Trending topics in hospitality: key takeaways from last month

Trending topics in hospitality: key takeaways from last month

In a rapidly changing industry it can be hard for managers to stay on top of the latest trends in addition to keeping up with daily tasks. But events and conferences provide a great way to catch up with peers and learn about the issues of the day, as we demonstrate in this, the start of a new, ongoing series of trending topics.

Recent events we attended include Hotech 2020, which brought together around 300 executives from across the Asia-Pacific region, the Hotel Distribution Event 2018 in London, and the IDeaS Roundtable Session in Dallas, where discussions covered topics as diverse as the changing distribution landscape, the increasing use of artificial intelligence (AI), and strategies for targeting millennials guests.

Here we take a look at some of the hottest topics discussed:

Airbnb: partner or threat?

airbnb-roomThe huge growth in bookings on Airbnb has made the online marketplace an important player. While some say that Airbnb is just another distribution channel, others argue that it provides direct competition for hotel brands and can impact KPIs such as ADR.

There is no denying that Airbnb is a growing force in distribution, said Steven Howe, digital manager at Apex Hotels during the IDeaS Roundtable Session in Dallas, with statistics showing that the platform now accounts for about 9% of global hotel room count. For hotels, it’s cheaper than an OTA and brings in new customers, especially thanks to its popularity among millennials.

Tim Ramskill, managing director for pan-European travel and leisure equity research at Credit Suisse, warned against “complacency about the impact of Airbnb”. He claims that while OTAs are a potential cost challenge, the platform presents a revenue threat to hotels.

A shifting relationship with OTAs

The changing distribution landscape, caused in part by the growth of Airbnb, has had a knock-on effect on OTAs. Other firms such as Amazon, Alibaba and Apple are also rumoured to be entering the space.

According to Peter Tengstrom, partner and managing director at Midstar in attendance at the Hotel Distribution Event in London, “OTAs are more friends now than foes”. He believes that they can provide useful insights into how successful particular branding choices have been using metrics such as OTA ranking. OTAs can be useful because you can see how well certain promotions and offers perform using the OTA ranking and other metrics, he suggested.

“You have to manage the brand on the OTA’s website. That’s your window to promote the product,” said Tengstrom. “The OTAs help show the naked picture if you can’t perform.”

While Tengstrom perceives OTAs as a useful tool, Nick Chadwick, SVP hotel asset management at Starwood Capital Group, would like to see their relationship with hotels redefined. Chadwick proposed a dynamic pricing system for OTAs, in which hotels pay more when they are getting the most out of them.

While this seems unlikely as things stand, further shifts in distribution could force the OTAs to reassess their contracts if more rivals enter the space.

Driving direct bookings

Among attendees at the IDeaS Roundtable Session, the consensus was that wholesalers are responsible for parity issues, with Amoma cited as one of the worst offenders. Andrew Rubinacci, SVP Revenue and Distribution at Omni Hotels, suggested that ending relationships with some wholesalers could be an option for better distribution strategy.

The theory is that removing inventory from wholesalers and tour operators would encourage guests to book via the property’s own website. Once on the website, the hotels are in charge of converting the website visitor to a paying guest, by including an easy-to-use interface and interactive chat bots that keep people on the website longer and make it more likely that they will book. These chatbots offer an efficient but inexpensive way for properties to interact with guests and accompany them throughout the booking process.

We discuss the issue more generally in our white paper, Shifting your budget to direct - not a fad.

Leveraging artificial intelligence

artificial-intelligenceChatbots are just one way in which AI is playing an increasingly important role in the hospitality industry, alongside digital in-room assistants such as Amazon Echo and Google Home. Some 5,000 rooms are already voice-activated at the Wynn Las Vegas, and there is huge growth potential.

Discussions also covered other possibilities for AI including property-specific mobile apps that allow guests to control lighting, temperature and devices from their phones, as well as AI booking services. However, it was suggested at the IDeaS Roundtable Session in Dallas that most people will still want to see a property before letting AI book for them, and hotels will need to update their own systems in order to fully integrate with AI booking.

One of the other big questions relating to AI and voice automation centres squarely on travel bookings and how that will affect hotels, airlines and OTA as voice-activated devices become the new gatekeeper to the customer. How will everyone need to adapt?

It’s certainly something to look into, though, given that experts predict around 20% of all searches will be made using AI by 2020. There’s a long way to go but an NPR-Edison Research study published in the Harvard Business Review in August this year found that 18% of adults in the US - 43 million people - now own a smart speaker, and worldwide ownership exceeds 100 million units. This figure is projected to reach 225 million by 2020.

Improving efficiency using new technology

Many discussions focused on improving the guest experience, but it’s also important to consider the impact of technology on the lives of staff. Thanks to new technology solutions, the days of managers manually compiling spreadsheets to set pricing strategy or find rate parity issues are thankfully long gone.

“New mobile solutions can enhance the working practices of key executives overseeing multiple properties, working remotely and automating mundane tasks to create more time for strategic activity,” said Rachel Grier, Managing Director, Asia Pacific, IDeaS Revenue Solutions.

Plus it’s not just the big chains that can use these systems, as increasing affordability brings them within reach of small independents too.

Prioritising market segments

At Hotech 2020, speakers underlined the importance of maintaining good awareness of changing patterns in regional markets. For example, Ting Huang, research analyst for Euromonitor International, revealed that the growing middle and upper classes in Asia are driving growth in in-region travellers. It’s essential for managers to appreciate that these new guests may prioritise different factors when choosing a hotel, especially when it comes to mobile booking preferences and integration with different mobile apps such as WeChat.

In addition to regional considerations, speakers also discussed the importance of different age groups. Millennials are increasingly important in the industry and new strategies should be developed that fit their desires, which include demand for non-traditional accommodation, according to Rachel Grier.

“To address these challenges, we are seeing large hotel chains develop new brands to attract guests from this demographic and focusing their product design and positioning to appeal directly to younger booking segments,” she said.

To keep up with the latest industry developments and future events to make sure you catch the next instalment in this series of posts, sign up to our resources centre.

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