The ability to provide a rich selection of goods and services for potential customers has aided the rapid growth of peer-to-peer platforms. Airbnb, one of the most successful of these, defines itself as “a social website that connects people who have space to share with those who are looking for a place to stay.” Because of its rapid growth and popularity since Airbnb’s launch in 2008, hotel industry leaders worldwide have been attempting to answer the Airbnb vs. hotels challenge.
What impact will the homeshare service have on the hotel industry? With each Airbnb vs. hotels discussion comes a variety of responses and platforms, some accusing Airbnb of unlawful practices and others praising Airbnb for its innovative platform.
Any supply, whether it is apartments, hotels, villas, B&Bs or private rentals, affects hotel supply and subsequent demand. From a consumer’s standpoint, now is a great time to find and book whatever kind of lodging one may be looking for because of the multitude of options. The desired type of lodging depends upon the purpose of the consumer’s travel, and location and price have an impact on hotel demand as well.
At present, Airbnb is reported to account only for 1 to 2 percent of entire hotel demand, but Airbnb’s greatest effect on that demand is seen in large, popular cities such as Los Angeles, New York City, San Francisco and Chicago. In these cities, according to AHLA reports, Airbnb cuts into 5 to 7 percent of hotel demand.Taxes are a controversial issue in the debate over vacation rentals, with hoteliers complaining that most homeowners who rent via Airbnb have an edge because they don’t pay them.
Previously, homeshare platforms took advantage of one of the tax code’s best freebies: a provision allowing people who rent out their homes fewer than 15 days a year to pocket the income tax-free. However, this is starting to change because once hotel industry leaders caught wind of this exemption, they began to take steps to eliminate it.
Hotels have to pay taxes and so should those on Airbnb, the argument goes. As those on Airbnb haven’t been paying taxes, home renters are able to competitively enter the market and price many hotels out of it.
This tax exemption is being protested in many large cities where Airbnb demand is higher. Cities like Chicago and San Francisco are trying to make changes in order to enforce tax payments for home renters. Currently, the city of Chicago takes 4.5 percent of a hotel room charge, which Airbnb has agreed to collect from its renters, but Chicago hotels also pay the full 16.4-percent hotel tax, including money that goes to the state and other taxing bodies – taxes Airbnb hosts don’t pay. Many cities worldwide have yet to make any tax changes and Airbnb hosts are able to run businesses and supplemental incomes tax-free.
In media reports including interviews with its executives, Airbnb implies that its hosts mainly use the platform for supplemental income and only rent out rooms part-time. The American Hotel and Lodging Association’s research and data analysis show otherwise. Their analysis revealed an obvious trend from two overlapping groups of hosts; multiple-unit operators who rent out two or more units, and full-time operators who rent their unit(s) 360 or more days per year. AHLA found that these two groups of hosts generate a large amount of Airbnb’s revenue each year.
“We support the rights of property owners to occasionally rent their homes to earn extra income,” the AHLA has said. “But we share the concerns local residents have expressed about the growing number of commercial operators who are using sites like Airbnb to run multi-unit, full-time lodging businesses without any oversight.”
Nearly 26 percent of Airbnb’s revenue in 14 of the nation’s largest cities came from users that listed properties for rent full-time. Forty percent of the company’s revenue in 14 of the nation’s largest cities is generated by these multi-unit operators. AHLA has said closing the “illegal hotel loophole: is the only way for state and local governments to protect communities and ensure a fair and competitive travel marketplace.” Their analysis was conducted by John O’Neill, professor of hospitality management and director of the Center for Hospitality Real Estate Strategy in the School of Hospitality Management at Penn State University. The tax debate will continue to escalate as Airbnb settles into the hotel industry.
