Over the recent few years consumer behavior has changed dramatically. Easily available information coupled with the continued economic turmoil has made today’s consumers extremely discerning in their choices around travel. Hoteliers in turn, with access to the same data, have to fight harder to win customers’ loyalty. Just relying on standard approaches to marketing or relying on online travel agencies (OTA’s) to fill up the rooms is no longer enough. The ability to analyze Big Data and making profitable decisions continuously is the new mantra. It is clear that this is a disrupted marketplace for hoteliers – the key question is “how does the hospitality industry adapt its go-to-market strategies to remain profitable?” The emerging trends in this industry provide an answer:
Marketing to the Hyper-Connected Traveler
The increased use of social media has created both challenges and opportunities for hoteliers, as they determine how to participate and respond to the ever-growing buzz online. Travel-focused blogs feature consumers’ experiences, sparing no details. Social networking sites like Facebook provide a forum to share travel stories and photos. Websites like TripAdvisor offer customer opinions, ratings, reviews and comparisons of hotel stays. Quantifying and incorporating insights from these sources can have a measurable impact on a hotel’s performance and on its ability to captivate this hyper-connected traveler.
Embracing a Smarter Approach to Pricing
In order to become more competitive in today’s rollercoaster market, hotels must be smarter about pricing. It’s Business 101: when demand is robust, price aggressively; when demand is low, you need competitive pricing. This back-to-the-basics approach is what defines a rational pricing strategy, which involves understanding demand, customers’ willingness to pay, available inventory and overall market conditions. While disruptive technologies like social media and online travel agencies (OTAs) are here to stay, hoteliers would be remiss to lose sight of how important it is to make intelligent pricing decisions. And yes, augmenting these pricing decisions by leveraging social media Big Data is the next analytical step hotels should take.
Rethinking the OTA Strategy
Pricing to win customers is only half of the equation; the other half is to retain them. By increasingly relying on OTAs to drive business, hoteliers have lost focus of the customer experience and outsourced to the OTAs blindly. Improved customer service (as reflected in the social media scoring) can have a significant impact on a hotelier’s ability to price without sacrificing occupancy.
Perhaps hotels could borrow some ideas from the airline industry and offer enhanced services. Say your customer visits your website and requests a stay but you are unable to accommodate him, but what if you could direct him to a nearby hotel? Sure, there is risk in this, but the customer will look for another option anyway – why not help him find an alternative quickly? The focus should always be on meeting customer needs, and it can start by changing how you sell and market your services. The study referenced above notes that improved customer service (as reflected in the social media scoring) significantly impacts a hotelier’s ability to price without sacrificing occupancy, so it is worth rethinking OTA strategies.
Investing in Mobility
Mobility is the new buzz word in hospitality. Knowing that the traveler of today is constantly connected, hotels are figuring out ways to harness technology to provide the ultimate customer experience. Smart phone apps allow customers to search, book and check into a hotel, and provide a key pass (much like mobile boarding passes) to enter their room. Imagine giving customers the ability to request additional services such as room service from their smart phone while still en route to the hotel. Or if you wanted feedback on their stay, you could send a push notification via smart phone as their taxi pulls away from the hotel – TripAdvisor-like ratings can be yours in quick order! Hotels have just begun to scratch the surface on mobility and this disruptive technology can harness significant customer goodwill and profitability in the years to come.
Back to the Future
The best way to run a business is to know how to serve a customer at the right time with the right service. Heretofore, demand forecasting was seen as a means to an end – specifically as a means to do intelligent pricing and revenue management and not as an end in itself. It is no secret that sales, marketing, operations, revenue management and finance all have their own forecasts and rarely do these forecasts synch up. But if done right, collaborative demand forecasting can give hotels a holistic solution designed for all of decisions made by all stakeholders in the business.
Race to the Top
In a disrupted marketplace, hoteliers will do well by going back to basics. Know your customer better by harnessing Social Media data. Invest in Mobility and direct contact to connect better with your customer. Use dynamic pricing to keep up with the shifts in the market.
The face of a hotel customer has changed and the industry has had a structural shift due to technology. Adapting to this new reality will mean the difference between success and failure and those agile enough to capitalize on these emerging trends will survive the race to the top.