEL SECTOR

By Tim Stock

Thanks to bargain-hunting travelers and the growing use of the Internet for more than just airplane tickets, the online travel business is strengthening. Better still, the online outlook is brighter than that of the industry as a whole. In fact, Jupiter Media Metrix reports that travel advertising online has returned to 94 percent of its pre-Sept. 11 levels.

A rose-colored view

That's great news for the majority of hospitality suppliers, but what does the resurgence mean for the luxury travel market? The rosy outlook has come through special deals and bargains for travelers that are creating a serious profit crunch for the luxury niche. In fact, Ernst & Young expects industry profits to tumble 18 percent to $18.4 billion this year, down from $22.5 million in 2000.

Yet it's no surprise that price-slashing practices benefiting budget or mid-tier travel may not be appropriate for luxury travel. Marketing discounted rates whether online or offline won't appeal to discerning luxury customers. And, sadly, should another catastrophic event occur, no amount of discount will ever get these customers back.

Still luxury marketers need to search beyond their short list for new customers. And, without a doubt, digital marketing is the way to go. Along with getting the word out to new prospects, digital marketing enables luxury marketers to strengthen their identities, too.

Luxury demands service

Throughout every point of the sales cycle, today's sophisticated leisure and business travelers seek a combination of service and style that makes them feel pampered. Pampering is the hallmark of luxury providers--a trait that affords world-class reputation and market premiums. From most angles, these providers maintain a lofty status. Despite their reputation for cutting edge person-to-person service, these same providers lag behind the travel industry's more competitive tiers when it comes to using the Internet.

Traditionally, luxury travel providers have viewed computerization as the antithesis of service and style, rendering online media an unacceptable marketing tool. However--with the current climate compounded by increased competition, rising operating costs, shortages in labor and the overall need to do more with less--digital media could not be a more potent tool if used correctly. In the case of luxury travel, technology can be used to strengthen the service encounter by improving delivery, consistency, reliability, accuracy and speed or efficiency. Is efficient and robust communication not a luxury? Marketers can gain rich knowledge by developing a new dialog with customers.

Success is in the planning

Just like any serious marketing effort, working with digital marketing requires a plan that is in line with the key strategies of a property's business model. Luxury travel marketers first need to take a step back and think about the goals of their traditional media, and apply those goals to their digital campaigns.

A luxury hotel, for instance, would not be advised to embark on a sweeping email blast or promote deep discounts through Internet advertising. Neither tactic would efficiently bring loyal customers, although a few stragglers may come calling once or twice.

The typical goal of a traditional luxury marketing campaign is to reinforce branding, to overwhelm potential customers with the "wow" factor. Nevertheless, the savviest luxury providers know that they must offer substance along with brand-enhancing messages. One Chicago hotel provides customers who have arranged in advance for limousine transportation from the airport with a "limousine menu." Their order is delivered to their room upon check-in. These amenities can easily and effectively be brought into online marketing for a more robust digital experience. A convenience, such as a "limousine menu," could be made available to customers through email or even on the property's Web site.

Meanwhile, a Las Vegas resort chose to make the online booking experience easier for travelers who prefer human interaction, by adding voice call capability to their email communications and Web site.

Fortunately, marketers don't need to realign the stars just because technology exists. Some of the most powerful upgrades include simply revamping online content to better outline valuable services provided or regrouping online content to reflect the convenience of an "online concierge."

Know the customer

Whether embarking on an email, online, GDS, PDA or wireless campaign, luxury providers first need to know whom they want to market to--no matter how finite the profile of choice. To begin the dialog necessary to acquiring customers, it's better to have a small universe of 100 highly-likely-to-book potentials than 20,000 broad possibilities.

This enables that flexible service for the same type of transaction can be provided while still maintaining customer satisfaction. These potential customers can then be segmented into like groups based on the types and levels of service they desire and require. Once these scenarios have been broken down, marketers can zero in on the important elements of the campaign: the quality of the list or the media buy, the offer and the creative execution. Personalized, tightly woven campaigns will be
the antidote to spam and will be key to building lifetime value.

