FROM GOOGLE ANALYTICS TO DIGITAL MARKETING

Proceedings of FEB Zagreb 11th International Odyssey Conference on Economics and Business June 16 20, 2020 Croatia 1/2020 ISSN 2671 132X Vol 2 No 1 pp 1 886 June 2020, Zagreb Editors Jurica Šimurina U

Proceedings of FEB Zagreb 11th International Odyssey

Conference on Economics and Business

June 16-20, 2020 Croatia

1/2020

ISSN 2671-132X Vol.2 No.1 pp.1-886 June 2020, Zagreb

Editors:

Jurica Šimurina University of Zagreb, Faculty of Economics & Business, J F Kennedy square 6,

10000 Zagreb, Croatia jsimurina@efzg.hr

Ivana Načinović Braje

University of Zagreb, Faculty of Economics & Business, J F Kennedy square 6,

10000 Zagreb, Croatia ivana.nacinovic@efzg.hr

Ivana Pavić

University of Zagreb, Faculty of Economics & Business, J F Kennedy square 6,

10000 Zagreb, Croatia ipavic@efzg.hr

Publisher:

Faculty of Economics & Business University of Zagreb

J F Kennedy square 6

10000 Zagreb CROATIA





 DOI: https://doi.org/10.22598/odyssey/2020.2

Indexed in: EconLit, ProQuest, EBSCO

International Editorial Board Lovorka Galetić – chair (Faculty of Economics & Business, University of Zagreb, Croatia)

Károly Balaton (University of Miskolc, Hungary) William C Gartner (University of Minnesota, USA) Aleš Groznik (Faculty of Economics, University of Ljubljana, Slovenia)

Joe F Hair, Jr (University of South Alabama, USA)

Ulrich Hommel (EBS Business School, Germany)

Zoran Krupka (Faculty of Economics & Business, University of Zagreb, Croatia)

Milan Jurše (Faculty of Economics and Business, University of Maribor, Slovenia) Tonći Lazibat (Faculty of Economics & Business, University of Zagreb, Croatia)

Junsoo Lee (University of Alabama, USA) Michael J Morley (University of Limerick, Kemmy Business School, Ireland)

Jurica Pavičić (Faculty of Economics & Business, University of Zagreb, Croatia)

Soumitra Sharma (Juraj Dobrila University of Pula, Croatia)

Robert Sonora (University of Montana, USA) Mark C Strazicich (Appalachian State University, USA) Jean-Paul Thommen (University of Zurich, Switzerland)

Goran Vlašić (Faculty of Economics & Business, University of Zagreb, Croatia)

Krešimir Žigić (CERGE-EI, Prague, Czech Republic) Joseph Windsperger (University of Vienna, Austria)

Organizing Committee

Jurica Šimurina (chair) Lovorka Galetić Marijana Ivanov Mario Spremić

Božidar Jaković

Ivana Načinović Braje Ivana Pavić Danijela Ferjanić Hodak

List of reviewers

Ana Aleksić

Ana Novak

Blaženka Knežević

Branka Tuškan Sjauš

Danijela Ferjanić Hodak

Davor Labaš

Domagoj Hruška

Goran Vlašić

Ingeborg Matečić

Irena Pandža Bajs

Ivan Strugar

Ivana Barišić

Ivana Dražić Lutilsky Ivana Načinović Braje Ivana Pavić

Jasna Prester Jovana Zoroja Jurica Šimurina Lovorka Galetić Maja Klindžić Marijan Cingula Marijana Ivanov Mario Spremić Mateja Brozović

Mihaela Mikić Mirjana Hladika Miroslav Mandić Nikolina Dečman Petra Barišić Rebeka Danijla Vlahov Golomejić

Sanda Rašić Jelavić Sandra Horvat Tanja Komarac Vanja Krajinović Zoran Krupka

University of Zagreb, Faculty of Economics and Business

Beata Buchelt

Cracow University of Economics, Poland

Agnieszka Ignyś

Poznań University of Economics and Business, Poland

Jana Blštáková

University of Economics in Bratislava, Slovakia

Simona Šarotar Žižek

University of Maribor, Faculty of Economics and Business, Slovenia

Nataša Rupčić

University of Rijeka, Faculty of Economics

Jean-Paul Thommmen

University of Zürich, Switzerland

Josef Windsperger

University of Vienna, Austria

FROM GOOGLE ANALYTICS TO DIGITAL MARKETING OPTIMIZATION IN HOTEL INDUSTRY: PROPOSAL OF FRAMEWORK AND EMPIRICAL EVALUATION OF HOTEL INDUSTRY IN CROATIA, BOSNIA AND HERZEGOVINA

