Leveraging Frictionless Booking Tools to Incentivize Behavior and Increase Revenue in the Hospitality Industry, with Ellis Connolly

Episode Transcript

Robin: Welcome to “The Innovative Hotelier Podcast” brought to you by “HOTELS” magazine. I’m your host, Robin Trimingham, and my guest today is Ellis Connolly, Chief Revenue Officer at Laasie. And today we’re chatting about Leveraging Frictionless Booking Tools to Incentivize Behavior and Increased Revenue in the Hospitality Industry. Welcome, Ellis.

Ellis: Well, that was a mouthful. Yeah. Welcome. Thank you so much for having me, Robin. I appreciate it.

Robin: Well, I agree with you, this is quite the topic. I’m sure we’ve got a few people scratching their heads already. So, before we dive into the meat of this conversation, can you please start by helping our listeners understand what is your definition of frictionless booking?

Ellis: Yeah. I mean, that’s a great question and I think it’s almost the perfect path to purchase that digital marketeers in hotel and even e-commerce, right, are trying to get to, which is how do we move a guest, a consumer, a customer from the top of the funnel to the bottom of the funnel, meaning a purchase or on past a confirmation page with getting enough information out of them, right, educating them enough about what they’re doing, but then also creating a seamless process to where it’s easy, quick, and painless? So, that, for my definition, is a frictionless booking process. And I think we have a lot of hoteliers that do it extremely well, and then I think we have some folks that still have a little bit of work to do. So, I think we’re here to talk a little bit about some of that.

Robin: Well, with any transformational process, you always have the front leaders, the fence sitters, and then the other guys. So, you’re a pretty interesting guy. You’re Chief Revenue Officer, but it’s pretty clear already that you have quite a gift for words. So, what first got you interested in using AI to incentivize behavior?

Ellis: Yeah. So, I will say this, we at Laasie have an amazing team on our product side led by a gentleman named Devin, he’s our chief technology officer. And he has built a product that takes AI capability in a very pure form of what we at Laasie are trying to accomplish and really nails kind of optimizing moving people through the funnel. And then as we get into the conversation, we’ll talk more about kind of where our AI capabilities lie as well.

But I wanna be clear here. I think AI almost has a cliche aligned to it within a lot of technology companies that sit out there. I think you hear the word AI or machine learning used ad nauseam, right? So, where we leverage it is very specific around optimizing rewards in a conversion or in a loyalty kind of mechanism that helps create a higher adoption rate of people selecting, understanding, and eventually taking the rewards that they want. And I know we’ll talk about this a little bit more, but it’s a very specific use case that we’re leveraging it in, and it flat out just works. So, kudos to our team and Devin and our whole crew that does that.

Now, you asked, when did I get interested in AI and leveraging conversions? You know, I think if you go back to early on in my career, I was Chief Revenue Officer of a company called TrustYou. And in that company, we also leveraged AI and machine learning and analyzed millions and millions and millions of reviews, right? And then from that, we were able to take insights and make them actionable and drive hotel and hotel organizations to build on the successes that they found or find things that they needed to fix. Right? So, my interaction with the AI universe, for lack of a better term, you know, started many, many years ago. And I think it continues to get better within our industry. And as I was advising with Jen prior to coming on board full-time here as chief revenue to lead commercial, you know, I was at Sabre and I was leading the North American account management team there. And the things that Jen and Devin were working on as I was advising with them was just extremely exciting. And, you know, come Christmas time, Jen and I got to talking and I’ve been here since January. And I think I made the best decision of my life.

Robin: So, that’s pretty fascinating. You’re what I’m gonna call an early adopter when it comes to AI technology and the applications that have been coming online. So, you’re the perfect person to ask, why is this better than a traditional loyalty program approach?

Ellis: Yeah. So, let me maybe…let me set the stage of why Laasie is growing at an amazing pace right now, why we’re resonating very well with hotels and hotel groups, and also more importantly, why we’re resonating more with consumers, customers, and guests. So, I think there’s three parts to the Laasie story of where we are today. So, we are truly at an inflection point of what loyalty means for both guests and hotel operators. And we cannot go two weeks without seeing or listening to, or hearing some massive loyalty program making a ton of changes within their tiers, within their schemas, within their points valuations. You know, IHG just relaunched, Marriott just relaunched, Westgate Resorts just relaunched. And this is…and I’m talking all within the last like two or three months. And then you look at CitizenM created a subscription-based loyalty program.

So, all over the pandemic, people were traveling less. And the frequency of travel is really what drives existing loyalty programs, right? If you’re a points-based program, you have to travel in order to earn points. And when you earn those points, those points turn into something valuable that’s…we could argue or debate about that point.

Robin: Well, let’s hope so.

