The best way to think about it is this: what’s stopping you earning as much from your rooms as you can? If you’re using an OTA, there are two answers:
- That guest has been acquired expensively and will continue to be so – because OTAs essentially lease your guests to you, charging the same high commission every time
- You’re forced to offer that room at your ‘best price’ – regardless of how valuable that guest actually is to you
But how valuable a guest is to you is about much more than what rate they’re paying on a given day.
Hotels know this. But this truth is hidden when using RevPAR alone. Here’s why:
Imagine two guests offering to pay £100 for your last room. But one booked direct, while the other booked through an OTA. Every hotel would rather have the guest who booked direct, because they’re cheaper to acquire. But according to RevPAR, both guests are worth the same.
NetRevPAR – which takes acquisition costs into account – is a better measure, but still doesn’t tell you the whole story…
Why? Imagine both guests are paying the same and cost the same to acquire. According to NetRevPAR, they’re equally valuable. But are they really?
What if one guest had never stayed with you before, while the other has stayed half a dozen times? You’d take the guest who’d stayed before. Because they’re more likely to keep coming back. So they’re worth more to you, over their lifetime.
Hotels know this intuitively, but they don’t usually factor it in when making decisions that affect their bottom line. That’s where we come in. We help uncover the two additional essential measures that take you beyond RevPAR to insight and marketing action:
- Customer LTV
By using your own data to accurately forecast occupancy, Noetic1 gives you the confidence to only use OTAs when you need to – so you can stop selling your rooms for less than they’re worth.
But it does something even more important. With smart guest profiling, Noetic1 puts a £ next to every guest you’ve ever had, so you can focus on filling your rooms with the right guests. Guests who cost less to acquire and stay more often and therefore deliver you higher lifetime value £.