Enhancing Guest’s Local Experience

Many hoteliers are rationalizing Airbnb’s entry into the lodging space as non-competitive. As the hotel industry learned from the dawn of vacation rentals and online travel agencies, ignoring groups that fulfill lodging demand at scale is a bad idea. Airbnb is now operating at scale, and just getting started.

Airbnb takes an asset-light strategy to a new level, operating a digital exchange that matches individuals to individual lodging units. Airbnb has A-tier investors, smart management and a sizeable valuation. Its next funding round will value the company at over US$13 billion. As of mid-December, that put the firm slightly below Starwood (US$14.2 billion) but above Wyndham, InterContinental and Hyatt.

One single night, during July 2014, Airbnb housed 330,000 total guests (20,000 in Paris alone). It should be noted that Airbnb offers three distinct types of product – host present/shared rooms, host-present/private rooms, and host absent/full unit stays. The third option may be most directly competitive to hotels, but as mainstream travelers become more familiar with Airbnb, traditional hotel guests, particularly Millennials, may start considering alternatives. The biggest difference, however, is the guest experience. Airbnb’s ultimate goal is to provide a great host to guest match. When it works, visitors are no longer tourists; they live like a local and get an expert insider perspective on local experiences that can make a stay truly unique and memorable.

Airbnb disrupts the hotel industry not only by introducing supply at a lower price point, but also while enhancing the guest experience through personalization. That improved value proposition is the future battleground for traditional hoteliers. To successfully compete with Airbnb, hoteliers must ask “why“ guests are staying and organize service delivery standards to offer unique guest experiences – just like Airbnb.

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Top Dining Trends for 2015

Small plates: Small plates can be served at any time and are seen as ways to help dieters avoid overindulging.

Roll and go: Bun-less creations that are rolled instead of presented as traditional sandwiches are growing in popularity. Even the traditional hamburger filling and rolling the contents in flour tortillas.

Lose the fat-infuse: There has been an increased awareness over the past several years of the downside of fat, as well as the emphasis on gluten free and vegan foods. As a result, chefs are changing to beer braising, cider poaching and quick pickling to infuse flavor while avoiding exposing food to fat.

Back to the future: Traditional items are making a comeback on today’s menu such as meatloaf, liver and onions, shepherd’s pie and pan-fried chicken.

Grab-n-go: Grab-n-go dining is increasingly popular and spans from fresh exotic fruits to house-roasted Himalayan salted pumpkin seeds. Travelers are looking for healthy and convenient ways to satisfy their need to recharge, and stay on track.

Raging ramen:  Once thought to be a food for cash-starved college students, ramen is now breaking into the street food fad. Ramen applications include stir-fry and salad.

Tea mixology: Tea mixology involves infusing simple tea with a variety of herbs and spices.

Slow ride, cook it easy: Many customers are now on the slow food bandwagon at home. This has dramatically increased public interest in restaurants that practice slow food cooking methods. Consumers who appreciate and are willing to pay for slow foods are equally interested in the process used to create them. Many restaurants are showcasing these by putting the process right in the dining room with charcuterie drying, cheese caves and vinegar barrels.

Branding the chef: Guests today want to take home a little more from their favourite eatery. Many chefs are creating their own signature products that they bottle and package for home use.  Bottling items, like signature sauces and dressings are replacing traditional store-bought items in customers’ pantries.

Source: Benchmark Hospitality International 

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Internet Marketing Trends 2015

The Internet is everywhere. Customers can browse and buy, anytime and anywhere. There are approximately 13.4 billion Internet-connected devices in the world and roughly two Internet-connected devices for everyone on the planet. Context is important to the connectivity conversation. For instance, hotel marketers need to think about where their guests are when they access information, what is most important to guests within those contexts and how marketers can use that information to drive consumers to book. Think about how you can segment customers by context: observe, measure and learn your customers’ pain points in each context.