In a way, Airbnb could almost be viewed as an online travel agency, its beginnings like those of Expedia or Booking.com. Airbnb’s effect on the hotel industry has been analyzed and debated multiple times, but what of Airbnb’s effect on OTAs? As Airbnb continues to add more lodging and homeshare options, it will grow in capacity and influence relative to other OTAs. These OTAs don’t pay taxes on the properties listed but they do collect taxes from the hotels that use their sites to gain bookings. One solution to the tax debate could involve Airbnb collecting taxes from hosts in order to level the playing field between hotels and private rentals
What makes Airbnb unique is its aura of being new, fun, easy and different. Airbnb has done a wonderful job at branding itself as a unique accommodation option for travelers. This, along with its homeshare platform, has helped Airbnb distinguish itself from the many independent hotels and branded chain hotels.
Hotels, especially independents and boutiques, should take the Airbnb lesson to heart. Hotels can embrace their independent standing and promote local culture and authentic experiences. Instead of sticking to popular tourist attractions, provide suggestions for neighborhood cafes and sights off the map.
Airbnb has utilized the powerful tool of human connection. Airbnb is more than just a host site, it is a travel community. Many travelers become friends with their Airbnb hosts. Independent and boutique hotels can utilize this tool of human connection by hosting social hours in the lobbies or offering more personal connections with employees. Independent hotels also should be on as many channels as possible to drive more bookings. Travelers that are looking for accommodations on Airbnb are typically those that also seek out independent hotels.
Airbnb provides a wonderful platform for hosts to list properties. The online site, the mobile site and app are very user-friendly and appealing, though Airbnb does not offer any type of soft brand benefits for its hosts. Airbnb also does a great job at providing transparency for its users. Airbnb offers large amounts of information about the host, the location, surrounding attractions and the homeshare property. Many users find the transparency in information refreshing, and reliable, though others consider it slightly discriminatory in terms of host selection.
Such issues don’t pertain to a boutique solution that handles – better yet, resolves – a host of issues. This boutique hotel solution suite applies to all types of accommodation options including B&Bs, home rentals and hotels. In addition, its marketplace platform is unique in that it offers solution packages for all types of lodging industry offerings rather than just nice accommodation options. Also, it includes hotel soft-brand benefits such as marketing, education and training and guest loyalty programs, with RevPAR solutions and advanced CRS. In both its breadth and depth, it offers a great combination of Airbnb’s founding principles and the structure of hotel brands.
There are many future possibilities for hotels and Airbnb to work together. While Airbnb doesn’t promote itself to hotels, it has been a great channel for many hotels to grow supplemental income. Airbnb offers a great platform with a unique customer. As is the case with any new company, Airbnb is exploring the market and what it means to enter the hospitality space. This always comes with some challenges, but Airbnb is laying the groundwork for many other complementary companies that support this growing hotel economy. All in all, it’s important for all platforms in the lodging industry to understand that different players are entering and will enter the market. It’s up to your hotel to decide to embrace and grow with the changes, or stall progress because of them. It’s also up to your hotel to choose the right partner.
As the hospitality industry is constantly changing, Airbnb will quickly need to settle disputes that dog it, particularly the tax issue. While the argument is ongoing, independent hotels should try to implement Airbnb’s successful business practices while continuing to focus on business development and reaching new guests. Many new players are bound to emerge and every type of accommodation option, whether an OTA or boutique hotel, will need to learn from all the others. In addition, it will have to learn to distinguish itself in order to succeed and increase guest loyalty.
By Pamela Barnhill, President & COO, IHT, IBC and IVH Hotels
This article initially appeared on Hotel Business Review
Even though independent hotels consistently make the news, the concerns of the owners and managers of independent hotels are often overlooked. Many cite consolidation, low margins, distribution, loyalty programs, rising operational expenses and technology as some of their key issues. How are independent hoteliers meeting these challenges?
With capital flush and entrepreneurs eager to enter the new peer-to-peer economy, the rise of fresh ventures has created a breadth of innovative, stimulating options for independent hoteliers. This is an exciting time for hotel owners who are ready and willing to embrace the changing landscape.
Last year and early this year have been a banner period for deal-making for buyers and sellers alike. What’s curious is how attitudes differ on whether it is time to buy with plenty of upside or time to sell for fear of oversupply and a pending recession; opinion is truly split. Also, many are rumbling about a hospitality technology bubble in the brewing. In this low-margin business, we have already seen large consolidations among OTAs, so one may say that is a natural progression in brands, management and tech companies to scale.
