To kick off 2018, our Chief Product Officer, Dan Hang, sits down with industry insider Del Ross for a fresh perspective on the state of hospitality. With over 17 years in the industry, Del has been a great advisor to Revinate throughout the past year. During his career at IHG, as Vice President (Americas Sales & Marketing), Del delivered $12 billion in annual revenues to IHG hotels worldwide through sales and marketing efforts at all consumer touch points. During his tenure, Del was responsible for nearly 80% of IHG’s worldwide operating profit annually.
Dan and Del break it all down below. Del starts by sharing a surprising development in hospitality. Then he offers tactical advice to hoteliers on grappling with the “powerhouse players,” employee turnover, and the complex world of hospitality technology.
DH: You have been in this industry for a while, so you’re probably rarely surprised. What’s been the most surprising development over, say, the past 2-3 years?
DR: Five years ago, it seemed clear that the future for independent hotels was grim. The thinking was that only the giant hotel chains could hope for bargaining power with the OTAs. And with the shift to mobile bookings, an independent booking site was even harder to find on a mobile device and often poorly designed for conversion.
Today though, we see strength among independents and small to mid-sized hotel groups. Airbnb has helped to create an appetite for unique, boutique designs and guest experiences that have carried over into the hotel business. Booking engines are improved, making it easier for guests to find what they need, select an appropriate room & rate, and complete a booking via any internet device.
Recently, many independent hotels and groups have established an additional advantage. Leveraging smart CRM technologies and deep traveler insights, hotel operators are able to retain guest relationships and encourage low-cost, high-rate direct channel bookings. Timely, targeted communications and promotions that anticipate travel needs and leverage guest preferences are highly effective. Hotels with a robust guest marketing program can avoid paying high intermediary costs for repeat guest bookings, while at the same time encouraging more frequent visits.
The combination of these developments has made it possible for independents and smaller groups to not only survive but thrive. I expect to see the resurgence of independence continue for the next several years even as the giants continue to combine and expand.
DH: In this industry, it seems that the strong only get stronger. Airbnb, Google, and the OTAs have continued to grow in 2017. How should hoteliers feel about this phenomenon, and maybe more importantly, what should they do?
DR: Hotel owners and operators need to recognize that none of these powerful distributors or lodging providers have created more travelers, trips, or lodging demand. Each of these disruptors has found a way to address a need or a source of frustration – booking “friction” – which is appealing to the same travelers who would have booked direct 15 years ago. It is not too late for hotels to leverage the same factors leading to the success of these powerhouse players:
- Airbnb has exploited the appeal of individualized lodging options, flexible locations, and more home-like amenities. Hotels can do a better job highlighting the unique features of their property and rooms to returning and prospective guests. Cloud-based technologies have made it possible for nearly any building to offer some lodging units. It may be worthwhile to explore creating a “virtual hotel” model, also eliminating the need for costly, “non-rev” spaces of a traditional hotel such as a lobby and back-of-house offices
- Google has always been about making information easier to find, review, and process. Hotels cannot offer search engines, but they can take steps to ensure that Google is working for them instead of around them. Investing in professional descriptions (including translations), photography, images, and other Google-friendly content can boost placement and appeal. Traveler reviews can also be a source of advantage, particularly if they are published on Google directly. For example, one of Revinate’s ‘hidden gems’ is its Surveys product, which is directly integrated with Google. Since Google is now the market leader in product reviews, anything that provides an advantage in search listings should be explored. Smart hotels don’t fight Google…
- Expedia, Priceline, Ctrip, and other OTAs are massive, powerful, and have some of the best hotel shopping and booking experiences. They are also struggling to compete with Google, developing risky new ventures, integrating company acquisitions, and worrying about their future. Hotels should take advantage while they can. Despite having massive technology resources and deep experience in digital commerce, OTAs have a secondary relationship with travelers. Hotels and other suppliers actually deliver the traveler experience and are in a better position to own the customer relationship than the anonymous intermediary used for the original booking. If a hotel operator has a plan and program in place to capitalize on the intimate connection created when a person sleeps in your product, they can secure preference and influence future travel behavior more effectively than the OTAs
DH: One of the biggest challenges we hear from hotels is high levels of employee turnover. What advice do you have for GMs and owners on how to keep things running despite the fact that they’re in a constant state of hiring and onboarding new people?
