As part of HOTELS’ 50th anniversary issue, the editors spoke to “disruptors” – leaders of competitive or complementary industries whose innovations are challenging hoteliers – to chronicle their opinions on trends to watch as well as ignore, keys to profitability, the future of room service and what hoteliers might be ignoring at their peril.
HOTELS: What is the biggest threat to the hotel industry and why?
Greg Marsh, co-founder and CEO, onefinestay, London: Over the past 20 years, online travel agents have grown from nothing to represent more than 50% of the total enterprise value of the hospitality industry. Today they are outspending hotels on technology, commoditizing brands and winning customer loyalty through their convenience and choice. While truly special independent hotels will always have a niche, how long before OTAs relegate the major hotel brands to a subordinate role?
Cyril Ranque, president, Expedia Lodging Partner Services, Geneva, Switzerland: The so-called user engagement crisis, where the rapid proliferation of mobile devices and growth of social networking have changed the way travelers and hotels consume and share information. We are solicited today like never before, straining our attention. Our ability to build products that help solve everyday problems for consumers and partners alike, in the most simple, delightful and effective way, is a key focus.
Clayton Reid, CEO, MMGY Global, Kansas City, Missouri: The perceived safety of travel has degraded over the past two years, especially in regions where terrorism has made a direct impact on tourism. And travelers have more angst generally for all types of travel, meaning hoteliers must acknowledge the negative implications of these concerns and proactively offer reassurances through service and product improvements.
H: What’s the most misguided trend you’re seeing and why?
Marsh: Everyone is talking about personalization as the path to salvation. I’m skeptical. The fact that customer data can be used creatively doesn’t intrinsically mean that it creates value. When a company remembers my details, on its own it rarely transforms a mediocre experience into a great one. I bet if you offered most people the same service with no recognition but for US$20 less, they’d take the discount.
Ranque: The recent push of direct loyalty member rates available only on a brand site. This strategy asks a consumer to search multiple sites for the best price, which sets the industry back 20 years and takes away a convenient, transparent and consistent way to shop. The OTAs have helped travelers discover, book and experience travel in an efficient way, and those chains are denying consumers a service that they have voted for over the years.
Reid: Hyper focus on millennials has created marketing and hotel product development (as well as PIPs) that are stereotypical, too broad and miss on key target markets. Millennials are quite different behaviorally across their age group—not to mention that other generations represent a massive market. Millennials are tastemakers and represent the largest age cohort, but the group is influencing too many broad industry decisions. Understanding niche behaviors that go beyond generalizations allow more informed operations. When you operate just for millennials, you’ve missed the mark.
H: What should hoteliers stop doing and do instead?
Marsh: City travel used to be challenging: Get the right currency, master a foreign dialect, navigate local idiosyncrasies. In the old paradigm, the hotel was a sanctuary from chaos and complexity. Now that we travel with a smartphone, we are at home everywhere, so we seek something different from our accommodation. We want immersion, not insulation. Hotels need to turn themselves inside out to embrace this. Expose customers to the city; don’t protect them from it.
Ranque: It doesn’t make much sense anymore to talk about owning the customer when the majority of consumers shop across brands, and devices, and belong to a variety of loyalty programs. Consumer needs vary dramatically depending on whether they are traveling for business, leisure, in a group, with a family or as a couple. The solution is to provide a variety of flexible options.
Reid: Softer demand is coming eventually (we think in late 2018). But loyalty programs and newly available data will allow hotel operators to stop giving away so much inventory and rate margin to third parties. Instead, brands should focus on direct channel discounting and relevant guest offer structures that sit outside OTA agreements. As our industry faces headwinds, the historical supplier approach has been reliance on others to solve demand slack. Today, it’s a problem that should be managed with more self-discipline.
Karen Tepper, vice president mobile, Priceline.com, Norwalk, Connecticut:Hoteliers should stop thinking about mobile as only being able to deliver last-minute reservations. We see our customers using our mobile website and apps in their research and planning stages as well. Hotels can use mobile as a way to build base business by offering exclusive discounts for non-same-day reservations.
H: What’s the one trend you are watching? Why?
Marsh: The same smartphone that distracts and entertains us is also a remote control for our lives. In our homes, we are increasingly spoiled by the ubiquity of on-demand lifestyle services such as Uber. We demand the same level of instant gratification wherever we are in the world. So what is really the role of a full-service hotel when I have every hotel service in my pocket 24/7?
Reid: The way in which marketers attribute revenue to marketing investment is evolving quickly and allows hotel operators more insight into shopping and booking behavior. This has implications for how supplier brands spend in categories such as search, programmatic and paid social media and even offline advertising. Multi-touch attribution is re-shaping hotel marketing.