But the naysayer may counter, “How will they maintain the culture or loyalty program?” or “Why was that really necessary?” Could it be that as brands, they are suffering and direct bookings are down? Could the brand be delivering less? Look at the monthly bills and line items and it’s clear which bookings came from GDS, OTAs, meta and brand.com/CRO. A recent review of one such bill was very interesting: After stripping out GDS, OTA and meta, what was left that was truly owed to the brand.com was minimal.
Now that independent hoteliers have an ever-increasing array of options to drive GDS, OTA and meta bookings – and, of course, the recent Google book direct – hoteliers are less reliant on brand.com’s lengthy contract with its expensive fees and its restrictions, especially in light of the easy and just-as-effective alternatives through either soft brands and/or collections.
What does a brand, soft brand or collection do? That depends on its capabilities and experience, but the shared core is a backbone to support the hotel with brand or brand-like benefits, along with reservations.
There are companies that build and own their technology and companies that rent it from someone else. The world of integrations makes this a very gray area. It is important for independent hoteliers to be aware of the large-scale proliferation of firms claiming they have something to sell that is actually a white label, or reseller, agreement regarding someone else’s product or service. One hotelier recently shared a story about how he found out the hard way that a cloud-based PMS sold to his hotel was actually not a PMS the seller had built but one it had purchased long after its initial development, making it hard to build out some missing functionality. That was such a disappointment, especially since that arrangement should have been disclosed upon sale. Should we really allow this rampant white-labeling to occur without disclosure?
What is still puzzling, however, is the impact of large brand consolidations. They have the loyalty programs, they have hotels, they have large guest files with retargeting. What are they missing? Could it be a technology platform? Do they face large licensing fees because they never made the investment in integrated systems so they are paying massive pass-thru fees? What about revenue management systems? Are they cultivating and reacting to smart data and guest-specific data?
Much as in the greater economic picture, reservations come from distribution channels and demand. Many believe distribution channels should be allocated and open according to net rate to the hotel owner to maximize the hotelier’s total RevPAR. Where does the demand come from? Outside of brand.com and OTAs, it is largely due to salespeople, Google/meta searches and repeat business – the cheapest business.
Of course, the cheapest way to cultivate repeat business is through repeat guests and email marketing. This is also where it gets tricky, as brands with loyalty members and OTAs don’t share guest emails with the hotel. So a hotel is either forced to break into its own system and scrape that system to capture that information or make a h3 effort to capture email addresses at check-in. Both are good options, but of course what is even better is driving reservations through a loyalty program such as InnDependent InnCentives or Google or a collection that shares full guest information easily and ensures that future repeat business is at a zero-percent commission to the hotel.
What about operating expenses? Many independent hoteliers claim they feel like they are operating on an island. Many feel they have to call four or five vendors every time they need linens to ensure they get the best deal. What about food and beverage in breakfast? The fact is now there are programs such as Source1 that give independent hoteliers as good or better pricing than their branded counterparts, but they are still hard to find and largely word-of-mouth. It is even harder to find one that is free to join and still saves the hotel owner over 5 percent per month just for signing up to be part of the buying group.
ack to the current marketplace. Independent Hoteliers are coming up with ever-fewer solutions to combat the accelerating costs of operations and face squeezed margins due to high cost of distribution and reservations*. One is labor, but most hotels run about lean as possible and many didn’t increase their workforce in proportion to recent occupancy gains. The second “solution” is system integrations to cut down on the monthly fees for services bolted onto the PMS or CRS. The third key is getting full guest information to drive repeat business. If you don’t have a cost-effective behind-the-scenes technology platform that integrates PMS, CRS, Channel Manager, Meta, Google, Wholesaler and Revenue Management with purchasing buying group power on operating expenses all in one, you will end up paying more and your bottom line will suffer. In addition, if you don’t succeed in getting full guest information, you will force your guests back to the top of the search funnel and trigger commission after commission forever.
