January 18, 2017 · Stuart Butler
Why 2017 Is the Year of the Hotel Guest
Every year, the gurus in every industry like to summarize their expectations and assumptions for the upcoming 12 months into a catchy headline. For example, for many people, 2016 was a year focused on the “Battle for direct bookings.” This culminated in the big brands spending millions on book-direct campaigns and the OTAs responding by dimming properties who offered lower rates and even rolled out their own loyalty programs. 2015 was, perhaps, the year where we hit the mobile tipping point and we finally saw mobile traffic exceed desktop traffic for most hotel sites.
So, at the risk of being cliche, Fuel would like to designate 2017 as “The Year of the Hotel Guest.” This is the year when we hope that hoteliers remember why they got into this industry and truly double-down on the guest and the guest’s experience.
There are many disruptors in our industry. Most of which are being led by technological advances that offer more control, more efficiency or more insight. Many of these are changing the way we operate and market our properties. But, at the end of the day, all of these advances and disruptors are rooted in making life better for our guests.
UPDATE Jan 19th, 2017: We covered the first half of this article in our podcast this week
UPDATE Jan 22nd, 2017: We covered the second half of this article in our podcast this week
So, here are 5 of the biggest disruptors we see happening and what your hotel can do to embrace and take advantage of the change.
1. The battle for bookings rages on
There’s no denying the consolidation that’s occurred over the past few years. Between Priceline Group (PriceLine.com, Booking.com, Kayak, OpenTable etc) and Expedia, (expedia.com, Orbitz, Travelocity, Trivago, Hotwire, Hotels.com etc), there are really only 2 major players in the third-party inventory space. (Sorry BookIt.com). Or at least there were. Now we also have Google and TripAdvisor. I’ll get to those in a minute.
The reason that Priceline and Expedia went out and mopped up all of their competitors was because they realized before anyone else that whoever controls the booking controls the guest. They get their contact information and their booking information, and they get multiple swipes at upselling, cross selling and reselling that guest over the lifetime of the relationship.
This is why I believe that there’s a better than good chance that TripAdvisor is susceptible to a purchase within the next 12-24 months by one of these behemoths. With the rollout of TripConnect and InstantBooking, TripAdvisor is essentially a META search and an OTA rolled into one. Oh, and did I mention that they have already captured the hearts and minds of the guest with their brand becoming synonymous with hotel reviews?
And, let’s not discount Google’s impact. The Google Hotel Ads (Formerly Hotel Price Ads) platform has been out for a couple of years now, and to be completely honest, it has not overwhelmed those of us who have used it during that time. But we are seeing definite investment from Google to make it work, including making improvements to the administration tools to make it easier for hotels to manage and continuing to give Hotel Ads more and more prime real estate on the SERP. One way or another, Google is going to continue pumping resources into Hotel Ads because they know how much money it can represent if they can eliminate the OTAs from being an unnecessary middleman.
So, there’s one side of the equation. These humongous, publically traded companies are all vying for a piece of the hotel’s pie. One may say that there’s not much the properties can do but sit back and watch this craziness unfold.; however, many properties, including the major chains, aren’t going to sit quietly and leave their destiny in the hands of others. In fact, they are doing everything they can, short of picking a fight, to combat the situation and turn the tables completely.
The big chains have spent millions of dollars over the past year, educating their guests on the benefits of booking direct. Marriott, with their “It pays to book direct,” and Hilton, with their, slightly more cheeky, “Stop Clicking Around” campaigns have been a shot across the bow at the OTAs. These guys are standing up and saying, “We don’t need you, OTAs”.
In response, the OTAs have initiated retaliatory measure with practices such as “dimming” hotels that offer lower rates and even offering their own discounted member-only rates – sometimes unsanctioned by the properties.
Needless to say, this battle that will continue throughout 2017 is really a battle to win the hearts and minds of the hotel guest. This is also a battle in which, regardless of independent or flagged, the hotel is better equipped for victory. Here are a handful of things that your hotel can be doing to ensure that you end up on the winning side.
- Use OTAs for generating new business, not repeat guests. This means that rate parity is essential. Develop a more real-time strategy by limiting your OTA inventory, but opening it up last minute when it makes sense.
- Communicate with the guest during the stay to foster a better relationship and ensure that they are having a great time.
- Listen to feedback during and after the stay by sending surveys. Pay attention to what the guests are saying and make them feel like you are listening to them and that you care about what they have to say.
- Offer and promote benefits to booking direct. This can be as simple as faster wi-fi or a free bottle of water. Regardless, you have to be the one to educate your potential guest when they are looking at your site and comparing it to the OTA’s site.
- Collect the first-time OTA guest’s email addresses at check-in and use them to communicate with the guest and sell them the benefits of booking direct and explain to them how that helps you as a small, independant business when they book direct.