AND SERBIA

Kenan MAHMUTOVIĆ University of Bihać, Faculty of Economics, Pape Ivana Pavla II br 2, Bihać,

Bosnia and Herzegovina kenan.mahmutovic@unbi.ba, kenan.mahmutovic@gmail.com

Abstract

Digital analytics is crucial in the process of benchmarking business performance and predicting future trends in the hotel industry It requires that hotel management knows new technologies and techniques and methods of digital analytics The first aim of this paper is to shed light on the role and importance of digital analytics in the hotel industry and to propose

a framework for the development of a digital analytics dashboard for a hotel website This framework suggests a set of KPIs and metrics that should facilitate strategic and tactical marketing decisions in the hotel business The second objective of the paper is to examine the level of application of digital analytics (Google Analytics) in the hotel industry of Croatia, Bosnia and Herzegovina, and Serbia Through the empirical research using the content analysis method on a sample of 1006 hotel websites, the author investigates differences between countries, but also differences between hotel groups according to their categorization, and examine the significance of these differences Results confirm a significant and very strong association between the hotel location (country) and the use of Google Analytics on the hotel website However, a significant and moderate association between the hotel categorization and use of Google Analytics has been confirmed only in Croatia, but not in other countries In the conclusion, the author interprets the research findings, points out the limitations of the research, and provides recommendations for future research

Keywords: digital analytics, marketing optimization, hotel industry, google analytics, KPI JEL code: M310, M15, Z330

Introduction

Tourism, and in particular the hotel industry as its backbone, has become a significant catalyst for economic development in the world with an increasing share of GDP and total employment At the same time, this industry is increasingly influenced by the changing digital environment, which is full of diverse information on new consumer habits and characteristics,

as well as new distribution and promotional channels Hotel websites have become the most important distribution channel, and the emergence of new channels such as online travel agencies creates new pressures on business conditions and pricing strategies Quality and timely information are essential for hotel management to understand the efficiency and effectiveness of business operations and to make good marketing decisions Some previous

research findings demonstrate a positive association between marketing effectiveness and business performance in terms of growth, enhanced customer satisfaction, competitive advantage, and a strong marketing orientation (Gladson-Nwokah & Gladson-Nwokah, 2015; Appiah-Adu, Fyall & Singh, 1999; Taylor, 1996) To be effective company needs adequate information available to managers (Moncarz, 1996) to conduct marketing analysis and to make effective strategic plans and implement marketing strategies (Hart & Troy, 1985; Buttle, 1986; Seaton & Bennet, 1996)

In today's fast-changing digital environment, digital analytics is crucial in this process of benchmarking business performance and predicting future trends using the data collected from the hotel website It requires that hotel management knows new technologies and techniques of digital analytics, to be able to collect the needed information and to analyze them in a meaningful context Google Analytics is the most used digital analytics tool for web sites in the world Very few scientific papers and literature deal with the use of digital analytics and Google Analytics in the hotel industry This is the reason that the first objective

of this paper is to shed light on the role and importance of digital analytics in the hotel industry and to propose a framework for the development of a digital analytics dashboard for

a hotel website This framework suggests a set of KPIs and metrics that should facilitate strategic and tactical marketing decisions in a hotel The second objective of the paper is to examine the level of application of digital analytics (Google Analytics) in the hotel industry

of Croatia, Bosnia and Herzegovina, and Serbia through empirical research on a sample of

1006 hotels, to investigate differences between countries, but also differences between hotel groups according to their categorization, and to examine the significance of these differences

In the discussion, the author interprets the research findings, points out the limitations of the research, indicates the theoretical and practical implications of the paper, and provides recommendations for future research

Framework development

Marketing information system and digital analytics

The marketing orientation as defined by Kohli and Jaworski (1990) requires adequate knowledge of consumers, competitors, as well as the overall market environment The strategic and tactical marketing decisions that the company makes regarding market segmentation, target market selection and positioning, competitive strategy, and the selection

of an appropriate marketing mix and control system must be based on timely and accurate information The marketing information system (MIS) consists of people, equipment, and procedures for collecting, sorting, analyzing, evaluating, and distributing the necessary, timely, and accurate information to marketing decision-makers (Kotler et al., 2005: 337) MIS interacts with decision-makers to identify their information needs, collects information from internal sources, through the collection of marketing intelligence and the marketing research, makes data more useful through the analysis process, and then distribute information to decision-makers