Hoteliers that belong to organizations such as the Independent Lodging Industry Association and hotel-centric groups such as IBC are giving hoteliers the tools they need to drive total REVPAR.–Pamela Barnhill
This article initially appeared in Hotel Business Review
Historically, guests sought out brands for their loyalty programs and the consistency they offered. These were important for years, when the hospitality field was dominated and defined by well-known names such as Marriott, Holiday Inn, Hilton, Hyatt, Starwood and the famous membership organization, Best Western. Those brands and the membership organization continue and remain powerful.
I must admit that I, too, sought out such brands in the 1990s as a road warrior eager to stack up their loyalty benefits for my personal travel.
With the growth of the Internet and third-party providers, however, the terrain began to shift; online transparency paved the way to what we now think of as soft brands, which broaden, complicate and sometimes blur the picture.
Could it be that the customer actually didn’t care as much about the consistency as their ability to predict the quality of their upcoming stay? Could it be they still care about obtaining some loyalty benefits? People can now easily see the hotel’s pictures, labeled and presented by both the hotel and the customer. People can easily see reviews posted by past guests. People can search and find a hotel based on reviews, pictures and amenities first – and name second.
In response to changing travel patterns and interactions between the guest and the hotel, the legacy brands have begun marketing their boutique brands, such as Starwood’s W and soft brands such as Choice’s Ascend or Marriott’s Autograph.
Keep in mind: Hotel collections such as Preferred Hotel Group, Leading Hotels, Chic Retreats and InnDependent Boutique Collection (IBC) have been doing this longer than many of the new soft brands. Why do they command so little attention when together they control more hotels than the historical brands and their newly minted soft brands?
How do collections differ from brands and soft brands? Are there different reasons motivating hotel owners to join a brand, soft brand or a collection? Are brands better or different from soft brands and collections? Why do the prices vary so widely between brands, soft brands and collections?
As hotel owners, members of the IBC team frequently ask ourselves this question; we are bombarded by sales and marketing literature, and our history suggests we should closely examine these options.
Technology should work, be flexible, and help hoteliers run their hotel while solving the need for maximizing total RevPAR. That means that net rates should be taken into account during revenue management as well as helping the hotel look favorable and enhance guest service and loyalty.
In my opinion, brands, soft brands and collections all offer much of the same thing: a technology platform with collection benefits. At the end of the day, as hotel owners, we all want robust technology, purchasing power, a loyalty program and unique revenue that doesn’t take away from our direct bookings. Now, sales and marketing literature will suggest otherwise – quite successfully. The Internet has certainly changed the way travel is booked, and fragmentation is ever greater.
There still are property management systems, but now some PMS are “smart” and can connect and function similar to relatively new market entrants Channel Management (CRS) and Revenue Management Systems (RMS). Some CRS And RMS share full guest information and some don’t. Sure, at check-in, we can collect the full guest information, but doing so adds one more friction point. As hotel owners, before we sign a brand, soft brand or collection contract, how often do we ask, “Do I get full information?” or “How powerful is your API connection?” or “How many unique visitors are you attracting or what channels do you connect with (besides the obvious OTAs and GDSes)?”
Another important question the hotelier should ask is whether the company is licensing the technology or owns and built it? Naturally, technological change is a concern. Why would a hotel want to sign a technology contract for anything other than month-to-month when the technology is moving at light speed? So many contracts are multiyear, a concern to hoteliers who don’t want to tie up their properties.
According to http://roadwarriorvoices.com/2015/03/27/boutique-hotels-missing-opportunity/, the loyalty program has always been a solid measure of the brand offering, but that is changing with InnDependent InnCentives, Stash and Voila. These programs available to independent and boutique hoteliers differ based on hotel location, amenities and desired cost structure. At press time, InnDependent InnCentives was the only loyalty program that includes 20,000 independent and boutique hoteliers and the least expensive.