2. The Sharing Economy
Chances are that you’ve participated in the sharing economy in some way or another. Whether it’s a ride-sharing service such as Uber or Lyft, or crowdfunding such as KickStarter, or more important to us, accommodation disruptors such as CouchSurfers, VRBO or AIrBnB. And you’re not alone; millions of people have increasingly embraced the phenomenon and are benefiting from the concept of someone having something in excess and someone else needing that something and being willing to pay for it.
There are many perceived benefits for a consumer to jump into the sharing economy. It often offers a financial benefit, and there’s a perceived environmental benefit is some cases. It is also a lifestyle choice for many consumers, and, perhaps most of all, it offers a unique experience to a population who is hungry to try something new and unexpected. This is not a fad and it’s not going to disappear. As an industry, we have to understand that and understand the scale.
As of the end of 2016, AirBNB had approximately 2 million total listings. To put that in perspective, Marriott (after the Starwood acquisition) has about 1.1 million total rooms. So, AirBNB is equivalent to a large chain. A VERY large chain.
Obviously, we have to look at these as new competitors in every market. Like with any competitor, we should look at how we stack up and what advantages we can offer. Ultimately, the best thing your property can do is to differentiate yourself.
Remembering that this is the year of the guest, think about what your hotel can offer the guest that these other guys cannot:
- Focus on on-site amenities. Make sure you have top-notch video and photography of your water features and anything else your property offers. The vast majority of AirBNB units offer a room and nothing more. You have an entire building, with pools, gyms, spas etc. Most of which is included in the price.
- Really SELL the rooms. You are in the hospitality industry. You should have mastered the guest room by now. From the convenience of the location of the outlets, to the beautifully designed decor, and the beds that make you feel like you’re sleeping on a cloud, let the guest believe that your rooms are second to none. Photos are great, but you should really embrace video. This allows you to SELL the beauty and comfort of the room and budget the guest into booking with you vs. the competition.
- Offer entertainment. You have the advantage of having multiple guests staying at your hotel at once. This means that the cost-per-guest of providing entertainment is significantly lower than it would be for an AirBNB property. Get to know your guests and what they like and then offer live bands, DJs on the pool deck, kids club activities, movie nights, etc.
3. Technology Takes Over
I spent countless hours trying to track down an Amazon Echo as a Christmas gift this year only to come up empty handed. I already have one, but I wanted to get more for my house and more for family and friends. And judging by the scarcity of inventory, I wasn’t alone. Whether it’s Amazon Echo, or Google Home, or Apple’s Siri-enabled devices, we are now living in a world where every aspect of our home can potentially be controlled by our own voice. We are a long way from the days of the clapper light switch. I can now control the color and intensity of my lights, the temperature of my rooms, open the blinds, or simply play any song ever created with only a few words.
This world seems futuristic, but it’s here and it’s now and your guests are going to increasingly expect the same creature comforts when they are visiting your hotel. I’m not saying that you have to go and put an Echo in every hotel room today. (Although, that’s exactly what Steve Wynn is doing in Las Vegas), I’m saying that you should continue to deliver an experience that is in line with your guest expectations and that gives them the comfort of home while away from home.
This can begin in small ways. The best illustration of in-room technology that I have had the pleasure of experiencing is simply having Netflix-enabled smart TVs in the room. When I’m traveling on my own, it allows me to keep up with my binge-watching schedule. When I’m traveling with my family, it gives my kids a reason to not jump on the beds when we’re trying to pack for a day on the beach – and that is something I really appreciate. It’s a nominal investment, but the benefit to the guest is tremendous.
You should also consider the cost savings that some of these technologies offer. Take the thermostat for example. Having more control over the temperature of the room when nobody is currently in the room can save a property thousands of dollars a year. Offering keyless entry to the room save thousands on unnecessary keycards.
The final piece of technology, and perhaps the most important, is a hotel-branded mobile app. This technology is the first opportunity a property has ever had to communicate in real-time with a guest during their stay. If used correctly, this almost guarantees a satisfied guest. Not only can a property check in to make sure that the guest is happy with their room after check-in, but it also give the property the ability to provide unique, real-time offers and value to the guest that they will appreciate but the hotel will make money from.
Technology is changing the way we live our lives and it needs to change the way our guests enjoy their stay. Most important, it needs to make our guests happy and comfortable. If you’re considering implementing new technology into your hotel, here are some considerations:
- Use Technology to enhance the experience
- Make it frictionless
- There’s no substitute for a friendly smile
4. Loyalty Programs
Until fairly recently, the majority of hotel loyalty programs have been anemic and really only relevant to the most hardened business traveler. There has also been the notion that if you’re an independent hotel and not a part of a chain, then there’s no value in offering a loyalty program.
