Transactional Marketing vs. Relationship Marketing in the Hotel Industry

Generating revenue is key to any business, including hotels. This is why is very common that in the industry most hoteliers put all their effort on transactional marketing. This means the focus is mainly on short-term relations with guests, and once the transaction is done (the booking is made), the relationship ends.

Can you see what this approach is lacking? A good long-term strategy, and for that hoteliers need to make the switch from transactional to relationship.

Why transactional marketing is not enough in the hotel industry?

Transactional marketing in the hotel industry focuses on short-term, one-time interactions with guests. It aims to drive immediate sales and bookings through various promotional tactics.

This approach promotes enticing offers, discounts, and special deals to attract guests and encourage them to make a reservation. However, after the booking is done, the guest doesn’t hear back from the hotel until the moment when the reservation begins.

There is no useful exchange of information, no extra value delivered to the guest and no relationship-building.

Transactional marketing is effective in capturing the attention of price-sensitive travellers and boosting occupancy during specific periods. For example, offering a limited-time promotion for a discounted room rate during the off-season to attract budget-conscious travellers.

But the question you should ask yourself is: is this enough to bring back your guests in the future? Will they choose again to stay in your hotel?

Why should you focus on relationship marketing?

Relationship marketing can be on the opposite side of transactional marketing. It focuses on building long-term connections and loyalty with guests. It emphasises understanding individual guest preferences and delivering personalised guest interactions to improve satisfaction and create lasting relationships.

This approach involves engaging with your guests before, during, and after their stay, aiming to create emotional bonds and repeat business. Relationship marketing fosters customer loyalty, encourages positive reviews, and generates word-of-mouth referrals.

A report by Skift Research states that hotels with effective relationship marketing strategies see a 20% increase in repeat business and a 5% increase in direct bookings. This means you are investing in long-term results instead of just quick fixes.

Moreover, there are several other reasons why you should focus also on relationship marketing instead of fully doing transactional marketing.

First, relationship marketing can lead to higher customer lifetime value. This is because customers who have a positive relationship with your hotel are more likely to stay there again in the future, and they are also more likely to recommend the hotel to their friends and family. In addition, they are more likely to try added services like room upgrades, spa treatments, special dinners, and more.

Second, relationship marketing can help to reduce your marketing costs. It is easier and cheaper to engage with your existing customers than to reach new ones. According to Bain & Company, just a 5% increase in customer retention can have an increase in the revenue of up to 95%.

Third, relationship marketing can help to improve guest satisfaction. Relationship marketing calls to put the guest at the center of everything. And this generates higher satisfaction. Why? Because customers feel valued, seen and heard.

How can you implement relationship marketing in your hotel?

In the long run, relationship marketing is a more sustainable and profitable strategy for hoteliers. By focusing on building relationships with your guests, you can generate more revenue and build a strong name in the industry.

Here are some examples of how you can focus on relationship marketing:

Make the guest experience a complete experience

Relationship marketing not only focuses on the transaction but everything that surrounds it. This means, you need to provide value and create a full experience on every stage of the guest journey. From the booking moment to the post-stay, make sure the experience is easy, valuable and personalised.

If you want to learn how to create a guest journey and personalise it, review our Ultimate Guide to Personalising the Guest Journey

Reward loyalty

There are many ways to reward loyalty. You can do it using a guest loyalty program, creating a special campaign for guests that booked more than two times, a gift, and more.

Create initiatives that truly resonate with your guests

If you know who your guests are, you can create initiatives that match their needs, expectations and preferences. Use your hotel CRM to gather all this information and then gather ideas about how to cater their needs. This shows that your brand truly cares about what your guests think and about building real connections. If you receive a great number of business travellers, you could offer amenities that are thought to make their stay more pleasant and easy.

Worship feedback

Okay, not exactly "worship". But the point is that feedback should be at the center, right next to your guest data, because it will help you to understand what your guests think about your property, how was their experience with your customer service, what things they didn't like, and more. This gives you a tremendous opportunity to build a relationship. By directly addressing their feedback, you're showing that you care about your guests and that they are not just one more number in your reports.

Build a brand that is worth remembering

Building a relationship is a two-way street. It is not only you who will pursue your guests, but they should also agree to stay in communication with you and feel attracted to your brand. This won't happen unless you are offering something unique and enticing. It is not about how cheap or expensive your rooms are, it's about how you present your brand. Things like your messaging, the images you use, the way you communicate with guests, and of course, your offering, will play a key role in switching from transactional to relationship marketing.

Your hotel marketing strategy needs to consider all these points and focus on building an exciting, attractive and Instagram-worthy experience, that will have guests accepting to "enter" into that relationship.

Key takeaways

By focusing on relationship marketing, you can create a loyal customer base that will keep coming back for more. This is a more sustainable and profitable strategy than focusing only on transactional marketing, and it can help you to achieve your business goals.

This means you should work on implementing guest-centric relationship marketing strategies, since they offer many compelling benefits.

As a result, the hotel not only attracts new guests but also witnesses increased revenue through higher occupancy rates, repeat business, and the positive impact of enhanced brand image.

In essence, relationship marketing proves to be a powerful tool that not only solidifies guest loyalty and satisfaction but also bolsters the hotel's overall success and profitability.

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