Better eBusiness May Have Helped Hotels Avoid A Truly Lousy 1H09

Henry Harteveldt Wow, once you get into this blogging thing, it's hard to stop...

I am a fan of Travel Weekly, a truly comprehensive travel industry publication. I've been reading Travel Weekly for the million or so years I've been in the travel industry and am sincerely impressed with how its editor, Arnie Weissman, continues to take the publication in new and exciting directions.

The July 30 issue of TravelWeekly.com has an article by Jeri Clausing regarding hotel industry performance for the first-half of 2009 from Smith Travel Research (STR), a leading hotel industry research firm. STR's data clarifies the enormous financial impact the recession is taking on hotels::

  • The average hotel occupancy rate declined 10.9% compared to the first half of 2008, to 54.6%
  • The average daily rate (ADR) paid by a guest fell 8.7% from the first-half of 2008, to $98.66
  • On average, hotels' revenue per available room (revPAR), a key profitability metric, declined 18.7% compared to the first-half of 2008. Bobby Bowers, senior vice president of operations at STR, describes the decline as "by far the largest first-half decline ever recorded by Smith Travel Research."

There's more, but it's pretty bleak. I don't want to lose you, so for all the gory details, read the Travel Weekly article and the STR announcement.

Anyway, this got me thinking (always risky): How could eBusiness have helped? True, nothing could have protected hotels from the massive economic mess we're all in. I do, however, believe that hotels made their own challenges worse. How? As an industry, hotels failed to use eBusiness as effectively as they could have -- and should have.

  • Show me a hotel Web site that lets you shop based by a price point (e.g., ($100/night), price range ($100-$149/night), or total budget ($200 for 2 nights). If you don't think this is important, you're wrong -- terribly wrong. Our North American Technographics(R) Travel Online Study, Q1 2009, shows that 46% of US online leisure travelers say they allow their budgets to dictate where they go on a trip. If you call any major hotel' chains toll-free number, a property directly, or a travel agency, they could help you with any of these three requests. eBusiness channels and experiences must emulate, and ideally beat, their offline counterparts.
  • Hotels don't do a good job of creating any emotional engagement. Not every trip can be a getaway to a glorious exotic destination for a relaxing vacation -- but just because a guest is going to a not-so-thrilling destination doesn't mean your Web site's planning and booking process has to be not-so-thrilling as well.
Two years ago, we wrote about how travel companies need to humanize their digital travel experiences by making them useful, usable, and desirable. Hotel Web sites may be useful, but they struggle with usable. Desirable is nowhere to be found -- maybe it's drowning its sorrows in the lobby lounge. By creating a sense of desire -- tapping into consumers emotions, for example -- you can attempt to separate the heart from the brain. The brain says "buy the lowest rate available." Desire gets the traveler to consider trading up -- something our research shows 34% of US online leisure hotel guests, and 41% of US online business guests, will consider if they view the premium as affordable.And don't forget, we live in a world of Bookers. Seventy-seven percent of US leisure hotels guests research and book at least some portion of their trips online, as do 68% of business guests.
  • Few hotel Web sites provide the necessary context required to help travelers make well-informed decisions. Many lack useful content as well. I worked in luxury hotel marketing. To this day, I can't tell you which is better, a superior room or a deluxe room. Sadly, most hotel Web sites can't help you, either (some of the online agencies, like Expedia, actually do a better job of this). Pan Pacific Hotels does an excellent job with how it presents room information within an availability search. Unfortunately, most major chains' Web sites, including Accor, IHG, Hilton, Hyatt, Marriott, and Starwood, do not. Room descriptions lack critical details that allow a guest to make a well-informed decision, like room dimensions, details about the furnishings, and relevant, good-quality visual content.
  • Poor post-purchase and on-property electronic communications. Yes, reservation confirmation emails arrive almost instantly. And, giving credit where due, many chains' confirmation emails (including Hilton, Hyatt, and Marriott) include links to both complimentary and fee-based hotel services. Too often, though, that's the only electronic communication the guest sees. Hotel execs tell us they often can't send any other email to guests if the reservation is made within a week of arrival, because properties lack the ability to operationally respond. As for guest communications during the stay, well, as they say in Brooklyn, fuhggedaboutit. Few, if any, major hotels take advantage of email or mobile communications to reach guests -- and their wallets -- while they're on property. Lots of great revenue-generating opportunities are missed as a result.

