Empowered by the explosion of data companies own or have access to about their existing customers as well as prospective customers, travel CMOs and their teams are on a mission to drive and transform business. Yet, more opportunities and promises mean more complexities in technological offerings and skill and function demands. It is within this context that marketing operations has risen as an important discipline in the past few years.
As a result, marketing operations is often tasked to manage channel and campaign processes and performance evaluation, select and manage technology partners, plan budget, and coordinate inter- and cross-team communications. Yet, core questions remain: Should there be a separate marketing operations specialist/team? What are the responsibilities and decision-making powers of the marketing operations function? In addition, there are broader questions that are related to operations and crucial to marketing success, including how marketing teams should be structured, what functions should report under marketing, and how budgets should be set.
To help travel marketing executives see how they stack up in the industry in these areas and set up strategies to optimize, Skift Research conducted a survey of senior executives and marketing professionals in various travel sectors on their practices and attitudes related to these questions. We will release the survey findings in a series of reports, each focusing on one specific sector. This report presents data for hotels.
For the purpose of this report, we included respondents who selected “hotels and hotel groups” as their primary industry. Total sample size is 118. Please see the Appendix for more detailed sample demographics.
What You'll Learn From This Report
- 2019 marketing priorities for hotels and hotel groups
- Prevalence of dedicated marketing operations functions in hotel companies
- Responsibilities and effectiveness of marketing operations functions in hotels
- How hotel marketing teams are structured and the effectiveness of each structure
- Ideal marketing team structures in delivering marketing success
- Functions that report under marketing in hotels
- How hotel companies set up marketing budgets and the effectiveness of each budgeting approach
- How hotels that are more profitable than peers stand out in key marketing operations areas
2019 Marketing Priorities
Most hotel marketing leaders have clear mandates on what to deliver for 2019. Acquiring new customers, generating revenue and building brand awareness are unequivocal priorities for a large majority of marketing leaders in hotel companies.
Designated Marketing Operations Function
A separate marketing operations function has already become an industry standard for hotels. Seventy-seven percent of hotels surveyed already have a designated marketing operations function, including 53% that have a team rather than one person handling operations.
Hotel marketers recognize the importance of having a designated operations function
For the 23% of hotels that either disperse operations responsibilities across various teams or don’t have specific operations functions, 93% state it’s necessary to have a designated operations function and only 7% have neutral attitude about having a designated operations function. This is clearly a small minority.
Responsibilities of Marketing Operations Function
Marketing operations in hotel sector are taking on a variety of responsibilities to help navigate complex marketing activities and processes. Campaign operations and tracking, cross-functional communications, budget setting and tracking, and tech development and partner selection are the top five responsibilities for hotels.
Marketing operations plays decision-making roles in budget setting and tech development and deployment
As marketing teams get more complex with marketing and advertising channels and tech capabilities, decision making often requires the involvement of many stakeholders and prolonged processes. This can also create ambiguity and tension as to who should make the final decisions. Marketing operations in the hotel sector are tasked with the crucial roles in these two areas. About two-thirds of marketing operations in hotels have decision power in budget setting and tech deployment. Within that, 11% of marketing operations functions are sole decision makers for budget and 6% of them are sole decision makers for tech deployment.
Measuring Success of Marketing Operations
Eighty-six percent of hotels surveyed say they measure the success of marketing operations. Congruent with the responsibilities that marketing operations are taking on in cross-functional coordination and budget and tech management, increased efficiency and clarity of success measures of other marketing functions are the most used metrics to measure success. Many hotels use the same success metrics as other marketing functions to evaluate operations success, namely, increased ROI and revenue.
Roles of Marketing Operations in Delivering Marketing Priorities for 2019
There is still work to do for marketing operations in the hotel sector to deliver success. While 31% of respondents believe operations is crucial in delivering marketing priorities, only 17% state operations is very effective in executing its outcomes.
Marketing Team Structure
Depending on the size and the operation type of the hotels, hotel CMOs or equivalent marketing executives have mandates vastly different from others. While these variations mean there is no one-size-fits-all approach to structure a marketing team for highest efficiency, an examination of what the industry is doing is still an important first step for better team design. Half of surveyed marketers in the hotel sector base team structure on functions, trailing the other structural approaches by 37 percentage points or more. More than 80% of those who use this structuring approach think it’s effective, the highest among all the approaches. What’s worth noting is that while only 8% of hotel marketers build their marketing team by customer segment, 80% of them think it’s effective, the second highest among all the approaches.
Despite the overall feeling that their current team structure is effective, hotel marketers are thinking about alternatives
Hotel marketers might be taking the customer-centric approach to heart. While only 8% structure their marketing teams by customer segment, 25% select it as the ideal team structure for marketing success.
Functions That Report Under Marketing
Among all the evolutionary changes in modern marketing, the controversy and lack of so-called industry standards over what functions report under marketing are probably the most prominent. The list here says it all. In addition to the traditional core capacities of marketing, we see e-commerce, customer insights, customer loyalty, and revenue management reporting under marketing at various rates.
Hotel marketers believe more functions should be integrated into the marketing team to deliver best outcomes
Functions with the biggest gaps between reality and desired inclusion are customer loyalty, customer insights, research and development, and lead generation.
Marketing Budget Approaches
Traditionally, marketing budgets are set once a year by using the previous year’s budget as a base and assigning a percentage increase/decrease as a reflection of revenue growth projection. As marketing gets more dynamic with data and measurement tools, this approach may make it difficult to adjust budgets based on results and thus create inefficiency. Only 20% of hotel marketers are still using this incremental approach in budget setting, while others are adopting more flexible approaches based on activities and regular evaluations. A combined approach, which is characterized by setting budgets once a year but evaluating and adjusting regularly, is adopted by 24% of hotel marketers surveyed and is regarded as effective by the highest percentage of respondents, compared with those who use other approaches.
Hotel marketers believe budgeting approaches that are based on clear goals and allow for regular evaluations and adjustments are crucial for delivering marketing success
When asked the ideal budget approaches for marketing success, there is big convergence on activity-based and combined approaches, with 78% believing either is important for achieving marketing goals.
Functions That Head of Marketing Reports To
The central role that marketing plays in hotel companies’ business is clear. For more than half of the companies surveyed, the head of marketing team reports directly to the CEO.
Highlights of Hotels That Are More Profitable Than Peers
In the survey, we asked the respondents to report their companies’ financial performance. Forty-three percent of surveyed hotel respondents say their companies are more profitable than their competitors, 46% say their profitability is about average in the hotel industry and another 10% say they are less profitable than their competitors. We’ve found that the companies that are more profitable (outperformers) do stand out in the key areas we’ve discussed above.
They are more likely to have established a separate marketing operations team.
Their marketing operations functions take on more responsibilities.
Their marketing operations functions are more likely to be the sole decision makers or influencers in budget setting. For tech decisions, their marketing operations functions are more likely to share decision making with other teams.
They are more likely to have set up metrics to track operations success.
They are more likely to use increased efficiency and clarity on success measures of other functions as operations success metrics.
They are more likely to structure marketing teams by team function.
Their team structure is more effective.
They have more functions reporting under marketing.
They adopt flexible budgeting approaches.
Their budgeting approach works.
Their head of marketing is more likely to report to the CEO.
Their marketing teams are focusing more on driving business.
They believe the importance of marketing operations in marketing success.
Their marketing operations is more effective in delivering marketing priorities.
Appendix: Hotel Sector Survey Respondent Demographics