We all recognize that travel has been hit hard by recent events, but there are luxury travel customers out there ready to accept marketing messages. Even in light of circumstances, Forrester reports that 48 percent of Web buyers are unconcerned about the economy. They are not concerned that the economic instability will affect them and are responsible for 52 percent of total online spending. These consumers are relatively affluent compared with their offline counterparts and therefore are more attractive customers for luxury marketing. According to Jupiter, four online travel agencies and three airlines are among the top ten online travel advertisers, accounting for 70 percent of the market. As the market continues to rebound, these travel advertisers are gaining fertile ground - and the data they need - for explosive growth to succeed. The question is: Will you be among them?

What's the point?

That said, what can luxury marketers expect to garner from an effective digital campaign? Definitely, brand recognition and information that allows marketers to confidently follow up with interested customers. Ideally, a depth of relationship that provides for a more targeted segmentation. Certainly, a better click-through rate and higher customer satisfaction. Marketers should be setting metrics that work toward establishing a foundation for future, more highly targeted, campaigns. A small group of luxury hotel properties, for instance, may want to track how they can migrate customers from one property to the next. Another luxury provider may consider how to turn business travelers into leisure travelers--or vice versa. Keep in mind, no matter how you slice it, acquiring customers is expensive.

Whether sending traditional direct mail, using banner ads or renting lists of email addresses, media cost and response rates drive customer acquisition costs anywhere from $70 to $250 according to Forrester Research. The premium benefit of using online media is that it can be applied incrementally from one niche to the next, allowing marketers to monitor real-time effectiveness at each step. As they gauge results, marketers can make quick decisions about whether to invest more in certain niches or not--an attribute that's especially important with today's restrictive budgets.

The retention marketing story

With retention conversion costs from approximately $5 to $20, retention marketing is another sequence. Check back with us for "Digital Marketing Works for the Luxury Sector Too, Part 2: Retention (Keeping Them)."

Debunk the Myths

- Digital marketing is not a quick and dirty substitute for direct mail.

- Digital marketing is not always the least costly solution, but acquisition rates for digital marketing reach 2.5 percent versus 1 percent for direct mail.

- Digital marketing does not alienate consumers from the personal touch. In fact, it can help define the value-added service that differentiates a luxury brand.

- Digital marketing does not necessarily require a vast pool of consumers. Highly targeting niche segments proves to be the most effective technique.

- Digital marketing is not an all-or-nothing proposition. Digital services can and should be scaled and tailored to customer needs and preferences.

Tim Stock is the President/CEO of scenarioDNA inc. scenarioDNA develops digital-marketing strategies exclusively for travel/destination clients. 

Source:  Hotelmarketing.com


WORLD TOURISM TO REACTIVATE IN SECOND HALF OF  2002

Xhinhua News Agency  -  The World Tourism Organization (WTO) representative for the Americas, Carlos Gutierrez, forecasted on Thursday a recovery of the tourist sector by the second half of 2002.

Gutierrez, who is participating in the 2002 International Tourism Convention of Cuba in Varadero, a tourist resort some 100 kilometers east of Havana, said that among the favorable factors for this forecast was the gradual increase in travelers.

He numbered in this sense a decrease in inflation, moderate oil prices and the recovery of stock markets.

He said the forecasts indicate that there would be 1 billion tourists by 2010 and the number would grow to 1.5 billion one decade later.

The WTO official said that the sector has managed to recover, through an increase of reserves by tour operators and an increase in airline movements.

Gutierrez blamed the drop in tourism in 2001 not only on the September 11 terrorist attacks on the United States, but also on the world economic deceleration.

He said that among other negative factors were the outbreak of foot-and-mouth disease in Britain, the conflict between Israelis and Palestinians, and the Argentine economic crisis.

Gutierrez added that in this context, the most affected segments were, among others, long-trip travel and air travel, as well as those markets that mainly rely on tourism coming from the United States.