That’s all about to change as hotels redefine what it means to have a loyalty program. You see, in the past, loyalty programs were geared toward offering incentives for future stays. That paradigm is shifting as properties begin to look at what they can do to make the guest happy during their current stay.
There are a few factors that are leading to this change. Firstly, as I mentioned above, traditional loyalty programs have not been successful in solidifying the guest’s loyalty. In fact, the vast majority of business travelers are the primary users of loyalty programs and a closer look at this demographic reveals that these guests are double dipping. They have joined multiple loyalty programs and stay at multiple properties. They just get the benefits without making the commitment to a single brand.
Secondly, the guests expectations have changed. In a recent study conducted by Fuel and Flip.to, we found that 78% of people would prefer a discounts and value added to their current stay versus a bigger discount applied to a future stay. Even when that future discount was significantly greater, it doesn’t matter. People want instant gratification. They want everything now.
This is great news for the hotel industry. We can stop focusing on discounts and start focusing on adding value. Our costs will be reduced, but our perceived value will increase and, hopefully, so will our guest satisfaction.
Let’s take a look at Hilton’s “Stop Clicking Around” campaign and how they’ve intertwined that with their loyalty program. Yes, they still give you points that can be redeemed for future stays. But, more important, they’re offering real value through add-ons and exclusive perks. For example, if you’re a HHonors member, you get a higher tier of Wi-Fi than non-members. You also get free bottles of water at check-in. In addition, you also need to be a loyalty member to take advantage of certain features such as mobile check-in and keyless entry.
Spread over all their guests, the high speed wi-fi isn’t costing a whole lot. The water costs very little and the mobile check-in and keyless entry actually save them money.
Now, take this philosophy a step further and you can even start offering value by giving guests discounts at the restaurant, the bar, or the spa. Not only does this save the guest money, but it also drives people to your facilities where you can make additional revenue. Think of it like this. When a guest stays at your property, there’s a chance they will eat at your restaurant. There’s also a chance that they will eat at one of the other hundred restaurants nearby. It stands to reason that if you offer some sort of discount or incentive for them to eat at your restaurant, then more people will choose you versus going out to eat. That’s good for business.
It doesn’t just have to be on-site incentives though. Perhaps you can get discounted show and attraction tickets and offer them to your guest cheaper than they can get them elsewhere and still make a few extra bucks. All the time, building value in staying with your property and building loyalty through guest satisfaction.
So, my top tip for building a loyalty program is to offer unique value to your guest. Consider:
- Faster Wi-Fi
- F&B Discounts
- Early Check-in
- Welcome Gifts
- Exclusive events (wine and cheese receptions, social mixers etc)
- Mobile Check-in/keyless entry
5. Surprise and Delight
Running a successful hotel is not complicated. You provide clean and comfortable rooms, you offer friendly and genuine service and you’re going to end up with a happy guest the vast majority of the time. But, if you want to be truly exceptional, you have to go the extra mile. This is where you can really put the guest back at the center of the discussion and stand out from the crowd. This is where surprise and delight comes in.
The concept of unexpected gifts or gestures that put an uncontrollable smile on someone’s face is very simple, relatively inexpensive, and yet so few hotels go to the effort. It is time that hotels remember their roots, remember that they are hosting the guests, remember the art of hospitality and adopt the mindset of a traditional inn keeper. A mindset where the guest is first and foremost in every decision and every action.
Whether you’re a brand or a small boutique, you can devise some simple daily routines that are genuine and personalized to the guest and that have a major impact on your bottom line.
If a guest leaves your property having been surprised and delighted, they often become enchanted with your property. This has so many immeasurable benefits. Firstly, you’ve likely won a guest for life. This is real loyalty. When a guest feels like you genuinely care about them and they leave feeling blown away by the way they were treated, you’ve won a customer for life. Secondly, the word-of-mouth exposure is huge. You’ve just created a brand ambassador for your property. They tell their friends, who tell their friends. They post it on social media for the world to see. They even write blogs and tell their story on podcasts. You cannot buy this kind of exposure, you can only earn it.
Great Examples of Surprise and Delight:
- Ritz Carlton – Joshy the Giraffe – http://www.huffingtonpost.com/chris-hurn/stuffed-giraffe-shows-wha_b_1524038.html
- Gaylord Opry: Guest Gift – http://www.amommystory.com/2012/03/a-crazy-example-of-great-service.html
While it seems that everything in this industry is constantly changing, the reality is that nothing has changed in the past thousand years. A great hotel experience is rooted in the hotel treating the guest like an individual, catering to his or her unique requirements and genuinely caring about their satisfaction. How we accomplish this will evolve, but why we do it will not. We, as an industry, want to make people happy.