Hospitality Industry Technology Exposition & Conference
November 14–15, 2017
Hospitality Industry Technology Exposition & Conference
April 11–13, 2018
RAI Amsterdam Convention Centre
Hospitality Industry Technology Exposition & Conference
June 26-29, 2018
R. A. Rauch & Associates, Inc. 27 July 2017
Let's look at the revenue components of an independent hotel. A savvy sales team can make or break your hotel as group business generally books well in advance to provide the ideal base business. Without the power of a brand sales team and the tools that they provide, your independent hotel's sales efforts need to ensure that they are utilizing the right channels to effectively capture transient demand.While global distribution system business is mostly pay-to-play, it provides exceptional return on investment in the right markets. Responding to requests for proposals from national accounts can be tedious, but it is an essential piece to your revenue puzzle. Local negotiated rates are equally important for your sales team to seek out. These accounts are special rates set up with local businesses that have travel needs in the area and driven by the relationships your team develops with the travel manager of the company.Direct bookings are the most cost-effective business for boutique hotels, so it is always the goal to drive business to our own booking channels. Identifying what percent of business you need from group sales, GDS and online travel agencies is paramount to a successful revenue strategy. Understanding the cost of all of your booking channels allows you to properly layer in business by evaluating the effective average daily rate and adjusting your available rates accordingly. Set occupancy thresholds for your hotel as key indicators of when to increase your rates.Balancing meeting rooms and sleeping rooms has always been tough for revenue managers who have not been on the group sales side of the business and salespeople not familiar with RFPs. They must equip themselves with new tools. Identify your hotel's ideal rooms-to-space ratio to optimize profits on any piece of group business and to ensure your revenue manager and sales team are on the same page.Events and other contributing factorsWhile events might not provide a large number of roomnights, they do get people in the door of your hotel and help marketing efforts. If your hotel has an in-house food-and-beverage department, then capitalizing on these events is even more critical to achieving financial success and should be incorporated into your revenue strategies. Farm-to-table and locally-sourced product is expected at every dining occasion, and healthy options are also prized in today's market. Ensure your F&B team is keeping up with the latest event software--we use Social Tables)--healthy living trends, maintaining creativity and adjusting their menus accordingly.A destination is a high contributing factor in the decision-making process, so your sales team should highlight all of the attractive aspects of the local area. Does your hotel have a great bar for guests to grab a happy hour drink after their meeting? If your hotel is limited on amenities, then provide information on your local area and everything that could be attractive to a first-time visitor. The "work hard, play hard" mentality has taken the market by storm, so even if a client is looking to host a business meeting, they will also be exploring what to do once their meeting is finished.Digital marketingThe importance of marketing in your overall revenue strategies cannot be overstated, as it is the crux of how your boutique hotel sets itself apart. Establishing your hotel's identity and voice and ensuring that they are effectively communicated to all outlets is a must. Without the power of a big brand behind you, you are awarded the chance to create a brand that really defines the hotel and the experience your team provides. Your social media platforms create a stage for your hotel's voice to be heard, so their importance is far greater than they would be for a branded hotel. Develop creative packages and collateral that capture the guest experience to set yourself apart from a franchised hotel. These pieces tell a story that evokes a potential guest's wanderlust and shows value.Your website should be constantly updated with local happenings, events and hangouts to keep up with search engine optimization (SEO) changes that stress local focused searches. This is a complete advantage over branded hotels that have monotonous websites with limited control over content. The goal is to create a local community hub that provides exceptional content to any visitor.Revenue management should never be on the back burner, especially for boutique hotels. Strategies need to be constantly looked at and questioned so that they can evolve. Pay attention to your rates daily and check them multiple times per day during peak demand periods. Schedule weekly revenue meetings with your hotel's key managers so that everyone involved is staying engaged and on the same page with your current strategies. Independent hotels can adapt quickly to changes in the market, so use this to your advantage.Good luck!
