Giving Your Guests to the Competition

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June 01, 2005
Hotel | RevPar
Dan Phillips - dphillips@its-services.com

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© 2005 Hospitality Upgrade. No reproduction without written permission.

I’ve been in the hotel business since 1987 and I’ve just about had enough. I’ve had enough of the poor philosophies and mismanagement of technology that drives our guests away, actually giving our guests to our competitors. I apologize. I just can’t keep quiet anymore.

Imagine this: you go to your preferred grocery store, the one that is in the location you want and that you see in the TV commercials. While going through the produce department, a local farmer has set up a small cart and is selling his homegrown tomatoes and cucumbers. Since they are fresher and less expensive than the ones on the shelf, you buy them. As you turn the corner you see a rack that contains promotional flyers with sales collateral from other grocery stores where you can buy dry goods or meats. Why, there’s even a flyer from this neat ice cream plant where you can tour the facility, get free samples and 25 percent off of your first purchase directly from the producer. As you pass the dairy section, you notice that the biggest competing grocery store to the one you’re in has set up a refrigerator and is selling gallons of milk $.10 less per gallon. You would wonder what kind of management runs this place?

Now take a look at the hotel business. We spend millions of dollars building a hotel in the right location. Then, we spend even more money on advertising and marketing. Then we spend yet more money on things like a CRS or on commission deals with travel sites like Orbitz and priceline.com. Basically, we spend a fortune in cash to get a guest inside the four walls of our guestrooms.

Then, with this precious captive audience, what do we do? Well, for starters for years now we’ve priced phone calls so high we drove the guests to first use calling cards and now cell phones. In the room the guest is presented with so much marketing from other hotel and F&B outlets that it’s difficult to remember exactly to what hotel brand the room belongs. Turn on the television and the guest sees commercials from other hotels. At the front desk a guest can pick up a magazine advertising hundreds of restaurants in the local area. Just as hunger pangs set in, a delivery menu from a local pizza joint is slid under the door. Even the concierge is promoting a restaurant competing with the one in the hotel. The final straw is hearing about a Sunday brunch being offered at another hotel when the radio wakes the guest the next morning.

Hotels have historically done a horrendous job of owning their customers. Every other industry would drool at the thought of having their customers locked up inside four walls for hours at a time. Hotels just simply miss the opportunity because they don’t recognize it. Now that the hotel industry has recovered from Sept. 11 and the related slump, there is an arm’s race going on to put the best into each hotel room to attract more guests. Who has the best bed, strongest shower, plushest carpets or the most attractive duvet? I say what about new technological weapons, the ones that produce revenue from our customers?

The typical hotelier response will be that we are in the “heads-in-beds” business, that we don’t understand technology. As long as that cowardly thought persists, RevPAR will continue to be basically defined by the rent for the guestroom. The closest our industry has gotten to leveraging technology as a differentiator lately is either new alarm clocks or plasma televisions, neither of which directly generate any revenue, or high-speed Internet access, which we have decided to give away for free.

It is time that we recognized our guests for what they are, consumers. This means that we have to put a point-of-sale mechanism into each guestroom. We have enough information on each of our guests that marketing to them should be not just simple, but smart. Between the information provided by the PMS or CRM and the plethora of information available today from just a home phone number, it is possible to develop a campaign of promotions that will entice every guest to become that consumer and open up their wallets to more spending during their stay.

Hotels have begun to sell their pillows and comforters, maybe even their robes and spa supplies. These could be marketed in the room and sold from there as well. But what we are really talking about might go something like this: a guest, 40-60 year-old male with an annual income of $80,000-$100,000 has 50,000 loyalty points, is a golfer and affiliated with a couple of airlines. The hotel he is staying at in February has a sister hotel in the islands that runs very low occupancy in July. By way of a point of sale mechanism in the room, the guest is shown a commercial of this island hotel with a golf course and white, sandy beaches, and, he is informed that for 50,000 points he gets four days and three nights for two for free, with a free round of golf and a sleeve of balls and is offered a discount coupon from the airline he uses.

This may be too big of a leap for you, but why not replicate the Sky Mall that you find on the airplane and put an e-commerce mall into your guestrooms? Why not use a point of sale mechanism to show local retail and F&B outlets, but only the ones that pay you an advertising fee? It is time that hotels went from revenue per available room to revenue per guest and use technology to get us there.
 

Dan Phillips is the COO if ITS, a consulting firm located outside of Atlanta, Ga., specializing in technology in the hospitality industry. For comment or question, he can be reached at dphillips@its-services.com.

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