1. Don't overestimate the difficulty of delivering a personalized experience “Hoteliers believe delivering personalized experiences is hard. I have always looked at technology as an enabler for innovation. With the right enablers, hoteliers can take advantage of technology to make personalization easy, which is one of the cornerstones of our eInsight CRM product. I think either hotels don’t know where to start with their data, or they haven’t democratized access to the right people who can leverage it to drive home personalization. Hotels that standardize 2-way communication among systems and make data integrations a priority are the ones able to break through and outperform in personalization. Information is more relevant, robust and customized when all the systems are speaking to the touchpoints guests have in the journey.” ~Charles Deyo from Cendyn eInsight CRM “Many hoteliers believe that personalisation is not important enough to spend time on. But in reality, the cost of standardised digital communication, and generic upsell offers and promotions is enormous. Hotels are literally losing money with every guest that is walking through the front door.” ~Erik Tengen from Oaky Upsell Software 2. Place importance on vendor quality rather than size “Unfortunately, in this industry, the size of a hotel tech vendor sometimes is overplayed or overemphasized, while the quality of product and engineering teams is underemphasized. People often assume that large companies have better products simply because they can afford better engineers relative to smaller companies. This is far from the truth—I've seen very large companies struggle with their platforms and engineering initiatives. And I’ve seen smaller companies blow away the industry with their solutions. The important thing for hotels to remember is not to judge tech vendors by the size of the company, but by the quality and capabilities of their product and their dedication to customer service. It seems obvious, but happens more often than you think.” ~Gautam Lulla from Travel Tripper RezTrip CRS 3. Understand that artificial intelligence will not take your job “Hoteliers believe that revenue managers will lose their jobs when artificial intelligence gets good enough. I believe that artificial intelligence is going to make revenue management an even more valuable skill because it will take more insight and analytical rigor to stand out from the competition set in a data-driven world. Hoteliers are used to looking at PMS as a cost centre of the hotel. With the maturity of Cloud PMS, the paradigm has changed. A PMS should not be considered as cost, but as a system that will help them grow revenues and business. Also, for most hoteliers, deciding on PMS is an operational decision whereas I feel it should be more of a strategic decision.” ~Aditya Sanghi from Hotelogix PMS 4. Stop running your operations with pen and paper “Perhaps the most common belief I used to hear was that the Concierge didn’t need an application because they could use Excel or their logbooks. We obviously felt differently especially after spending time behind the desk and seeing the amount of work done manually and the importance of providing a tool to enable the team to be more efficient. We believe the role of the Concierge should be in the center of the hotel operation since their work touches so many departments and has such a significant impact on the overall guest experience. A good Concierge team does the job so well that they make it look easy. What is often not recognized or seen is the volume of work being done behind the scenes to deliver such a great guest experience. Investing in a tool allows the team to be more efficient and spend more time and attention on the guests. I believe the reason guests come back now is mostly because of the way the Concierge and other team members make the guests feel when they leave, more so than just having a beautiful hotel. Without a tool such as ALICE, it is very difficult to be efficient and create that great guest experience.” ~Adam Isrow from ALICE Hotel Operations Platform 5. Leverage technology to decrease staff churn “I think the single biggest misconception is that hoteliers think the solution to their traveler personalization problems is to invest in traveler facing technology and create an omni-channel experience. The biggest problem hoteliers face is actually their staff turnover. What is the point of having traveler facing technology, without experienced staff that have the right technology to empower them to deliver on the brand experience? Your staff must always come first if you want to truly personalize and fulfill your brand promise. This means hoteliers need to balance their traveler facing and staff facing investments more effectively.” ~Kevin Brown from Amadeus Hospitality 6. Place less emphasis on meeting budget in volatile markets “Hoteliers are not comfortable making changes to prices without knowing the effect it has on their ability to reach budget. In a volatile market, too much emphasis is placed on meeting budget and making safe pricing decisions that ultimately limit a hotel’s revenue achievement. Placing an emphasis instead on demand-based pricing will help secure the highest possible revenue from the marketplace. "Some hoteliers believe it is prudent to wait until business is strong and making more profit before they invest in “nice to have” tools such as revenue management software. That is like saying an athlete should wait until they can run faster before they buy good running shoes. It is the revenue management system that will enable them to maximize their yield and create the bigger profits." ~Ravi Mehotra from IDeaS Revenue Solutions 7. Embrace technology, software is cheap and extremely easy to use today “Most hoteliers are skeptical about technology - for good reason. Tech companies have a long history of over promising and under-delivering. As a result, new technologies are not often eagerly adopted by experienced hotel people. They would rather "wait and see" before embracing yet another "shiny object" tech solution. The last thing we need is another complicated software program that takes up all of our time and delivers little value. Tech providers need to focus on the benefits of their solution and design products to require minimal effort for maximum value. Don't assume that because hotels are multi-million dollar businesses that we like to sit around on our laptops all day - we have become successful by taking care of travelers - and each other - with the service and care that we'd provide to our own families.” ~Del Ross from Hotel Effectiveness Labor Management System “The most common misconception about technology is that it's too expensive. Hoteliers have this misconception because they don’t fully understand the value that the technology brings. They see it as a cost rather than as a profit center. Hoteliers often buy technology the same way they would buy a TV or a pillow. And because of that, tech vendors have been forced to limit their innovation.” ~Marco Benvenuti from Duetto Revenue Management 8. Don't ever manually price hotel rooms “They believe they can do good or decent manual pricing... but in reality there is no way a human can do even a decent job at pricing a hotel. The math behind that statement is really simple, there are two main reasons why a human has absolutely zero chance versus an automated AI system: 1) The sheer scale of the problem. If you're a hotel with 5 room types, 4 variations on each room type (breakfast/cancellation), bookable 365 days in advance, and want to update each price once per hour then you have 0.49 seconds per price to do your analysis and set the