The Cuba 2002 International Tourism Convention started last Monday and will come to a close on Saturday.

HONG KONG UNIVERSITY  ‘SPACE’ OFFERS A PROGRESSIVE SERIES OF PART-TIME HOSPITALITY PROGRAMMES

Hong Kong is a leading tourist destination in Asia, and Tourism is the top foreign exchange earner among the service industries in the SAR. To support the hospitality and tourism services sector, there will be increasing demand for labour force with better training. The University of Hong Kong’s School of Professional and Continuing Education (HKU SPACE) is going to offer Certificate in Hospitality Management and Diploma in Hospitality Management in June 2002. The Bachelor of Arts in Hotel and Hospitality Management is proposed for September 2002.

The Certificate programme aims to produce graduates who possess the knowledge, skills and professional attitude needed to take on challenging responsibilities in the hospitality and related industries. This is a part-time programme covering six modules. Students may complete this programme in a minimum of one year.

The Diploma programme is to produce graduates who have acquired an in-depth knowledge and understanding of the theoretical and technical aspects of management of a variety of hospitality industry business operations. This is a part-time programme covering twelve modules with face-to-face lectures. The programme may be finished in a minimum of 4 terms in 2 years. Application Deadline for the above two programmes is June 5, 2002.

The proposed Bachelor of Arts in Hotel and Hospitality Management programme, is offered jointly by HKU-SPACE and the Scottish Hotel School, University of Strathclyde as a top-up, part-time programme for the Diploma in Hospitality Management programme.

This is the first time that such progressive series of part-time hospitality programmes are designed by any educational institution offering academic and professional certification with local and international recognition.

Eligible students may apply for a $10,000 subsidy from the SAR Government new Continuing Education Fun.

Details are available at our website www.hku.hku/space/. For enquiries, please contact Dr Roberta Wong Leung at 2867 8386 or Ms Fiona Lam at 2867 8308.

PHUKET RUNS AFTER BEACH-SEEKING MICE

TravelAsia.com   -  PHUKET: Hotels on this world-famous island are positioning their properties for a much-awaited MICE business takeoff later this year. A Tourism Authority of Thailand (TAT) survey says Phuket has the best potential for development as an international convention destination, with Bangkok second, Chiang Mai third and Pattaya following fourth.

In 1999, 299 international conventions were held in Phuket compared to Bangkok’s 387. In 2000, Bangkok hosted 624 international conventions while Phuket hosted 450. Last year’s figures were not immediately available. Even with three million tourists or so visiting annually, Phuket still lags behind Bangkok as a Mice hub. But local hoteliers believe it is only a matter of time before Phuket outranks Bangkok.

“With a choice of almost 30,000 rooms, from exclusive luxury hotels to small bamboo bungalows, Phuket has something to suit every preference, every budget,” said Poomiphat Navanukroh, general manager of Cape Panwa Hotel. “Although primarily a pleasure destination, it caters to a large number of corporate groups who find the island’s Mice facilities ideal for all types of corporate functions.”

The four-star Cape Panwa Resort is expanding its facilities to attract more Mice customers and is undergoing a series of renovations and refurbishment to this end. The resort, located at the tip of its namesake Cape Panwa, “is a secluded venue for serious discussion groups and impact training, well away from the distractions common to many Southeast Asian holiday destinations,” says Navanukroh.

Thailand’s tourism plan for 2002 mandates TAT to develop for Mice, not only major cities as Bangkok, Phuket, Chiang Mai and Pattaya, but also other parts of the country with perceived potential. Phuket has just been aggressively increasing its appeal to the market in the last few years.

In 1999, Sheraton Grande Laguna Phuket was adjudged ‘Best Meeting Venue (Resort)’ by the Meetings and Conventions, Asia/Pacific Magazine. With its concept as an integrated resort whereby meeting participants have easy access to Laguna Phuket’s 28 restaurants, world-class golf course and health spa, it attracts a major share of the important Mice market.

