Digital marketing is increasingly important for the hotel industry as over half of bookings are now done online. Hotels need to innovate digitally to compete with online travel agencies (OTAs) that capture a large percentage of booking revenues. A recent study rated Four Seasons, Hilton, and Marriott as leading major hotel brands in digital innovation based on effective websites, mobile apps, social media presence, and digital marketing strategies. However, many hotels still lag behind guest expectations, and new forms of digital marketing like flash sales and social networking sites continue to disrupt traditional marketing channels.

1. Digital Marketing Innovation in
Hospitality
July 2012
For more information contact:
Jennifer Anthony
jennifer.anthony@hawkpartners.com
703-304-4585
Brooke Hempell
brooke.hempell@hawkpartners.com
678-602-6058
Scott Wilkerson
scott.wilkerson@hawkpartners.com
301 951-7046

2. With over half of bookings done online, major hotel
brands need to innovate digitally to sustain leadership
• OTAs were estimated to cost hotels $2.5 billion in 2010, capturing $40–120 per
booking, vs. the $2–6 cost to hotels when booking is done at their own sites
% of Major Chain Hotel Bookings Online
60% (U.S. 2011)
16% 17%
12%
40%
10%
9%
OTA
Brand Sites
20%
0%
2006 2007 2008 2009 2010
Source: “Distribution Channel Analysis: A Guide for Hotels,” HSMAI Foundation, January 2012
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3. Four key elements drive digital innovation within the hotel
space
Web Site Digital
Effectiveness of brand
site
Marketing
Search, display, and
• Site technology, search &
navigation email marketing efforts
• Reservations & service • Innovativeness of content
• Rewards/loyalty • Frequency, integration w/
• Property/destination guides social media, presence on
emerging platforms
Mobile Social
Innovation/optimization
of smartphone & tablet
Media
marketing Brand presence,
• Availability/functionality/ community size,
popularity of apps
• Robustness of mobile site
Digital & user engagement
• Major platforms: Facebook,
Innovation Twitter, YouTube
Source: Adapted from “Digital IQ Index: Hotels,” L2 Think Tank, March 2012 3

4. A recent study rates Four Seasons, Hilton, and Marriott
ahead of other major hotel brands in their “Digital IQ”
L2 2012 Digital IQ Index Rankings
Competitor
Rank Digital IQ Rationale
• Website delights, with strong visuals, curated itineraries and user reviews
1 150 • Cohesive online experience, with multiple social communities
• Experimental approach to digital, with staff contributing content
• Leveraging IT on-property to deliver digital guest experience
2 149 • Highest score in search marketing
• Largest/fastest growing Facebook Community
• Robust online booking engine
3 143 • Co-founder of Roomkey.com – driving effort to bypass OTAs
• Strong mobile experience in-room and on the go
• Mobile standout, including use of targeted mobile advertising (e.g., to
4 137 business travelers accessing an airport’s WiFi service)
5 133 • Forward-thinking Foursquare initiatives and site relaunch
6 131 • Innovative use of social media, bolstered by guest-supplied photos
• Highest rating for branded site
7 128 • Partnership with Bazaarvoice to integrate guest opinions in Facebook
8 125 • Considered “strong but safe”
• High LOVE factor, photo contest sparked strong user generated content
9 116 across channels
Source: “Digital IQ Index: Hotels,” L2 Think Tank, March 2012 4

5. Mobile
The travel industry boasts the highest share of mobile
commerce revenues
• Hotels have moved quickly to optimize their web sites to offer mobile booking
functionality (with biggest jumps in Android and iPad-supported applications)
US Mobile Commerce Revenue Mobile Adoption Rates
by Industry (2010) % of Hotel Brands on Mobile Platforms
22%
BlackberryBlackberry
Entertain/ 2012
Tickets
20%
Other 2011
12% 3%
House iPad 44%
Travel wares iPad
30% 6% 12%
Office
Supplies 46%
7%
Android
Android
10%
Books/
Music/DVDs
Computers/ 9% Mobile 66%
Electronics website
20%
Apparel Website 63%
13%
68%
iPhone
iPhone 54%
Sources: “US M-Commerce, by Industry,” ABI Research, as cited in press release, 5
December17 2010; “Digital IQ Index: Hotels,” L2 Think Tank, March 2012

