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Newsletter

Uber for...just Uber? Newsletter #22

Uber for...just Uber? Newsletter #22

Uber for...just Uber? Newsletter #22

Newsletter

In Newsletter #22: Uber for ... just Uber? |  | Marriott-Starwood-Angbang? | Moving the discussion of hotel technology from one of cost to profit. 


 

I had so much fun explaining the Marriott-Starwood merger to our team this morning. For those of you who haven’t been reading this newsletter from the start, it was born out of our weekly Monday meeting. Every week we share hospitality news with each other and every Monday we start the week by highlighting our favorites. In the past we’d often share aspects of our discussions with our clients - a practice that eventually turned into this newsletter. For those who only know of the Marriott-Starwood merger from soundbites in the news, Deanna Ting at Skift does a wonderful job simplifying the complicated deal.

We also like to bring in technology stories where it makes sense. Our industry is not where it needs to be with technology mindshare and support (our third story below). Hotels still “have” technology (often begrudgingly), whereas we believe hotels need to “be” technology. The on-demand economy and the sharing economy are two storylines we focus on a lot and so the potential unraveling of the Uber for X business model (highlighted below) is a learning all can benefit from. But it’s not all doom and gloom. As Zeel (on-demand massages for hotels that don’t want to run their own spa) showed us this week, some business models still make complete sense.  

We have written often about whether the Airbnb website might make like an OTA and host hotel rooms, and while we could not feature it today, those that want to understand the counter-argument can find that here. If Airbnb doesn’t take the OTA plunge, there are other companies that might try to become an all-encompassing OTA in their place. One company we had the good fortune of meeting last week, www.alltherooms.com, is already finding success in facilitating bookings from both the sharing economy as well as the traditional hotel market. As their name suggests, you can pretty much find any bed there is, hotel or alternative, on their platform.

I’ll be heading to Hospitality Upgrade’s Vendor Summit in Atlanta this week and looking forward to meeting more companies in our space.

Best,

- Alex Shashou

 

"We learned that where we were staffing in the morning, no one was there in the far corner of the park. It’s interesting when operations sees this sort of data, they were so excited that I kind of had to hold them back."

Darla Morse, chief information officer for SeaWorld Parks & Entertainment, on the power the right operations technology has in fine-tune staffing decisions.

 


 

HIGHLIGHTS FROM THE WEEK'S NEWS...

Uber for ... just Uber?    

New York Times | The Uber Model, It Turns Out, Doesn't Translate

Why it matters: Everyone has been pitched the next “Uber for X” business (or come up with the idea themselves) and while it’s tough to ignore the runaway success Uber itself has had, it’s even harder to imagine all these companies succeeding. Back in May 2015, CB Insights put out a report showing a massive $3.89B invested in the on-demand economy since 2010, excluding Uber! Just because someone wants to invest in a company, doesn’t mean it is a good idea as these companies have found out.

Apart from Uber, the hyper-successful granddaddy of on-demand apps, many of these companies are under pressure. Across a variety of on-demand apps, prices are rising, service is declining, business models are shifting, and in some cases, companies are closing down. If the on-demand movement is purely a labor play (workers on-demand), the Uber for X phenomenon may not work out. 

So why does this matter for hotels? What Uber has done is created a huge consumer appetite for on-demand mobile services. While many disruptive companies trying to take a small piece of your business away are failing, you can continue to leverage your existing labor force without this risk. This on-demand movement has educated consumers to the idea of on-demand service, an idea that always existed in a hotel, just not powered by mobile technology. You have the advantage over these disruptors and by presenting a great mobile experience to your consumers, your on-demand services (that have always existed) can flourish.  

 

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The Inside Story of Marriott-Starwood-Angbang  

Skift | The Inside Story of Angbang's Long Pursuit to Acquire Starwood 

Why it matters: 

For those trying to understand the Marriott-Starwood merger (or maybe-merger), this is a handy summary of events. This story is looking like one that will take a few more twists and turns before it’s resolved. On one hand, you have Marriott, the most strategic of partners and one that currently holds the contract. On the other hand, you have a potentially more lucrative investor in Anbang, a chinese insurance company, which has a genuine interest in Starwood and enough funding to cover the $468M Marriott would be owed if Starwood backs out. Our sense is that the Chinese have the upper hand here. But regardless of which company has the winning bid, Marriott will come out ahead - either adding a massive portfolio to its hotel collection or receiving cancellation fees to the tune of $468M (not an insignificant amount when you consider that their existing 759,000 rooms brought in $1.4B in operational cash flow in 2015). For what it’s worth, we feel that Marriott is a stronger contender for Starwood’s brands given the clear synergies and size the combined chains would have.

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The challenge of moving the discussion of technology from one of cost to profit.  

Hotel News Now | Hotel Tech Execs: Buy-In, Legacy Systems Still Issues

Why it matters: It’s a sad truth, but even today we see this all the time. The majority of hotel owners simply do not want to invest in technology as an infrastructure (and competitive advantage). Technology is still often seen as a sunk cost, with owners asking themselves, “What is the minimum amount we can do?” Especially when it comes to integrating systems… there are always those that ask us not to integrate, to save a few thousand dollars here and there. In the grand scheme of labor productivity, you have to ask yourself if this is really the best strategy? Putting extra work on your employees every time they perform a task, just to save a line item expense?

At the HTNG conference, we sat in on a work group on “Hotel Systems Dashboard” from the folks at Marriott. What was most interesting about the framing of the workgroup was not the ability to standardize data reporting (as we first thought it would be), but actually the thought that by giving a General Manager a data dashboard to look at every day, you may in turn be training him or her on the importance of the data which will in turn build a wish to spend adequately on technology. Now this is clearly not the case for all. The brilliant general managers and staff we are working with in our hotels know how important technology is to running their operation and are working closely with us to understand which components are most important to them and helping us build these out, but this is not the norm yet. In Crossing the Chasm, a popular book on navigating sales stages, we are still working with Early Adopters. We expect this to change over the next few years as better technology is adopted across the industry. As Ms. Petry, Marriott SVP, puts it, “We’re still behind and getting there.

 

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