Hospitality Real Estate Investment Trusts (REIT) – not something of huge concern for hotel digital marketers.

Should it be? 

In this article, we’ll discuss Wall Street’s new partiality for hotel investments over stocks, bonds, commodities, and even traditional commercial real estate (CRE) acquisitions in 2023, and why digital marketing must be considered when measuring risk.

A Hotel Website is More Than an Essential Asset

Consider this: A common refrain at the January 2023 Americas Lodging Investment Summit, more than just being a vehicle for passive income, a growing number of investors consider hospitality ventures to be a lower-risk investment capable of higher returns than more traditional stakes. While SitusAMC’s Val Trends Report for Q4 2022 revealed the first decline in overall CRE returns (-3.5%) since the start of the pandemic in 2020, the hotel segment was the one exception, up 70 bps to best three previous quarters of growth.

This could be the underlying reason why we’ve tracked one particular article, Promote Your Hotel Before It Opens – 10 Strategies For Success, as our most popular blog post to date. Notice TravelBoom Success Manager Alyssa Fate’s first recommendation on the list:

Herein is where the problem lies. In his Today’s Hotelier August 2022 article titled  “Look Before You Leap,” law firm Offit Kurman’s Eric Tucker provided an “overview of key revenue-related provisions in hotel purchase and sale agreements.” Cited as his first (and some would say obvious) key provision for success is due diligence, which includes the sharing of detailed historical financial information on the performance of the hotel, providing lists of top accounts, etc.

If “et cetera” doesn’t include website performance and digital marketing analytics, that’s the problem.

From my experience as a former Director of Sales, this step in due diligence will require more time than your average investor would typically spend researching, say, a mutual fund. A newly-hired salesperson requires at least 90 days to get a firm understanding of current top accounts and marketing plans by market segment and account. During onboarding, a hotel sales manager would also learn the same fundamentals for the hotels in their compset, as well as comparable properties in the overall market. Then comes SMART goals for increasing market share with higher-rated accounts and replacing lower-rated business during periods of demand, and strategizing for special events and times of special need.

Anyone in hotel sales definitely recognizes that I’m over-simplifying the role for this example, but suffice it to say that if the Director of Sales is expected to dedicate the time and effort to find the money, potential hotel investors should also have a thorough understanding of this process.

But it’s Not Like the Website Affects the Hotel’s Cap Rate, Right?

Considering that your hotel’s website is, in fact, its virtual storefront, shouldn’t an investor analyze the performance of a property’s website and online presence as part of their PSA due diligence? Every aspect of your sales team’s marketing plan should include its online execution. Like proverbially knocking the tires before purchasing a new car, can you easily find your hotel with a simple Google search? Since a potential guest could be shopping for you on multiple devices, try your exercise on a desktop and with your smartphone, too. Can you easily navigate to and book the property’s best available rates? Would you reserve a room, directly with the hotel, based on its current website?

While TravelBoom specializes in designing, managing, and optimizing virtual storefronts for independent hoteliers, some brands permit vanity websites for franchisees, begetting more property-level control of content and organic search optimization than a brand.com redirect. With a clear understanding of both property-level and brand management of your hotel’s website (as well as its social media accounts), you can more accurately gauge the risks of lost transactions and project potential profits from enhanced digital marketing performance.

As an investor purchasing an interest in a boutique or flagged hotel, you are also either acquiring a virtual storefront that’s most likely past due for a performance improvement plan (PIP), or are the proud, new owner of a hotel still in need of a virtual storefront. To dispel the notion that it’s “just a website,” now consider that your hotel and virtual storefront are not the only outlets offering your perishable inventory.

For an eye-opening exercise, try listing every possible outlet that a guest could utilize to reserve inventory at your hotel. How is accurate information about your property, along with inventory, availability and rates in parity, shared in real-time with hundreds of metasearch engines and OTAs that are basically subletting your accommodations? As an investor, if you don’t ask, do you truly have a full scope of the revenue generation and expenditures of your hotel investment?

But why should Digital Marketers concern themselves with Hospitality REITs?

During an expert revenue management panel at the 2023 Hunter Hotel Investment Conference, sales, marketing and revenue generation leader and professor Kate Burda stressed that to accurately measure demand, all hotel owners and investors must ask themselves one question, “Do you know who visits the (hotel) website, and who doesn’t?”

While helping independent hoteliers master their digital marketing is at the heart of what we do at TravelBoom, that oftentimes means we’re counseling real estate investors, financial advisors, consultants, lawyers, and even instructors in need of the latest research, like our upcoming 2023 Leisure Traveler Sentiment study, or perhaps just a simple explanation of the difference between search engine optimization (SEO) and pay-per-click (PPC, metasearch).

Some savvy investors request budgeting advice for costs and upkeep of a new hotel website before they purchase the property, in which case TravelBoom can use a host of analytics tools to base recommendations on the long-term outlook for the growth of your unique hotel’s (and your compset’s) future revenue opportunities. 

Whether you might buy, or have already purchased a new property, TravelBoom has the know-how to create, improve or manage your virtual storefront. There’s no such thing as a “dumb” hotel digital marketing question, so contact TravelBoom for answers today. Leanne deMaille is the Director of Business Engagement at TravelBoom Marketing. Continue the conversation with her at (843) 848-2164, or via email at Leanne.deMaille@TravelBoomMarketing.com.