R. A. Rauch & Associates, Inc. 6 December 2016
Just 10 years ago, Facebook morphed into a mainstream business tool, Twitter arrived, the iPhone exploded on the scene and Android phones were born. Today, the pace of change has accelerated dramatically. In his new book, Thank You for Being Late, Thomas Friedman explores this very age of acceleration. Our trends this year do not include every trend, just what we believe are the Top 10. Certainly we could add the Internet of Things (IoT) but we cover some of that in our technology trends below. We could also add the proliferation of brands but that is more of a continuation of the past few years. Feel free to weigh in on social media or on our website!Artificial Intelligence (AI) and Robotics are for real. AI is a fast-moving technology that enables machines to perform tasks that could previously be done only by humans. Robots will have an impact on some area of the guest or associate experience in 2017. One of the benefits of robots will be the data they provide us as guests utilize the services. The Residence Inn LAX uses a robot named Wally to retrieve items for employees and guests. Maidbot has developed a housekeeping robot, Rosie, and Hilton has Connie the Concierge. Hotels will use the robots just as much for customer service and excitement as it might be doing for ultimate savings on labor costs.While there is a threat to workers whose jobs are "routine," AI will not cause mass unemployment. It might, however, have a positive impact on net income as a capital expense replaces a labor cost and at the same time may require many workers to learn new skills. The overall result of mechanization in the past has actually created new jobs. Only time will tell!Text and Chat are here to stay. Chat apps like Facebooks's Messenger and WeChat, the app that I use when dialing abroad and the most popular communications app in China, have huge implications for our industry. Texting guests in response to "in the moment" needs, safety and security issues that would require immediate and subtle communication or eliminating language barriers are all technologically feasible and available. Texting can provide for ancillary revenue streams (we've beta tested an "eat, play or shop" app that guided guests to local deals including at our own facilities). Chat is already global and Chatbots are basically AI that can appear as customer service assistants. Services like Zingle allow us to communicate with our guests from one central hub (whether they are using a messenger app or texting) and offers automation.Mobile Check-in has been around for the last few years but will hit full stride quickly as the technology has been refined. Just about every guest has a smartphone and if a guest does not actually utilize mobile check-in by going directly to their room, they will show up at a pod rather than a formal front desk. In the future, these pods will be tablet based kiosks like you see in the airport. A guest can pick their room directly from their phone and the door lock will be programmed to only open when that mobile device is nearby. Taking this idea into the rooms themselves, some brands have begun to move away from having the traditional guestroom phone. Instead, they opt for an in-room tablet that controls every aspect of the room. Ideally, these two sets of technology will be merged into one so that a guest can control everything directly from their mobile device.Sharing Economy or Alternative Lodging, call it what you want, but Airbnb and Uber have created a firestorm in our industry. Uber has virtually put taxis out of business and Airbnb threatens to become a primary lodging force. While Airbnb steals some market share from hotels, its future is likely as an online travel agency of sorts. Their low commission structure allows them more upside as a very unique distribution channel that represents both hosts and hotels rather than a traditional competitor to hotels. Additionally, they will become tired of the litigation with hundreds of cities. These companies, Airbnb and Uber are perfect examples of how technology can simplify a business by streamlining the purchase process. Hotels should look to them for inspiration rather than as the enemy and seek to answer the question, "why would a guest choose to book Airbnb over my hotel?"Loyalty Pricing is a huge component to revenue management! Getting guests to book direct and determining the value of each guest are keys to success here. With online travel agencies (OTAs) charging high commissions, it is imperative to manage the cost of acquisition of each customer and find ways to educate them to book directly with the hotel. OTAs have spent hundreds of millions of marketing dollars to condition consumers to think they have the best deals available. Brand campaigns like Hilton's "Stop Clicking Around" are a great start to combat this perception. Millennials are not as brand agnostic as we once thought so let's educate our guests on the benefits of booking direct and ensure we know the cost of each channel (Kalibri Labs is the expert on this subject).In-Room Technology is vastly different than it was at the turn of the century. Today's guests expect the in-room entertainment experience to be better than or at least as good as they have at home and they want it on demand. Gone are the days when "Free HBO" on your marquee will build hotel business. If a guest cannot access their Netflix account or various on demand streaming services, then how is the in-room experience better than what they have at home? Additionally, look for various customizable technologies to start being included in room packages. Everything from custom lighting, smart