2.2% – a closer look into hotel conversion rates

What is the average conversion for a hotel website? 2.2%. That’s according to a recent Fastbooking study. The UK firm 80 Days, in an extensive report titled “The great unanswered digital questions of hoteliers” came to a similar conclusion: 2% percent.

Both studies were conducted on hundreds of hotels, different in size, star rating, and location. Results, therefore, are pretty reliable, but this does not mean that if your hotel is performing below this percentage you are doing a mediocre job, au contraire! When it comes to hotels, in fact, there are dozens of factors and variables that can cause this number to fluctuate wildly.

No such thing as an industry average

In the article mentioned above, Jean-Louis Boss, Fastbooking chief marketing & digital services officer, writes:

“One shouldn’t be fooled into trying to meet an industry average. Instead one needs to understand the factors that make up those rates and try to improve each point”

I fully agree. Take into consideration that conversion not only has to do with the number of finalized transactions on the booking engine but with the number of website sessions as well, meaning that the more traffic your website has, the lower your conversion rate is likely to be.

The website sessions paradox

In my career, I have been a consultant for hotels with very high positions in review sites. One, in particular, ranks #1 on TripAdvisor out of 1,200 hotels in its city, and it has been there for a few years now. This fact alone positively influences its official website traffic, although this traffic does not come uniquely from users willing to book.

“With great powers come great responsibilities”, said (probably) Voltaire or (less likely)  Churchill (the paternity of the quote is still debated to this day).

You can imagine how many nosy users, travel bloggers or envious competitors check its website out of mere curiosity. Its results, if I look at the revenue alone, are great, but conversion stagnates at 0.10% (more than twenty times lower than the Fastbooking and the 80 Days analysis) and no matter how much I optimize its distribution mix and its advertising strategy, the number is unlikely to change.

I had the same “problem” with a hotel twenty kilometres south of Athens, Greece: it owns one of the biggest wellness centres in southern Europe, and half of the website users are locals looking for its famous thalassotherapy treatments.

Average conversion is 0.7%, but if you filter its spa page traffic out, it spikes to 1.5%. You can run an empirical experiment yourself: monitor your conversion rate the week after sending out the yearly Christmas greetings newsletter. It drops dramatically.

Is it a bad thing? Of course not, it only means that your website traffic is up. That is why I prefer to play it safe when it comes to absolutisms on the hotel conversion rate subject.

The 80/20 rule and conversion by source

Now, according to FastBooking, 20% of its hotels have a conversion rate of 5.6%, over twice the average. Again, this data is just simple indicators and should not be taken as a general rule or an industry standard, but they give a pretty interesting view of our over-fragmented industry.

The sources of traffic seem to play a major role in conversion rate: Google Hotel Ads has a remarkable 4.17% average conversion rate, more than twice Adword’s (2.05%). Not all metasearch are created equals, though, and TripAdvisor gets the bronze medal with a mere 2.34% conversion rate.

Organic search, not surprisingly, is slowly but steadily dropping: with natural SERP results pushed further and further down by paid ads and universal results, your precious SEO tactics produce only 1.55% conversion rate, less than Trivago, a channel known for its not-always-amazing ROI.

hotel conversion

Desktop versus mobile

It’s the end of desktop as we know it

The Fastbooking article then analyzes conversion by device. As you may already know, in late 2016, internet usage on mobile devices exceeded desktop’s for the first time in the history of the web, though the conversion trend did not move at the same speed. Mobile conversion is, de facto, only 0.8%, 1/6 of desktop conversion. The lack of a centralized, user-friendly and standardized mobile payment system is one of the crucial industry knots that we are still unable to untie, and this partially explains these unencouraging results.

The Occam’s Razor: location and rates

When looking at location, the study shows rather predictable results: properties in capital cities get on the podium (2.56% conversion rate), almost one point more than seasonal touristic destinations (1.78%). Similar results are provided with conversion by rate: properties with daily prices below 150€/night have a conversion of 2.74%, while more expensive properties drop down to 1.35. Equally unsurprisingly, the study points out that hotels can increase their conversion up to 67% by simply offering the best available rate on the official website.

The light at the end of the funnel

The study takes then an interesting turn when it breaks down the traveler online booking journey: 42% of users checks the hotel booking engine for availability and rates, 9% moves forward into the booking process and only 2.2% finalizes the transaction. This cast an eerie shadow over the common booking engine user experience and reinforce the need for a better and frictionless check-out experience.

UX, speed and widgets

The study ends with some general tips on how to optimize the user’s booking experience, by offering a clean and lean design, emotional impact and fast loading pages. It then highlights the increasingly relevant role that third-party widgets play in today’s conversion landscape: from price comparison tools (average 30 percent of conversion increase) to review widgets (+15%) and live chats (+15%), these widgets are a strong ally in your quest for better conversion.

