AS A HOTEL ELECTRONIC DISTRIBUTION CONSULTANT, I’m deeply familiar with tools and techniques the lodging industry uses to present our properties on our brand websites, as well as the online travel agencies (OTAs), global distribution systems (GDSs) and elsewhere. I know the limitations of internet booking engines and of central reservation systems (CRSs); I know the costs associated with OTA bookings; I know complexities of using GDSs, wholesalers, and social media.
And I know that despite these limitations and complexities, we’re doing quite well in presenting and selling our accommodations. But I don’t think we’re doing well enough. And I don’t think we’re sufficiently concerned about our failure to do so. I would suggest that we’ve become a bit too comfortable. Or to put it more bluntly, a bit complacent.
Thoughts on Technology, Opportunities and Expectations
Occupancy Expectations
At times we adopt this mindset: “OK, we didn’t sell it today; we’ll try again tomorrow.” Except, we can’t. Our product is perishable. Unsold, in other words, equals “wasted.” When I worked on-property, we were thrilled to achieve a full house – 100% occupancy – but we were also satisfied with less. An annual occupancy of around 70% was wholly acceptable to sales, to the general manager (GM), and to the owner (although they would have liked higher number!) We all
felt we had given it a good try.
My question, in retrospect is: Were we being tough enough on ourselves? A 70% occupancy equals a 30% waste rate, and a 30% failure rate. Should we – the sales team, the GM, the owner – have been content with those occupancy levels? Or could we have done better? After a career in the hotel industry, I know this forgiving attitude to occupancy was close to an industry norm. Hoteliers are nice people being nice to nice guests, as well as to each other. What’s different (and better), in the hotel industry is our general respect, civility and patience with each other. Maybe there are times when we need a bit less of these qualities – especially patience.
Let’s focus on room rates for a moment. Until the advent of Excel, the emergence of the first generation of hotel operations analysts (the precursors of revenue managers), and the arrival of revenue management systems, we ran unscientific operations when it came to both annual and day-to-day rate setting. Revenue management systems showed us that improved rate management performance was possible. Have we hit the optimum rate bullseye yet? I would suggest we’ve made progress but still have a good distance to go.
The Role of Technology in Hotel Marketing
Allow me to narrow my focus a bit, on two fronts. The first relates to the implementation of technology in hotel marketing and sales over the decades. We’ve implemented a succession of systems – word processors, guest profiles, Excel, guest databases, revenue management systems, email marketing, and loyalty programs. Our ever-evolving tool kit has aided and enabled us. But has it improved our per-hotel production performance? I readily admit there are headwinds to occupancy (and rate) improvement. Increased guestroom supply and the remarkable emergence of alternative accommodation – particularly Airbnb and VRBO – have challenged us. But I feel uncertain as to whether we've made a fully effective use of our evolving tool kit. Has skilled and intensive use of these tools been a consistent managerial priority, I wonder?
The “Look-to-Book” Conversion
This brings me to the core issue that prompted this article: The success (or lack of it) of our internet booking engines (IBEs) – the reservation function on brand and individual property websites.
Successfully selling hotel accommodation on the internet isn’t easy. Nonetheless, I’m frustrated we only convert about 2.5% of lookers into bookers when shoppers visit our brand and property websites.
Is my frustration with those visitors? Yes, a bit. But it’s also with those of us in hotel electronic distribution who are content with what I see as our failure rate. As I see it, a 2.5% conversion rate equates to a 97.5% failure rate – a situation we don’t talk about. And what is our collective reaction to our failure rate? Are we embarrassed? Incensed? Indifferent?
I’ll be kind and term our reaction acceptance. But we need not accept it. Instead, we should commit to promptly doubling it to 5% conversion and then growing from there. Is this possible? I’m certain it is.
Twenty-five years ago, hotels were early adopters. We saw the internet as a new and promising presentation and booking platform. Since then, we’ve fallen behind when it comes to embracing and implementing the ever-evolving techniques of cutting-edge e-commerce.
While retailers in other industries studied, and made substantial financial commitments to determining, where their “lookers” came from, to what product configuration and configurations they responded, to what display styles they reacted most favorably, and to successfully merchandising add-ons (the impulse-buy items at the physical or virtual cash register), we in hotels generally ignored these evolving best practices. Too frequently, we’ve been content with linear, unemotional,
under-motivating accommodation presentation.
Our lack of what I will term “e-commerce passion” (bluntly put, apathy), has been rewarded with ... that 2.5% conversion (or 97.5% failure) rate. So, our technology has given us better insight – on industry-wide and individual guest challenges and opportunities. Our technology has supported analysis, action and interpersonal interaction. It has enabled competitive equality (but, competitive advantage? Maybe, maybe not). Has it improved average daily rates? Yes, it has. Occupancy? Debatable. Website conversion? I don’t think so.
In the end, I believe – that we are capable of more than we’re producing today. Do I like pressure to perform? No. Do I want to be like other high-intensity industries? No. And I don’t think these are necessary to achieve performance improvement.
We have abundant aspirations, decent (if often unconnected) tools, patchy training, often insufficient coaching and monitoring, and inconsistent management. If we were to tighten up each of these, significant progress – on occupancy, on rates, and on IBE conversion – would be possible.
Do I think improvement is possible? Yes. Am I correct? Are we complacent? Let the debate begin.
John Burns is president of Hospitality Technology Consulting.
