In Newsletter #31: Expedia & Loyalty | The curse of bad reviews | Technology transformation
I’d be lying if I told you I wasn’t nervous taking a stance FOR an OTA, none the less our own investor Expedia. However, their recent move to allow a hotel chain to place their loyalty program rates on the booking platform is genius and while it’s clear why Expedia would want to do it (lower rates and improved relationships with hotels), I genuinely think it’s not a bad idea for hotels either, and at the risk of irking a few, we are going to attempt to explain why. Now, we are not an OTA nor do we deal with bookings, so we do welcome all your rebuttals and follows ups as it will only serve to educate us.
Elsewhere we found two very interesting and related articles on how a hotel can leverage its “Massively Transformative Purpose” or put simply, use technology to do what you are the best at. With all the transformation we have already seen in this industry, from full service to limited service, chain to boutique, and general proposition to niche segmenting (think Equinox hotels), it seems only fair we highlight how a hotel might think about the transformative power of technology. This happens to tie very nicely with the technology-first thinking we discussed in our piece on “What if Airbnb Built a Hotel?”
I’m speaking at The Lodging Conference at the end of this month. First time at the conference and would love to connect with anyone going.
- Alex Shashou
HIGHLIGHTS FROM THE WEEK'S NEWS...
What are you good at?
Aethos Consulting Group | Hotel Leaders, "What's Your MTP?" - A Question About Business Transformation and Technology
New York Times | When Every Company is a Tech Company, Does the Label Matter?
Why it matters: Taking the 2014 book Exponential Organizations: Why New Organizations are Ten Times Better, Faster, and Cheaper Than Yours (And What To Do About It) as his starting point, Aethos Consulting Group Managing Director Thomas Mielke challenges hospitality leaders to ask themselves three important questions when it comes to leveraging technology at their hotels.
- What are you good at?
- How, and in what areas, can you leverage technology to become better and more efficient?
- And consequently, how can you tap into “externalities” for scale?
The first question might seem simplistic, but it’s particularly instructive for a discussion about technology implementation. As Mielke observes, when it comes to the hotel industry, “technology is routinely considered merely in marketing terms or as a tool to streamline the processes or administrative functions.” We’d also add booking technology as the third technology category with which hotels seem preoccupied.
Why is this important? Well, when it comes to the question “What are you good at?,” the answer for hotels is rarely marketing, administrative functions, or bookings. The answer, rather, should be guest experience or customer service, and those are the things that should be supported by technology at your hotel.
It then follows that the answer to the next question Mielke poses - How, and in what areas, can you leverage technology to become better and more efficient? - is technology that supports the prime mission of the hotel’s operation: providing better service. Seen in this context, technology becomes something integral both to the business strategy and to the concept of hospitality itself, rather than regarded as an afterthought or at odds with traditional hospitality. Indeed, if every company is a technology company, as New York Times Business Editor Jeff Sommer argues, hotels would be technology companies in a way that supports their mission of hospitality, not booking technology companies, even though that’s where all the focus these days seems to be.
The last question - the one about tapping into externalities for scale - is something that can happen much more easily, with technology at the core of the business. Skift touches on this trend in their recent article Big Hotel Chains Ditch Full-Service Properties in Favor of the Light Touch Approach, which talks about some of the ways new consumer expectations are shaping amenities and service delivery at some of the newer brands, but also touches on the financial upside for hotels for focusing their attention - and technology - on their core offering and then using that technological platform to offer additional services at scale.
Expedia to let guests book through your own loyalty program. Are you buying it?
Tnooz | In a First, Expedia Promotes a Hotel's Loyalty Rates and Rewards Program
Hospitality Net | Hotels Offering Loyalty Programmes on OTAs: The Dark Side
Why it matters: Expedia made what could be a ground-breaking move for OTAs to align with hotels. Although it will naturally be met with skepticism, and is no doubt a strategy that benefits them (or else why would they do it?), it seems like a worthwhile experiment for hotels. We welcome your thoughts on our take on this new program.
Spend your time and money stopping the bad experiences first
MarketingCharts | Bad Customer Service Interactions More Likely to be Shared than Good Ones
Why it matters: Your guests are sharing both their good and bad customer service interactions, but sharing the bad ones quite a bit more - says a new Zendesk study. Respondents to the company’s survey who had suffered a bad interaction were 50% more likely to share it on social media than those who had good experiences, and 52% more likely to share it on an online review site, like Yelp or TripAdvisor. That’s particularly problematic for companies getting bad reviews: separate results from the survey indicate 86% of respondents who have read negative reviews claimed the information impacted their buying decision.
For hotels, this reinforces the importance of customer service, and suggests, perhaps counterintuitively, that focusing on minimizing bad customer service deserves equal - if not more - attention than providing particularly good customer service. Another way to think about this is is the ROI on spending money to not make a customer service mistake is - for better or for worse - potentially more valuable than the ROI of spending money on trying to wow your guests.
This line of thinking presents a challenge for most hotel decision makers. It is easy to evaluate the ROI of upselling guests as simple revenue upside, but much more difficult to value the negative impact of a bad guest experience.