price. Even if you simplify the problem drastically, let's say you have a fixed additional cost for breakfast & cancellation, that you just want to update the prices once every four hours, and that you only allow your guests to book in the last 30 days, then you still only have 96 seconds per price to do the calculations and set the price. The sheer scale of the problem makes it impossible for any human to keep up and do a good job. 2) The complexity of the problem. It's important to acknowledge that no price is an isolated island, if you change the price of one room type for a particular arrival date then it will have an effect on all the other room types for the same arrival day. But that's not enough, it will also have an effect on the adjacent days as many people stay more than one night and some one-nighters are flexible and price sensitive. There is this ripple effect and you need to present the optimal set of prices, not the price that is thought to be optimal for one specific room type. Quite often the optimal price for one room type will have a negative impact on the overall revenue, and to calculate the optimal set of prices is both hyper complex and very computationally intensive, it simply cannot be done by a human. Humans should focus on strategic revenue management, not at setting prices.” ~Leif Jaggerbrand from Atomize 9. Stop paying massive sums for integration fees when the entire world has moved to open APIs “Hoteliers that its extremely hard and expensive to integrate different software solutions. Having built our own PMS with open API, I can confidently say that this is no longer true, and we stimulate hoteliers to integrate as much as possible to make their lives easier.” ~Matthijs Welle from Mews Systems 10. Use technology to create more personal interaction, not less “Messaging is impersonal, you can’t replace in-person interactions.” The aim of messaging is not to replace in-person interactions or even phone calls, it is to fill the customer service whitespace or void that exists today. There are a large portion of travelers and consumers today who are not communicating with your organization because you may not have the proper means. With the increasing influx of technology separating the hotel staff and guests (e.g. OTAs and Mobile Room Keys), messaging is one of the main components connecting hotels with their guests today.” ~Chris Hovanessian from Whistle
Cendyn’s Charles Deyo isn’t your typical hotel tech founder by any stretch of the imagination. Deyo is an avid scuba diver, he meditates under pyramids for spiritual guidance and even plans to play guitar at an underwater music festival next year. By 1996, the same year that Expedia was born, Deyo had spent 20 years in the hotel industry before founding Cendyn with his wife Robin to help hoteliers win in the digital age. Cendyn’s first product to market was its eProposal solution which allowed hotels to accept group business RFPs via their websites and grow their group business. While eProposal is still a core component of the Cendyn Hotel Sales Suite, it is only a small piece of Cendyn’s current offering. Today Cendyn’s sales and marketing solutions power more than 30,000 hotels globally through products that touch on hotel CRM, sales software and hotel digital marketing services. Back in 1996, Cendyn’s initial product to market was its eProposal solution which allows hotels to accept group business RFPs via their websites to increase group bookings. Today, eProposal is still a core component of the Cendyn Hotel Sales Suite. The best tech companies listen carefully to client pain points and develop solutions based on those requirements. The history of Cendyn is a textbook example of how to build a great business by listening to your customers. As the internet boomed through the early 2000s Deyo and his team noticed that there was a huge skills deficiency in digital marketing amongst hotels and began to offer digital marketing services to help clients grow their direct channel. During our interview with the Cendyn chief, Deyo told Hotel Tech Report that the biggest inspiration for building his empire was Grateful Dead frontman Jerry Garcia. When asked why, he noted that the Grateful Dead is not just an iconic band but is actually one of the greatest brands of all time. The Grateful Dead brand is so prolific that at its peak it raked in more than $90M per year. Deyo believes that the Grateful Dead’s success could be attributed to one of Garcia’s core beliefs that is summed up in this iconic quote: “We did not want to just be the best at what we did, but the only ones doing it.” ~Jerry Garcia Deyo has always wanted to innovate ahead of the competition and be the “only one doing it” as an ode to Garcia. When Deyo started Cendyn there were few (if any) online platforms facilitating group business RFPs in hotels and he wanted eProposal to be the only one doing it. While others were busy copying his recipe for success, Deyo was pioneering the concept of hotel CRM to provide actionable marketing insights where hotel marketers previously lacked any tools to make data driven marketing decisions. Cendyn is yet again pushing ahead with plans to change the way hotels leverage CRM systems within their businesses. Historically, the hotel CRM sits within the marketing function but Deyo and his team believe it will become much more operational in the future and Cendyn is focused on pioneering the ways hotels leverage CRM systems for operations and not just marketing. Related article: "Super Angel" Dave Berkus on the convergence of PMS, CRS and hotel CRM Deyo believes that hoteliers, too, can benefit massively from living by Jerry Garcia’s credo. The hotel industry is one of the most competitive in the world and in order to stand out hoteliers must find unique ways to can add value for hotel guests, shareholders and staff. In this exclusive interview we spoke with Cendyn CEO Charles Deyo about the competitive advantage enjoyed by hotel technology early adopters, the evolution of hotel CRM as an operational tool and more. Power couple Charles and Robin Deyo co-founded Cendyn together What was your background prior to starting Cendyn? Before starting Cendyn I had many years of hospitality experience including 13 years at Hyatt Hotels as Regional Controller and AVP of Sales and Marketing, 3 Years at Kerzner International as Senior Vice President during the development of Atlantis in the Bahamas and 3 Years as Regional Vice President at Boca Resorts (which also owned The Biltmore and Registry Hotels). Tell us about the Cendyn founding story. After spending 20 years in the hotel industry, I realized that hotels needed software solutions to run their business better. We developed solutions that eliminated the pain points for hotels and drove sales and marketing performance. When Robin and I started Cendyn in 1996, the Internet bloomed in front of us and we decided to use this new medium to develop web-based tools that could help the industry we had worked in for years run their businesses better. The first product we brought to market was eProposal, which is still the industry leader almost 20 years later as part of the Cendyn Hotel Sales Suite. Back then, I did it all, from being the programmer to the accountant and everything in between. We were a small, family-run tech firm. After expanding into hotel CRM and digital marketing, (we were one of the early trailblazers in these areas for the industry), the momentum kept going as we won some of the biggest brands and best hotels in the world as clients. That really amped up with the investment from Accel-KKR a few years ago that gave us opportunities to open new locations, acquire companies and