5 Principles to Improve Your Hotel’s Conversion Rate

by usuario4 usuario4 - 21 February, 2018

5 Principles to Improve Your Hotel’s Conversion Rate

Understanding the reasons behind the decisions travelers make is a real obsession for hotels.

In relation to this phenomenon, there is a concept commonly known as behavioral economicsBrands such as Amazon and Netflix invest millions in understanding the psychology behind consumer buying habits in order to boost the conversion rates of their online strategies.

In the tourism industry, OTAs build platforms involving human behavior processes to increase the profitability of these platforms. The advantage of implementing these technologies in the platforms is that hotels can learn from them and apply these in their own sales processes. To analyze the situation and to have a reference, Phocuswright and Jumpshot carried out a study  regarding online booking between 2014 and 2016 in the United States. It showed that bookings from computers are still the most frequent, with conversion rates of around 10% for both OTAs and hotels. However, the OTAs obtained a clear advantage in mobile platforms, with rates between 6 and 7% compared to 1.5% for hotels. If we compare this with our booking engine, we will soon become aware of the margin of improvement that we still have with regards to OTAs and even metasearch engines.

It is worth taking note of these 5 basic principles on which to improve the conversion rate of our hotel and to put them into practice:

1) Reduce the decision-making process.

According to the famous “paradox of choice”(a term coined by psychologist Barry Schwartz), having too many options can be a bad thing. When we have many possibilities available, there is always the feeling that a better choice could have been made. The entire shopping process is filled with anxiety and uncertainty.

In terms of how this system works for businesses, consumers can feel paralyzed when having too many options. This actually makes them  less likely to make a purchase.An intelligent decision could be to reduce the alternatives or dissect the process in distinct stages. The objective is to properly simplify the process, offer certain room options, rates, and structured supplements.

In accordance with  the approach of the power of predetermined valuespeople always choose the default value. This trend allows us to direct the buying habits of our guests and ease the decision-making process.

2) Rounding the number of rates and prices.

According to a study carried out by the Journal of Consumer Researchrounded numbers are better at driving shopping intuitively and emotionally than unrounded numbers –for example, $100 vs $98.75. This is because rounded numbers are easier to process and because they encourage confidence and emotions that lead our future guests to “feel good.” On the other hand, the extra mental bandwidth needed to process unrounded prices makes the decision more rational.

Considering that travel purchases are often linked to an emotional desire, rounded numbers can be a useful additional useful way to make room rates and deals look more attractive.

3) Remorse in the purchase.

The dropout rate in the travel industry is remarkably high. A study conducted by the company SalesCycle observed that 81% of people leave their online travel bookings. While there are several reasons for this trend, there is a universal issue within consumer psychology which often causes consumers to rethink their purchases. Commonly known as the buyer’s remorseconsumers are driven to feel guilty after making an expensive purchase. Therefore, even when a person spends hours consulting online reviews and comparing hotel options, they may have a persistent feeling of not having made the right choice after making a reservation.

To minimize this effect in the booking process, we can choose to minimize the amount of data requested in the purchase (for example, name, address and card number) at the time of completing the booking process. This will reduce the amount of time your potential customers have in order to think about what the purchase entails.

4) Use urgency-based selling

A series of tests performed by  MarketingExperiments found that the use of urgency-based selling increased bookings by 992%. Companies such as Booking.com and Expedia use this principle as one of the most relevant factors when optimizing the user experience on sales. The idea of urgency is built aroundthe heuristic of scarcitywhich observes and studies why a product or service increases its value when it’s scarce. Since consumers don’t want to miss the opportunity, they are more willing to pay for something that may be scarce and briefly on sale. We can summarize this section with the following motto:  “Urgency can be a very powerful tool to help hoteliers increase their bookings “.

5) Emotional Commitment

Regarding the science of behavioral psychology, it is important to remember that the decisions made by human beings have an emotional background. This is especially emphasized in the relationship the customer has with traveling, an experience inherently based on fun, freedom, and emotion. The boom of last-minute bookings is very representative as it relates to emotional decisions at any given moment. Therefore, even though discounts, offers, and incentives provide a stimulus, we shouldn’t forget the importance of inspiration. In comparison with the nature of mass consumption experience in OTAs, hotels can take advantage of transmitting the product with a distinctive personality. The way in which we can tell stories helps to create living images capable of generating emotional commitment with the target audience, thus changing the idea of booking a hotel room into a much more personal and human point of view.

It’s true that the peculiarities of behavioral economics are often somewhat subtle and even counterintuitive in some cases. However, by establishing certain principles we will help to influence the decisions of travelers and “push” them as close as possible to complete the booking.

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