Mobile Hotel Bookings Show ROI in Recession

A Look at an Emerging Channel Marketers Aren't Cutting

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NEW YORK ( -- Hotel operator Marriott reported an earnings loss for the fourth quarter last week, but there's one small encouraging sign: the chain's mobile bookings.

Marriott Mobile generated $2 million in gross revenue between its August 2008 launch and the end of the year. But revenue from mobile bookings in January was headed upward fairly quickly, the hotel chain told Ad Age.

Marriott Mobile
Marriott Mobile
Meanwhile, Omni Hotels' mobile site has grown 85% in the past six months, and Hilton's mobile channel has generated a 22% return on investment for the brand. Those kinds of numbers are bright spots in a tough time for hoteliers -- and they show that even in recession, companies are willing to invest in and experiment with new media when the ROI is clear.

While some hotel operators have dipped their toes into mobile advertising, none has aggressively promoted its mobile site. But customers are finding the sites anyway, as often-early-adopting business travelers buy rooms wirelessly when travel plans change because of flight delays or bad weather.

One of the biggest drivers: convenience
A third of U.S. travelers have used their mobile phones to access the internet, although only 15% of travelers showed interest in purchasing travel using their handsets, according to a PhoCusWright survey based on about 800 responses. On the upside, 48% of travelers who earn more than $200,000 a year said they were open to getting travel offers, vs. 32% of those who earn less. Twenty percent of the highest-earning group said they were interested in mobile bookings, likely because they're early adopters.

"Convenience will be one of the biggest drivers," said Kyra Hicks, who directs Marriott's online-sales programs.

Omni Hotels' mobile site has also been working hard without the benefit of any direct promotions. Its WAP site traffic grew 85% in the past six months, and mobile is seeing a conversion rate of 25%, said Kerry Kennedy, the hotel's e-commerce director.

That means one in four people who visit the chain's mobile site end up booking a room, suggesting that many users who come to the site are not comparison shopping; they already know they want to purchase a room. Mobile's conversion rate far exceeds the 3.5%-to-7% rate of the hotel's online website, Mr. Kennedy said.

Investments in mobile amid cuts
Omni is cutting budgets across the board, and marketing dollars aren't exempt, but the company will continue to make investments in mobile initiatives that can effect sales conversions.

"We don't have to do mobile banner ads," Mr. Kennedy said. "They're great for visibility and brand awareness, but we have to make sure there's a tangible ROI with everything we do."

Mr. Kennedy said while many of the wireless bookers are likely already familiar with the Omni brand or are enrolled in one of its loyalty programs, some arrive at the hotel's site via location-based services.

Hilton told Ad Age its mobile channel has generated a 22% return on investment for the brand, even though it has done limited mobile promotions. The hotel chain spends about 1% of its total distribution spending on mobile, said Chris LaRose, who directs Hilton's website strategy. Distribution spending includes the points through which customers buy rooms from Hilton, such as call centers and global distribution services used by travel agents.

Mr. LaRose said he couldn't disclose the exact revenue derived from mobile last year, but added that wireless bookings generate roughly $1.4 million in an average 100-day period. He did say more marketing dollars are expected to be allocated to digital in general and mobile in particular.

'Shift to digital'
"Where we're seeing in general is a shift to ... digital across the board. The rate of return that we're seeing in online campaigns is much more favorable than what we've seen historically in print," he said, adding that because it is still an emerging medium, it will take some time before mobile ROI is on par with the return from traditional online channels.

Hilton is also expected to double its mobile spend this year and invest in ways to get consumers onboard beyond just rooms booking by bringing apps, widgets into the fold, Mr. LaRose said.

Other initiatives include mobilizing some of the services the hotel offers such as check-ins, arranging room service and booking sightseeing trips -- all in advance of arrival.

"We're trying to ... incorporate a more holistic view that Hilton Hotels aren't just guest rooms. It's a stay; it's an experience," Mr. LaRose said.

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