As we collectively don our party hats to bid adieu to 2012, it has been another year of profound change for the hospitality industry in general and hotel’s in particular. And it’s not just the amount of change; it’s the pace of it. Unpredictable economies, the continuing evolution of distribution players, new consumer technology all result in constant challenges to occupancy and ADR.
For hoteliers of course, this is nothing new. Whether it was wars, SARS, economic meltdowns or whatever disaster de jour, change has been the norm since at least 2001. And while we came to realize that something was always going to affect travel, nobody was really quite prepared for the systemic changes that have been brought about by the Internet, and its companions, Social Media and Mobile.
Time was, guests came to you one of two ways; they (or their travel agent) called and reserved, or they walked in the front door. ‘Distribution’ has of course been radically altered in the Internet Age. And, while it’s easy to lay it at the feet of “the tech”, that misses the point, and hence a clue to a partial solution. The following quote from the subtitle of Clay Shirky’s 2007 book “Here Come Everybody” provides some insight into what’s happening, and thus some clues as to how to begin to manage it:
“Revolution doesn’t happen when society adopts new technology, it happens when society adopts new behaviors.”
Travelers have adopted new behaviors. It’s not the technology per se, it’s what they’re doing with it. Whether checking for a hotel on Expedia, then Trip Advisor, then pinging their friends on FaceBook, or checking out your branded website on their mobile phone or tablet, your guests come looking for you different ways, and in different places. And like it or not, when they come looking, you need to be there waiting for them. You need to be found, and you need to be relevant.
RoomKey went cloud-based long before anybody was calling it that so we understand both today’s technology, and more importantly, what people are doing with it. Because we’re hoteliers too, we understand that the only way to grow your business is 1) to steal share from the guy up the road, and 2) to protect more margin on every transaction. We understand that when you boil away some of the seeming complexity and moving parts of the hotel business, it all comes down to occupancy and ADR. Those two things flow from customers, and we have some pretty relevant experience with them as well.
The hotel business is not the first industry to deal with discount challenges. You already know that typically the customer you acquire with price, will be lost the same way. Industry research has shown that volume lift generated with discount rarely pays back the lost margin. Frequently it also devalues your existing clientele while slowly trading them down for a lower value customer. Fred Reichheld, the author of “The Loyalty Effect” referred to this as ‘adverse selection’. All of this is utterly consistent with the experiences of other industries facing similar volume and margin challenges.
What these industries found is that ultimately, the way you acquire and retain better customers is with a quality product , at a fair (not cheap) price, and great service. In other words… the basics. The catch is, you still have to get it all in front of today’s ‘connected consumer’.
So the bad news is… there’s no Silver Bullet. But the good news is… that you can proactively manage the challenges of identifying, engaging, acquiring, retaining and growing more, and more profitable guests! And we can help.
As we move into 2013, we will use this space to listen, discuss and inform. We’ll share our perspective as hotelier’s, and we’ll share the knowledge we bring from outside the industry to provide some added perspective. Our objective will be to try to lay bare some of the issues, and to present approaches that can help. Mostly we’ll try to simplify and make more manageable some of the seemingly intractable changes all of us are dealing with. We’ll seek to be a voice of reason and trust.
Happy New Year! It’s going to be a great 2013!Clay Shirky, Customer Acquisition, Customer Loyalty, Discount, Fred Reichheld, Hospitality, Hospitality Internet Marketing, Hotels, Loyalty, New Years, Occupancy and ADR, RoomKey, Technology