We’re all publishers now. We need to help our customers find the content they need in the contexts that matter to them. Great content can lead to: product differentiation; more inbound website links; websites that are “sticky” and convert at a higher rate; engaged customers and an increase in loyalty; and the ability to leverage social media channels. Marketers need to cut through the clutter and create content that is: snackable: simple text, easy to read and easily scanned; shareable: use imagery to convey your brand because images sell; and sharp: content should be large, bold, clear and should answer customers’ questions quickly.

Deep customer insights. Guests are leaving digital footprints. This data gives access to deep customer insights into what your customers really care about. Data can highlight customer behaviors, wants and desires; leads to product, promotion, placement and pricing decisions; and cannot be easily duplicated by the competition. Marketers should be willing to start small. “This isn’t about big data; it’s about big questions. What are the things that matter to your guests? What are the questions that they have? And how can you use the data that is created to help them answer those questions and help them make a booking decision?”

Storytelling. Storytelling should be kept top of mind when it comes to content marketing. If you are trying to tell your story and differentiate, your website needs to be more like a book, more like you’re telling a story and more engaging. This is going to make people want to come in and visit and learn a little bit more: a) Sell the experience with a consistent story. b) Make pictures easily viewable across different devices             c) Incorporate video to engage customers (keep it short for mobile users) d) Use Facebook, Instagram and Pinterest to share photos e) Create a YouTube channel

Design for mobile. Hoteliers need to keep mobile in mind for marketing as travelers will often abandon non-mobile-optimized websites. When it comes to designing for mobile: a) Leverage unique capabilities (swipe, zoom and pinch features) b) Make the experience easy with features such as click-to-call and interactive maps c) A mobile-optimized booking engine is mandatory.

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Revenue Managers must look at Bottom Lines

The future of revenue management is now in looking beyond the top-line sales that revenue managers typically look at. Having exhausted all revenue streams in managing revenues by looking at gross sales, 2015 will now have the advanced revenue managers looking at net sales. Thus revenue management is looking at more revenue streams besides the room and more variables to think about forecasting besides past history. Using top-line revenue as a guide for evaluating a hotel’s performance will need to be supplemented with measures that provide more of an indication of profit contribution, like Net RevPAR and sales and marketing efficiency.

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Employees must come first

People — especially employees — must come first in 2015 on the operational front. This is just one of the predictions revealed in a wide-ranging forecast for the coming year published in the December print edition of HOTELS. Hoteliers need to be proactive about training and retaining staff, according to Russell Kett, chairman, HVS London.

So what is really new about this? Many international hotel chains truly follow this motto and that is why they have been so successful in spreading their wings internationally. On the other hand, many of our Indian chains barring the exception, just mention this in their credo but blatantly look the other way when other interests come up. Thus profitability, guests, ego, personal agenda, etc. take over and the employee is left behind.

In the current trough that we are undergoing since the past 3 years, it is only the ethically strong who have supported their employees through falling bottom lines and declining revenues. Don’t get me wrong – I am not talking of downsizing in the case of excessively staffed hotels… I am referring to the pink-slip being given merrily in some organizations with no thought of the employee. Even in the case of downsizing, I have yet to hear of hotels assisting the employees who are let go, to get new jobs.

What these hotel owners need to realize is that the atmosphere created is negative and will only take their business down further. Also, when the business trend begins moving north in a year’s time, as is forecasted; their employees will not be loyal to them.

Hence People — especially employees — must come first in 2015 on the operational front.

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2015 Business Travel Forecast

American Express Global Business Travel has released its annual Business Travel Forecast revealing air, hotel and ground transportation prices are expected to be neutral to slightly higher across all regions in 2015. With new hotel supply limited in many major markets, the slight increases in business travel demand expected should put more pricing power in the hands of hoteliers next year, according to American Express.

Additional global hotel pricing predictions include:

  • In North America, hotel rates are expected to trend upwards, buoyed by favorable economic growth, increasing demand and a lack of new inventory. Additionally, moderate and upscale hotels continue to explore ways to further differentiate themselves from the competition. Amex is forecasting rate growth for mid-range hotels of 3% to 6% and upper-range hotels 3.5% to 7%.
  • Across Europe, the Middle East and Africa, hotel rates are predicted to rise slightly in nearly all countries and categories, as demand steadies. American Express forecasts rate growth for hotels in EMEA at 1% to 6% for mid-range hotels and 0% to 5% for upper-range properties.
  • In Asia Pacific, hotel rates across the region are expected to rise minimally across most categories in the coming year. The forecast for rate growth ranges from 0.8% to 3.5% for mid-range hotels and 0.7% to 3.5% for upper-range hotels.