mirrors and in-room tablets will be tailored to the specific guest's preferences before they arrive.Marketing and Social Media 2.0 is here so it is time to measure the results of all these new data points. Creativity in social media has caused lots of fans, likes and followers but quantitative success does not always transfer to tangible ROI. Data and analytics must be mined to measure successes and look for new ways to improve our guest experience or market toward a specific demographic. Search engine marketing, optimization and advertising initiatives are crucial to our hotels' success in this digital age and remember that mobile is king!Culinary Options are expanding beyond the standard hotel restaurant. Guests expect an experience at every level when visiting a hotel, so F&B should not be an afterthought (even if it is just a Grab n Go option). Locally sourced products (especially the concept of root to leaves) and unique experiences continue to be the rage but make sure to still have some mass appeal options for the wary traveler just in need of a good burger. Look for the confinements of a traditional restaurant to disappear being replaced by open social areas that can be utilized for multiple purposes. Specific menus for room and pool service will be replaced by either a full menu or unique delivery services as the open-eating concept expands to all areas of the hotel.Company Culture has become extremely important in retaining good talent. Jumping ship is easy to do unless employees are truly engaged and supportive of the mission. While job benefits are always a positive, they are now so common place that they cannot stand alone when it comes to employee retention. Take a note from how we treat our guests and create an environment where your team feels valued, cared for and respected. Then watch as your service scores reflect the work of a satisfied team. With minimum wage increasing throughout the country and a workforce more health conscious than ever, this trend of defining a positive company culture can be seen everywhere.Design, Brands and New Markets are blended together here because the pace of change is enormous and some changes meet right here. Minimalist design has certainly played a large role in some of the new soft brands as well as independent boutique hotels. Further, while it is likely not good business to focus design on one market segment, the growth of the millennial market, coupled with the growth of the Chinese market leaves us two very rapidly growing segments. Millennials became the largest generation in April of 2016 and will represent over 80 million Americans within 20 years. The Chinese outbound travel market is number one in the world and will likely hit 200 million by 2020.Next month, we will begin updating our forecast to reflect some of the political changes that might be impacting demand in our lodging sector. In the meantime, may you and your families enjoy a festive holiday season and an exciting New Year!
R. A. Rauch & Associates, Inc. 7 November 2016
According to Geoffrey Moore in his book Living on the Fault Line: Managing for Shareholder Value in the Age of the Internet, stock price is a measure of future potential based on present competitive advantage. Competitive advantage consists of two components, GAP and CAP. The first, GAP, is the distance between your hotel offerings and your nearest competitors or the competitive advantage gap. The second is CAP, the competitive advantage period, that is the projected period a company can maintain its differentiated position. In other words if a hotel company has superior products and significant barriers to entry, it has both a competitive gap (product differentiation) and a competitive cap (time lag for competitor entry).When developing a cohesive marketing strategy, both CAP and GAP should be incorporated to achieve success for sustained periods. With that in mind, here are some guiding principles to help you achieve a competitive advantage in your market.Distribution Dilemma and Marketing DollarsMany hotels receive reservations from third party sources, most notably online travel agencies (OTAs). It is important to understand the OTA booking process and what its impact is on the hotel. OTAs buy keywords that allow them to dominate the search process. This is largely due to their ability and willingness to spend marketing dollars. For example, if a guest attempts a search with the keywords "hotels in Scottsdale, Arizona," a search engine results page (SERP) on a non-mobile device will appear as follows:As you can see, the top four results are Google Ads and not surprisingly, these four ads are all for OTAs. While the results will vary based on the time of day and the number of people bidding on certain keywords, OTAs dominate the broadest searched terms.After scrolling past the four ad placements, you will see a Google Maps listing with three locations. These Google Local rankings are the results of a great search engine optimization (SEO) campaign as well as Google's local algorithm. Once past the map we get into the organic search results, as follows:This example is from the same search query, "hotels in Scottsdale, Arizona." The top three results are a great example of content marketing, i.e., these "Top 10" type posts are extremely engaging and useful for guests, which is why Google has given them such high priority in their organic ranking. If you take note of the websites these links are for, you will not be surprised to find out they are all OTAs and metasearch engines. Metasearch engines (defined as a search tool that uses another search engine's data to produce their own results from the Internet, think Kayak, Trivago or