DR: Automation may be the key to mitigating the risk and pain of employee turnover. While housekeeping robots and room service attendants may be science fiction for now, other technologies can execute best practices with minimal reliance on human operators. Throughout the guest journey – from the booking to pre-arrival to check-in and through checkout and beyond – there are opportunities to use technology to automate guest interactions in a way that enhances the experience. For example, a guest who books a package rate that includes a spa treatment or a special restaurant experience are sharing important information about themselves. This information can be used to trigger targeted communications at specific times that will enhance the experience that was purchased, improve the overall satisfaction with the stay, and increase the likelihood of repeat visits.
Automated “trigger” campaigns can be built once, using the right CRM technology, and set up to run forever – until stopped by the hotel operator. As you’ve seen with several customers of Revinate Marketing, these “set and forget” campaigns can be game changing. If the marketing or sales person who built the campaign departs, the campaign continues!
Technology can also be used to build ongoing marketing communications programs that put the right, relationship-building message in front of the right person at exactly the right time – all without manual intervention. By replacing time-consuming, manual processes with automation, the hotel manager can focus staff on the human touches that make a guest stay memorable and happy.
DH: It seems that the hotel tech landscape only continues to expand, not simplify. What advice would you offer hoteliers on how to manage this complexity?
DR: There are new travel technology startups every day. Some of these will change the industry just as the OTAs did 15 years ago. Others will disappear within a few months. When evaluating new technologies, hotel owners should ask themselves these questions:
- What need does this address? Prioritize solutions which contribute to profitable RevPAR growth. The next priority item is operating cost savings, particularly labor savings. Guest satisfaction is the third priority, but emphasis should be placed on enhancements to the guest experience which influence future hotel choice. Some hotels may also want to consider solutions which create ancillary revenue opportunities, like upsells and upgrades
- How much time is required? If the solution requires significant, hands-on operations, it is unlikely to be successful, even if it has great potential. Prioritize solutions that can be automated or save time in other areas that can be re-allocated to new activities — it is hard enough to manage training for the basics of hotel operations. As a rule of thumb, assume that for every person who must be trained, the chances of successful implementation is reduced by 20%
- How stable is the provider? Look for companies with a history of successful, consistent operations. Avoid companies with less than two years of operating history — this is the critical period for startups during which most failures happen. Along with stability, pay attention to whether the company leadership and customer success team has any experience in the hospitality industry. While it is not critical for a technology provider to have worked behind a front desk in his/her career, it is important that they understand the hotel business and its unique success drivers and challenges
DH: You’ve been a great advisor to Revinate over the past year, but you have also worked with dozens of other companies in this space. What, in your mind, is most different about Revinate?
DR: I’ve been in the hotel industry for 17 years, and after all this time my favorite part of the industry is working with hotel owners, managers, and their teams. No other industry is built around “people who like people” — and it is a pleasure to support professionals who are driven by the happiness of their customers. The hotel technology provider landscape is filled with smart, innovative companies, but most of these don’t really appreciate what makes this industry special. Revinate ‘gets’ the hotel business. The company’s passion for its customers is unique in the industry. Revinate seeks to help hotels, not just sell to them. Hotels need an ally in this complex world, and Revinate is well-positioned to become that trusted partner in revenue growth and guest satisfaction.
As Revinate grows, it is important that the company maintain its strong values and customer-centric culture. The company has a history of recruiting smart, innovative people who are also fun, engaging, and passionate about hotels.
I look forward to watching and being part of the ongoing evolution of the lodging industry, and it is clear that Revinate is going to play a big part in this exciting future. Thank you for inviting me to be a part of the Revinate family!
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