An interesting reference was made in http://www.tnooz.com/article/billboard-effect-hotels/ regarding Lazy Man’s Approach. Back in 2011, HeBS Digital coined the expression, “Lazy Man’s Approach,” in referring to hotels relying on the billboard effect for their online distribution and thus justifying working closely with OTAs. The fact is, the billboard effect is only one element of a complex online distribution ecosystem that hoteliers and hospitality marketers ought to master in order to succeed and achieve their business objectives. Studies show the billboard effect may not be driving direct bookings after all. In our opinion, “Lazy Man’s Approach” also applies to hotels depending upon their brand and soft brand to drive direct reservations. How do you market your own hotel and independent brand message? Who is working for you to ensure you are driving direct bookings?
Nowadays, hotels must ask more questions of their brand/soft brand/collection/technology partners and embrace omnichannel marketing. That combines content marketing, traditional advertising and digital tactics across various platforms, social networks and devices. There are no silver bullets today – it’s competitive out there, but there are a handful of companies that can and do cost-effectively drive RevPAR for hoteliers.
Online bookings and distribution are evolving and becoming more complex, with new channel managers and partners as companies are constantly integrating and expanding. In this evolving landscape, Google is now a pure player, Amazon is getting serious about destination travel, TripAdvisor is morphing into a real OTA, Expedia is digesting Travelocity and Orbitz acquisitions made earlier in 2015 while Priceline is getting serious in the China travel distribution market.
With rate parity clauses under heavy fire in Europe, it’s only a matter of time until these changes come into play in North America and elsewhere across the globe. Of course, this is where the private channels and marketplaces are making a serious bid, providing an opportunity for hoteliers since private channels don’t break parity and they increase distribution and direct bookings. Discussion boards persist, asking how can hotels convince Internet users to book on their own website rather than on an OTA. Most don’t share their lucrative secret weapons and the most successful rely on power distribution and retargeting software with captured guest information.
Ensure you receive full guest information from your partners. If you don’t, start shopping for new partners. Having full guest information allows you to send out emails, newsletters and drive repeat guests at no acquisition cost.
Ensure you have a rewards program. If not, look into the three loyalty companies mentioned before (Stash, Voila and InnDependent InnCentives). Many will waive the sign-up fee and are as low as 4 percent of top-line revenue per reservation.
If you are dedicated to or locked in with your brand/soft brand and don’t have the capability to send out emails/newsletters, ask your brand/soft brand/collection to feature you and sponsor your specials for you. Sending out special offers or value-add promotions is always a good practice, especially when addressing your customer base. Let them know about your best rates, or perhaps even implement a refer-a-friend discount or promotion while you’re at it. Look into retargeting software if you haven’t done so already. Some collections will do this for you if don’t have the manpower or in-house knowledge. Then, at the first opportunity, start looking at hotel collections. The flexibility and cost savings might surprise you.— Pamela Barnhill
This article initially appeared in Hotel Business Review
I’m an experiential traveler, looking for different types of places to stay depending on the nature of the trip. I’m not brand-loyal. What matters to me is how the place I choose to stay in fits my needs, so service and distinctiveness matter to me more than familiarity. Community matters to me, too. I like to feel at home wherever I am. I also want to stay in a place that surprises me – pleasantly. I book trips different ways, too.
Which raises the question: Do brands matter anymore? Some, of course, stand for distinctiveness itself, like Apple – and, at least until very recently, Kimpton in hotels. Would Apple signify flair and independence if Sony bought it? Will Kimpton retain the magnetism and stylishness it’s known for now that InterContinental Hotels Group is acquiring it? More on that later.
I want to talk about how we shop, in a world where social media and price rule. When I’m in the market for a dress, I want something different, something unique. Price matters. So do reviews. Above all, I know what I don’t want: to wear a dress someone else will. I’m not totally against shopping online, though I prefer my research to be digital, trying the dress on in a store. Fit matters, after all. So does the personal touch. That doesn’t mean I buy custom-made. It does mean I pay attention to style more than brand, to what other people say and to pictures I can research on the web.
With social media influencing us 24/7, it’s time hotels come around to this view of brand, too. Today’s traveler wants something different, distinct, fresh, and local – something with personality. That’s tough for a brand.