another aggregator) further demonstrate how OTAs control key real estate on SERPs because Kayak is owned by Priceline and Trivago is owned by Expedia. As an aside, Trivago has been climbing Google's ranks in related searches to hotels over the past 5 years.The Perfect Mix - Channel ManagementMore than ever it will be vital for hotel owners and operators to stay on top of the distribution landscape that is expanding beyond OTAs including popular sales vehicles such as meta-search, flash sales and mobile channels. Beyond simple awareness of the different mediums available to sell hotel rooms, hoteliers must know the cost and expected return of each distribution channel. Hoteliers must preserve rate parity and their brand by utilizing the most cost-effective distribution channels instead of using desperate measures to sell inventory.One option to consider is to search for a cheaper OTA. For example, why not use Airbnb? At 3 percent they are a much cheaper choice than the others. Sure, they are not a traditional OTA because they have non-hotels as their core business. Look for Facebook, Google, Amazon and Apple to join in on the fun in 2017 and beyond. Let's hope these new competitors in the OTA world price their commissions at levels closer to Airbnb.When creating a strategic distribution channel plan, direct to hotel and voice tend to be the most overlooked channels representing almost 40 percent of our business. Direct to hotel and voice includes walk-ins, calls directly to the property, groups and any other booking handled on property. These channels also happen to be the most cost effective for hotels by avoiding commission charges while having a higher conversion rate. To optimize profits the property needs to utilize guest service agents (GSAs) as an extension of the sales team. Give the GSAs tools to "close the sale" by training them to answer questions and provide guests with the information they are seeking.5-Point Plan to Book DirectThe best answer to improve the distribution dilemma is to get as many customers as possible to book directly with you. The chains have launched aggressive campaigns and Kalibri Labs has come up with a 5-point plan that will help hoteliers. Cindy Estes Green, the most articulate consultant I have heard on this subject, has determined five benefits that direct bookings via brand.com will have to make you more profitable:Lower the cost of initial customer acquisition. COPE (contribution to operating profit and expenses) is revenue after transaction related costs.Increase the knowledge of the guest to personalize his/her experience. Brand.com bookers create 17.9 percent higher net revenue than those coming from OTAs.Build on that relationship. The lifetime value of a guest is huge as the cost to acquire a guest for the first time is much higher than that of a repeat guest.Diversify your demand streams. It is a very high risk to have limited customer types and clients when a downturn comes.Improve guest engagement. When guests get what they expect, they become more loyal.Adapt or Get Left Behind - Messaging AppsThe industry has only recently adopted chat apps. WhatsApp, Facebook Messenger, Lola Travel and artificial intelligence apps are out there. WeChat, my favorite, is a messaging and calling app that allows you to easily connect with family and friends across countries. It's the all-in-one communications app for text (SMS/MMS), voice and video calls. Keep your eyes on Chatbots, by definition a type of conversational agent or computer program designed to simulate an intelligent conversation with one or more human users via auditory or textual methods. A number of vendors are trying to break through and become a leader. We use Zingle at a number of our hotels and the feedback from our guests being able to communicate directly with the hotel via text has been nothing but positive!The Science Behind Revenue ManagementRevenue management has morphed from the days it was first introduced by the airline industry in the 1970s to being a complex science today. Managers have always lowered prices to stimulate sales when demand is weak and have raised prices during peak demand periods. Hotels are now able to update prices for all future arrival dates to match market demands each day via advanced market intelligence applications. TravelClick has pace reports for transient and group demand that look at bookings one year in advance. STR is now offering intelligence looking at future bookings rather than solely historic figures. Today, it is time for the industry to price based on value perception and not just price relative to a competitor. Understanding the true demand in a marketplace is quite scientific.The hotels that need help with revenue management are generally focused-service hotels. Full-service hotels typically have a seasoned professional at the helm. One of the interesting things about these properties is that they are able to sell more than rooms and these assets (think spas, golf courses and restaurants) can be sold as well as the meeting facilities by new apps. I was involved in the planning stages of a new app that will sell all of those services as well as rooms by the hour (no, not for the reasons you're thinking, rather selling rooms when they are needed). Take a look at HotelsByDay or AsYouStay and you will see the opportunities for certain markets.Search Engine Optimization - Content MarketingThis is where content comes into play. Content that is well-written, includes verbiage that plays well within the search engines and, most importantly, is what users want to consume, will win over potential guests. Optimizing content marketing is different than just having command of the