So how could eBusiness have helped hotels? Here are just a few:

  • Web sites with useful tools, like budget-based shopping
  • Better content and written descriptions
  • Creating timelines from time-of-booking to check-out, and determining the most effective digital channels and marketing or promotional messages that would work to coax much-needed revenue from guests' tightly-guarded wallets.

Against the loss of business from key segments like meetings/conventions and corporate travel, nothing could have totally insulated the industry from all the turmoil. But by failing to push themselves to do more with eBusiness, to invest when times were better, to re-think property operations against the increasingly "wired" guest that hotels serve, hotels may have allowed their financial troubles to be worse than they should have been.

If you're a hotel executive, or if you work for a company that supports hotels through technology, please weigh in. I'd enjoy hearing from you.

Thanks for your time.

Henry

Comments

re: Better eBusiness May Have Helped Hotels Avoid A Truly Lousy

Excellent points here, Henry...two especially stand out:"Show me a hotel Web site that lets you shop based by a price point"I feel that OTAs are often much more web-savvy than many hotels. Actually just wrote about it last week:http://www.hotelmarketingstrategies.com/cut-ota-comissions/This is a great idea hotels - especially larger ones - would do well to imitate. I believe every major hotel booking site has a feature like this - why don't hotels themselves have it?"Poor post-purchase and on-property electronic communications."So much can be done with permission-based email to enhance a guest's experience. Again, a quick look outside the hospitality industry shows many ecommerce companies that do a fabulous job on building relationships through email. If hotels did the same, they could increase loyalty & repeat sales.I know many hotels send out standard emails...but they look too corporate for my taste. Why not just send a series of personal messages from the management?

re: Better eBusiness May Have Helped Hotels Avoid A Truly Lousy

Josiah, thank you for writing.I agree that online travel agencies are generally more savvy when it comes to online marketing and the overall online experience. They frankly have no excuse not to be -- the Web is their primary channel.Not that I am excusing hotels' poor performance, but the Web is one of several channels hotels use. Hotels must, must, must invest more time and effort, at the corporate/brand and property level, to improve their online experiences.As far as communications during the stay, whether by email or mobile (Smartphones blur those), I am doubtful most property-level management would do a good job of this. With no disrespect intended, most hotel properties don't currently have staff who truly understand how to manage these channels and the associated communications. For now, I believe it would be more effective for hotel brands to offer this solution, and for properties to input the offer into the application.Thank you again for contributing to the blog. We appreciate it.Henry

re: Better eBusiness May Have Helped Hotels Avoid A Truly Lousy

Hello Henry,I especially like this point you refer to:"Creating timelines from time-of-booking to check-out, and determining the most effective digital channels and marketing or promotional messages that would work to coax much-needed revenue from guests' tightly-guarded wallets."Much more integration of channels and intertwined marketing approaches must grasp the attention, create a spot on their consideration spot and ultimately, convert.

re: Better eBusiness May Have Helped Hotels Avoid A Truly Lousy

Henry:In our experience in working with lodging management we have found a certain reluctance to adopt new technologies for fear of the unknown. There is a lot of hotels can do on a property level to promote their in-house amenities and services, such as restaurants, spa, etc.Our company created a Mobile 4 Lodging program (http://www.mobile4lodging.com) that allows hoteliers to interact with their guests via SMS during their stay. There is a lot of excitement for a service like this, but fear of Corporate approval, or not understanding the technology holds properties back.

re: Better eBusiness May Have Helped Hotels Avoid A Truly Lousy

All good points, we are seeing many websites offering "traveller review" type content and very few offering hoteliers' posted content as http://www.hotelbeam.com or others.Online bookings are a great source of revenues for hotels and sufficient resources, including competent staff, should be dedicated to this area. One item of improvement we can see is the level or quality of information as descriptions, pictures and rate plans featured via the GDS's, it is clear that often poor information on GDS's is not promoting hotels but causing new customers to turn away.