accelerate product innovation. Today, we’re lucky to have over 30,000 hotel clients using our solutions. Who was Cendyn's first customer? Frank Calaguire at Starwood. Frank and I worked at Hyatt together and we deployed our first SAAS solution (Cendyn eProposal) at The Westin back in the 90’s. Frank was a good friend and the Managing Director at Westin Copley Place. eProposal is now in over 22,000 hotels worldwide. The hotel tech market is incredibly competitive, how does Cendyn stand out? Cendyn is a cloud-based software and services provider that develops integrated technology platforms for driving sales and marketing performance in the travel and hospitality industry. The Cendyn Hospitality Cloud offers the most complete set of innovative software and services in the industry, covering hotel marketing, guest engagement, group sales, and event management. Cendyn's eInsight CRM is more than a marketing tool and delivers operational insight Who is one mentor that has made a big impact on your entrepreneurial journey? This is probably not one you hear everyday in hotel tech interviews but The Grateful Dead has had a huge influence on my perspective both personally and within the realm of entrepreneurship. Jerry Garcia said: “We did not want to just be the best at what we did, but the only ones doing it.” Most people don’t realize that the Grateful Dead was one of the most successfully marketed bands of their time and turned their brand into a cash cow which generated $95 million a year at one point. What's one commonly held belief that most hoteliers believe to be true that is actually wrong? Hoteliers believe delivering personalized experiences is hard. I have always looked at technology as an enabler for innovation. With the right enablers, hoteliers can take advantage of technology to make personalization easy, which is one of the cornerstones of our eInsight CRM product. I think either hotels don’t know where to start with their data, or they haven’t democratized access to the right people who can leverage it to drive home personalization. Hotels that standardize 2-way communication among systems and make data integrations a priority are the ones able to break through and outperform in personalization. Information is more relevant, robust and customized when all the systems are speaking to the touchpoints guests have in the journey. What's the most surprising thing you've learned about scaling technology into hotels since founding Cendyn? I was always surprised that standardized integration took so long for our industry. Today, we integrate to hundreds of hotel systems which is key to getting a true 360-degree view of your guest. There are hotels leading the way in how they use technology integrations and those at the other end of the spectrum, but what we do see day-in-day-out is in those hotels that have done so, they have an improved ability to; send the right message to the right guest, through the right channels; gain a clear understanding about the history and preferences of each guest in real time regardless of how they booked; empower their guests to receive information and communicate in the ways that work for them; and deliver the best kind of service, whether it be human interaction or through the use of technology. How do you see hotel tech changing in the next 5-years? We will see more intelligent use of data with AI and bots to further leverage the guest experience. Because of more integrations between technology systems and a higher flow of data between platforms, bots and AI will increase in learned automation and intelligence that can deliver more of the right messages, at the right time through the right channel. We’re in the process of breaking new ground with CRM technology as the core with bots and AI serving based off centralized intelligence. In five years, it will all evolve around the model of a central global profile for guests that references a sophisticated rolodex of data to help serve the customer’s desire for personalization at every touchpoint. Bots will make recommendations, personalize communications and adjust service algorithms in real-time based on data points. CRM will no longer be seen as a marketing function, but rather an operational tool that intelligently orchestrates how everyone interacts with a guest. For Cendyn specifically, we will continue to grow our organic revenue at 20% year over year, along with continued evaluation of M&A opportunities. Do you have any new products or feature launches? As we continue to operationalize CRM for hotels, our latest release of eNgage allows for more sophisticated algorithms that anticipate varying engagement opportunities with hotel guests that, in turn, alert hotel staff. We have a lot of hotels using this solution with great success for personalization, including our client TFE Hotels, headquartered in Australia. They’ve got eNgage across their international hotel group in Australia, New Zealand, Germany, Denmark and Hungary. What advice do you have for hoteliers in this economy? Adopt more technology. Even with all the strides the hotel industry has made, it is still behind other industries. Technology must have an ROI by driving sales and marketing performance. With eInsight, our CRM product, we drove an average 33X ROI for our hotel customers in 2018. As the economy hits an inevitable slow down, technology will determine the winners and losers. What's one piece of advice that you have for any entrepreneurs looking to get into the hotel tech space? Keep it simple. Make it valuable. This has been a mantra of Cendyn from the beginning of our company. What is the best book you've read lately? I think we are experiencing significant generational differences due to technology, social media and the varying thought processes. Given that, I thought “Sticking Points” by Haydn Shaw does a great job of explaining how we can make this work with our evolving business teams. Great people working in harmony make great companies. What is your favorite podcast Cendyn’s upcoming podcast series, of course. What is one thing that most people don't know about you? I play guitar and am certified in scuba diving. I plan to play the underwater music festival in Big Pine Key, FL next year. I also meditate under a pyramid on life and business opportunities when needed.
In our Product Deep Dive series, we go deep into one solution to help hoteliers evaluate and assess the best software for their specific situations. Vetting vendors is an intensive process. It starts with the discovery phase, where online research and consultations with colleagues inform the initial list of promising companies. Next, that list is whittled down after deeper dives into individual products, watching demos, and likely speaking with individual vendors. Finally, the selection happens -- and the truth eventually reveals itself. After implementation, and a few months of using the service, you’ll revisit and evaluate. Was it the right decision? For the following hotels, the answer was a decisive ‘yes’ after choosing a new central reservation system. When discussing the search process with Travel Weekly, Brian Christensen, the corporate VP of revenue management and distribution for American Casino & Entertainment Properties, noted that his team “spent a lot of time on discovery” and “looked at some of the best.” The vendor evaluation process is a deliberative marathon that results in a decision with wide-reaching organizational implications. With that in mind, it's instructive to consider why hotels select one vendor over another. These insights may accelerate your own decision process when selecting a new central reservation system for your hotel. Here's why these hotel