Tips On How To Advertise a Small Hotel or B&B
Last update: 19th February 2018
The first part of our Tips On How To Start And Operate a Small Hotel or B&B were more related to setup and improvement, today we will look more into operation. Same as before – all prices below are for sake of convenience stated in US$ (USD).
Customer Acquisition & Putting Your Establishment on The Accommodation Offers Map
The single most important thing is to get started – you’re new, nobody knows you, nobody trusts you – you’re going to need a trusted 3rd party to take off. One of the options how to get customers quickly is to list your establishment on a portal like Booking.com, Hotels.com, Expedia.com and many others but I don’t have any hands-on experience on all of them so I will cover my experience with just one (on purpose not disclosing which one). Before you rush to list your establishment there please do make sure that you get great photos (and I don’t mean good – I mean great) of your establishment, the rooms, the hallways and the reception if it looks good. Photos are key to everything especially in the very beginning where there is no reputation build – you have zero reviews. This looks all great but there is a downside to it – more in the following paragraph.
The Deal With The Devil
I called it the deal with the devil because these portals are the devils. While being listed there works to your advantage as you got into a world wide directory and customers can easily find you, there is a huge downside to it.
First issue is the filtering model. While luckily default is still by rating however once you switch it to price filters (from low to high) there is a war going on – bidding to the bottom price. There are also these pricing brackets say for example $0 – $61, $61 – $120, $120-$180, $180-$240 and finally $240+. As stated previously we assume, that your establishment is generally in the bracket of $50-$100 per month, however it’s not that easy – say the season is starting to take off and you technically could charge your clients – say $63 (that’s what your competition is charging), but then you will be in the second tier and completely miss the customers who ticked only accommodation up to $61, while they might have budget in range of $55-$65 there is no such option and for them to avoid all those $70+ offers they just tick the $0-$61 – now you find yourself in a dilemma – are you going to take the loss of $3 per each day up front or are you going to take your chances? Well that’s a business decision you need to make on your own – I just wanted to bring it to your attention.
Another issue with the low-high filtering is that during low season some establishments paying high rent get very desperate and these places which normally charge $100+ per night can suddenly start competing with you in that $0-$61 bracket, this is very unfortunate and a fight you simply can’t win, if you can afford it I would recommend to use the time to take a rest, do some small or large repairs and get ready for a higher season because if you want to fight with them you will find yourself in a $30-$40 territory and twisting the market further. Yes, it can get very ugly in a hurry.
What you need to be careful about as well is the capacity management. If you have let’s say 10 rooms as maximum at your disposal at any given moment I would not recommend to offer on any of those portals more than 2 rooms at once per portal – the reason is quite simple really – you risk overbooking your capacity. If some customers actually book 6 rooms at one portal and 5 rooms at another portal you sold 11 rooms while in best case scenario you have 10 rooms and you found yourself in trouble – now you are overbooked by 1 room and the rules are that you cannot simply cancel the last reservation – these portals force you to find another hotel in the same quality and same location as yours, during high season this can be quite challenging or nearly impossible and you might end up paying more than what you charged the guest in the first place – so yes you will be taking a loss.
If you can’t solve it and there are no rooms left in your area they (the portal) will place your guests that you charged $60 in a better area for say $100 or whatever is available and you will eat the loss of $40 per night per room, “lovely”.
The horror does not end there – on any booking made through these portals you will be charged something like 15 % commission and another 2-4% will be billed by the credit card company for processing the credit card payment, obviously you will be also paying local taxes and others. After all this is deducted you can easily find yourself pocketing on the original $50 something like $35 if you’re lucky and that is before you account for the staff, rent, water, heating, electricity and other costs.
All and all – if you sell a room through these portals you are basically outsourcing the advertising and marketing (they advertise their portal and your small place in it for you) but you pay a very high price for it.
