Decision process — How a guest chooses a hostel?
“You can have the best product in the world, the most comfortable beds, the most innovative restaurants, the most customer-friendly staff. But if no one can find you, then you’ll be quickly going out of business.” — Chekitan S. Dev.
In this blog article, we’d like to dive a little bit deeper on how guests end up finding your hostel, and why they decide to stay at your property and not at one of your competitors. To give a better perspective, we’ve divided this topic into 3 parts:
I — Traditional buying process
II — Distribution management
III — The distribution cost puzzle
It’s important to consider that 95% of the travellers first select the destination they want to visit, work or experience and from thereon choose the kind of accommodation they’d like to put up at.
I — Traditional buying process
The traditional buying process has 5 phases and can be applied to both, destination and accommodation.
Awareness
The first step of the decision-making process is recognising the need for a service or a product. This recognition usually starts with a desire: a want. Once your customer already decides on the destination, they need to collect information to decide which type of accommodation they want to book. They compare the possibilities according to criteria such as recommendations, location, price, service and reputation. This leads us to the second phase, and it’s at this level where hostels start to compete.
Consideration
This is the phase where a lot of information is gathered. When researching the multiple options available, customers rely on internal and external factors, such as social media, word of mouth, online presence, rates and reviews…
Preference
Evaluating all alternatives further guides the consumer in developing an idea for what they are looking for. The alternative hostels could be using different baits to allure the customers; like promotions, availability, style or experiences. Your advantages must be able to convince customers why your hostel would be the best fit for them.
Purchase
Once the customers already have all the information, including feedback from previous consumers, they arrive at a conclusion on the option that best suits their needs; zeroing in on the property they’d like to stay at.
Post-purchase evaluation
This refers to the reflection after purchase, based on satisfaction or dissatisfaction.
To better understand your customer, let’s exemplify through a journey map. In the following scenario, the potential customer is looking for accommodation in Milan, Italy.
- Customer recognizes the need for a hostel in Milan;
- They start to gather information on Google, social media platforms, from friends and influencers that have previously been to Milan; reading blogs about the city and deciding which areas and what prices fit their budget.
- After gathering some information, they arrive at an OTA or metasearch and visualize many possibilities. They check for your reputation and, 1/3rd of the customers will also check your website.
- If you have a dedicate booking engine and a sales-oriented website, you’ll probably convert it as a direct booking. Otherwise, they’ll book through a trustable OTA.
- Post-purchase for hostels could be divided into two types. Firstly, when they book: you might start to interact with your future guest by sending a confirmation email with general information about your hostel and helping them to plan their stay. Secondly, after the check-out, at this point, it is necessary to understand if their purchase matched their expectations and if they are happy with the overall experience. A follow-up email asking them for their feedback and ratings or encouraging them to leave an online review is a great idea post-purchase.
II — Distribution management
Basically, distribution is getting the right information to the right customer at the right time to attract their attention to your product, providing a mechanism to complete the purchase and pay.
A large part of the distribution competition is driven by the OTAs, the Online Travel Agents. Consumers could also find and contact the hostels directly, assuming, of course, they have a website.
Google plays an important role in the research process. With Google Hotels, it’s possible to compare prices among the OTAs, Metasearch and direct channel. Reviews, score and location are available within this powerful platform. The guest can finalise the booking purchase through Google and it might drive considerable revenue, opening your availability there. Counter has direct integration with Google where you can manage your availability, reservations and rates from our PMS, if you want to know more about it, just send us an email.
Since each channel has different characteristics, hostels need to or at least try to influence ‘where’ their customers make their booking. Balancing the advantages of one particular channel against its disadvantages to arrive at their desired goal. This means maximum occupancy every night at the optimum price. For many independent hostels, OTAs deliver 2/3rd to 3/4th of their bookings.
In order to work better with OTAs, it’s necessary to provide textual content including descriptions, photos or videos and access to the hostel’s availability and rates. It’s better if the process is automated.OTAs are known as “billboard to the world”, it gives you visibility in different markets and to different customers that probably would have never arrived directly to your own website.
Hostels would definitely prefer to drive as much of their reservation directly through their website. The advantage of doing so is quite evident, but the most important is ownership of customers. Having a strong website and an effective mobile presence with an intuitive, easy to use, and powerful booking engine is vital.
III — The distribution cost puzzle
The biggest myth is that OTAs are significantly more expensive than direct bookings that come through the hostel website.
Smart hostel owners understand their distribution costs channel-by-channel and choose to selectively make use of OTAs to drive bookings and diversify their profitability. Competing against the biggest OTA would mean massive investment in marketing.
The goal is to find a balance and work efficiently with every distribution channel. Remember that every channel is a different “window”, you attract different guests from different channels. Probably the guest that arrived at your hostel from a certain OTA, would never find you if you haven’t opened your availability.
In the next blog article, we’ll be sharing some tips on how to get the best from the OTAs… Stay tuned!