Today, the marketing information system is facing the challenges of the new digital era An important advantage of the digital economy, e-commerce, and digital marketing is the high degree of measurability and analysis of consumer behavior Companies can collect and process large amounts of data from the digital environment This data may come from own business sources (such as the company website or other online channels that company uses), from online marketing intelligence sources (websites and other online channels used by competitors, social networks, etc.) or through the online marketing research, and may relate to the consumers, to the competition or generally to the market environment Every click, every

visit, and every online activity generates a digital footprint, which is recorded on the servers, generating a valuable digital database By analyzing and mining this data, companies can obtain very useful information for decision-makers

Digital analytics is a set of business and technical activities that define, create, collect, verify

or transform digital data into reporting, research, analysis, recommendations, optimizations, predictions, and automation (Phillips, 2013) The classic definition of MIS should be upgraded with digital analytics to support all elements of MIS

Previous academic papers show a significant impact of marketing performance measurement

on marketing results, financial results, and company performance (Gök, Peker & Hacioglu, 2015; O’Sullivan, Abela & Hutchinson, 2009; O’Sullivan & Butler, 2010; Ambler & Roberts, 2008; Stewart, 2009; Li, 2011; Hacioglu & Gök, 2013)

Main benefits of digital analytics for digital marketing experts are website usage analysis, campaign and event tracking, digital business performance management and ad campaign optimization (Zumstein & Mohr, 2018), while data collection automation (Pauwels et al., 2009) and standardization (Russel, 2010) stand out as important features of digital analytics Despite these benefits, it is evident that digital analytics is utilized on an ad-hoc basis, the metrics data are not used for strategic purposes, and the benefits of the usage remain unclear (Järvinen & Karjaluoto, 2015)

A website is a basic tool for conducting digital marketing activities Its mission is to support all other digital channels (e.g., social networks, mobile applications), as well as all activities related to the marketing mix Therefore, digital analytics as a process of collecting and analyzing data from a hotel website can help companies make both strategic and tactical marketing decisions Its task is to ensure the effective and efficient achievement of the set marketing goals, by defining and monitoring the appropriate analytical parameters and adequate and timely reporting Measuring effectiveness aims at minimizing the cost of digital marketing and maximizing return on investment in various areas, such as attracting visitors to

a website, converting visitors to buyers, or encouraging customers to make repeated purchases New IT solutions have made it possible to monitor the performance, effectiveness, and profitability of individual marketing activities, and to report results through the easily understandable dashboards The new technologies not only enabled counting and calculations (number of visits, sales revenue, earnings calculation), but also adequate forecasts based on processing large amounts of data collected from several sources like social media, review data and search engine traffic

Importance of the hotel industry for Croatian, Serbian, and Bosnian economy

Positive economic developments with fewer visa barriers, lower transportation costs, and new tourism business models have affected the growth of the tourism industry worldwide, with 1.4 billion tourist arrivals in 2018, and hotel value sales of EUR 525 billion with an estimate of the compound annual growth rate of 4% in the next 5 years (UNWTO, 2019; TuiGroup, 2019) At the same time, export earnings generated by tourism have grown to USD 1.7 trillion (UNWTO, 2019) making this sector a truly global force for economic growth and development

With 710 million international tourist arrivals in 2018 and USD 570 billion in international tourism receipts, Europe remained the largest and most mature tourism market in the world, accounting for 51% of international tourist arrivals and 39% of tourism receipts in 2018 (UNWTO, 2019)

According to the Croatian National Bank, tourism revenue in the Republic of Croatia amounted to EUR 10.1 billion in 2018, representing a 19.6% share of GDP In the same year,

the number of employees in the provision of food, lodging and preparation services amounted

to 101,000, of which 71,000 were in legal entities, which is 5.4% of the total number of employees in legal entities of all forms of ownership (Croatian National Tourist Board, 2019) There were 731 hotels in Croatia in 2018 The most represented are 3-star (44%) and 4-star (43%) hotels, while the percentage of 5-star and 2-star hotels counts for 6% and 8% respectively In the same year, 20,436,000 overnight stays (22.8%) were spent in hotels and aparthotels, while in private rooms 43,382,000 overnight stays or 48.4% of the total nights spent Overnight stays of foreign tourists prevailed in hotel accommodation (89%) compared

to overnight stays of domestic tourists (11%) (Croatian National Tourist Board, 2019)

