Hoteliers at the front line in the fight for guests’ loyalty see the future as bleak unless hoteliers work together, partner with tech companies, fundamentally change how they interact with guests and learn from everyone.
PALMA DE MALLORCA, Spain—If hoteliers are content telling themselves and others the biggest threat to the industry is Airbnb, then they have misjudged the problem and in essence already given away the shop, according to sources at the recent Hospitality Industry Technology Exposition & Conference.
Above the online travel agencies and disruptors sits Big Tech, global giants poised to take even more, sources added.
Hoteliers are forcibly stating that what the hotel industry requires is a fundamentally different methodology than the one it employs today—a different notion to how it sells and packages merchandise, physical goods and experiences.
It might very well be painful, but hoteliers and brands have to spend more cash; otherwise the industry will lose even more market share, sources said.
“Marriott (International) has a market (capitalization) of $26 billion, and then there is Airbnb, which has no assets, with more than $50 billion, and Booking.com, with $100 billion-plus. Then at the top is Google, which has $250 billion in cash,” Lyle Worthington, chief information officer of The Student Hotel, said during a HITEC panel discussion titled “Death of direct booking: Will you accept your fate?”
“Google, Amazon, Apple—all told, those three have more than $800 billion in market capitalization, and they have data. Hotels cannot compete,” he said.
Nick Price, chief technology officer at CitizenM, agreed.
“Without a doubt, we’d have to be both blind and stupid not to think so. And there is one reason why. They have created a digital customer that they know intimately. That customer merely arrives at our hotels, at which point they’re treated in the same way they always have (been),” Price said.
“Check-in asks ‘Have you ever stayed here before?’ and that is when my blood pressure goes up. … Then when you say ‘Yes, I have,’ he replies, ‘Welcome back.’ Unfortunately, that experience sums up everything that is wrong. We do not know the guests, and we seem not to care.”
Meanwhile, Darrin Hubbard, chief information officer at Six Senses Hotels & Resorts said, “We’re happy to share our intimate details with Amazon,” and as a result, “they understand us better than hotels.”
It would take a minor miracle for hotels to catch up, panelists said.
“(These tech giants) do everything around technology, and (hoteliers) are not as good, as we do not have the necessary architecture built up from the ground, and it is difficult because of legacy,” Hubbard said.
Christian Palomino, VP of global information technology at Meliá Hotels International, said the first step to repairing this issue in the hotel industry is assembling the proper tools.
“We come from a physical business. Delivering experiences is our DNA, and we need to maintain this, but what we also need are tools that allow guest preferences to be better considered. Ultimately this is all we have, experiences,” he said.
Worthington said when guests share their preferences, those preferences rarely ever reach the hotel staff that could best use them to tailor stays and add to revenue.
Hubbard added that good ideas to better the relationship between guests and hoteliers are hard to execute, especially on a global scale.
Price disagreed on this point and said that inventory and offerings provide hope in redressing the balance.
“The hotels we have, they have so much—facilities, amenities and experiences—but how many can we buy online? One, the guest room. We are selling like for like with the OTAs, and they are winning. … Guests do not think, I’ll just book the room, and then I’ll do everything else when I arrive,” he said.
Tip-toeing through the thicket
Panelists said one reason hoteliers step carefully with online travel agencies, and perhaps soon with the tech giants, is that no one wants to penalize guests going through other channels, even if the principal desire is to encourage guests to come direct.
“We’ve learned how to pay incredible commissions, and everyone is always so polite about this. We’re too polite about this. You do not go to Sainsbury’s and find Tesco products. When we lose control of distribution, we lose control of the guest,” Price said, referring to two United Kingdom supermarket chains.
Worthington said part of the problem is “an old-school mind set into the new world, adding that he wonders “if loyalty is a mistake.”
Palomino said the industry’s notion of what loyalty means “needs to develop rapidly.”
“We continue to have a 20th Century mentality of points and prizes. We need meaningful rewards. … Now we are in an age of emotional loyalty,” he said.
Panelists said hoteliers spend too much time arguing with each other and other stakeholders.
“There still is opportunity if you are a hotelier, but we need to grow up,” Palomino said.
He added hoteliers also are guilty of putting up tremendous barriers between the hotel and the guest. If to get to the right point means working with OTAs, so be it, he said.
“Having friction is simply unacceptable. Customers’ first perception of a hotel is a digital one, and we suck at it,” Palomino said.
“Name a hotel firm that can package all I want for me, and please tell me what technology they are using, as I want it,” he added.
Price said the architecture must first be in place.
“The ability only sits in the (property management system), and guests do not book travel this way anymore,” he said. “We cannot achieve what we want to achieve without technology. Ask yourself what percentage of your tech is in the cloud, and it if less than 50%, 60%, 70% you cannot do what you need to do in today’s world, and you will remain only, firmly in the CapEx-OpEx world.”
Investment and partnerships in the booking process can free up resources to be better allocated once guests are on the property, Hubbard said.
“Move on, as other industries have the solutions. Every offering should be able to be bought digitally, and we need the technology to be able to do this,” he added.
Palomino said hoteliers can’t be shy about taking risks.
“E-commerce comes first. There must be a symbiotic relationship between e-commerce and online sales. This is how guests see the world, and to get to where we need to be, we must be allowed to fail,” he said.