groups selected Travel Tripper’s RezTrip CRS. Meriton Group: Optimized for direct bookings on both mobile and desktop Over the past two years, hotels have become acutely aware of rising commission payouts to intermediaries. To increase direct bookings -- and reduce reliance on third-parties -- many hotels have focused their online efforts on simplicity and clarity. When potential guests can make a decision as quickly as possible, it enhances the search experience and leads to stronger performance in the direct channel for hotels. When comparing CRS providers, Meriton Serviced Apartments sought an integrated system that would power a shift from high-commission OTA channels to direct bookings on both desktop and mobile. After implementing RezTrip CRS, and its smart rate and revenue management tools, Meriton enjoyed a significant spike in direct business, says Matthew Thomas, Group General Manager of Meriton Serviced Apartments. “Our direct bookings instantly increased once we launched RezTrip across our portfolio of hotels. The newly enhanced mobile version has enabled us to capture the growing global shift towards mobile-device made bookings.” To successfully capture more mobile bookings, hotels must address consumer reluctance to purchase on mobile devices. The comScore Mobile Hierarchy report explored the “m-commerce gap,” or the disconnect between time and money spent on mobile. For hotels that want to drive more mobile bookings, this disconnect highlights some key hurdles to overcome, such as improving navigation and providing more detailed product information. After evaluating all options, the Meriton team felt that the Travel Tripper technology excelled. It made the mobile experience just as easy to use as on desktop, and effectively translated hotel’s engaging imagery to the smaller screen. Functionality: More direct bookings through an integrated booking engine optimized for conversion on both mobile and desktop Business impact: Since launching with Travel Tripper in summer 2016, Meriton has experienced significant uplift in conversion rates across its properties, particularly in its mobile channel, where it is using RezTrip’s recently redesigned mobile booking engine. Mayfair Hotel: Conversion-optimized booking flow By 2020, Euromonitor predicts that 44% of sales will be made online in the travel industry -- more than any other industry. With such a massive share of commerce occurring through digital channels, hotels must implement conversion-optimized reservation systems to compete. When the Mayfair, a boutique hotel in Miami, began evaluating new central reservation systems, the mandate was clear: Replace the existing clunky booking technology, with its poor usability, small images, and hard-to-read descriptions. Rich content engages guests, and so the hotel’s new solution had to be modern, usable, and emphasize the unique appeal of the property’s elegant, understated style. In addition to featuring bolder, more prominent images, rooms should be easy to browse, select, and book. Mayfair wanted a streamlined booking flow that didn't take too long to complete. RezTrip’s two-step process fulfilled this objective, resulting in more lookers converting to bookers on Mayfair’s website. Functionality: Simplified browsing with rich content, and a booking flow streamlined into two steps to optimize conversion across devices; Business impact: Mayfair saw an 84% increase in year-over-year website revenue, alongside a 76% increase in direct bookings and a 60% increase in conversion rates. Stratosphere: OTA-like rate controls Despite intensive marketing efforts by hotels, direct bookings remain flat. To succeed in earning more direct bookings, hotels must mirror some of these platform’s most favorable features. Consumers turn to OTAs because of usability and utility. This is especially true on mobile, which is perceived as easier to use with instant updates, discounts and streamlined search and booking. Another growing threat to direct bookings is metasearch, which also offers finely-tuned mobile experiences, such as Google’s new combined flight/hotel user experience. To compete for bookings, hotels need more granular rate controls that level the playing field with both OTAs and meta. As a casino and resort located in Las Vegas, the Stratosphere has many rooms spread across multiple room types, and, given its size, has high volume and multiple sources of revenue. The resort’s local market is also extremely competitive and prone to demand fluctuations, which requires more precise revenue optimization to adapt to changing dynamics. To improve the precision of its revenue management in the direct channel, the Stratosphere team prioritized the ability to personalize rates and offers with best-rate guarantees, strikethrough bookings, room countdowns and geo-targeted rates with Dynamic Pricing Rules. This functionality allows the hotel to do things like include breakfast in rates displayed to European travelers. With more control over individual rates and personalized offers, the hotel was able to enhance its revenue management capabilities. Functionality: Granular rate controls, such as Dynamic Pricing Rules with geo-targeting, as well as urgency messaging such as Stricter pricing and “rooms remaining” countdowns. Business impact: The stratosphere Hotel doubled the conversion rate within four months of integrating RezTrip CRS. Learn more about Reztrip CRS and Booking Engine screenshots RezTrip is an integrated solution that drives targeted results TravelTripper’s RezTrip is a trifecta: a robust central reservation system, an integrated booking engine, and a comprehensive distribution solution. It combines these three important tools into one coordinated e-commerce platform which gives hotels greater control over how rates are merchandised and distributed. The CRS connects directly to your hotel’s property management system, keeping reservation details, availability, and rates up-to-date without manual intervention. The outcomes are impressive. Meriton Serviced Apartments achieved an increase in direct bookings by switching to Reztrip's mobile-optimized booking engine. Reztrip also optimizes revenue across other key channels, as the single reservation system that connects to OTAs, GDS, metasearch, and even call centers. Mayfair leveraged RezTrip’s intuitive and elegant interface booking flow to increase website revenue 84% year-over-year. The integrated booking engine’s customizability allowed the hotel to build a powerful solution that met their exacting specifications. The Stratosphere more than doubled the conversion rate on its website, relying on geo-targeted Dynamic Pricing Rules and integrated rate matching to convert more lookers to bookers. Other features that improve conversions include automated email retargeting, strikethrough pricing, and “rooms remaining” countdowns. Inspired to experience RezTrip? Click here to learn more.
