With all indicators in the region’s hospitality sector looking very positive, there are plenty of causes for optimism. Dubai has been voted the best city in the world for hotels and shopping by TripAdvisor users in the second annual Cities Survey, beating New York and London for shopping, and Cancun and Bangkok for hotels.
STR Global reports Middle East occupancy as increasing by 3.3 per cent to 75.1 per cent in the first quarter, and the average daily rate gaining 2.2 per cent to $220, while revenue per available room shot up 5.6 per cent to $165.
But STR also added that if all the rooms in the region’s pipeline were to open, supply would increase 40 per cent. Some industry operators also caution about the risk of saturation in the UAE’s F&B sector, with the rapidly increasing number of outlets in malls and hotels vying for residents and tourists.
This crowded market means marketers need to focus on building and sustaining customer relationships, and driving revenue through them. According to a survey of US marketing executives by Gartner Inc., digital marketing budgets will rise by 10 per cent in 2014, following a double-digit percentage increase in 2013.
It stated that on average, companies spent 10.7 per cent of their annual 2013 revenues on overall marketing activities, with digital marketing spending averaging 3.1 per cent of revenue. (The respondents were from eight industries, but did not include hospitality.)
In the Middle East — and especially in the UAE — the real story of digital marketing innovation and investment in the region is in the hospitality sector, where social media is making a real impact on revenues and showing demonstrable return on investment.
Lack of understanding
But it can be a tough sell and especially for social media — 47 per cent of companies are still unconvinced about the value of social media (source: Bigmouth Media & Econsultancy 2013).
Commentators believe that US hoteliers underspend on digital marketing and continue to rely on ‘obsolete advertising formats’. They cite a lack of understanding that travel consumers have migrated to online, social and mobile channels.
Gartner believes that digital marketing is taking an increasing share of the marketing budget; 11 per cent of respondents said they spent more than half of their marketing budgets on digital activities in 2013 compared with only 3 per cent in 2012. Digital marketing represented an average of 28.5 per cent of the total marketing budget in 2013, as compared with 25.5 per cent in 2012.
However, while US hoteliers are spending an average of 28 per cent of advertising on digital marketing, over 42 per cent of room nights booked come from the Internet, and the vast majority of room nights booked via other channels are ‘directly influenced’ by the digital marketing presence of the hotel.
In the UAE, we see a perfect convergence in one of the most advanced, tech-savvy countries in the world (recently ranked the 24th most networked ready country by the World Economic Forum). Its hospitality and travel markets attract millions of tourists, while its resident base has a sizeable number of the young, affluent, online and mobile-enabled population. UAE hospitality marketers have to follow them and harvest the opportunity of the mobile-enabled social world of their consumers.
The return on investment for digital marketing is clear in the results achievable through integrating digital marketing and social media, where dedicated Facebook Apps can drive room, F&B and spa/other services bookings. They can create customer interaction and reward them, as well as drive traffic to the hotel website and collect data to through integrated back office management, creating even greater insights into customer behaviour and preferences.
There are some other real benefits, too. Beyond one-way digital marketing and advertising, socialising online with your consumers will increase a company’s Google and Bing visibility, as this factor becomes increasingly important in search engine optimisation.
This potential for consumer intimacy makes social media a vital part of digital marketing for the hospitality sector and a driver of customer relationship management, whether aimed at the resident population faced with a huge number of F&B choices, or overseas guests looking for a hotel room and other services.
— The writer is CEO of Dubai-based Nexa, a digital marketing agency.