In fact, the whole of Phuket’s hospitality industry is expanding Mice capabilities. From Phuket Arcadia Resort to Central Karon Village, Royal Phuket City Hotel to Novotel Phuket Coralia and Le Meridien Phuket to JW Marriott Phuket, the net for the Mice market is being cast with industry-wide fervour.

JW Marriott Phuket Resort and Spa anchored its marketing pitch as Phuket’s newest Mice venue with the importance the industry now places on the market. More than just banking on luxurious accommodation and extensive conference facilities, the hotel saw it fit to emphasise its location: 11 hectares of exquisite tropical gardens, with 17 kms of natural, undeveloped beachfront, adjacent to the Sirinath Marine National Park, and protected sea turtle nesting area on the Mai Khao district, the proposed site for the new Phuket Convention Center.

Even the Evason Phuket, while not being marketed by Six Senses as a Mice hotel, intends to get a piece of the Mice cake. Bernhard Bohnenberger, managing director of Six Senses notes: “The hotel gives us great opportunity for the meeting market, and for selling rooms during the low season. While leisure remains our main market, we don’t want to lose out in any sector.”

Phuket Arcadia Resort, which has a convention room that can accommodate 1,300 persons and currently boasts the largest number of rooms on the island, has added 220-rooms more to its existing 475 rooms to meet Mice needs.

Together with state-of-the-art conference facilities and a plethora of extramural activities, providing ‘value add-ons’ is increasingly becoming important. Thavorn Palm Beach Resort and Thavorn Beach Village added the Ramakien murals to their huge sculptures of Thai giants and guardians. Visitors to Karon Beach Resort walk through the mouth of Hanuman, the Monkey King, when they return to their rooms. And almost all Mice-inclined hotels have created special Mice deals and packages, not to mention Mice-market specific in-house entertainment promotions.

Smaller resorts are not to be outdone. Chedi Resort on Pansea Bay, which has been attracting the leisure market for 12 years with its private, quiet cliffside bungalows, has refurbished 110 cottages to five-star standards. It now boasts three international restaurants, all with Andaman Sea views, and a quaint, private conference space.

“Phuket has very few equals in the region,” concludes the Cape Panwa general manager. “In terms of ease of international access, communication and service standards, Phuket certainly delivers.”

The Mice industry in Thailand has enjoyed an average 10 percent growth per year in the past few years. The country ranks as 24 in the world and fourth in the Asia-Pacific region

Source:  TravelAsia.com

TAHITI IS TEMPTING

TravelAsia.com   -   Located across the world from France, the French Polynesian islands collectively known as Tahiti, are now hoping to redirect divers from the reefs of Malaysia and the Philippines.

The more popular of Tahiti’s 118 islands for dive holidays include Rangiroa, Bora Bora and Moorea. Jonica Parmor, regional director of GIE Tahiti Tourisme (jonica@traveltotaihiti.com.au) informs: “Each island is different. Islands such as Rangiroa are ‘low islands’ surrounded by a lagoon. while Moorea and Bora Bora are ‘high islands’ with mountains in the centre.”

Accommodation on Tahiti can generally be grouped into two categories: resort bungalows and family pensions. Prices for the former start at 30,000 central pacific francs (US$300) to 70,000 central pacific francs per night or more. Pensions costs 10,000 central pacific francs per bungalow per night, on average.

According to Didier Alpini, general manager of Dream Travel Tahiti, Rangiroa is extremely popular with Japanese tourists, thanks to direct flights from Japan. “Bora Bora is popular with the American tourists and Japanese honeymooners,” he adds. The US represents the biggest market for Tahiti dive sales. At present, Asia represents a small portion of total dive packages and Japanese comprise up to 95 percent of total Asian business.

“We’re hoping to develop markets in Australia, New Zealand and Asia including Singapore and Hongkong,” adds Gilles Petre, general manager of Blue Nui Dive Centre. “People in Malaysia and the Philippines are also familiar with diving and they are looking for new dive spots. Tahiti can be a novelty for them.”