In 2018 in Bosnia and Herzegovina tourism and travel contribution to GDP counted 2.0 billion EUR, or 10.2% of GDP (Knoema, 2020) In 2019, a total of 3,371,322 overnight stays were realized in Bosnia and Herzegovina within the category of hotels and similar accommodation, of which the share of foreign tourists was 71.8% (BHAS, 2020) In 2019, there were 145 hotels and 5 aparthotels operating in the Federation of Bosnia and Herzegovina (FMOIT, 2019), of which 77% were 4-star hotels, 15% were heritage hotels, 7.6% were 5-star hotels, and 5 were 4-star aparthotels In the Republic of Srpska in 2020, 101 hotels are registered From the total number, 5% are 5-star hotels, 38.6% are 4-star hotels, 52.5% are 3-star hotels, 5% are 2-star hotels and one hotel is 1-star hotel (Government of RS, 2020) In December 2019 in the tourism and hospitality sector in Bosnia and Herzegovina 43,058 persons were employed, or 5.2% of the total number of employees in Bosnia and Herzegovina (BHAS, 2020)

According to data from the National tourist organization of Serbia (2020), there are 250 hotels and 129 heritage hotels operating in Serbia From the total number of hotels, 2.8% are 5-star hotels, 39.7% are 4-star hotels, 36.8% are 3-star hotels, 16.8% are 2-star and 3.9% are 1-star hotels In January 2020, a total of 82,459 employees were registered in the area of accommodation and catering, or 3.9% of the total number of employees in this country In

2019, 10.1 million overnight stays were realized in Serbia, of which 60.1% were domestic tourists and 39.8% foreign tourists In 2018, tourism and travel contribution to GDP counts 2.0 billion USD (15.4% GDP)

Changes in the distribution and importance of a website and digital analytics

HOTREC (2018) study shows that share of direct bookings in Europe, which includes the use

of offline (phone, mail, fax, walk-in reservations), and online web site contact forms (contact

form on web site without of availability check, direct e-mail, real-time booking over web site)

were 52% in 2017, of which 28.9% were bookings from the hotel website In the same year,

the share of OTAs (online travel agencies) was 26%, while the share of global distribution systems (GDS) and social media channels in 2017 were 2.5% and 0.5% respectively

Considering that HOTREC (2018) survey reported that in the last five years the number of bookings continued to grow through OTAs (from 19.7% in 2013 to 26% in 2017), which are putting increasing pressure on hotels in terms of lowering prices and meeting specific requirements, it becomes clear that hotels need to empower and use the website as a direct channel for better communication and distribution of its products and services The issue of evaluating and continuously improving the hotel website is becoming a strategic issue, and digital analytics plays a crucial role in this process

Google Analytics – characteristics and capabilities

The tool that is mostly used for digital analytics is Google Analytics According to W3tech (2020) company report, 35.2% of the websites use none of the traffic analysis tools, while Google Analytics is used by 55.0% of all the websites that is a traffic analysis tool market share of 84.8% The success of the tool is surely associated with the fact that it is free to use

Aside from figures regarding user behavior, the user's background, and interaction on the website, Google Analytics offers a precise view of all user activities

Connecting Google Analytics with the hotel website, by placing GA tracking code on every page, provides insight into detailed information about visitors, their computers, geographic origin, number of visits and unique visitors, site retention, traffic paths, and bounce rates It also enables measuring of goal accomplishments such as registrations, online sales, and estimates of certain visitor demographics

One Google Analytics account can be used to track more properties (for example hotel website and mobile app) For every property more "views" can be defined Views enable companies to filter data that will be used in reports For example, a hotel group that has more hotels, and one main website, can have one view that will collect all data, and one view for each hotel section of the website Or, a hotel that has a blog and news section on its website, can define one view to collect and analyze only data for blog pages, and one view for news pages This kind of structure will enable easier management and assignment of access to individual reports for individual stakeholders within the company

