Everyone wants to be a disruptor, and with technology giants Amazon, Google and Alibaba moving into the hotel business there is no better time to learn from the industry’s biggest risk takers. That’s why Patrick Bosworth, co-founder and CEO of revenue management software developer Duetto, said the Revenue Strategy Summit was founded in the first place.
The event, now in its sixth year, took place on July 10 in Washington, D.C., with the goal of educating hoteliers on revenue-management strategy and how to remain successful in a world dominated by rapid disruption. Even though hotel companies have been outmaneuvered in recent years by nimble digital entities such as online travel agencies and home-sharing websites, Bosworth said there is still much reason for positivity.
“It’s my belief that hoteliers have been so far behind in their ability to create value in many channels that they have focused on the channels they have been able to control, where they have not seen erosion,” Bosworth said. “As new big entrants come in, they will compete for the same customers that Expedia and Booking.com do. It’s no longer a duopoly, and hotels have been able to leverage data to compete for those customers, as well.”
During a panel discussion, Alexander Pyhan, VP of distribution, OTA, meta and wholesale at Marriott International, said that with so many options for bookings open to consumers there must be a conscious reason behind every purchase, as well as a reason behind a consumer’s choice in brand. This reason can be something as simple as price or as complicated as a long-term relationship with a brand, but in many cases Pyhan said the power of loyalty and loyalty programs remains underappreciated.
“We need to create an ecosystem where the consumer returns,” Pyhan said. “The consumer wants a high-quality product, but they also want a seamless guest experience. That’s how brands need to evolve, not only from a hotel perspective but from a transactional perspective.”
Of course, such a simple premise comes with hundreds of operational and logistical hurdles, one of which is data. Pyhan referred to data as the “new oil,” and hotel companies must work harder than efficient data collectors like Google and Amazon to understand their customers. While it may not be possible to control whether or not a guest ultimately chooses to share his or her data with your company, it may be more pertinent to get a handle on your hotel’s online presence and how guests encounter your business on the internet.
“It’s hard for any brand owner or hotelier to understand where their inventory is being displayed online,” Pyhan said. “It’s frightening to invest billions in brand development, and you don’t know where it’s being displayed!”
In discussing what he termed the “innovator’s dilemma,” Andrew Rubinacci, president of AMR Hospitality Consulting, pointed to a common struggle legacy companies eventually contend with. If a company fails to do anything new or different for several years, it will eventually decline. In addition, if a company attempts to shake things up and take some risks, revenue will drop initially.
For Rubinacci, this is a difficult concept to sell to hoteliers, partly because the individual components that make up a successful hotel (owner, operator, brand, etc.) aren’t always aligned in a way that allows risks to take place.
“That initial decline in revenue kills people,” Rubinacci said. “Four months of not hitting revenue, you can’t get through that in an individual hotel, even if in 12 months you’ll be better off. Nobody is willing to take the hit to improve in the long term.”
Brian Berry, SVP of sales and data analytics at event management company Cvent, disagreed with Rubinacci, saying hotels are actually very familiar with the risks of losing revenue in the short term in the name of a bigger payday down the line. However, he said that in many cases, hoteliers fail to apply the lessons of these success stories to other aspects of operations.
“The dip you are pointing to looks like every hotel’s dip before a renovation,” Berry said. “They are willing.”
Berry also said the hotel industry has a lot of opportunities in the coming months to make use of advertising dollars in the group segment and earmarked this as one of the major trends he sees taking place over the next 10 years.
“When we look around at the hotel leisure business, by and large hotels spend 10 to 15 percent of their revenue on marketing there. On groups we spend only about 4 percent,” Berry said. “[Request for proposal] volume is a direct result of marketing, and the challenge is that in the hotel industry we are slow to respond to that. We need to shift dollars in sales to marketing.”