Hilton’s newest campaign—its largest ever—shows to what lengths hotel companies will use low rates and loyalty programs to take back their market share from online travel agencies, and get more customers to book direct.
For the 24.95 million people who tuned in to watch the Grammy Awards on CBS last week, an advertisement from Hilton may have stood out — especially if they were travel agents.
In the ad, Hilton Worldwide made it clear to potential guests to “stop clicking around,” explicitly saying that the lowest guaranteed rate at a Hilton can only be found in one place: Hilton.com.
The spot marked the launch of the McLean, Virginia-based hospitality company’s largest-ever marketing campaign, and was another firing shot in Hilton’s battle to reclaim its market share from third-party distribution channels. By touting the benefits of booking direct and bypassing sites like Expedia and Booking.com, Hilton is going after rate parity and most-favored nation clauses, and attempting to collect revenue that would otherwise go toward commissions paid to third-party sites and travel agents.
Those commission rates paid by hotels to online travel agencies can range widely from 10 to 30 percent, and hotels have long had a love-hate relationship with online travel agencies (OTAs). While they help hotels fill rooms, the sites can also eat into hotel revenues. By Hilton’s estimates, some 57 billion Hilton HHonors Points—or 1.6 million free room nights—went unearned last year because guests booked their stays through a third party.
As early as last year, Hilton already began chipping away at the commission rates paid to agencies like Expedia and Booking.com. Last year, Hilton negotiated for the right to lower commissions and earlier this year, the company tested out offering exclusive HHonors discounts of up to 10 percent off published rates at select hotels and brands in certain destinations. Now that Hilton has won concessions to offer lower rates to loyalty members openly on an ongoing basis—and not just through email—it’s running with it in this new campaign. Hilton, along with InterContinental Hotels Group, has also held out from partnering with TripAdvisor on its Instant Booking feature.
With the launch of “Stop Clicking Around,” Hilton extended those exclusive HHonors discounts to more than 4,500 hotels around the globe. The fact that those discounts apply at nearly 98 percent of Hilton’s entire global portfolio, and the fact that this campaign is the largest ever launched by Hilton in its 97-year history make it clear that Hilton is very serious about taking back market share from sites like Booking.com and Expedia.
In addition to offering the lowest rates available, the campaign is incentivizing guests to not only book direct but to also become Hilton HHonors members if they aren’t already. Members earn HHonors Points that can go toward complimentary room nights, free Wi-Fi, digital check-in with room selection, digital room keys, and exclusive events and experiences like Live Nation concerts or private dining experiences.
Emphasizing value and changing long-held customer perceptions that the lowest rates are only available on online travel agencies are the campaign’s main objectives. “The message is that there’s a lot of value to be had,” said Mark Weinstein, global head of customer engagement, loyalty, and partnerships at Hilton Worldwide. “We can offer a lot more of a personalized experience if you engage with us directly.”
Weinstein added, “The reality is that you can’t get a lower price elsewhere. We’re taking years of misconceptions and misinformation and really educating consumers and letting them know about these benefits for being an HHonors member … It was time to connect with consumers and tell them about those experiences, and be a bit bigger and be a bit bolder.”
Marketing to All Ages
While Hilton won’t disclose exactly how much this global campaign costs, it worked with London-based Fold7 to design broadcast, billboard, and digital advertisements, some of which feature The Rolling Stones’ famous tune, “I Can’t Get No Satisfaction” and show a range of different travelers, from businessmen and women to kids and couples.
Geraldine Calpin, Hilton Worldwide’s chief marketing officer, told AdAge that choosing to license The Rolling Stones song was a no-brainer. “We’re going for a different, creative, much bolder approach than before,” she said. “The testing was off the charts—every age and demographic love that track.”
Appealing to potential guests of all ages was another goal for this campaign. Weinstein said, “We are absolutely thinking about all customer segments. We’re looking at new brands like Tru by Hilton and how we partner with folks like Live Nation and the Grammys to connect at all levels and passion points. Every demographic has a lot in common and different nuances. We want to satisfy all needs but also provide moments of personalization at the customer level to provide relevant choices, whether our customers are boomers, gen X, millennials, or gen Z.”
Will Marriott Go Bold, Too?
Like Hilton, Marriott also won concessions to offer a best rate guarantee to its Marriott Rewards members on an ongoing basis and has been publicizing those rates on its own sites for more than a year. But unlike Hilton, it hasn’t been quite as bold with its statements. On Marriott’s sites, the company states that if a guest finds a lower rate elsewhere, Marriott will match that rate and give the guest an additional 25-percent discount. It also encourages guests to become Marriott Rewards members to have access to mobile check-in, free Wi-Fi, and the ability to earn points toward free stays.
Last August, Marriott International launched a new digital campaign starring YouTube star Grace Helbig, called “#itpaystobookdirect” and developed by the Marriott Content Studio. The spots used humor to demonstrate the benefits of booking directly with Marriott, and placed Helbig in a variety of situations where it makes more sense to be direct. Since the campaign launch, Marriott’s six videos with Helbig have garnered some 7 million views on YouTube.
“We have been very pleased with the customer response,” Drew Pinto, vice president of distribution strategy, systems, and intermediary channels for Marriott International said. “We have reinforced the message that ‘It Pays to Book Direct’ via an integrated marketing strategy that features digital placements, social media, search marketing, and prominent display in our owned assets such as Marriott.com.”
Now that Hilton has launched this global campaign, it’ll be interesting to see if Marriott will expand its Book Direct campaign on a grander scale, although when asked if Marriott would launch a similar campaign, Pinto said, “We prefer not to comment on what a competitor has decided is best for their business. As we mentioned, direct channel growth is a strategic priority for Marriott, and we will continue to evaluate and introduce benefits that we believe will be most valuable to our guests.”
Unlike Hilton, Marriott has also chosen to partner with TripAdvisor’s Instant Booking, something Pinto described as a mutually beneficial partnership for Marriott, its guests, and TripAdvisor.
“The TripAdvisor relationship is an excellent example,” he said. “They have created a new distribution model that addresses key concerns of hotel suppliers, makes it easy for consumers to book with our hotels, and allows Marriott to build a direct relationship with these guests. The agreement provides us with a level of control and profitability that aligns with our strategy.”
Hotels and Online Travel Agencies: Forever Frenemies?
With Hilton’s “Stop Clicking Around” campaign, it’s clear the company is ready to take back their share from online travel agencies, and it’s using a combination of lowest rates and loyalty program perks to do it.
When asked about Hilton’s future strategies related to online travel agencies, Weinstein said, “We’ve always been on a journey with our third-party distribution partners, and through those conversations we’re committed to delivering that value. It reflects that philosophy of ours—those customers who join Hilton HHonors receive more benefits and more value immediately—and we’re able to better personalize their experiences.”
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Photo Credit: A still from Hilton's new campaign urging users to book direct. Hilton Worldwide