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How to select a Management Company ( operator)?

If you have decided to simply own a hotel, but not run it, you have two first choices: branded or non-branded? We are assuming here the choice of a brand, due to advantages for distribution. Here are some of the key considerations to take into account whilst choosing a branded operator to manage your hotel:

  • How many hotels does the company currently operate?
  • Does the management company operate competing hotels in the same zone?
  • Length of agreement?
  • Procedures for extending or terminating contract?
  • Contract terms in event of the hotel’s sale?
  • Base fee to be applied?
  • Incentive fees earned or penalties assessed relating to operating performance?
  • Reporting relationships and requirements?
  • Break-off clause

Furthermore, is it a first tier or second tier company? First tier refers to management companies that operate hotels for owners using the management company’s trade name as the hotel brand. Hyatt, Hilton, Sheraton are examples. Second tier is management companies that operate hotels for owners who have entered into an agreement to use one of a franchiser’s flags as the hotel brand. Tiering does NOT refer to the quality of the management operating the property. It can be worthwhile to talk to other owners, and look at some of the key issues they have had to deal with. When it comes to management agreements, brands have a lot of power to unilaterally impose changes in standards that all system hotels must meet. These include such things as computer systems and software, new signage and logos, loyalty programmes, design requirements, promotions and centralise services. For some owners, the cost of these brand-imposed standards may simply not be worth it. The question then has to be asked as to whether the standard benefit the brand or the hotel… Is the brand growing too fast? In recent times, some issues have arisen due to the fact that some brands and operators expanded so fast that they lacked the adequate expertise, procedures, systems and personnel to manage properly.

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Value Proposition

Creating a Value Proposition

A value proposition is a promise of value to be delivered and acknowledged and a belief from the customer that value will be appealed and experienced. A value proposition can apply to an entire organization, or parts thereof, or customer accounts, or products or services. Benefits help in creating a value proposition for the guest. Hence to create a value proposition for a guest, the product/service must be first seen from the guest’s perspective rather than the organisation’s perspective.

The value proposition is, by definition, different than a company’s mission statement. A mission statement talks about how the company is going to offer a product or service to a specific market segment, while a value proposition explains why the people/companies in that market segment should want to engage with that business.

Value is innately subjective. Different people value the same thing differently.

For a restaurant, you must establish the value proposition that will best resonate with your target customer base. Make sure that the value proposition permeates through each part of the restaurant. For example, if your value proposition is simply “great seafood and the largest selection of white wines in the city,” then all restaurant employees should focus on delivering that value proposition. The wait-staff should lead with this statement at each table they serve. The kitchen should have a consistent menu of popular and unique seafood, and must also try to add a unique, seasonal choice. The wine-waiter should do the same—highlight the wide selection, but suggest special “pairings” of wine with featured seafood.

Deciding on the value proposition also helps with its focus. You might have a fantastic kitchen staff that makes great-tasting food, but you can’t be all things to all people. No single restaurant has the best steak, chicken, fish, wine, beer, appetizers and dessert. Any restaurant that tries to be the best at everything will find that they have spread themselves too thin. When you create an appealing value proposition for your restaurant, you are creating a reason for people to choose it over other options.

Keep in mind that your value proposition does not necessarily need to be food-related. For example, if you’re running a beach bar, your value proposition could be “sun-downer cocktails” or “beach games” or “trendy local live musical performances”.  Different people value things differently. Some people may not be interested in beach games, but you need to research what your guests may want and use the answers in creating your value proposition.

In summary, to ensure that your value proposition is successful, you must strategize such that the value as perceived by the guest is actually greater than the actual value in the product or service you are offering.