English language. It requires up-to-date knowledge on search algorithms and a vast understanding of what your online audience likes. This may come in the form of an agency or internal professional but basic search engine marketing (SEM) is one of the most effective ways to grow your business in an increasingly competitive marketplace. With millions of businesses out there all vying for the same eyeballs, it's never been more important to advertise online and SEM is the most effective way to promote your products and grow your business. Companies like Milestone, GCommerce and Screen Pilot can help get you started.Conversational and Social MarketingThe number of major social platforms has plateaued for the moment and they've begun to homogenize, e.g., Instagram Moments, and Snapchat LiveStories. There is limitless content being exchanged by the second all of which is a recipe for shorter-than-normal attention spans or what we call GADD (guest attention deficit disorder). Despite this, the potential is strong for your hotel property to enthrall even the most distracted social media user. Remember that content is king. Travel brands and companies have all discovered that high-quality content is the key to any successful social marketing campaign. One ultra-creative blog post or a string of fun Facebook updates is just a start. Committing to quality content that attracts travelers should happen with every Tweet, LinkedIn comment, Facebook or Instagram update and blog post.While it's smart to offer discounts and deals via social media to jumpstart your following from time to time, you shouldn't post these too often. Instead, your daily strategy should be to provide compelling content that stimulates more interest. This coupled with "wow" customer service that creates positive reviews is what will help you build and retain your reputation.While social media is not a panacea and does not yet close many deals, travelers clearly rely on the information to help them choose a hotel. Moreover, we are entering a period of time where reputation management is also becoming a science. Studies have shown that 90 percent of travelers trust recommendations from their friends and family more than any other form of advertising. Additionally, 70 percent of travelers make decisions based on reviews and responses on review sites. This field is growing as technology companies work to differentiate themselves.In 2016 half of the travel industry is using social media as a way of generating revenue and bookings. The majority of hoteliers have jumped onto the digital bandwagon to engage with customers. Social media has become a significant factor in a website's ability to rank. Content that has a social connection to a user, meaning someone you are linked to via Facebook, Twitter, or any major social network, is prioritized within their SERPs. Hotels can no longer afford to linger over adding social media to their marketing mix. It's now a necessary element of traffic-driving success.Hotel guests buy based on a loyalty to your business, not just the price. Loyalty is earned through superior "wow" customer service which creates a spectacular reputation. The content that is provided in your relationships with guests via social media should embody that stellar service and reputation. It's not about the discount you offer, it's about the passion for customer service that you provide, the knowledge of the market you have and ultimately the value that you have created both inside your four walls and in cyberspace.Data and Analytics - What Should You Look For?Your hotel has access to lots of data but the question is, do you use it? It is very costly to implement a comprehensive data analysis plan, especially across multiple hotel brands where systems cannot be integrated. However, each hotel has more information about its guests than ever before. Prior to being checked in guests can now provide their favorite room types, room temperature, foods, TV shows, pillows and more. This tailored guest experience currently exists in new high-end hotels but it will soon be available at every hotel. Utilizing this information and adapting it to our targeted advertising campaigns on social media and search engines can produce much higher returns on investment.I use data to understand price sensitivity in each market. When is it better to take the soccer team of young adults four to a room? What market segment is really better for this hotel? With occupancies at peak, it is paramount to our success that we optimize rates to offset the rising costs of labor, healthcare and more. Taking all this data into account when building our marketing strategies will help us attract guests that are perfect for our hotels. In turn, this produces a better guest experience that results in higher reputation scores. It is a win-win!To Sum Things UpMarketing is often an afterthought within the hospitality industry and where there is focus, it is pigeonholed to specific buzzword-oriented areas with hopes of creating a temporary boost in traffic translating into a temporary boost in bookings. This reactive nature is, unfortunately, a product of hospitality, an industry that lives and breathes off operations to achieve success. But marketing is meant to be coupled with a long-term strategy that guides the branding, voice and growth of your hotel over the next 10 to 30 years.The OTAs embraced marketing in today's Internet age before hotels but that does not make them the enemy. With the proper marketing strategies in place and a good understanding of your channel mix, hotels can work to regain ground on SERPs and be setup for future success thanks to CAP and GAP principles.To a great 2017!
