LOS ANGELES—Cost of acquisition is a problem that’s on every hotelier’s mind. And, for one company, the answer lies in social media.
While many hotels have used social media to increase brand awareness and guest engagement, monetizing sites like Twitter and Facebook is in its infancy. Some brands have moved in this direction—for instance, Conrad Hotels & Resorts’ partnership with Curalate to provide direct bookings on Instagram—but this kind of interaction is still unusual for hoteliers.
“That’s exactly the problem we’re trying to solve—the cost of acquisition,” said Tom Galido, chief strategy advisor, Kaptivating Hospitality. “Our founder, Mike Palmer, looked at a number of ways we could potentially do that, and one way was to turn social media into a profit center rather than a cost center.”
Kaptivating’s Konnector technology reverses traditional search by pinpointing consumers with intent to purchase and proactively drive bookings. The Konnector identifies prequalified customers from social media who ask questions, place reviews, give recommendations and purchase travel-related products and services.
For instance, if someone on Twitter mentions he or she is going to Las Vegas next week, Kaptivating’s system delivers a message from one of its hotels telling the guest to stay there. “We close that loop in about eight minutes. We do a lot of testing, and eight minutes after asking seems to be the best time to get a click-through,” Galido explained.
Of course, not everyone who indicates travel intent will get an offer from Kaptivating. “There’s customers and then there’s customers,” said Galido. For instance, one of the company’s algorithms has a sentiment score that can tell if the potential guest is someone who has a history of complaining on social media. “We could bend over backwards for this person, and he or she still finds something wrong with it. We throw those people out.” Typically, if a customer has a 90% confidence level from the algorithm, that person is sent an offer.
“Our click-throughs have been amazing,” said Galido. “When I worked at Yahoo, we looked at these paid search campaigns and, if one had a 2-3% click-through rate, that was considered a successful campaign. On these curated and filtered responses, our click-through rate at scale has been 30% or more.”
Just as important, said Galido, is the company has had zero reports of spam. “That’s a huge statistic for us because we want to make sure we’re getting these results for hotels, but we’re doing nothing to hurt their brand,” he said.
Hotels can determine what kinds of offers they’d like to send to guests, as well as the voice of the person the potential guest interacts with. “We can match personas—that’s part of the algorithm. Not only do we match the hotel offer in terms of luxury or budget, but we also have your metadata so we can match a voice to talk to you that will most appeal to you,” said Galido. Hotels have the option of using a universal voice; the handles of employees like its concierges; or, if they have a relationship with an advocate for the brand that’s not affiliated with the hotel, that person’s account can be integrated as well. “We do a lot of testing around fake personas generated as a character for a target user for the hotel brand, as a control group, and, sometimes, they perform better when they’re unaffiliated with the hotel,” said Galido. “Being more genuine is what we try to do and create that authentic vibe. We recommend brands use a hotel employee or, if there’s a relationship with a Las Vegas expert, we get a lot of good conversions from that voice.”
Kaptivating will send an offer with a unique code and URL that can send the customer directly to the hotel’s booking engine. “If you look at a hotel that has $200 a night, two-night stay, if you’re looking at Expedia, that’s about 20% [commission], so that’s an $80 cost,” said Galido. “Booking.com is slightly cheaper at 18%, so it’s $72.” For its part, Kaptivating has two payment models. Hotels can pay cost per lead, where Kaptivating charges for click-throughs to the booking engine, or pay a flat fee in the range of hundreds of dollars per month and 10% of the booking. “For that hotel, as long as it can book five to six bookings a month through our service, we’re already cheaper than the OTAs,” said Galido. “We come in, even with the low cost and 10%, we get below $70 per acquisition and, every booking after that, the overall acquisition costs per user drops dramatically.”
Galido noted that the latter involves a bit more integration because the hotel has to add tags to the booking engine. Hotels that own their booking engines or those that use engines that don’t charge for customized tags have no problem. “Some other booking engines are not friendly to adding tags and will charge the hotel an add-tagging fee plus a monthly fee to have custom tags on their page. Those kinds of services will charge less on the outset, and then it’s hard to make a switch and they start nickel and diming you,” said Galido. “Those hotels are more inclined to use a cost-per-lead model.”
Hotels also gain data insights into customers. “Not only are we driving click-throughs to hotel booking engines and specific offers, but we’re gathering a lot of data about known travelers,” said Galido. “I know who you are from your Twitter handle, and I can log that in my database so, if I ever see you again, I know a little more about what kind of hotels you’re into, so I can make more intelligent choices in terms of inventory. As time goes on, I think this will be more important than the ability to drive people to a booking engine.”
This is true even for guests that don’t book. “We know what you looked at, so there’s more information for the CRM that the hotel can use later,” said Galido. “You tried to book a suite and not the lowest cost room. Now that we know that, you’re probably more on the luxury side, so we’re not going to present you with budget choices in the future.”
Kaptivating currently works with several hotels and companies, including Beacon South Beach; The New Tropicana Las Vegas, a DoubleTree by Hilton; Treasure Island, Las Vegas; JJW Hotels & Resorts; and K Hotels. But, Galido noted that a hotel doesn’t have to be in a major market to take advantage of this technology. “Our value proposition is we can help you compete on a non-commodity basis if you understand why people go to your hotel,” he said. “If you have a Fairfield Inn that’s by the visitor’s entrance of the Air Force Academy, if a guest is visiting a cadet, this is the best place to stay. We can help that Fairfield Inn on a more differentiated basis. Those are the campaigns where we get the crazy results. We had a hotel that was the closest to the entrance of the California condor bird-watching grounds, and that’s how it markets itself.”
In addition, the company is entering the F&B market. “We’re working with a hotel on the beach in Los Angeles. It wants to get more of the Silicon Beach tech crowd to have drinks and wait out the crowd before they go home, so we’re driving more into F&B as well,” said Galido.