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Up Selling and Cross Selling

An up-sell is to get the guest to spend more money – buy a more expensive model of the same type of product, or additional features that relate to the product in question. A cross-sell is to get the guest to spend more money by adding more products from other categories than the product being viewed or purchased.

Say the guest is planning a special anniversary dinner with his wife at your hotel. He comes to reserve a table in your restaurant for a 3 course table d’hôte dinner with a bottle of domestic house wine. You offer:

  • A three course table d’hôte seafood dinner in the private gazebo on the restaurant lawns with a bottle of champagne ~ Up-sell, same product family, more expensive
  • A couples Swedish Massage at your spa followed by a 3 course table d’hôte seafood dinner in the private gazebo on the restaurant lawns with a bottle of champagne ~ Cross-sell

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Importance of Understanding Needs

Selling when needs are absent, may lead to lot of objections. Also. if the needs are abstract and not formed clearly, the selling process may still lead to some objections. Creating concrete needs make the selling process smooth. A high-pressure salesman is the one who starts selling before establishing concrete needs whereas the effective salesman spends time in creating and developing the right type of needs. There are essentially two types of needs:

  • Abstract or Unclear Needs: Dissatisfaction/Problem may make the customer worried and make him think towards change. However due to inadequate value propositions he may live with the problem rather than accept your solution, making price the main issue.
  • Concrete or Clearly Felt Needs: These are the strong desires and wants which are clearly felt and perceived by the customers. Concrete needs make your selling process smooth.

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Linking Loyalty programs to Social

While the impact of loyalty programs has long been assumed beneficial, a study published by Cornell University confirms it: After guests enrolled, they returned to a hotel nearly 50% more often, and hotels increased their incremental annual per guest revenue nearly twice over.

An emerging key component to a successful loyalty program strategy is the marriage with social media. Every day, consumers are checking in and snapping photos all while looking for the next best amenity.

Here are a few things every luxury hotelier should consider to multiply the efficacy of their efforts:

  1. Use your loyalty program as a social conversion activity.

Social has much greater impact when used beyond gathering likes and other vanity metrics. Social has the biggest impact when focused on driving conversion actions. Motivating socially activated consumers to join your loyalty program is an ideal conversion activity.

  1. Recognize and reward members for social engagement.

Foundational to most loyalty programs is the idea that the more a customer participates the more they receive. Additionally, luxury consumers have come to expect high-touch brand interaction. By recognizing and rewarding social participation of loyal customers, you can encourage positive word of mouth and make participants feel special — a feeling you want connected to your brand.

  1. Socialize your existing member list.

Socialize an email list by combining social intent with an offer — such as a room upgrade — sent over email to analyze which social channel your audience prefers and to move a private offer into social. This allows the brand to increase engagement and acquire new loyalists organically. Utilize your current database to advocate on your behalf in social — where everyone is looking to their network for validity.  4. Link your data. 

Recognizing loyalty members for social participation also enables marketers to link guest activity across programs, connecting the dots between social handles, email and rewards accounts. This gives a more holistic view of guest activities and a truer sense of their brand value. Populating this data into your CRM also gives you a richer view of what motivates and delights those customers who spend the majority of their travel money with your brand.

Bringing together your social media marketing and loyalty program creates a virtuous cycle where you can learn more about guests, enabling you to further tailor offers and create even greater loyalty moving forward. Furthermore, as social media consumers see posts from your most influential audience — happy, loyal customers — they will be more likely to take action as well, from giving your brand a try all the way up to joining the program themselves.

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Hotel Revenue Acquisition Costs

Based on a recent study over 3 years, released by The Hospitality Asset Managers Association (HAMA) it was found that Hotel revenue acquisition costs have far outpaced revenue growth. It specifically looks at both the external costs of brand allocations (for marketing, advertising, major promotions, loyalty programs, national and global sales offices) and third party commissions (for group & transient bookings) as well as the internal costs of marketing and sales programs, including local marketing, sales staffing and other expenses, including reservations staff.

