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Traffic Reports
Conversions

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Remember that this whole effort of comparing traffic reports is not for some sort of resort owner score board. You do not need to be number one to make a good annual profit. What you do want to see is a good conversion ratio. How many people who look at your site actually convert into bookings?

If you do not have some type of real-time online reservation system, you can't know for sure. But you don't need to know exactly in order to have a good working idea.

Let's say that in a years' time you have 15,000 unique visitors come to your site. Let's say that during that same year you book 3,000 room nights. That would mean that one person out of every 5 who visits your site books with you.

Not all of those room nights come from Web site visits. Out of those 3,000 room nights, how many were repeat guests, word-of-mouth, phone calls from print ads or brochures, billboards, radio ads, etc?  While it is possible to track how many really do come from the Web, it is far more complex and expensive to do than what most need to bother with.

All Advertising Drives People To Your Web
No matter what you do for advertising, in almost all cases people will visit your web site before they make a booking.

It can be argued that since a traffic report gives a very good over-all picture of how well your entire advertising effort is working, the above method of deriving at a conversion ratio is close enough for most to use.

Traffic reporting exists to improve your financial ratios, to help make a profit. Each operation has a slightly different number crunching model. What follows are simple examples that are designed to give you the general idea of how using your traffic report can help you really pin down conversion. Adapt these for your personal business model. After these two examples you'll get the general idea.

While I use cabin rentals in my examples, these exercises also work for fishing trips, boat rentals, and packages of all the above.

Example One
How To Calculate & Use Conversion Ratio for Room Nights Needed

Let's say you have 10 cabins. With 10 cabins  you have a potential for 3,650 room nights in a  year - 10 cabins times 365 nights in a year is 3,650 potential room nights. Call it an average of 1,825 potential room nights for every six months. Thus for the18 month period shown in these traffic reports those 10 cabins hold a potential 5,475 room nights.

1. Let's say you had a total of 33,000 site visitors for the 18 month reporting period, and in the reporting period you had a total of 2,738 booked room nights. Thus:

33,000 divided by 2,738 is 12. This shows a conversion ratio of 1 room night booked out of every 12 site visitors over those 18 months. Your conversion ratio is 12:1 or 12-to-1 however you like to see it.

2. Now let's say that in order to realize your financial goals for the next 18 months you need to book an additional 450 room nights. Thus:

12 x 450 = 5,400  You need another 5,400 site visitors to hit your financial goals.

3. Now go to your traffic report. Where are you weak? Where are you strong? What are the fastest and least expensive ways to boost your weak points and buy more strong points? What will it cost to get those extra 5,400 site visitors? Make a choice and go for it. Remember - it takes money to make money. Now let's take a look at that!

Example Two
How To Calculate & Use Conversion Ratio for Cost To Acquire Visitors

How much will it cost you to get those extra visitors? Will it pay? Will you make a profit?

Determine your ADR (average daily rate). We'll say for this example it is $85 a day. We use the same numbers given in example one above.

First determine the cost per site visitor. Add up every single cent you spent on advertising for the 18 month reporting period. Add in all other costs you associate with advertising. Let's say you come up with $7,500 for the reporting period. Thus:

$7,500 divided by 33,000 site visitors is 23 cents. It cost you 23 cents for each one of those visitors. (I've rounded to keep it simple.)

Now assuming that costs stay about the same:  0.23 x 5,400 needed visitors, which is $1,242 dollars more you'll need to spend. Is it worth it to you?

Well, your ADR is $85. Thus $85 x 450 new room nights = $38,250.   You spent $1,242 to gross another $38,250. If your profit margin is at least 15% (if it is not your rates are not high enough) your gross profit here is $5,737 after all expenses and the extra $1,242.

By looking at your traffic report you can see where, and how, you can attract those extra needed visitors. Again by merging your financial ratios with your traffic metrics you can see how much those extra visitors will cost you, and therefore if the whole exercise will pay off. Again, this is not a super-precise exercise. It is close enough to give you a good idea of how all your advertising is working.

Online Conversion Tracking
If a Web site has some type of purchasing means, such as a shopping cart, it is possible to accurately track the conversion rate. However, most Mom & Pop resort operations don't use online booking systems. In my opinion that is a good thing. Online booking systems are great for well-known hotels and airlines. But Mom & Pop, who are not a trusted, known brand, are better off answering the telephone on a live call from someone looking at their Web site. This allows them to answer questions and "upsell". While it is true that some people will use a small resort online reservation system, I have not seen them used on a level that surpasses the good old telephone. I suspect that will change in the future, just don't know when.

Written August 2008 by Gary Cooley