6. Mobile
A new generation of mobile apps enables easier booking
and quick access to property-specific information and deals
Starwood Choice Hotels Marriott
“Native booking module makes it “Quickly find & book 6,000+ “Just one tap away on your
easy to browse and book hotels” properties anytime, anywhere” iPhone or iPod Touch”
Browse city guides,
Retina display
maps, hotel photos
graphics
Access to
special deals
24X7 Cust Svc
SPG Account Info GPS functionality to find
Sources: “Top Five Hotel Mobile Apps,” Inventorspot.com, iTunes
& Latest Offers hotel near current location
6
App Store, Hotels, July 2012

7. Web Site
But many hotels lag behind guest expectations for current,
easy-to-understand web site content and rate information
Source: HotelMarketer.com Infographic, May 2012 7

8. Web Site
Curated content is a powerful way for hotels to keep
travelers on their web sites for longer
Average Time On Web Site % of Hotel Brands
(in minutes, by Content Feature) (w/Feature on Website)
Concierge/ 6.24
15%
Staff Tips 5.31
Curated 6.20
Itineraries
17%
5.38
Photos of 6.04
Local Attractions 5.25 27%
Guest 6.12
Testimonials
5.41
52%
Photo 5.47
Galleries 5.14 94%
With Without
Source: “Digital IQ Index: Hotels,” L2 Think Tank, March 2012 8

9. Web Site
Recognizing the value of unbiased ratings, Starwood
was the first major hotel brand to offer online ratings & reviews
Starwood launched Ratings &
Reviews in October, 2011 with
direct mail campaign
• Recent guests received an invitation
to rate their hotel experience, rather
than traditional satisfaction survey
Similar to 3rd party review
Reviews are displayed directly sites, guests can see
breakdown of ratings
with hotel property booking
pages, making it easier for
consumers to find relevant
property-specific information
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10. Digital
Hotels trail other prestige industries in their use
of email marketing best practices
• Hotels take the first step of signing up guests through email, but miss out on
critical touchpoints, including welcome email, and making emails viewable on
mobile devices
Use of Email Marketing Best Practices
Average Emails Hotel Industry, December 2011
98%
per Week
Spec Retail 3.2
Magazine 2.8 60%
56%
Beauty 1.2 50%
Fashion 0.7 35%
Hotels 0.2
11%
Jewelry 0.1
Send to Links to Viewable Additional Welcome Email
a Friend Social Media On Mobile Emails Email Sign-Up
Source: “Digital IQ Index: Hotels,” L2 Think Tank, March 2012 10

11. Differentiation in social media is increasingly difficult, Social Media
as presence across platforms has become table stakes
Overview of Social Media Marketing Practices
Social Media
Competitor
Facebook Twitter YouTube FourSquare
• Book travel • 38K Followers • Frequent updates
• View or post photos • Need to have Twitter • Videos of chefs
• Tab for Hilton Honors account to access cooking, events & • NA
• LGBT promotion icon • Frequent updates new room designs
• Video of Annual Report
& Welcome • No link through
• View & post photos • 183K Followers home page
• Frequent updates • NA
• Welcome icon for • Old postings
community service
• Book travel • No link through • 1st hotel to partner w/
• View or post photos • 13K Followers home page
• Primarily travelers Topguest to connect
• Welcome concierge • Leverages YouTube
posting vacation with location-based
video for announcements
• IHG curated discussion photos/comments • Socially resp focus networks
• View or post photos • 91 Followers on • Through SPG site • Integrated
and/or reviews SPG Insider (limited • Frequent updates partnership
• Check events posts) • Videos of chefs
• Use SPG points to bid • 49K on Starwood cooking & special • SPG members earn
on auction events Buzz (freq updates) events rewards
• View photos
• Occasional promotions, • No link through • Some use with focus
limited activity homepage • Few company posts
• 10K followers • Limited viewings on western US
• No direct booking properties
functionality • Limited updates
Sources: Hotel websites, Facebook, Twitter, YouTube, Hebsdigital.com, 11
“Converging Social & Mobile: Why 2012 is going to be the year of SoLoMo,” 3/2012