What hotel brands do – at least they used to – is serve up the familiar. Major brands build their loyalty programs on that concept, not to mention their buildings. You know what to expect from a Marriott product, an InterContinental hotel, a Choice hotel (Best Western? Not so much). And that’s comforting, for sure.
But today’s adventurous, better-informed traveler wants more, wants the total experience. Sure, brands provide standards: What you see is what you get – again and again and again. And there’s the rub. What is a brand today? A flag? A franchise system? A collection? Even the franchise systems are fuzzing the definition, generating soft brands to extend themselves and give them cachet.
Well-known hotel brands like Marriott, IHG, Best Western – the list goes on – are dependable, and you can’t blame them for trying to corner the market with their soft-brand strategies. But that doesn’t make them buzzworthy, especially when social media-driven sites like Airbnb are coming on strong. Airbnb, basically, trades on the notion of community. Its branding is based on experience, locale and individuality. The adventurous traveler goes to the Airbnb site and looks around, seeing whether there are accommodations that will enhance the trip he or she wants to make. It’s like wandering into a conversation among a group of friends; it’s all about peer-to-peer interaction.
People want the local experience, the human touch. So the definition of branding is changing as people change their lodging behavior. Not only is it more peer-to-peer – which is especially true for early adopters eager to try out the highest tech – it also incorporates other people’s reviews and pictures, and people seem to put more trust in those than what a third party or corporation does.
Almost all the big brands are creating soft brands so they can attract everyone, but I’m still not sure that that’s the answer. It goes back to this peer-to-peer idea. People like doing business without the use of an intermediary, they like to know it’s a local experience, they like to know they’re dealing with the business owner rather than providing their money to a third party with no stake in the guest’s experience. The skin in the emotional game doesn’t require a brand.
Years ago, when I was recently out of school, my job required me to move to Washington, D. C. for a few months and the employer was not going to pay for my housing. Looking back, I think how much easier it would have been if there had been Airbnb at the time.
We all know how hard it is to find short-term housing. The problem is compounded when you are working and don’t have time to search and negotiate. Not being familiar with an area and not knowing whether it’s safe don’t help. I didn’t know D.C., let alone the distance to certain areas, and as a woman, I had concerns about safety.
Services like Airbnb would have helped. Airbnb serves up reviews and pictures, both of properties and the general area, and offers a variety of types of housing or lodging to accommodate different people’s needs. The peer-to-peer economy is amazing, even revolutionary. And now that the technology is there to support it, it’s getting ever more popular.
Airbnb isn’t so much a brand as it is a community because it’s a shared a local experience, a personal experience. The definition of branding is changing as people change their lodging behavior. Because it’s more of a peer-to-peer experience and it also incorporates other people’s reviews and pictures, people seem to put more trust in it than what a third party or corporation does.
I don’t think people necessarily become loyal to a certain brand, but they do to a place, a site, a group of people. We’re back to this idea of a community that they can trust. How do you build this community of people with a set of preferences and shared experiences? That’s the issue facing independent hotels that stay local and reflect the small business owner type mentality.
Almost all the big brands are creating soft brands so they can attract everyone, but I’m still not sure that that’s the answer.
It goes back to peer-to-peer. People like doing business without the use of an intermediary, they like to know it’s a local experience, they like to know that they’re dealing with the business owner rather than providing their money to a third party with no stake in the guest’s experience. Putting skin in the emotional game doesn’t require a brand.
Everybody is sharing everything. There are these sites you can go to if you’re looking to find out about a store, a hotel, a store with hot fashions – the Yelps, the Facebooks. There’s so much information in regard to places, things and amenities that it’s very difficult to find anything that’s never been reviewed before. So what about brands?
The value of a brand is it’s familiar and dependable. The drawback is it’s familiar and dependable, which is where soft brands come in. What makes Apple unique and what makes Airbnb unique is this aura of new, fun, easy, different.
Hotels, especially independents, should take Airbnb’s lessons to heart. People pay attention to reviews and pictures and are ruthless in their desire for service, safety and amenities. Those companies that address those needs are and will continue to be rewarded.