To get a grasp on the current hotel distribution landscape and how much intelligence and work is needed to optimize each channel, it’s worth taking a moment to review its early history. Distribution mix was once a simple concept: walk-ins, phone calls, and the occasional (physical) mail were, fundamentally, the sole sources of hotel bookings. But things started changing when electronic reservation systems made their first appearance in the '60s and, eventually, became mainstream in the ’80s. By the end of the 20th century, hotel distribution shifted (literally almost overnight) online, and started to resemble what it is today. Over the last two decades, consolidation and new players entering the market have been crucial to an extraordinary growth in digital hotel distribution. Flash-forward to today, the current landscape is touted as merely a duopoly held by Booking and Expedia, and that is a quite accurate statement, at least to a certain extent and for the moment being. Even though it seems like distribution is ever-moving, in fact, there are clear patterns and trends. According to Phocuswright, for example, 2016 was “the first year when OTA lodging bookings in the U.S. exceeded total hotel website gross bookings”, and forecasts expect OTAs to reach over 40% market share by next year. This means that despite above-the-line marketing, targeted discounts and revamped loyalty programmes, consumers are not shifting to direct as their primary booking option as intensely as the big chains wanted. With this in mind, perhaps hotels should start reconsidering their relationships with online travel agencies and focus on the channels bringing the highest profit and volume. In an age where OTAs and wholesalers flex their rates across metasearch engines or marketplaces it is very unlikely that users will just “stop clicking around”. You just need to accept it and move on. There are, however, alternative distribution channels that could be leveraged with success or, at least, kept under one's radar. So let's dig into these distribution Goliaths. Booking.com Born from the merging of booking.nl, bookings.org and Active Hotels (a.k.a. ctivebooking.com), over the years Booking.com became the biggest e-commerce website for travel, with around 200 offices worldwide and over 17,000 employees. Two years after Expedia turned the opportunity to buy booking.nl down in 2003 (ouch!), the Dutch startup was eventually acquired by Booking Holdings (at the time still operating under the Priceline Group moniker), which rebranded to Booking.com in 2006. The first version of the booking.nl website went live in '97, with an inventory of ten hotels and a commission rate of 1/4 of what it is today. According to its founder, Geert-Jan Bruinsma, he had the original idea during a dinner with friends, "got inspired" from the Hilton official website source code the and launched it with barely 50,000 €. During the years, Booking Holdings continued to grow thanks to an almost-mistakeless acquisition strategy: from Asian-based OTA Agoda to rental car service TravelJigsaw (a.k.a. Rentalcars.com), from travel metasearch engines Kayak, Momondo, CheapFlights, Mundi and HotelsCombined to restaurant-reservation service company OpenTable, not to mention yield management solution PriceMatch (now integrated in BookingSuite), RocketMiles, ASDigital, Buuteeq, Hotel Ninjas and the heavy investments made over the years in Chinese OTA Ctrip. Expedia Founded in 1996 as a division of Microsoft, Expedia was acquired by IAC/InterActiveCorp in 2003, which eventually spun it off in 2005. In 2012, Expedia took a majority stake in trivago (which the American OTA still owns after the metasearch went public). Under the IAC/InterActiveCorp brand first, and the Expedia's brand then, dozens of companies (eventually acquired or merged) operated and continue to operate: TripAdvisor (spun off in 2011), Hotels.com, HomeAway (merging VRBO, bedandbreakfast.com, vacationrentals.com, Abritel and FeWo), Egencia, Travelocity, Orbitz, HotWire, Wotif, lastminute.com.au, Ebookers, CheapTickets, AirAsiaGo, Venere.com (eventually merged into the mother brand), Classic Custom Vacations and many others. Today's market value of the company is almost $20 Billion, with over 22,000 employees around the World. Agoda Founded in 2005 by Michael Kenny and Robert Rosenstein, merging planetholiday.com and precisionreservations.com, Agoda can be viewed as a precursor in the industry. PlanetHoliday, in fact, was founded in 1997, just one year after Booking.nl and Expedia. Agoda focus is mainly on the Asia-Pacific region and it has a portfolio of over 1,000,000 vacation rentals and hotels worldwide. In 2007, the Bangkok/Singapore-based company has been acquired (for an undisclosed amount), by Booking Holdings, even though it continues operating independently. HRS With almost half a century of history, HRS Group is the (grand)father of all OTAs. Founded in 1972 by hotel clerk Robert Ragge, in 1995 it became the first website to provide an online hotel database. In his book, Outliers, Gladwell popularized what became known as the 10,000-hour rule, by documenting the lives of successful people. “Ten thousand hours is the magic number of greatness”, he wrote, inspired by the work of Daniel Levitin, the neurologist who scientifically proved that “10,000 hours of practice are required to achieve the level of mastery associated with being a world-class expert in anything”. The theory is fascinating, though, not always reliable, and HRS is the perfect example of this fallacy: even with almost half a century (or 400,000 hours) of experience under its belt, today it has a significantly less prominent market share than it used to have, while OTAs born decades later have outgrown it. In 2008 Ragge's son, Tobias, succeeded his father and acquired Tiscover, hotel.de, HolidayInsider and bought stakes in meetago and Lido Group. HRS currently lists 850,000 properties, operating mainly in German-speaking Countries. Wholesalers and Bedbanks Wholesalers and bed banks both made an extraordinary (yet unexpected) comeback over the last few years, mainly fueled by nebulous B2B2C rate strategies and smart acquisitions. With its database of over 70,000 beds and around 5,000 employees, the World’s largest bedbank is, of course, HotelBeds. Founded in 2001, HotelBeds became independent in 2016 (it was, up until that moment, owned by TUI), thanks to the backup of private equity funds Cinven and CPPIB. HotelBeds recently played the divide et impera card, by acquiring two of its main competitors: Tourico and GTA. AirBnB, Google and Amazon So, while even the small hotel entrepreneur is familiar with the aforementioned players, there are at least three companies trying to undermine this status quo. Airbnb, for example, recently officially stated that it offers more listings than Booking.com, while Google entered aggressively into the travel space, thanks to the European introduction of its facilitated booking system Book-on-Google and with its redesigned destination hotels page (https://www.google.com/travel/hotels/). Amazon, after trying (and failing) to get into the industry back in 2016, is rumored to be slowly (but steadily) trying to gain a more prominent slot in the market. Conclusions Far from being fully exploited or stagnated, the hotel distribution space still has a lot of potential, both in growth and diversification. With, on one side, main OTAs turning into metasearch engines-slash-marketplaces-slash-B2B providers hybrids and, on the other, search engines and retailers playing the OTA’s game, our industry has never been so interesting.