Tahiti is a year-round tourist and diving destination although there are specific dive seasons, depending on the migratory habits of marine life. For example, July through October is the season for whale watching while schools of hammerhead sharks can be seen in Rangiroa from January through March. August in Manihi and Rangiroa is Manta ray fish season.

But Tahitian dive operators are concerned that the higher cost of Tahiti diving packages are a major hindrance. Blue Nui’s Petre elaborates: “People tend to compare our prices with Fiji, Malaysia, Papua New Guinea and the Philippines, because our prices could be one or two times higher.”

Source:  TravelAsia.com

HOTEL CHAIN PROVIDES DOG OWNING GUESTS WITH MAPS OF FIRE HYDRANTS

In general, the hotel industry is trying to cater more than ever to guest with pets, but none of the chain hotels has gone as far as the 35-unit Kimpton hotel chain. For example, guests bringing their dog to the Hotel Rouge in Washington D.C. can spend $15 and get a heart shape peanut butter cookie and a map marking all the local fire hydrants for those all-important tinkle breaks.

At Kimpton's Hotel Monaco in San Francisco, VCR rentals of "Lassie," "Dr. Doolittle," and other animal- inspired titles are available on request. The Pacific Palisades in Vancouver allows its canine guests to play with bright orange Frisbees. Pet-friendly packages at Kimpton hotels include an in-house vet, use of therapeutic pet beds, and free doggie cook books. In most cities, the hotels have cleverly promoted the services through the local SPCA chapters who have thousands of well-heeled society members emotionally tied to their pets

BHUTAN OPENS THE DOOR

The Kingdom of Bhutan is making a serious push for top end tourism traffic, having inked agreements with three international luxury hotel groups, and eyeing new regional air links by the end of this year.

Speaking to TravelWeekly during the destination’s first appearance at ITB Berlin, director for the department of tourism Sangay Wangdi said that the kingdom was making a more concerted push for the high-end market.

Often mistaken by many as being “closed”, Bhutan was building a more solid promotions platform as part of a push by the government to create jobs, bring foreign currency and enhance the country’s overseas profile. However, it would keep regulations in place to avoid attracting mass traffic.

“The underlying policy is still high value, low volume, therefore we still charge US$200 per night,” said Wandi. “There was a misconception whereby people thought we had a ceiling on numbers but it was never there. Anyone who paid that fee could come in. The problem was that the government has never done marketing – but now, we’ve a distinct identity. This is a clear sign we are now in the market.”

Tourism numbers to the Kingdom remain modest at 6,300 in 2001, down from 7,500 in 2002. The country’s target is 15,000 in the next five years. Part of this would mean going into the first joint ventures with foreign partners.

“For developing this sector, we are permitting joint ventures in setting up high-class resorts – Aman is coming in, as are HPL (Hotel Properties Ltd of Singapore) and Oberoi. The government has cleared JV partnerships with these groups, who will go into joint ventures with local groups.

“These are high end brands, who bring clientele paying US$700 per night.”

Meanwhile national carrier Druk is looking to get two or three new aircraft by year-end, including Airbus 319s and Boeing 737-600s, which would spell a significant percentage increase in capacity. With the larger craft, the carrier is doing feasibility studies on possible routes including Singapore, Hong Kong and Dubai.

Source:  TravelWeeklyEast.com  

U.S. OFFICIAL FORECASTS INCREASING U.S. TOURISM IN CUBA

A U.S. tourism official forecast on Thursday that Cuba would become the main tourist destination for the United States when the blockade imposed by Washington against the island country is lifted.

Greg Ortale, the president of Minneapolis Greater Convention and Visitors Bureau who is now attending the 2002 International Tourism Convention of Cuba at the tourist resort of Varadero, some 100 kilometers east of Havana, told reporters the island has everything it takes to become a successful destination.

He considered that by the end of the blockade, the Caribbean country will have to increase and develop its hotel and non-hotel capabilities, because "there will be a large flow of my compatriots."