R. A. Rauch & Associates, Inc. 6 July 2016
and mainly Airbnb--has yet to really affect the hospitality industry as most of the impact has been during the aforementioned high-demand periods.Fallout from minimum-wage increases and changes to the overtime laws for salaried workers will begin to be noticeable in 2017 and rising health care costs will negatively affect profits. As mentioned above, we are lowering our U.S. RevPAR Forecast to 3.75%, down from our original 5%, however, there are no meaningful changes in fundamentals going into the summer of 2016. Supply-and-demand dynamics are strong in most markets and rate growth should be solid all summer.The bottom line for hotel owners is sell now if you do not plan to hold for a few years as next year will not be as robust.Trends to watch in 2016Marriott International's pending acquisition of Starwood Hotels & Resorts Worldwide as well as the Expedia acquisition of Orbitz and HNA Group's proposed Carlson Hotels deal are harbingers of a consolidation coming in the hotel industry. While it is too soon to determine what other brands or companies will decide to come together, it is clear that we are entering the age of consolidation as the economy is clearly in the mature stage. Hotel values may have peaked nationally as real estate investment trusts are not actively purchasing since their stocks declined and the runway from 2013 to 2015 is shorter. However, values will not decline sharply this year. Private equity is in abundance, 2016 still has a positive, election-year outlook and foreign capital continues to find the U.S. lodging industry attractive.Although we are coming to the end of our current economic cycle, it does not mean we are entering a recession. We are currently still forecasting between 1% and 2% growth for 2017, but as hoteliers we need to prepare ahead of time for this pullback after several years of fantastic growth. Invest in upgrading your product while profits are strong and interest rates are low so you can keep up with the new supply as we enter this soft landing. With the current geopolitical threats around the world, any unforeseen event could tilt this soft landing toward a more difficult economic environment.Strategies to SucceedDigital Marketing--Today, there is no excuse to rely on gut instincts in developing an operating strategy. Fact-based decision-making is much easier now that systems are available for general managers and marketers to improve their business acumen. Technology, data and analytics are all improving, and teams must not work in a vacuum, meaning that synchronized decisions with all departments are paramount to success. There are business intelligence and analytic applications that, coupled with a revenue-management and reputation-management system, can be deployed to automate the information process.The online travel agencies have been considered the enemy long enough. Consider them a friend but do not rely on them, as the goal must be to increase direct bookings to your property. Think of them as strategic partners that make up less of your demand component going forward. Now is a great time to start testing the waters and see what works in revenue management and digital marketing. Be innovative and see what drives new revenues and what does not.Content Creation--Remember that when content is created it must be created for different devices. Mobile is king! Ergo, fine tune your content by channel and medium.Content must be fresh and original as well as valued by your readers/guests. Marketers must also work with revenue managers so that the content targets the guest that is appropriate for the hotel. Customer-acquisition costs that contribute to the the bottom line--including booking engine transaction cost, ad spend and all other costs associated with customer acquisition--are very high and will certainly continue to be high if a large number of those guests do not return. Repeat guests are much easier to get back than new guests. Experience during the guest stay as well as communication before and after check-out is critical.Knowing your audience, keeping a fresh web presence and understanding your channels will go a long way toward successfully marketing to both new and repeat guests. Desertion management, which is a way to address the guest who does not come back, can allow you to have much better reviews while retaining guests who were going to leave and never come back. In other words, if you do make an error, catch it and make a comeback!Revenue Management--Demand forecasts by market are good but the real question is "What are the booking patterns in the market?" Also, what future dates are already selling and at what pace?Do not rely exclusively on competitive market intelligence as cancellations may not be captured in time for you to react. Sharing economy or vacation rentals might affect the market, especially during high-demand dates. The truth is, no matter how good your revenue management system is, an experienced user wins in every market.Analytics--Today's analytics can assist hoteliers in providing guests with personalized and responsive experiences. The ability to target the wants and needs of today's travelers is so far beyond that of just a few years ago. So long as the data we have is not abused, we have huge opportunities to provide incredible service. To ensure this, if you do not have a dedicated customer experience team, now is a good time to create one.Enjoy the summer--it will be financially rewarding for those who are prepared to capture high rates while we can.