Total customer acquisition costs rose by 23% while brand allocations grew by 37%, and third party commissions by 34%. As a result, properties now control less of their marketing fund (44% vs. 49% in 2009). It is thus critical to understand and then control external costs, including the costs of customer acquisition.

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Features, Advantages & Benefits

Features: Facts or characteristics of a product or a service. Example: Our hotel provides 24-hour services which include a state-of-the-art Business Centre, Concierge service, Doctor on call, In-room dining, i-pod with docking station, Laundry and dry-cleaning, Broadband and Wi-Fi internet, Car and Limousine service, and various other international amenities and services. Research shows:

  • Features have a small impact during the initial stages of a selling process
  • Telling more features creates an opportunity for the guest to front more objections
  • Features have very less impact in the advanced stages of a sales call

Advantages: Show how a product can be used or is better than that of the competition. Example: Our hotel is the closest to the international airport as well as near the central business district and is located in a high security zone. Research shows:

  • Advantages have a positive effect in the initial stage of a selling process.
  • Have less impact in the latter stages of the sales cycle.

Benefits: Show how a product can meet the concrete need expressed by the guest. Examples: Having our own Pan-Asian restaurant ensures that your Japanese guests staying at our hotel will be very comfortable with us, especially since our staff have also learnt basic Japanese and will be able to converse with your guests / Is parking a major concern? Do not worry as our hotel offers parking for up to 400 cars at any point of time / Our rooms with balconies directly overlooking the sea will offer your guests the opportunity to take in the sea-spray during their stay. Research shows:

  • Benefits have a consistently high impact throughout the selling cycle.

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Info, Time, Power – Negotiating Leverages

Information, Time & Power – Leverages of Negotiation

In negotiations, Leverage is power. Whoever has the most… wins

Here are some primary questions you must ask yourself when you are negotiating: “Who has the superior bargaining position? Why is it superior?” The next question you must ask is, “How and when can you use your leverage to your foremost advantage?” Timing and technique matter. Now, as you analyze your situation, realize that everything the opposing person wants or needs for agreement is to your advantage (as long as you understand their reasons). On the other hand, everything you need or desire for an agreement adds to the other side’s leverage (also only if they comprehend your reasons).

Hopefully your preparation has given you as much information as you need to be a strong negotiator. As you negotiate, new information will come up that will help you understand where the other person is coming from. As much as possible, make sure you don’t give too much information to the other side. Try not to contribute any knowledge that would grant them superior power. This is not easy, but the better you do it, the better your leverage during a negotiation.

You have to evaluate your leverage over and over again as well as the leverage the other person is showing you. Why? Because as talks move forward, events, positions, and attitudes change. More than likely, your adversary is also performing the same calculations. It’s very much like a chess match. Each advance changes the posture of the game. The correct moves at the proper time can threaten your contestant’s king. So you should deliberate many times on how and when to use your leverage during a negotiation to achieve dominance.

If you fail to stay updated and informed as the process unfolds, you may not maintain any advantage. If you require an emergency appendectomy the doctor and the hospital obviously have the advantage and the most leverage. You are not in the position to negotiate the cost of the operation while you’re rolling in pain on a gurney to the operating room. However should the sickness be one which is not an emergency and in which you can take a second or third opinion, your leverage increases as you may have options to obtain medical opinions with other hospitals and doctors.

Here’s another factor: It’s not entirely the scrutiny of powerful positions that creates leverage. It’s also how that force is handled. You can use it subtly or with a hammer. You can apply it when circumstances are proper and when you are at your best, or use it at the improper time and destroy your superiority.

Finally, there are two important questions to ask yourself continually: Who needs it more? Who has the greater motivation? If you determine the other side’s needs are greater than its wants, you have the advantage.

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Probing Techniques

Guidelines in using the Probing Technique

Request permission and then ask a few closed questions to get the client’s response and to know his inclination. [Explain that you are asking these questions to be able to subsequently match your product/service with his need].

Subsequently, ask open questions to get more details. Do not ask too many questions which may irritate the client. It is recommended to provide some info about your company/product after asking a few questions.

Note: Questions using ‘Why’ and ‘Who’ are tricky and should be used with caution.

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