Adapting to guests lies at heart of industry disruptors
 
Adapting to guests lies at heart of industry disruptors
18 AUGUST 2017 9:01 AM

Disruption is not all about Airbnb, according to hoteliers. Instead, speakers on a panel at the recent Hotel Data Conference said the key to dealing with disruption is being able to deal with changing customer needs.

NASHVILLE, Tennessee—Disruption in the hotel industry is less about products or services and more about customers.

That’s what speakers said at the recent Hotel Data Conference on a panel titled, “’Disrupting disruptors’ is more than a catch phrase.”

Before hoteliers can even consider the actual issues acting as disruptors, they must remember that customer needs are at the heart of the matter, speakers said.

“Generally, disruption is when a customer need is not met, and some technology is developed or someone comes up with a new product to meet that need better,” said Mark Morrison, VP of owner strategy and services for Expedia.

Dexter Wood, SVP of real estate investments and portfolio management at Park Hotels & Resorts, echoed that consumer-centric approach, adding that “anything that gets between us and our customer, technically, is a disruptor. It’s all about who owns the customer, and if brands lose ownership, that’s the big risk.”

Keeping that core belief at the heart of approaching discussions about dealing with disruptors is key, the panelists said, because it helps hoteliers remember that it’s consumers who drive change and disruption in the industry.

The experience disruptor
While many cite Airbnb and similar alternative-accommodations providers as disruptors, panelists said hoteliers must go beyond just Airbnb itself and instead focus on the underlying disruptor, which is the growing desire among consumers for authentic experiences.

“I see consumers themselves as the biggest disruptor, because they’re looking for a much more personalized experience than what the industry has ever offered before,” said Wendy Ferrill, VP of worldwide sales for Best Western Hotels & Resorts.

“I can’t not think about Airbnb, but it’s because more and more people are looking for authentic experience,” said Mitch Patel, president and CEO of Vision Hospitality. “Hearing stories about the customer and host relationship and that experience being the reason people choose Airbnb has pivoted our company’s thinking and our traditional model of how we’re developing and managing hotels.”

He explained how Vision Hospitality, which has one independent boutique hotel set to open next year and several more in its pipeline, is looking at these types of hotels more than ever before for that very reason—to get at the heart of the experience disruptor.

“People stay in Airbnb because experiences don’t get more authentic than staying in someone’s apartment in Tribeca, and we want to be able to provide that to today’s customer,” he said. “Airbnb has no question grown its customer base … and we want to recapture some of those travelers.”

Ferrill said now more than ever, it’s important for hoteliers to play up the local presences they’ve always had.

“Our properties are owner-operated, so those owners already are part of their communities,” she said. “That sense of place is critically important, so having unique experiences and bringing local food into the hotels is very important. It helps you take on the personality of your market.”

She said that keeping tabs on what might be benefiting or interrupting any part of the customer experience is critical, whether that involves amenities or even booking platforms. It’s up to hotel companies, she said, to use the data they gather to continuously make that customer experience path smoother.

“We have to see where inefficiencies are and try to solve problems for them,” she said. “A lot of people talk about combating (online travel agencies) as disruptors, but we lean in and (listen to our customers) and we try to be on those shelves where we can, but also offer the best rates to our customers.”

At the same time, Wood cautioned that while authentic experiences for guests at every part of the journey are key, hoteliers must remember that there are costs involved.

“It’s great as long as people are willing to pay, and everyone seems to want it for free,” he said. “That’s the battle with customization and having unique experiences—at what cost?”

The technology disruptor
Beyond the customer-experience disruptor, the speakers agreed that technology is a widespread and growing disruptor that can be tough to deal with since it infiltrates so much of the industry, from revenue management to distribution.

And as the hotel industry changes to rapidly to keep up with customer desires, technology can be quick to lag.

Wood said it’s especially tough as technology-driven companies crop up—particularly in the distribution space—that allow guests to search for lower rates and rebook reservations.

“As an owner, I always look back to technology, and I see the problem many of us are having in high-occupancy markets like New York City and San Francisco and that’s last-minute cancellation,” he said. “There is tech in place that allows people to constantly search for a lower price and rebook rooms with no penalty. We have to figure out a way to fix that.”

He pointed to new last-minute cancellation policies from Marriott International and Hilton as possible fixes to this problem.

“There has to be a penalty (for last-minute cancellation),” Wood said. “Airlines have adopted it … now everyone knows about change fees and they just live with it.”

Morrison said Expedia sees itself as a technology company, so that investment is critical.

“It’s about investing in the back end so you don’t have technology debt,” he said.

The hoteliers on the panel said it’s historically been tough for the industry to keep up with technology because money often has to go elsewhere first.

“In the hotel space, we haven’t invested historically a lot in technology because we were investing significant resources into the guest experience and capital,” Ferrill said. “Now it does get harder to invest your money as a hotel brand because the cost of a sale is so high.”

At the conclusion of the panel, speakers again reiterated that keeping focused on customer needs are what will equip the industry to deal with disruption and come out ahead.

“Lean into the customer,” Ferrill said. “The customer is the decision-maker. Figure out how to do business the way they want to do it. If you want to win the business, you have to win the customer.”

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