Consumed Revenue and Why It Matters for Hotel Marketers

Consumed Revenue Hotel Marketers

Traditionally, digital marketing teams have focused on gross revenue and return for reporting and optimization purposes. For hoteliers, gross revenue is the revenue directly attributed to a booking at the moment the booking occurs. For example, if a traveler decides to book a $100 hotel room today for an upcoming vacation, that $100 will be recorded and attributed to today’s date, the same day the booking occurred.

Gross revenue is widely used in digital marketing because it is the easiest to track at the moment of purchase. However, it doesn’t always paint the full picture of what travel brands use internally to gauge profitability. Consumed revenue is often an overlooked metric in the hotel digital marketing industry, but it serves a very important purpose.

What is Consumed Revenue?

Consumed revenue is recorded once a customer has checked out and paid for their hotel room. In other words, consumed revenue depends on when the customer actually completes their stay, rather than when the hotel is booked. This has important implications for accounting purposes. Since this revenue is not recorded until after the customer completes his/her stay, consumed revenue also takes into account any cancellations that may occur after the room has been booked. This is an important internal metric that hoteliers view as their true source of actualized and recordable revenue.

Taking Action

What are you supposed to do if you look at consumed revenue to evaluate your monthly metasearch campaign performances? One important consideration is to look at check-in dates to determine important trends according to different publishers, device types, points of sale, and many other dimensions.

While doing a consumed revenue analysis for one of our customers, we noticed a higher percentage of December bookings with January and February check-in dates, causing their consumed revenue for December to be much lower year-over-year. By utilizing Koddi’s advanced reporting interface, we were able to evaluate these check-in date trends and adapt our metasearch bidding strategy to meet the customer’s objectives. In this case, analyzing consumed revenue drove us to:

  • Target shorter booking windows
  • Optimize toward mobile purchases more likely to be consumed soon after the booking date
  • Target in month check-in dates on desktop devices

How This Strategy Affects Consumed Revenue

For example, by targeting shorter booking windows on mobile devices, we can quickly gain consumed revenue from same day and next day mobile bookings. On desktop devices, we can target specific further out bookings if customers are looking to drive more consumed revenue for specific check-in dates. The possibilities are endless.

Consumed revenue is an important metric for hotel marketers and revenue managers. Looking at consumed revenue can uncover unique changes in consumer behavior and help find hidden pockets of inefficiency that impact your business. To learn more about reporting for metasearch campaigns, download our free metasearch whitepaper.

Marketing , Metasearch