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Is brand the biggest driver of revenue for luxury hotels

We wanted to compare revenue against some marketing KPIs to see which luxury hotel brands are the highest performers. This was to challenge the idea that luxury brands rely on brand rather than broad searches such as ‘luxury hotels’, in the way that those driven by budget will tend to use searches such as ‘cheap hotels’, rather than specific brands.

We gathered the data and included a non-luxury hotel brand as a control.

BrandRevenue (2018)Monthly organic trafficBacklinksTotal social following (Facebook, Twitter, LinkedIn, Instagram)Organic keywordsProjected traffic valueMonthly brand searches
Marriott International$20.75bn9.7mn10.7mn2.279M4.6mn$9.6mn31,000
Hilton$8.9bn1.9mn4.17mn 3.537M607k$2.1mn90,000
Accor$3.99bn3.2mn20.5mn 941,4711.5mn$1.8mn246,000
Hyatt Hotels$4.45bn2.3mn2.77mn 1.531M1.4mn$2.7mn30,000
Mandarin Oriental$1.4bn191k2.75mn 909,430233k$173k86,000
Best Western$6bn (2012)1.4mn10.4mn 1.372M1.1mn$2mn604,000

 

Supplementary data:

Global monthly searches for

  • ‘Cheap hotels’ – 273,000
  • ‘Cheap hotel’ – 20,000
  • ‘Luxury hotel’ – 15,000
  • ‘Luxury hotels’ – 43,000
  • ‘Hotel spa’ – 29,000

Key finding: Brand isn’t the only thing driving revenue

Those who use luxury hotels don’t search for them as broadly as those who use cheaper hotels (‘luxury hotels’ vs ‘cheap hotels’). Brand equity (based on branded search) does not equate to higher revenue. This means there are things lesser known brands can do to steal the lead on their larger competitors.

  • Marriott International earn twice the revenue of the next competitor, Hilton, but have to drive 410% more traffic to earn this. They appear to do a large part of this despite low brand search, potentially because they are answering nearly 4 million more keywords. This may also be aided by its link profile which is more than twice that of Hilton. This suggests that Marriott International’s brand isn’t as strong as some of its competitor which drive most of its revenue from branded search.
  • Accor are a smaller brand altogether but drive a larger proportion of their revenue from branded search – those looking for an Accor hotel specifically. The same is true of Mandarin Oriental.
  • Backlinks are essential to build brand visibility in SERPs, but Accor’s impressive 20 million links don’t help drive traffic in the quantities that Marriott’s 10 million do This may relate to its wider range of hotels which include the Savoy as well as the mid-range Ibis. It is important to note that it may be that Accor have worked harder to target a smaller number of keywords with their link-building activity. Compare this to Hyatt who have driven similar traffic with 34% fewer links. Mandarin Oriental’s link profile has even less impact on its organic traffic.
  • Projected traffic value as a percentage of revenue:
    • Marriott International – 46%
    • Hilton – 24%
    • Accor – 50%
    • Hyatt – 61%
    • Mandarin Oriental – 12%
    • Best Western – 33%

This suggests that the Mandarin Oriental has a higher proportion of non-commercial traffic – or those who book over the phone.

  • While many of the transactions may not happen online or as a result of organic traffic, it is interesting to see the relationship between revenue and organic traffic. Below are the organic visits stats as a percentage of revenue:
    • Marriott International = $2,139 (‘per visit’)
    • Best Western = $4,285
    • Mandarin Oriental = $7,329

It is interesting to see the role of organic search, as Marriott International make less per visit than the mid-range Best Western – in line with Hilton ($4,684). Mandarin Oriental make 242% more per organic visit than Marriott – though we acknowledge the impact of ‘unseen’ marketing activity in these figures, for example outdoor/TV/print etc.

  • If social is a gauge of brand size and loyalty, it is interesting to see that brand might not be worth as much as other factors (including margins). For example, Hilton’s 3.5 million social audience is 55% larger than Marriott’s, but their revenue is 57% less. Below are the social followings as a percentage of revenue:
    • Accor = $4,238 (‘per follower’)
    • Marriott International = $9,104
    • Hilton = $2,516
    • Best Western = $4,373

We’re not suggesting that Marriott International drive $9k from each social follower, but it is interesting to see the correlation between revenue and social size.

  • Hilton and Marriott dominate brand search. While they run in almost perfect parallel, Hilton turns 57% less.
  • Of the smaller businesses, Mandarin’s decline seems to be Accor’s gain. While Mandarin are the better known and more sought out brand, their revenue is 65% less. Again, we acknowledge the impact of margins.
  • There are many similarities between luxury brands and mid-range brands in terms of performance and the role of keywords, organic search and social media. There are larger differences between the luxury brands themselves. This shows that the market (and the audience) don’t always have distinct behaviours when it comes to booking hotels.
 

In the list of the most expensive hotels suites in the world, these four from our five brands are featured:

1. The Royal Penthouse Suite, Hotel President Wilson, Geneva, Switzerland — $80,000 (Marriott)

3. The Penthouse Suite, Hôtel Martinez, Cannes, France —$53,200 (Hyatt)

7. The Penthouse Suite, Hotel Cala di Volpe, Porte Cervo, Italy — $41,177 (Marriott)

10. Suite 5000, Mandarin Oriental, New York, US – $36,000 (Mandarin Oriental)

 

 

Conclusion

While this data is just a snapshot of reality, and only part of the whole picture, it is interesting to assess the relationship between certain metrics. This quick study suggests that brand remains an important asset, but that there are other drivers of revenue and points in the purchase journey and decision-making process.

With the vast range of digital marketing tools at their disposal, it will be interesting to see if any of the smaller brands leverage this opportunity to increase their revenue.

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