August 24, 2018

Insights from the 2018 Hotel Data Conference

By Sam Conley

 

Last week in Nashville, I attended the Hotel Data Conference. Now in its tenth year, the HDC is a well-established gathering of hospitality professionals who come together to discuss the future of the industry. Over the week, I attended breakout sessions about Alternative Accommodations, Loyalty Sessions, and Independent Hotels. Below are a few of the takeaways I gathered from these sessions.

 

Breakout Session: Alternative Accommodations: Are they really alternative?

With demand for Alternative Accommodations like AirBnB increasing annually, how can hotels tap into this change in the marketplace? Should hotels try to fight AirBnB?

The session started by listing a few reasons travelers book alternative accommodations:

  1. It feels like home.
  2. They are often easier to accommodate more friends and family.
  3. They are typically more economical compared to booking multiple hotel rooms for a group.

MJ Paschall, Senior VP at AKA, a portfolio of luxury extended stay residences, added that alternative accommodations are being redefined by professionally managed companies that have the ability to curate unique experiences and build long-term relationships with customers that will keep them coming back for more. Service, from her perspective, is a huge differentiator and that Alternative Accommodations have evolved far beyond couch surfing. She concluded by recognizing the importance of customers that come for business but stay for leisure.

Another point raised was the importance of early engagement prior to arrival for extended stays. This opens up a dialogue with the guest to learn more about the reason for the stay and how it could be enhanced. One of the panelists cited the “Purple M&M Test”. For example, if you are traveling as a family and your kids love purple M&M’s than this is an opportunity to surprise and delight.

 

Breakout Session: Loyalty ROI—fact or fiction?

Nicole Lundin, Head of Loyalty and Social Engagement at Viceroy Hotel Group, spoke about leveraging technology as a differentiator to personalize the guest experience. Experiences can be in the form of perks at the property such as room upgrades. However, more travelers are linking loyalty to a difference in service. For example, if a problem arises, can they count on the hotel, brand, or OTA to resolve the issue quickly and to their satisfaction? In today’s fragmented booking landscape, “owning” the customer is often defined by how well you can serve them. The more you know about that customer, the better equipped you are to help them. Viewed through this lens, loyalty is both a differentiator and a missed opportunity for hotels. One possible solution is to use AI to reward guests based on past purchases.  While the hotel industry debates the merits of loyalty, OTA’s with their own loyalty programs continue to grow channel contribution.

 

Breakout Session: Independents: No flag, no problem

According to panelist Tim Franzen, President of Graduate Hotels at AJ Capital Partners, independent hotels are thriving in specific markets. Driving this expansion is the differentiated customer experience that an independent hotel can offer over a branded property. According to Raj Contractor, Host Hotels and Resorts, some markets are better suited for independent hotels than brands. It’s a question of strategy and knowing what type of markets make sense for independents.

Tim Franzen pointed out that the success of a newly opened independent hotel hinges on not underestimating the ramp-up period needed to build brand awareness. He went on to say that an important factor in the success of an independent hotel is a general manager who is an entrepreneur.  There will always be challenges operating a hotel and these challenges are often amplified for independents. For example, if a revenue manager or another key employee leaves, you don’t have the resources of a brand to fill the gap.

Independent hotels typically have more exposure to the OTAs and less leverage than the brands in negotiating lower commissions. Tim Franzen advised to use the OTAs as a tool and counseled disciplined revenue management practices to understand the hotel’s most profitable channels. He also said converting the OTA booker to a direct customer was the responsibility of the operations team.  Stacie Bushaw from NAVIS said that direct bookings in their portfolio typically contribute 30% more revenue than other channels indicating that the direct booker is a more valuable one. The session ended with the panel discussing the importance of local markets for hotels with an important F&B component. This seemed to underscore that a different marketing strategy is needed for locals than other important feeder markets that are further away.

 

Additional Takeaways

  • As unemployment continues to go down, labor costs for hotels continue to rise. This is affecting hotel profitability.
  • With the current political climate, international arrivals are decreasing as other countries take market share away from the United States.
  • RevPar growth for luxury and upscale segments is fueled by growth in ADR.
  • Branded hotel loyalty programs are impacting ADR and profitability.

 

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Garrick Lee
Marketing Manager, HEBS Digital
Phone: (212) 752-9425
Email: garrick@hebsdigital.com