Google Analytics reports consist of dimensions and metrics Dimensions describe the data Practically in the reports, they represent the names for the individual rows in the tables Dimensions answer the question "what/which" such as "what keyword they used" or "what city visitors came from" Metrics measure data Metrics are dimension elements that can be measured Metrics answer the question "how many" or "how long," such as "how many visits"

or "how long a visitor stayed on a page." There are more than 230 metrics and dimensions that can be combined when creating specific reports within Google Analytics, and the advanced capabilities of this tool are revealed by linking companies' website databases (CRM database) to a Google Analytics database, which enables custom dimension and custom metrics analysis For example, if a visitor is browsing hotel website searching for a double room with specific requirements, this information (location, type of room, specific requirements, etc.) can be sent to Google Analytics as custom dimensions so that the company can analyze what types of visitors (their geographic, demographic, technological characteristics) are most often looking for such accommodation, and through which online channels they came to the hotel website This helps hotels better understand their customers, makes it easier for them to segment the market and to make positioning decisions, as well as

to better tailor their offer and make better decisions about promotional budget allocation Also, it is important to understand that any event on the website can be tracked and also measured as a custom metric on the website For example, clicking a button to check available dates can be tracked and measured as a custom metric, which provides information

to a hotel about how many potential guests were interested in the hotel Other examples of events tracked as custom metrics are newsletter signup, product details viewed, rating form submitted, contact form submitted, booking made, etc

Proposal of a framework for building custom digital analytics dashboard for a hotel website

In this chapter, the author suggests a framework for building a custom digital analytics dashboard for a hotel website The aim of this chapter is not to provide technical details about using Google Analytics and creating custom reports and dashboards, but to propose the framework that can be used for creating such dashboards in Google Analytics or using any other tool

A key issue for many companies today is how to process a large amount of data collected and turn it into useful information for decision making (Lavalle et al., 2011) The essential question is which KPIs to monitor, which metrics to use, and how to apply the obtained

results in strategic and tactical decision making A practical framework with clearly defined KPIs and how they are calculated can significantly help companies to solve this problem

Fáilte Ireland (2013) outlines the five categories of primary KPIs in use in the hospitality industry: accommodation, food, beverage, profitability, and liquidity, while main KPIs for accommodation category are: average room rate, bedroom occupancy rate, revenue per available room, cost per occupied room and labor cost ratio Pantelić & Nadkarni (2019) have investigated the perceived importance and relevance of key performance indicators (KPIs) in UAE hotel properties Through a detailed review of previous research, they have identified the following KPIs in the hotel industry: sales growth, market growth rate, customer online engagement, market penetration index (MPI), number of new customers acquired, total revenue, gross operating profit (GOP), F&B sales/revenue, F&B cost of sales %, revenue generated index, total operating cost, room occupancy, employee cost %, average daily rate (ADR), guest turnover ratios, revenue per available room (RevPAr), EBITDA, guest interaction quality, service outcome quality, maintaining hotel star classification and number

of products and services innovated per year

From a digital marketing perspective, we can define KPIs as metrics that indicate the firm's overall digital marketing performance concerning its most important digital marketing goals The KPIs are supplemented with other more granular metrics that are used to evaluate the effectiveness and efficiency of specific digital marketing activities that support the overall digital marketing performance measured by the KPIs (Chaffey & Patron, 2012)

Saura, Palos-Sanchez and Cerda Suarez (2017) highlighted that the most common, and conceptually simple methods for calculating the profitability of digital marketing actions is ROI (return on investment) and CTR (Click-Through-Rate) The same authors define six basic KPIs that companies should follow and analyze with web analytics in their DM strategies: conversion rate, goals conversion rate, type of user, type of sources, keywords/traffic, keyword ranking

Smith's (2014) SOSTAC® marketing planning model indicates that digital marketing implementations require strategic and tactical decisions The strategic decision level needs information related to market segmentation, positioning, online value proposition, and competitive strategy, while the tactical level needs information to help manage the elements

of the marketing mix This model is a base for framework development

Custom dimensions and metrics can be used to collect and analyze data that Google Analytics doesn’t automatically track (Google Support, 2020) For example, if a hotel stores the gender

of signed-in users in a CRM system, it can combine this information with analytics data, to see page views by gender Or for example, while a user is making a booking request on the hotel website, information about the room type, the number of persons, the number of overnight stays and included services, as well the total value of the purchase can be sent to Google Analytics and combined in reports with all other metrics and dimensions

Built on the previous elaboration, a framework presented in Table 1 suggests that the hotel analytics dashboard should consist of two parts: strategic and tactical decisions part Through the three-step process for the creation of custom reports, the author proposes KPIs and metrics for strategic and tactical decisions The first step in the process is to define hotel business objectives The second is to translate those objectives into KPIs (key performance indicators), and the third step is to define metrics to be collected to create custom reports