Ellis: Yeah. Let’s hope so. The difference between a points-based program and what Laasie does is that we believe that anytime someone transacts with your brand, you should reward them. The world is a much different place now. You know, you think about the way people are instantly gratified about everything, you know. There’s not a sit-and-wait culture anymore, right? Look at the employment environment right now, people are moving, people are shaking. People are going to do things that they feel that they want to do. They have a life calling, right? And that’s a whole nother debate for another conversation as well. But we believe that instant gratification is the way of the future for loyalty. And we believe this can stand alone within its own capacity like we do with Margaritaville Hotels and Resorts, or it could stand within an existing points-based program to help those points-based program encourage and engage and reward folks that may not be traveling at the same amount of frequency that they have in the past.

Robin: That’s actually pretty interesting. So, tell me more here, how do you leverage this instant gratification philosophy that you’re talking about to customize a loyalty program for a specific client? Like, let’s say one of the big brands that’s had a program forever and now they know they need to change.

Ellis: Yeah. So, I think there’s…look, there are a ton of different ways that we could talk about or strategize about building a parallel to points strategy that would align with an existing points program, but I’ll give you a couple of examples. So, sitting within major brand programs, you have different soft brands. You have lifestyle brands and you have different economy scale brands that are either sitting way up high in the ultra-luxury or sitting towards the bottom in the economy scale. So, if you think about the different types of products, the different types of consumer goods, and the different perceived value of rewards that would align with each of those economy scale type properties, Laasie has a reward platform and a merchant platform that spans the gamut across all of those kind of perceived economic value scales, where we can plug instant reward content into each of those levels, into each stays within those properties. And at the end of the day, someone who maybe isn’t spending $1,000 a night ADR, but is spending, you know, multiple times that 89, 99, 109 ADR, we have valuable products from our merchant model that will fit into that, as opposed to that person having to wait 20 stays, 60 stays, 90 stays to reach some tier where they’re gonna get access to some benefits that may or may not be guaranteed when they stay, and then reward them every time they try to get to that next tier. I mean, that in theory is a model. There’s many other different ways that you could skin that as well. But let’s take one step back and talk about the Laasie convert product, right? Because we have two very distinct products.

Robin: You have two different platforms if I understand it.

Ellis: Exactly. So, we have the Laasie loyalty platform, which is your…think of it as a full-blown loyalty platform, but we don’t use points, right? So, all of your enrollment capabilities, all of your experience capabilities to create rewards and operationalize them, all of the engagement capabilities, right? And then all of the enrichment capabilities. So, the ability to seed that data back into a CRM to build audiences like for like, and there’s a whole data layer that kind of lives above and below all the things that Laasie does. So, that’s Laasie loyalty. We call that product Retain, that’s currently live in couple of hundred properties right now, Margaritaville Hotels and Resorts being our most prominent customer. They just launched their Margaritaville Perks program back on Valentine’s Day. So, all that is powered in sitting on top of the Laasie platform.

Our original product that we came to market with five, six years ago is a product called Laasie Convert. And what Laasie Convert does, it touches on the exact initial question that we opened the conversation with, which is how do you create a frictionless booking experience while also encouraging people to book direct, right? The holy grail for hoteliers, and 99.9% of the time, the least cost of customer acquisition is gonna come through booking direct on your hotel website.

Robin: And the highest value because it’s all about who owns the customer.

Ellis: A hundred percent right. You’re 100% right. So, how do you, as an…let’s just talk as an independent hotel, you’re a single hotel, you’re sitting in, you know, Dubuque, Iowa or wherever it might be and you’re competing with the Marriot, the Hyatt, the Hilton, you know, across the street, you have the same amount of rooms. You’re probably lowering your ADR by a couple of bucks to try to compete in rate. So, what are the things that you can do as that independent hotel in order to create value, but hold your rate integrity? And Laasie provides a product within the path to purchase that educates this traveler and this guest that they’re gonna be receiving immediate rewards when they book direct. And those rewards are gonna have a high perceived value, right? These are gonna be, you know, $25 credit to Lululemon. This is gonna be a, you know, 30% off your shopping spree at Bloomingdale’s, right? And then this is really where we start to leverage the AI capabilities that we were discussing at the beginning of the show, which is we are integrated into over 50 booking engines, right, in the CRS space. So, once somebody makes a booking, we now are able to take this information from the booking engine, as well as from the IP address and we can start to formulate who and what you are and why you’re traveling.

Robin: So, to make it very clear then, you can potentially tell the difference between the person who will appreciate the Lululemon certificate and the Bloomingdale certificate.