Arise Travel is an early stage startup that most hoteliers haven’t heard of today but the firm’s technology could be the answer to the seemingly never ending direct booking wars if things go according to plan. The firm was founded in December of 2017 by two early (former) employees at cloud property management system provider Frontdesk Anywhere who got loads of experience dealing with intermediaries while building the business. Every industry has intermediaries and those intermediaries deserve to get paid for driving business to their partners. Before we jump into how Arise can help build healthier (and more equitable) relationships between OTAs and their hotel partners let’s take a quick 10,000 foot view of where the relationship sits today. Why haven't the OTAs been broken up yet? The problem with the OTA-hotel dynamic is mostly a result of consolidation that has surprisingly not been addressed effectively by most antitrust authorities. The reason that antitrust authorities haven’t addressed this issue is likely because the duopoly actually benefits consumers (by delivering lower prices for accommodations) and many of the world’s most powerful antitrust authorities have mandates to protect consumers rather than businesses. Here’s a quote directly from the U.S. Department of Justice Antitrust Division website about the group’s mandate: “Competition in a free market benefits American consumers through lower prices, better quality and greater choice. Competition provides businesses the opportunity to compete on price and quality, in an open market and on a level playing field, unhampered by anti competitive restraints.” As such, it is unclear that the Booking/Expedia duoply (which is estimated to control ~80% of the market today) will ever be broken up given the focus on consumer protection. Arise shifts the focus from direct bookings to lower commissions Historically, most of the companies that help hotels gain leverage against OTAs today have been focused on driving new direct bookings. The general idea is that by helping hotels increase their mix of direct bookings - these hotels will pay lower absolute commissions in the short term and also in theory should be able to negotiate lower commissions over the long haul. The earliest companies to play in this space were Triptease, Stay Wanderful and Hotelchamp. These direct booking platforms help hotels optimize their website performance to increase conversion and effectively maximize their funnel rather than bring new prospective guests into it. More recently, The Hotels Network and 123Compare.me have jumped into the fray. Similarly, digital marketing agencies began positioning around direct bookings with firms such as Screen Pilot, Travel Tripper and TravelClick leading the pack. Ultimately the goal of any great hotel digital marketing agency should be to drive bookings at a lower cost relative to OTA commissions. In addition to the benefits of website optimization based direct booking platforms, digital marketing agencies help bring new prospective guests into that funnel through digital marketing on paid channels such as Google, Facebook, Email Marketing and Instagram. So tech companies have gone a long way to help hotels gain leverage with the OTAs by driving direct bookings via digital marketing, website optimization, etc. While this is a great approach, Arise Travel has a surprising way to end the direct booking wars - and the team wants to do this without a single shot fired. With an OTA duopoly, is there a big enough market for Arise? While Expedia and Booking have approximately 80% of the OTA market, there are many other stakeholders in the accommodation supply chain. The total retail value of accommodations globally hovers around $570B and $200B of that gets passed to the hotel industry (Statista). Booking and Expedia revenue for all business units combined (incl. airline, activities, etc.) are ~$25B which shows that even though they have huge OTA market share, they actually have modest shares of the overall intermediary markets. So who else is in this intermediary market? Some examples include: traditional travel agencies, corporate travel businesses, smaller OTAs and OTA affiliate partners. Arise wants to help hotels fight the OTAs by mixing in more cost effective 3rd party bookings. When a hotel today forecasts a period with high demand, they’ll often use their channel manager to shut down distribution in what are called “closeout dates.” Closeout dates include peak times like big conferences coming to town, city wide events, etc. That sounds reasonable, right? Wrong. When hotels activate these closeout dates they are intentionally leaving bookings on the table today to save themselves for lower commission bookings tomorrow. Then, as occupancy begins to rise, hotels are able to increase rate which is why they’re ok to leave those bookings on the table. In super simple terms, let’s say a hotel will pay 20% to the OTA and 0% incremental for direct bookings (because many direct costs are fixed). The reason they shut down OTA inventory is because they believe that the rate increase they can command tomorrow will not justify the distribution cost today. Arise Travel founder Nadim El Manawy believes that billions are being left on the table and thinks that commissions should be dynamic just like room rates. Everyone knows that revenue management software is essential to running a profitable hotel business. If you charge too much - you lose bookings. If you charge too little - you leave profit on the table. Revenue management systems help hoteliers make sure that they can walk that fine line to maximize profitability and Arise Travel can have the same effect on 3rd party commissions. Here’s how Arise Travel’s technology works to supercharge your existing channel manager Arise automatically downloads closeout dates from your channel manager where your hotel is leaving bookings on the table. Your revenue manager can then go into the Arise Travel dashboard and input commission rates that they’d be willing to sell hotel rooms for during those periods. Rates and desired commissions then get pushed to Arise Travel’s network of intermediaries so hotels can sell rooms to prospective guests on 3rd party channels without commission negotiations or even the need for a traditional contract. Let’s say, for example, that The World Cup is coming to your city next summer so you don’t want to allow Expedia bookings at 20% commission knowing that you’ll fill your hotel regardless. You can’t renegotiate with Expedia but you can now login to your Arise Travel dashboard and notify intermediaries like small OTAs and corporate travel agencies that you’d be willing to sell rooms for a 7% commission during those times. You can even set variable commissions on a per room type basis, by rate code, day of the week and even by channel. Eventually the technology will make this all automated through integrations with top rated revenue management systems. Those intermediaries can then accept those terms and list your rooms for booking on their channels with automated rules. The big value prop for these intermediaries is that they can now sell accommodations that aren’t available on Booking and Expedia - this helps them differentiate and ultimately grow their businesses. You can now get rooms booked for a reasonable commission while driving up rates during this peak period. Consumers win by accessing your inventory in more places, distributors win by getting access to unique inventory and you win by maintaining reasonable commissions and selling your inventory more quickly. Arise’s technology handles all commission reconciliation and payouts automatically to save your team time. The entire payment and service history can be viewed at any time providing ultimate transparency into your channel management strategy. If Arise Travel can get big enough, it will eventually pressure Expedia and Booking to accept variable commissions that are market based. While Expedia and Booking may see short term headwinds from a concept like Arise Travel hitting scale, this is ultimately bringing much needed fair market dynamics and transparency to the industry which will lead to healthier hotel-OTA relationships and more innovation. Nadim has a massive vision for the industry and he needs the help of our global hotelier community to jump on board with what we at Hotel Tech Report believe is a “no brainer.” We recently sat down with Nadim to chat about his background, the future of hotel distribution, what’s next for Arise Travel and more. Hotel Tech Report's