Hotel chain bets big on digital transformation and is seeing great results

Meliá Hotels teams with Accenture to personalize the customer experience using digital tools

Meliá Hotels International, one of Europe’s largest hotel chains with more than 370 properties, is in the middle of an aggressive digital transformation effort because it has seen the writing on the wall, and the writing is getting bigger at an alarming rate.

“We believe that 70% of our customers will be coming through digital channels by 2017, so the company has to embrace and implement a full customer centric digital strategy now,” says Manuel Riego, Vice President of Global Digital Sales and Marketing.

Two key factors are influencing the hotel chain’s thinking. “The first one,” Riego says, “is the evolution of the customer. His behavior is changing so much in today’s market and, if you don’t understand your customer perfectly, you are going to struggle with long term growth. Secondly, since Meliá is a hotel management company, the way we give value to our owners is by attracting customers that pay more and attracting them at the lowest cost. We believe the most efficient way to do that is to win customers through our own channel, and this is why our digital transformation plan is so important.”

Meliá started on the transformation a few years ago, Riego says, but in 2014 when it recognized how rapidly things were progressing, it called in Accenture.

“The whole program is about driving direct bookings,” says Kevin Carl, global managing director of Digital at Accenture Travel. Online travel sites have been interjecting themselves between customers and the hotels, so if hotels can get customers to book directly “it reinforces the brand and it lowers costs because the hotels don’t have to pay commissions,” he says.

Most importantly, Carl says, when somebody books through a third party, the hotel company doesn’t know anything about the guest until they show up. “If they book direct, the hotel knows who’s coming, they know something about them, they can learn more about their behavior. They can also sell them on other products and service before or when they arrive, so establishing that direct relationship before the stay is critical.”

There are multiple facets in what has become known at Meliá as the “Be More Digital” program, Riego says. The first goal was to drive more qualified traffic to the company’s Web site.

“Based on work with Accenture, we attracted more than 40 million visitors to our website in 2015, up from 31 million the year before, and 50% of the online traffic was from mobile devices,” Riego says (up from 37%). That was achieved, Carl says, with global and regional digital marketing efforts.

The second goal was to improve conversion. Accenture helped develop a new responsive website “so customers would have a seamless, multi-device experience,” Riego says, and that helped “better position Meliá to capitalize on the mobile market opportunity that is growing in the hotel industry.”

Improving conversion also involved creating dynamic landing pages and using multi-variant testing campaigns, Carl says.

As the pieces were coming together Meliá realized it needed some internal change to capitalize on the information the digital transformation was generating. “We said, why don’t we create an analytics team to support our big data and understand our customers at a deeper level and in a way that will expand our customer knowledge,” Riego says. “So we created a team to focus on analyzing our customers’ preferences and then they can share that data with the marketing department so we can create personalized propositions for customers.”

The fourth and last part of the digital transformation plan was to digitize the hotel’s loyalty program. “Accenture helped us redefine the whole strategy of the Meliá Rewards Loyalty Program,” Riego says. “The loyalty program was always focused on reward points, but fell short in evoking a strong relationship with the Meliá brands.”

Instead of just using reward points to get rooms for free, today travelers can redeem points for a whole range of activities at the hotel, including spa treatments or food and drink services at the bar, Riego says. “It was also important for us to connect with the customer throughout their journey, so now benefits extend outside of the booking and on-property experience, such as offering access to VIP lounges in airports.”

These benefits “have helped us establish a stronger emotional connection between the customer and Meliá Hotels,” Riego says. “This is a big change in the loyalty program - going from a transactional vision with points to a much more emotional connection.”

And it seems to be working. Meliá has since added more than a million reward members which shows deepening loyalty to the brand and should result in repeat business. Riego says that, before this big digital push, 60% of the customers that booked directly through Meliá.com were reward members, and today that number has jumped to 80%.

“Now the pillar of the revenue strategy of this company is Meliá Rewards,” Riego says.

Asked if there any other measures to gauge the success of the program, he says: “Previously, we did not have the tools or knowledge to really get the most out of our customer database. In the past we sent 200 million communications a year. We still do 200 million, but now in a more segmented and efficient way. This effort has multiplied the incremental profit of these contacts by three, which translated into an increase of 50 million Euros in 2015 versus 2014.”

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