By John Bowen, Managing Director, MediaConcepts Pte Ltd
I can’t think of a single industry sector that isn’t facing some kind of massive disruption due to technology, and the hospitality sector is no exception. Hoteliers are losing out to third party travel agents who are using technology to better target the customers and make selection and buying easier for the consumer. Hoteliers face a double issue - they are both cost constrained and also tend to be run by older management who do not understand how millennials use technology. Millennials are said to outspend the previously biggest group baby boomers in 2017
The hospitality industry is unique in that the essence of digital media is the same as the essence of hospitality; both are about conversation, engagement and shared experience.
Customers expect to interact with suppliers in the same way they interact in their social life – there is no longer a distinction, it’s a bleisure outlook. Instead of going to a website they may wish to make a booking through Facebook Messenger, Instagram, Alexa, Cortana, Skype, Google home or one of the many other interfaces they interact with. Recently Expedia has announced its own version of Skype and Cortana bots to go along with its Facebook messenger and Alexa bots.
“The hospitality industry is unique in that the essence of digital media is the same as the essence of hospitality; both are about conversation, engagement and shared experience”
Realising the huge financial upside of using technology to better understand and target its audience OTA’s are leading the technology charge. With their low infrastructure costs, high margins and massive user databases it is no wonder that OTA’s are leading the way. It is estimated that the top two OTA’s (Priceline and Expedia) spent over 6 billion dollars in advertising in 2015. By engaging with the customers early in the buying cycle their aim is to provide an all-inclusive environment for consumers to live in.
Expedia has also started to offer guests add-ons such as free WIFI, breakfast and even Check-in with electronic key access. From a consumer’s perspective this is very engaging but from a hotels perspective this should be very worrisome. Once someone else owns the relationship with the customer they start to have control over the hotels business.
So, what can the hoteliers hope to do to compete with this? In truth, they will need to take a pragmatic approach. Fight the battles they can win, and think very carefully the implications of what they give away. Booking.com just recently got hoteliers to sign up to their “genius” program, where hoteliers agreed to give booking.com genius members Priority Early Check-In and Priority Late Check-out and a 10% discount on selected rooms - something that they don’t offer to their own website guests.
Luckily hoteliers have got, and will always have, the physical property and control of their inventory therein. Hoteliers should start to look at 3 areas.
The other side of this of course not only increased revenue, but much lower operational costs.