exclusive interview with Nadim below What was your background prior to starting the company? Before co-founding Arise, I led sales and partnerships for 4+ years at a cloud-based property management system company in San Francisco called Frontdesk Anywhere. Prior to moving to the Bay Area in 2011, I worked in Shanghai and grew up in Belgium. What made you decide to jump in and disrupt the travel distribution space? I met Alex Lamb, my co-founder in this business, at Frontdesk Anywhere where we were the second and third employees. Alex lead the engineering team there for 4+ years. Being in the PMS business, we became very familiar with how things work on the operational side at hotels, but we also had to work with many players in the distribution chain such as channel managers, GDS and wholesalers. We got to see how things are patched together behind the scenes today. Many of the hotels we worked with were very vocal about how a few online travel agencies were controlling their distribution and how much they were paying in commissions and fees. We also saw how the fragmentation of the PMS space and old technology used by existing intermediate networks was making it difficult for travel companies to gain access to hotel data and efficiently transact with hotels. We starting thinking about how we could use emerging technology to fix many of these problems, allowing new travel companies to grow faster and help move the industry forward. Who was your first customer? One large player in the corporate travel space (we can’t name the company yet) is taking a chance working with us in order to solve some of the problems and inefficiencies they face today. Our experience with hotel distribution technology gained over the years when building and maintaining a cloud PMS combined with our knowledge of distributed ledger technology and how it can be applied to travel distribution is what made them want to work with us. What is there so much excitement about Arise Travel as a disruptor? We build technology that helps hotels gain more control over the inventory they share with their partners. Our distributed ledger technology lets hotels enforce rate parity at the point-of-sale and dynamically adjust their commission rates based on demand, significantly increasing hotel profitability. Who is one mentor that has really helped you scale the business? I need to mention two people who have been very helpful since the beginning. Jing Zhou, who was at Hyatt for many years leading e-distribution for Asia Pacific, has been sharing her knowledge on hotel operations and distribution strategies. She has helped us stay focused when building our technology to make sure it fits with hotels needs. Varsha Rao, who was head of Global Operations at AirBnB for many years, has tons of experience in building and scaling businesses. Her constant ideas and advice on ways to start and grow the business have been extremely helpful. What's one big misconception that hoteliers have about distribution? Many hoteliers believe that they are powerless to change the distribution technology they’re dependant upon. Most hoteliers are quick to complain but because they don’t view distribution technology as a core competency, the idea of investing resources into something they’ve never taken ownership of before seems daunting. This mindset may have been reasonable in the past, but not anymore. Distributed ledger technology will show hotels that updating their distribution technology is possible with very little IT investment and without affecting their operations and current distribution channels. What's the most surprising thing you've learned about hospitality distribution since founding the business? That most innovative technology being worked on focuses on the travel search and booking process, but technology that can improve the traveler experience after booking is held back because many of these services have to rely on outdated distribution technology to function. If you could partner with any vendor in hotel tech, who would it be and why? AirBnB. Our technology creates a shared source of truth for hotels and OTAs, making it possible to automate commission reconciliation processes. With this automation in place, it becomes feasible for hotels to start setting variable commission rates for the inventory they send to OTAs. Instead of closing entire channels during high demand periods, hotels can lower their commission rate to maximize their profitability. We can help AirBnB grow its hotel business by accepting variable commission rates from hotels, giving them access to desirable inventory that is currently unavailable to other OTAs using a fixed commission model. Where do you see Arise in 5-years? Most of the intermediaries that survive of rate arbitrage and don’t bring real value to hotel distribution will disappear. We believe the efficiency and trust that distributed ledger technology can bring to the industry will drive down the commissions paid by hotels for bookings. I’d hope most hotels, including independent, will be benefiting from the control and efficiency our technology will bring to their online distribution. I’d expect many players involved on the supply and on the demand side to be using our technology. Do you have any new products or feature launches? Variable commissions hotels fully control and payouts are automatically handled. Starting with high demand periods, hotels can decide how much they are willing to pay in commissions for any given date, room type and rate. Today hotels pay fixed high commissions to OTAs and at times of high demand often take the risk to close those expensive channels as they are confident enough they’ll drive enough direct bookings to fill their hotel. Hotels no longer have to do that as they can now set variable commissions that they are willing to give OTAs on those high demand dates. We provide the transparency and control to hoteliers and we automate the commission payouts so it doesn’t add any more work for hoteliers. We work with hotel channel managers and switches. To get going hotels can contact us or also check with their service provider to see if they are already connected to Arise. Is there anything that the community can do to be helpful for you? We’d love for people involved in hotel distribution on either the supply or demand side to talk to us. The more people that understand and get comfortable with the idea that upgrading distribution infrastructure isn’t such a daunting task, the faster everyone will be able to benefit from it. Advances in Distributed Ledger Technology actually make distribution less complex than the processes in place today. What's one piece of advice that you have for any entrepreneurs looking to get into the hotel tech space? Make sure there’s a clear need for your solution in the space and if so, have a very good understanding of all the current players, how they work together and all the moving pieces that shape today’s hotel tech space.
