As the travel and hospitality industry prepares for next year, let’s not kid ourselves: It’s likely not going to be as great as this past year.

The world is changing again. We’re (probably) not facing another 2020 or 2008 or 2001. But, the economy remains weird. Yes, leisure travel has been incredibly robust, but that could change at any time if guests start to worry about the state of their finances. There’s little evidence that business travel is returning to historic norms. Business leaders have found that virtual tools allow them to remain productive and generate revenue without requiring traditional levels of travel. Don’t expect that to change anytime soon.

Of course, if your property traditionally relied on business travel before COVID-19, you’ve been living with that reality for a while now. But we’re seeing countless examples of hotel commercial teams executing innovative tactics to get their share of guest revenue even in tough markets.

The cost of guest acquisition is fairly low as a percentage of revenue. But online travel agencies are beginning to get more aggressive in their marketing spend to gain share. Booking Holdings increased its marketing spending by 27% vs. 2019, and Expedia’s marketing spend is up 8% relative to 2019 with no indication that either plan to slow those investments. Booking’s Chief Financial Officer David Goulden said on the company’s latest quarterly earnings call that the executives have chosen "to drive ourselves, to continue to lean into the recovery.”

Given the terrible recent earnings announcements from Google, Microsoft (i.e., Bing), and Meta Networks (that’s Facebook and Instagram to you and me), your biggest advertising platforms have huge incentives to increase their revenues. Guess where those costs end up? You know it: as increased cost of guest acquisition.

Just to add to the fun, measuring your efforts is getting tougher. Privacy initiatives such as Apple’s App Tracking Transparency and Intelligent Tracking Prevention, as well as Google’s commitment to phase out third-party cookies and shift to Google Analytics 4 are starting to make tracking the effectiveness of your marketing investments more difficult.

So … yay?

Despite these challenges, I’m convinced that the world next year offers as many opportunities as challenges. Seriously.

First, the economy is far more uncertain than it is outright bad. Negative forecasts are just one of a series of possible outcomes. It’s possible that the worst case doesn’t turn out to be all that bad. Hopefully.

Second, if the pandemic has taught us anything, it’s the value of remaining nimble in the face of tough times. And that travel is a hugely important part of our guests’ lives, one that they’ll prioritize even in tough times. What we have to do is prepare now for whatever happens next year and be ready to shift plans based on reality, not just forecasts, no matter how well thought out they may be.

So, how do you do that?

What is your hotel’s base case for next year? What will you do if things shape up exactly as you forecast? Now, think about the worst case? How would your plans change in that situation? And, of course, what’s your best-case scenario? What would you do differently if business shifted dramatically for the better? You don’t need to have a fully baked marketing and operations plan for each situation, but, again, the pandemic taught us the need to adapt quickly. And that’s much easier to do if you’ve given some thought to what those plans would look like in advance.

Now, I imagine you’re already doing this. But we have to keep a very close eye on how we’re tracking against forecasts in an uncertain market. In particular, keep your eye on leading indicators including pace, lead time to book and website traffic. Segment those reports by booking channel where possible to make sure you’re getting your fair share of direct business as well. If you’re not already using GA4, get that set up ASAP. It’s already too late to avoid losing year-over-year tracking; don’t make that worse by waiting any longer. Finally, pay particular attention to trends around branded search to see how many guests are looking for you by name. That’s one of the best ways to lower your cost of guest acquisition long-term. Keeping track of how often people look for your brand can help understand how effective all your marketing is — and pay long-term dividends for your business.

Speaking of lower cost of guest acquisition, make sure you’re continuing to grow and maintain your database. Our research shows that every qualified email you collect turns into between $5 and $25 in long-term room revenue. Connecting with these guests is relatively inexpensive. And, best of all, these folks typically book direct, improving your overall return on investment.

Again, we learned the value in staying flexible during the pandemic. Don’t lose that skill set. We could see continued healthy demand next year. We could see a downturn. We could see almost any reality emerge. Keep the lessons we’ve learned the past few years top of mind and you’ll be ready no matter what happens.

The point is to not pressume the worst about next year. Instead, assume that uncertainty is going to be part of the new normal for some time to come. Guest acquisition might get more expensive. Demand may vary. So, plan for that uncertainty. Think through your most likely scenarios. Pay attention to your numbers, particularly your leading indicators. Connect and build relationships with your best guests. And maintain a nimble approach to handle changing market conditions. That’s living in the world as it is. And hotel commercial teams that do that are the ones who’ll be best positioned to finish next year in a much better place: On top of the world.

Tim Peter is the founder and president of Tim Peter & Associates.

The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or CoStar Group and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to contact an editor with any questions or concern.

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