Meanwhile, the rush to soft brands continues. Starwood, which pioneered the branded boutique with W (has it really been 17 years?) just announced it is planning a “collection brand,” aiming to join Marriott’s Autograph collection and Hilton’s Curio in the increasingly competitive field.
It seems everybody is getting into the act, upscale on down. Even Hospitality Lodging Systems, in addition to reviving Budgetel, is launching Haven, a soft brand consisting mainly of conversions. According to HLS officials, Haven will be midscale to upscale. And Best Western is finally executing on its BW Premier Collection, the membership group’s attempt to affiliate with intimate, boutique properties. Best Western’s initial foray into boutique is the Hotel Master Johan in Malmo, Sweden. At 68 rooms, it’s Best Western’s first independent boutique. At the same time, as if to hedge its bets, Best Western is launching the “lifestyle” brand Vib (pronounced “Vibe”), designed for urban markets. So the fuzzing continues and, as brands continue to dilute, boutique is becoming a movement.
That’s particularly clear in the Kimpton-IHG deal. When IHG announced in December it would buy Kimpton Hotels & Restaurants for $430 million in cash, InterContinental promised it would retain Kimpton’s character: stylish, occasionally a tad eccentric, and green.
Integrating Kimpton’s intimate properties – they span 40 to 100 rooms – will be challenging. Kimpton boutiques – Bill Kimpton virtually invented the segment – have always challenged the chains, occupying choice spots in historic neighborhoods, setting their pizzazz against a chain’s predictability, their maverick quality against chain cookie cutter.
Chains bring marketing, reservation sales and standard operating procedures and expensive PIPs (property improvement plans). Soft brands/affiliate networks bring marketing, reservation sales and lower negotiated vendor contract pricing and flexible freedom to operate the hotel. Kimpton seemed to be doing well on its own, however. Could we be seeing that hoteliers desire more of the top-line and bottom-line benefits without the “costs”? Can Kimpton can maintain its independent character as part of the IHG fold? We’ll find out soon.— Pamela Barnhill
This article initially appeared in Hotel Business Review
I remember a snowy afternoon in Salzburg when we wandered into what looked like a safe hotel near the mountains associated with “The Sound of Music” and the manager (or owner, for all I know) gave us a room – and an immediate shot of schnapps. Sure, the shower wasn’t the best, but I still remember that place for the friendliness and, of course, the schnapps, which I wouldn’t have been able to get in the States anyway because of my age. What stands out for me is how personal the service was, and how considerate. Nothing like a kind, worldly hotelier to make a girl feel at home, and in a clean, quiet place to boot.
What about the fourth floor of an old building in Florence where the rooms had frescoes on the ceiling and the most amazing lady brought us breakfast each morning? I’m also still shocked and gratified that we landed in a beautiful hotel in Venice with vaulted ceilings, stunning chandeliers and over-the-top decor. That special hotel feeling wasn’t just about Europe. After traveling extensively around Asia for a year, I recall similar stories about boutique hotels there – especially ones outside the big cities, where hospitality and respect for one’s inner spirit is for many a way of life.
One of my favorite boutique hotels was in Koh Samui, Thailand, where I enjoyed a beachfront bungalow mere steps from the ocean and was served the most amazing fresh seafood. Thai service is unmatched, every detail taken care of before you even raise a question.
Another incredible stay was in Pokhara, after a two-week trek through Nepal’s Annapurna range. Again, attention to detail and service and concern for our comfort were hallmarks of the hospitality there. But in the States, even now, it is hard to find fun, funky stays that would give you a warming shot upon check-in, classical paintings on the ceiling or glass chandeliers in the lobby and rooms. While Europe has changed over the last 20 years, and amenities have standardized there as everywhere else to satisfy visitors from all over our ever smaller planet, hoteliers in the States still seem afraid of being funky, afraid to make changes in their approach to the increasingly sophisticated global traveler.
