Why it matters:Pay-per-view revenue down, WiFi costs up, booking competition up… yes, the industry has changed, expectations have swelled and competition is surging. All of this, on traditional spreadsheets, spells trouble with lower revenue and higher costs per guest. However, with demand for these technologies depressing profits, the same technology can be leveraged as an opportunity…
The mindset shift we are looking at is a holistic approach to revenue management (article b); looking beyond room rates. How can you maximize opportunities to increase revenue across all departments? In article a, Adam Gillespie does a nice job of discussing the methods being used to find revenue across specific in-room channels. Along with 53% of customers, we would purchase higher speed WiFi ourselves. However, we see “holistic” as being more than a few add-ons. It’s about changing the rules to play in today’s game.
Let us explain. Two shifts we have all experienced are the service-on-demand & sharing economy movements. The ability to sell real-time availability. This has led to people selling their free hours (driving Ubers) and selling their free space (renting apartments, couches). So what are you doing to make that little extra? Hotels have so many hours and so much space, finding ways to maximize the spare capacity could lead to consistently improved margins.
Why it matters:We write a lot about mobile messaging, but for good reason. While many technologies pushed onto hotels are easy to dismiss, prohibitively expensive or complicated to implement, messaging seems so obvious. “At this point, everyone from age 8 to 80 texts” explains the GM of the Aloft Manhattan Downtown. Which put simply means that everyone is “tech-savyy” when it comes to a messaging solution.
For hotels looking to engage their guests and meet them where they are mobile messaging is fast becoming a hospitality imperative. As luck would have it, messaging is reportedly providing impressive guest satisfaction where implemented (be it in straight up text or even emoji form), but it can be the most lightweight of technologies for a hotel to institute. Some chains are turning to hyper-popular third-party messaging tools like WhatsApp and Facebook Messenger (Marriott and Hyatt respectively), while others are taking advantage of the native messaging applications each of us use every day.
And despite the ubiquity of mobile messaging in the real world, it’s perhaps telling that guests seem to be genuinely surprised to see it implemented at hotels. Perhaps adopting something this obvious will wind up being an important part of the holistic revenue equation (see Why it Matters above). As the Aloft GM reveals, “I had walk-ins come to the hotel just so they could try out [the emoji-messaging] program.” How many hotels can say this even about their most expensive amenities?
Why it matters:We’ve seen HOTAs before. None has worked (yet). While we think this concept is likely to grab some attention because of its relevant subject matter, we question its practicality from a business sense. The idea is fantastic in theory, but does the math work out?
Quite simply, if this business charges less of a commission than everyone else (solution #1 in the article), how can it drive more traffic (solution #4), as a smaller commission means fewer resources than other OTAs per booking and thus fewer ad dollars. Remember, customer acquisition is an expensive game. How would a HOTA expect to market and draw the conversions needed to survive with a smaller budget? The obvious answer would be higher volume but that is not an easy bet to make.
And should this OTA by hoteliers somehow figure out a way to become successful, what would stop it from becoming an OTA itself? Ultimately, while the intentions are noble, we question the validity of the business model. A worthwhile trend to note, it will be interesting to see how it plays out. It seems to us more likely the chains’ consolidation movement (Marriott + Starwood) competes.
In evaluating innovations in hospitality it’s helpful to consider the biggest problems facing the industry, and then identify the technology that helps solves them. Here are some of those problems and ways hotels have been solving them with innovative technology...
Just as Apple used mobile technology to redefine the notion of customer service in retail, and Uber used mobile technology to transform the meaning of customer service in transportation, mobile technology can similarly improve the provision of customer service in hospitality.