Ellis: You nailed it exactly on the head there, Robin. So, as an example, I live in north of San Diego. So, if I’m making a hotel booking and I’m traveling to, let’s say Orlando, because that’s coming up for me here in a couple of weeks, let’s say I’m traveling to Orlando. So, when I make that booking at the hotel in Orlando and I hit confirm, right, now, the Laasie software serves up what we call our reward carousel. Right? So, now based on what we know about you, we select specific rewards that we’re gonna give you an option to pick. Now, here are the things that we know, we know that this person…we don’t know it’s Ellis yet, but we know that this person is traveling to Orlando from San Diego. We know the dates that this person is traveling. We know how much they’ve paid for the hotel room. We know what type of hotel room they’re in. We know what days of the week, and we know the seasonality of this travel, right? We know that from the booking engine. From the IP address, we know the zip code of where the traveler is booking from, so we can assume some affluency based on economics. We know what day or what time of the day this person is making the booking. And we also know what device this person has made the booking from.

So, those seven or eight data points, I now know based on the $600 million worth of bookings that we’ve incentivized over the last few years, we now know that this traveler looks very similar to these types of travelers. And this is what these travelers selected. So, let’s make sure we include them, right? So, we’re gonna include offers in Orlando. We’re gonna include nationally recognized offers that have potentially resonated with your zip code before. And then we’re also gonna offer offers that are back in your home market. Because at the end of the day, we know you’re going to Orlando for four days, but you’re gonna have to go back to the San Diego market.

Robin: I’m actually finding this pretty fascinating because I knew something about this before we started chatting, but I’m definitely hearing a few things I didn’t know. Give us some data here regarding conversion rates between program participants and non-participants, if you can.

Ellis: Because we were doing AB tests ad nauseum coming in…like, coming towards the last six months of 2021. I think we were in, like, seven or eight AB tests on our Convert product. And over those seven or eight tests, the average conversion rate between the, you know, exposed versus unexposed Laasie content, properties were seeing an increase around, like, 36%. Direct booking increase when Laasie content was exposed on the website. So, when you start to see numbers like that, a 36% increase in booking conversion…

Robin: That’s a lot.

Ellis: That’s a lot. It drives the needle on revenue hands down. You know, and coming from the Sabre world where you look at, you know, booking engine averages between the 2% and 3%, you know, some even lower to be honest but, you know, moving a major booking engine conversion across the board from, you know, two and a half to two and a quarter extrapolated out over the course of the year or two years or three years is monumental revenue impact. And then that’s at one property. And if that’s exacerbated over the course of 10 properties or 100 properties…

Robin: Because you’re a chain, yeah.

Ellis: …a thousand properties, you know, those numbers start to become monumental.

Robin: Okay. So, you’re making a pretty compelling case here, at least from my perspective, but I’m sure we still have a few holdouts.

Ellis: Of course.

Robin: I read in a recent article when I was preparing for our chat. And I think it’s an article that you wrote that travelers are demonstrating a preference for brands that not only personalize offers to be relevant but also offer immediate high-value gratification attached to any purchase decision. So, what would you say to a listener who still has questions regarding the ethical using of AI to predict and influence purchasing behavior?

Ellis: Yeah. So, look, I think there’s two sides of the fence on this, right? And, obviously, Laasie, we are, you know, we are 100% ethical, GDPR, you know, standards, California Privacy Agency Standards, the whole nine. So, we are in line in leveraging our AI capabilities and exactly how we can, right? Or how we should be. We don’t touch any PII data, so we don’t touch any credit card data, we don’t touch any of that information. It’s cleaner and much easier for us. Now, I would say this, if you think about consumers and what the expectations of consumers are now within an e-commerce path to purchase and how quickly folks click the accept cookies button, how quickly consumers sign up for things through Gmail, sign up through things, you know, use Gmail to sign up, use your Facebook to sign up. You know, there is a lot of data that is just topical that’s stored there that Laasie has the ability to leverage that doesn’t, you know, require us to go deep to ask many questions or to, you know, scrape for lack of a better term, any data that we might need to use.

So, again, all of our stuff is based on the IP aspect of where you are, right? Which is pretty standard in data collection. And then the booking engine data that we leverage is all consumed by the hotel. So, it’s there for us to leverage, to serve up content on behalf of the hotel. That’s the other thing to keep note here of which is, it’s not a Laasie reward within the hotel ecosystem. It is a reward on behalf of that hotel, right? It’s a white-labeled product that…

Robin: You’re the facilitator.

Ellis: Exactly. That creates a perks program that the hotel can leverage and spin up, you know, pretty much immediately. Yeah. So, I mean, are there folks out there, you know, doing things that are unethical? I don’t know. We don’t really play in that space. I don’t know if that was the right question or the right answer, but I feel like there’s an expectation from consumers now that companies should know things about them. And if somebody wants a more personalized experience, they’re gonna be more willing to give more information to make that experience more personalized, whether it be in person, online, digital, whatever.

Robin: Ellis, I think you’ve given us all a great deal to think about here. It’s a very interesting conversation. I’m sure some people are gonna wanna replay this podcast more than once. I wanna thank you so much for your time today.

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