October 23, 2020
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Ullrich Kastner: Current developments of online marketing in the hotel industry during the Corona crisis

Especially tourism suffers from the consequences of the Corona crisis and has to struggle with heavy losses. But what is the situation in the hotel industry? Which hotels are suffering the most from the restrictions?

Ulli Kastner: In general, it can be said that city hotels are particularly affected by the consequences. However, there are also differences. Hotels whose target group consists primarily of business travelers and international guests have a significantly lower demand than hotels where most guests are national travelers. Cities such as Berlin, Frankfurt, Düsseldorf or Munich have seen a reduction in normal demand of up to 80%. However, cities like Hamburg or Dresden are already doing quite well again.

The picture is different in the leisure hotel industry. We are writing record figures with many hotels. The domestic travel trend is filling the beds and customers book almost exclusively online. Those who offer direct booking options have growth rates of 400 percent via the website in some cases. That is impressive.

Most interesting: The online distribution channel is gaining importance. More and more vacationers book on the Internet. Hotels notice that and spend partly more money for online marketing than before the crisis and can secure market shares from the OTAs. This is the good news in generally bitter times. We have also gained more new customers in the second quarter of 2020 than in the same period in 2019. Online direct sales are even more relevant and hotels are less interested than ever in booking & Co.

How are the consequences of the recent accommodation bans affecting you?

Ulli Kastner: We are of course experiencing a decline in demand. We are seeing up to 50 percent fewer clicks and conversion rates are also falling. And there is also a higher cancellation rate. Politicians have done us a huge disservice in this respect. These were four lost weeks, which cost the industry and us a lot of money.

Online marketing, especially meta search marketing, helps most hoteliers to strengthen and expand their direct sales. But is it worthwhile in these times to continue with Google, Trivago, Tripadvisor and Co. or would you rather keep the budget together?

Ulli Kastner: We strongly recommend our hotels to continue. The good thing about online marketing is that costs are variable. If there is no demand, i.e. the users do not click on the campaigns, there are no costs for clicks. And especially the little demand that is currently present in the cities is better received directly than through online travel agencies (OTAs). Cost-per-click prices are lower than ever. Our customers' cost ratio has fallen by 2 to 4 percent since June, and that is pure profit. And we've also seen that hoteliers who have stopped their campaigns with us and are now running the few bookings via OTAs are currently having to pay quite a lot for this. Now is the time to take advantage of the situation and invest.