It may be hard to embrace, and the process may be slow, but hotel owners and managers should stress out-of-the-box hospitality if they want to address the traveling public’s desire for something different that offers value. I’m not sure if our mistrust of what’s different stems from thinking the US traveler is enough of a market; maybe it’s because 9/11 made it hard for us to welcome different types of people to our hotels. Maybe it’s because our two largest hospitality vendors have yet to provide cost-effective alternatives that are fun and don’t mimic the big brands.
While the term “boutique” is evolving, to my mind it’s always meant fun, funky and not the same, and owners and managers of such properties are having fun too. Boutique hotels in the U.S. were always limited to four- and five-star, full-service hotels, and back in the day, the number of them could probably be counted on just two hands.
Things have changed.
Nowadays, that kind of hotel is called “lifestyle” or “boutique,” and is often independently owned or at least not controlled by tight regulations and standards modeled on a big brand. They’re at all star levels. Naturally, there are some gray areas, but it is nice to see distribution channels embrace more such hotels, giving the experiential traveler more and more options. Of course, the real test begins when a group of boutique hotels is owned by a large corporation and doesn’t have tight regulations for its operations. Perhaps it still qualifies as a boutique? Let’s not downplay the danger that the big brands and their new soft brands and boutique hotels with rigid standards will bring another dimension to the word “boutique.” That would certainly affect marketing for everyone.
Whatever the definition of boutique, what’s important is the operational freedom the owner, manager and staff have, allowing the hotel’s personality to shine through. Only if that’s available can the hotel provide a different, authentic experience – with a personal touch.
Naturally, a hotel, no matter how unusual, has to be clean and well-maintained. And naturally, one traveler’s nightmare can be another traveler’s dream: The first might want a dark room because he or she suffers from migraines; the second would complain that that very same room doesn’t offer enough light. Think of the traveler who complains that the pillow top bed is too high. Then there’s the reverse, the traveler who complains the bed is too low. Then again, who hasn’t invested in pillow top beds by now? I think we’ll see more and more travel reviews that may seem nitpicky just that way.
The point is, to each their own, and that’s where boutiques come in. And that’s why room descriptions and pictures are so very important. Remember, a picture is worth a thousand words. At the same time, hoteliers and guests must continue to find ways to direct work together and eliminate processes that force guests back to the top of the search funnel and the plethora of travel sites that don’t share a guest’s email or address. Hotels should own the guest information, not a third party company. With that kind of data, hotels can do email marketing, retargeting and regular mailings to past guests to encourage them to book direct next time and avoid a future travel agent commission.
This is where Google getting into the game, allowing hotels to be bookable direct while sharing full guest information with the hotel, is a very powerful tool for hoteliers. There will always be guests who want to shop, and the metasites are quite helpful for that. Boutiques and independent hotels can then work with a company that allows hotels to be directly bookable on the metasites, curtailing commissions again. Bringing the hotel and the traveler closer, creating a tighter, more personal relationship and taking care of one another – isn’t that why we’re all in hospitality together?
I’ve appended a kind of “primer” to help independent hotels leverage their uniqueness. Executing on these steps is sure to help your business:
Most hoteliers use their franchiser’s booking engine or third-party GDS/CRS systems like Booking.com, Expedia, Travelocity, Orbitz to get more reservations. As a hotelier, you are losing out on three major advantages when you use GDS/CRS or your franchiser’s booking engine.
(1) Your first loss is that you don’t get complete access to a guest’s database when you use GDS/CRS or brand’s booking engine.
Specifically, you don’t get a guest’s email address. When you use your own booking engine, you acquire complete, permanent ownership of guest’s data. You can send frequent reminders, special deals and discount offers to your guests. For instance, if you have 80 rooms and you get 60 new guests a day, in one month you will get 1,800 guest emails and in a year, 21,600 guest emails. In fewer than five years, you will have email addresses and a complete database of more than 105,000 guests.
(2) There’s a second loss you suffer when you use GDS or CRS or a brand’s booking engine instead of your website:
(3) The third major loss you suffer from using GDS or CRS or franchiser’s website is that these systems are very expensive:
This article initially appeared in Hotel Business Review