There Must Be a Better Way
Yes there is – you need to sell the room directly to the customer without a 3rd party processor. This is not easy to do but it’s not impossible either – you need to sell directly to the customer, meaning you need them to land on your website and contact you through your own contact form, send you an email or call you and they need to pay in cash on their arrival – this way you avoid most of the fees that are along the way which those 3rd parties charge you.
How To Sell Directly to Customer
In the past the direct listing was arranged through Yellow Pages or some similar telephone directory where you paid a fixed fee every year or paid nothing at all (included in phone bill), I suppose nowadays few people would call hotels one by one following some alphabetically sorted directory.
However what I do recommend is to list your establishment on Google Maps (free) and on TripAdvisor (free or paid) and also to get yourself a sales website so customers can easily find your contact information or even book directly through your website – this is something we are more than happy to help you with.
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The Google Maps listing is easy – basically whenever somebody in the area where you operate writes in their Google Maps “hotel” or “accommodation” they can easily find you and click through to your website where they can book directly. This listing is generally very useful for business customers who have a branch nearby and are looking for a place to stay for their visiting staff that is in close proximity to their office.
It could be also travelers riding a car from one country to another looking for accommodation. Another use case we came across were people looking for a place to stay for their overseas visiting relatives – the first place they usually look for is Google maps because they are looking for them for a place to stay that is nearby.
The TripAdvisor is a bit different beast, these customers are typically planning their stay in advance (weeks, months) and they are looking for a very good place to stay – it doesn’t actually mean they are looking for a cheap place or something that is in downtown – it’s that they are looking for a good deal – they typically want something in TOP 10 listed on TripAdvisor (if they can afford it) or something say in Top 80 % – generally trying to completely avoid a bad place to stay and if possible stay in at least above average hotel – these are the customers I recommend to work with, because even if you are not in the top tier location you can still make very good business out of your establishment if your rooms are clean, your WIFI is reliable and fast and your breakfast is excellent. This allows you to achieve very high occupancy rates while charging more or similar as the others who do not offer these services. The beauty of this is that TripAdvisor charges a fixed upfront fee based on how many rooms you have – they don’t charge you per room sold like the portals mentioned above do. While the upfront cost might seem high I strongly recommend to pay for it – it will pay off in multiple compared to the 15% fee paid per room sold with the other portals. If you decide to go with the free listing it’s a good start but then your contact details won’t be visible in their listing and you are basically relying on that the customer is willing to Google search for you – some might, but you are abandoning a very large portion of customers who are lazy or not capable to do this.
I guess at this point you are wondering how much does that TripAdvisor listing cost – it used to be in 2014 about $1000 per year for a 5 rooms establishment located in Europe. I expect that the price drops significantly with more rooms and it might differ for other locations, you would have to check this for yourself.
Other Advertising Methods
You might find yourself advertising in a different way that works miracles for you – great, good for you. What we tried to cover here is the basics for a typical establishment advertising on the Internet. We believe that for a small establishment Google Adwords might be too expensive unless it’s super laser focused on a very specific location – say “Hotel London” is really bad idea as the keywords are going to be very, very expensive while advertising a particular quarter in London might work for you. Same goes for Facebook advertising – in our opinion few people will get very excited about a small hotel that costs $50 a night to share it with the friends while the friends are in need for the accommodation in that area in the time they posted it, chances that they will remember it a few months later? Well, you decide.
- You absolutely need great photos of your establishment, bad photos (say taken with mobile phone) will work poorly and should be avoided at all costs.
- Advertising on booking portals such as Booking.com, Hotels.com and others is easy but expensive – it’s going to cost you large portion of your gross revenue, it should not be the only strategy how to obtain customers.
- Getting yourself listed on Google Maps and TripAdvisor is free or with fixed yearly costs based on how many rooms you have. These fees are typically lower than for the portals mentioned above, in order to be successful on these platforms you need a website where the customer can book directly. This is something we are more than happy to help you with.
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What can you look forward to the next time?
Next time we will walk you through the customer communication and how to make sure that once they send you an inquiry they won’t be let off the hook. Also we will show you how to push for more reviews from happy customers and how to make sure they will remember you.
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