12. Social Media
Hilton has the largest and fastest growing FaceBook
community
Close to • Hilton utilizes its
300K
Facebook page to:
followers
vs. 100K - Provide another
for SPG channel for guest to
and 111K book travel
for
Marriott - Target priority
segments, like the
LGBT community
- Run promotions and
sweepstakes
- Provide sticky
content that drives
engagement, like
photos
Source: hilton.com, Hilton Facebook 12

13. Social Media
New sales and communication avenues have the
potential to disrupt channel practices in the hotel space
Potential Disruptors in Digital Marketing
Consortium-Controlled
Flash Sales Social Networking Sites
Booking
• Direct booking hotel search • Total gross billing from 3 major • The fastest growing social
engine with better terms than daily deal sites represented networking site - businesses
most OTAs 8.5% of all travel vendor billing create Google + pages to
- Opportunity for hotels to gain for 4th Q 2011 ($71.5M) engage customers
back some of $2.5B in OTA • Pros: data mining resource - target by topic of interest
annual commissions • Cons: - offers platform for visitors to
• Drives down costs & enables - Cannibalizes sales recommend hotels
better customer experience - measure pages by type of
- Erodes rate parity (“The Law
• Launched January 2012 by of Unintended Channel Share interaction
Choice Hotels, Hilton, Hyatt, Loss”) • ~2/3 of hotel brands had a
IHG, Marriott & Wyndham; - Does not drive significant presence on Google+ in 2011
Best Western followed
bookings
Sources: “Digital IQ Index: Hotels,” L2 Think Tank, March 2012; hebsdigital.com, “Another
Look at Flash Sales Sites,” 3/2012; Tnooz.com, “Do Flash Sales level the Playing Field for
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Independent hotels,” 4/2012; Google +

14. Social Media
It is unclear if travel flash sales remain a disrupter, or a
focused way for smaller independents to increase reach
Breakdown of Flash Sales Travel Deals • Flash sales provide Independents and Inns with
from Groupon, Living Social and Travelzoo another lever to drive demand
Vacation • 12% branded hotel participation raises questions:
Tour
Homes/ - Are independent property owners using flash sales on
Operators; 5%
Timeshares; unsanctioned basis?
9%
- Do chains turn a blind eye at the corporate level to give
owners flexibility?
- To what extent does this practice violate pricing parity
agreements?
Independent Branded
Hotels; 42% Hotels; 12%
Inns and
B&Bs; 32%
Source: ”Travel’s Daily Deal: Distribution Disruption or Flash in the Pan?,” 4/2012; PhoCusWright
Market Research and Yipit, based on 4Q2011 flash sales deals for accommodations 14

15. Social Media
The marketing success of flash sale providers may
inspire hotel brands to up their digital email campaigns
Sample Flash Sales
• Built on email list of consumers • Weekly, members-only flash • Partnership creates email
interested in receiving travel sale with exclusive deals of subscriber base of 50 M
deals 50% or more off handpicked potential travelers
• Largest publisher of deals on hotels in top destinations • “Groupon Getaways” offer
the internet, with over 25 M worldwide discounted deals to properties
subscribers • Deals must be purchased within Expedia’s network of
• Publishes Top 20 deals by within 72 hours, need to 135,000 hotels
location, each researched by register as Orbitz member to
Testing Center receive Insider Steals by email
Uncertain if this model is sustainable and what the impact will be on major hotel brands:
• Do flash sales prompt repeat business? Additional spend on ancillary services?
• Is there additional opportunity to drive new bookings through email outreach? E.g.,
by inspiring unplanned getaways
• Or, will customers be content to wait for next flash sale?
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16. How to Learn More
• Please contact us to learn more about our perspective on digital marketing:
Jennifer Anthony: Brooke Hempell: Scott Wilkerson:
jennifer.anthony@hawkpartners.com brooke.hempell@hawkpartners.com scott.wilkerson@hawkpartners.com
703-304-4585 678-602-6058 301 951-7046
About HawkPartners! Sample Hospitality Clients
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works at the intersection of market research and
marketing strategy to help industry-leading,
Fortune 500 clients make fact-based decisions. In
the hospitality space, HawkPartners works to help
our clients understand their customers and
competitors, and to develop game-changing
marketing strategies."
Founded in 2003, the firm is headquartered in
Cambridge, MA, with additional offices in New
York, and Washington, D.C."
www.hawkpartners.com!
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