Conclusion

There will never be a unique answer to the one-million-dollar “what is a good conversion” question, we simply have to deal with it. Variables at play in the Hospitality industry are way too many to agree on a percentage,  nevertheless, studies like the one published by Fastbooking or 80 Days are essential to (at least) understand if we are moving to the right direction.

And, by the way, some people attribute the “With great powers come great responsibilities” to SpiderMan.

I like to think they’re right.

Related reading:

Video: the impact of AI on improving hotel conversion rates

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Simone Puorto

About the Writer :: Simone Puorto

Simone Puorto is a passionate marketing geek. After managing two hotels and running a team of consultants, he eventually focused on his biggest passion: writing. Over the last decade, he has worked with hundreds of hotels, web agencies, startups, and travel-tech providers worldwide. All these experiences ended up in two best-selling books and hundreds of articles. He's an MBA Lecturer Professor, Advisory Board Member for BWG Strategy, panel moderator, public speaker and regular contributor for blogs and magazines such as tnooz, HOTELSMag, HotelTechReport, and Booking Blog. In 2017 he launched his own company (Simone Puorto Consulting) and in 2018 he co-founded the hospitality chatbot startup Tell the Hotel.

 

Comments

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  1. Sam Weston, Marketing Manager @ 80 DAYS

    Thanks for highlighting our report Simone – a very interesting article.

    Driving incremental conversion gains is a fascinating science. We’ve been doing a lot of work recently to understand and improve conversion rate, looking beyond the norm to discover some of the more interesting influencing factors.

    Our free benchmarking tool, 80 DAYS Benchmark, can help 4 and 5 star hoteliers determine how their conversion rate (and various other metrics) compares versus their respective markets, but we would absolutely echo Jean-Louis’ thoughts that a benchmark isn’t a target to match.

    It can be counterproductive to think that the industry average is what you should be aiming for. Averages are exactly that; average. The adventurous hotelier should be aiming to drive those averages up.

     
  2. Krzysztof Kaczmarek

    You shouldn’t compare conversion rates from Google Hotel Ads to conversion rates from all AdWords campaigns. Only performance of branded keywords campaigns can be compared to GHA, and these campaigns usually have much higher conversion rates than 2.05%.

     
  3. Max Starkov, President @ CEO HEBS Digital

    Jake, I fully agree that the booking engine and its UX as well as rate disclosure are important factors for website conversion rates. So a top notch booking engine like SynXis or Windsurfer, full rate disclosure, messages like IHG’s “Book with Confidence” including Best Rate Guarantee, Reservation Abandonment Applications, etc. can definitely increase conversions for the ones that have entered the booking process. But with less than 1/3 of website visitors even entering the booking process, what happens with the remaining 2/3 of visitors? Obviously there are other factors in play here: quality of the website content, mobile-first design (59% of website visitors come via mobile devices today), strength of the property’s promotions, packages and special offers, website download speeds, etc.

     
  4. Jake

    > 42% of users checks the hotel booking engine for availability and rates, 9% moves forward into the booking process and only 2.2% finalizes the transaction. This cast an eerie shadow over the common booking engine user experience and reinforce the need for a better and frictionless check-out experience.

    Your conclusion is not supported by my (rather unscientific data): a lot of people dropping out of the booking process is due to drip-pricing and/or the poor upfront disclosure of important rate attribute. So that $100 rate is really $135 when the mandatory “resort” fees are disclosed after requesting prices, or that $135 is encumbered by a long no-cancellation period or is completely non-cancellable.

     
  5. Max Starkov, President @ CEO HEBS Digital

    From our experience across thousands of hotel clients we have learned that hotel website conversion rates (CR) are dependent on a multitude of factors, including:
    * Branded vs. independent hotels: branded hotels tend to have much higher website CR due to the strength of their loyalty programs, managed corporate travel programs, strength of their brand equity (Marriott vs. lesser know brand), etc.

    For independent hotels, resorts, small and midsize hotel brands, the average website CR is 2.35% across our client portfolio, but it ranges wildly based on our clients’ willingness to invest in their website. Here are the 8 main factors impacting website CR today:
    • Market parity: How do the property rates compare to the comp set in the destination
    • Rate parity: Are the property rates in parity across all distribution channels, including OTAs?
    • Is the website up to par with industry’s best practices: mobile-first responsive design, underlying website technology (CMS) and strength of various modules, enhanced merchandising platform, personalization capabilities and user experience (UX)
    • Website Download Speeds: typically cloud hosting with CDN achieves the best results, especially on mobile
    • Reservation Abandonment Application in place
    • Quality of the booking engine: is it responsive, merchandising capabilities, etc.
    • Enticing promotions: are their packages and promotions addressing all customer segments and all property occupancy needs
    • Is there Guest Recognition/Reward Program in place.

    Developing a robust website conversion strategy should become the top priority for hoteliers in 2018. This is a crucial step for improving direct bookings and lowering distribution costs. Any investment in website conversions will not only pay for itself, but will reward the hotel generously by improving the bottom line. Start by evaluating your current website conversion rates, the quality of your website technology, and the overall design.

     
 
 

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