In our Product Deep Dive series, we go deep into one solution to help hoteliers evaluate and assess the best software for their specific situations. Among the growing number of revenue management tools, IDeaS has established itself as one of the world’s top revenue management systems. Its flagship IDeaS G3 RMS processes 100 million revenue-enhancing decisions each day across 1.6 million rooms, translating rich data inputs into a dynamic revenue engine for peak profit performance. Here are 6 of the features of the IDeaS G3 system that we most certainly can’t live without. #1: Demand-based pricing by room type One of the latest IDeaS G3 RMS features allows revenue managers to yield by room type. For example, let’s say the system detects a spike in demand for the “deluxe double” room type. It will automatically increase the price for that room type -- without also boosting prices on other room types. Yielding by room type unlocks a purer yield management approach, with rates priced according to guest demand and price sensitivity for specific room types, rather than simple attributes or inflexible rules. This reduces the burden of manually yielding across multiple room types, says Angelo Fernandes, SVP for Terranea Resort: “This technology has enabled us to look at inventory by type or segment and actually make decisions to yield room types uniquely across different channels. Terranea is very unique, with 582 keys and a mix of rooms, suites, villas, casitas, and bungalows. IDeaS helped us understand pricing, availability, and demand for each room in order to optimize profitability.” The demand-based pricing approach gives revenue managers a more accurate, holistic view of a hotel’s demand profile. Automation ensures that each room type is priced appropriately for the demand, which yields the most profitable business mix. Sometimes dynamic room-type pricing can be unintuitive, says Fernandes, where smaller rooms are actually priced higher than larger, more premium ones. But it’s all based on actual demand rather than instinct or historical performance. “Effectively, each room type has its own BAR, so we’re now selling more rooms at the correct rate, and we’re also avoiding overbooking a certain room type and then having to move guests to a bigger room.” The IDeaS RMS “at a glance” dashboard #2: Virtual Revenue Management Service (VRMS) Most hoteliers feel under-resourced. Yet, smaller properties are naturally at a disadvantage when it comes to resources -- especially independents that find themselves in direct competition with “soft” brands that don’t directly rely on their parent company’s identity. These brands appeal to a different cohort than the majors, while still taking advantage of the parent’s revenue management expertise. That’s not to say that brand-affiliated hotels don’t also feel the squeeze when it comes to finding resources to devote to revenue strategy. IDeaS set out to solve this issue for any hotel, with its Virtual Revenue Management Service. VRMS helps hotels accelerate their revenue strategy by assigning an industry revenue expert to work directly with hotel staff—no matter the business objective, resource mix or skill level. The three phases of VRMS align hotel management and staff around the techniques and habits of a revenue-focused culture. With the end goal of establishing clear standard operating procedures around revenue optimization, VRMS ensure that hotels of all kinds benefit from the revenue management revolution. #3: Ideal Pricing delivers continuous pricing Automation is at the core of the IDeaS approach to revenue management. Through artificial intelligence and machine learning, it makes precise revenue management decisions that most revenue managers would never be able to see. Ideal Pricing uses deep market intelligence, such as search penetration, competitor rates, booking trends, and reputation scores, to intelligently forecast demand and power a continuous pricing model. The automated system prices room types at the ideal rate for a given product and set of guestroom attributes. The ideal pricing model intelligently prices by day or length of stay, while also allowing hotels to price within a range or set specific price levels for certain attributes. Revenue managers can link products to BAR or independently price as agile rates to dynamically flex products based on unique demand and attributes. The best part of this is that it all happens in real-time and in the background, so revenue managers can focus on tactics and strategy rather than manual data entry. The AI-powered analytics recognize relationships between all rates and segments, continuously making the smartest pricing decisions based on the latest information. With Ideal Pricing, hoteliers achieve peak profitability decoupled from a traditional rates-based framework. #4: Support before, during, and after implementation It’s a common refrain here at HTR: customer support is always a core consideration when evaluating new partners for your hotel. Poor support can scuttle even the most advanced product; without knowledgeable resources available before, during, and after the implementation, a tool risks failing due to low adoption and minimal integration into existing processes. IDeaS sees itself as an ally in implementation, and, as a result, provides robust implementation support that supports a hotel’s efforts to nurture a sustainable revenue culture. The clear plan is to train staff at the outset, as well as through continuous learning so that everyone has the tactical knowledge necessary to get the most of your chosen software. This includes how to read reports and what actions to take action based on those reports. #5: Rate publishing tool Most hotels realize that all distribution channels are not created equal. For peak profit performance, the highest value booking at the lowest acquisition cost. Individual channel performance, plus overall channel mix, equals the optimal revenue strategy. To achieve the optimal mix, hotels need a rate publishing tool that consistently and accurately updates rates across all chosen channels. This Functionality is integrated into the workflow, making it simple and easy to publish rates across channels. No more logging into multiple extranets and manually entering the same information multiple places. It’s all about working smarter and more strategically. Hotels also realize that there’s a trust issue when it comes to rates appearing equal across channels. Rate parity breeds confidence, and an integrated rate publishing tool empowers hotels to build that confidence through seamless rate management. The Demand360 view highlights the competitive market data alongside your hotel’s forecast and decisions. #6: Limited Data Build functionality Launching a new hotel is both an exciting and challenging time. It's a fresh slate to serve a new segment or expand in an existing market. The freshness also poses a problem for revenue management: Without any historical data, how should a hotel be properly priced in its early days? Pricing affects positioning; getting the pricing wrong can alter demand and consumer perception. The Limited Data Build feature addresses this existential issue for new hotels. To forecast demand in the early days, IDeaS will clone data from existing hotels with similar business mixes to provide baselines for demand and predicted guest behavior. One new brand in Germany, Me and all, found that the baseline data helped beat its ADR expectations by 15% in the first half year. “Up until now, one of the biggest problems has been forecasting how a new business will unfold. Normally, we rely heavily on a hotel’s historical market data besides examining the public price points of other hotels to get a feel for the market. On this occasion, however, there was a bigger knowledge gap to fill. -Monika Sand, Corporate Manager Revenue at Lindner Hotels AG Bonus! Lucky #7: Smart Space The complexity of managing revenue grows exponentially when adding groups and meetings to the mix. For larger hotel groups, there may be an additional layer of communication between a centralized revenue management team and property-level sales managers. SmartSpace is a dynamic cloud-based strategy application that provides a revenue-focused visual analysis of meetings-and-events trends and performance. Thanks to more intelligent analysis, hotels can finally optimize revenue on key demand days by using detailed demand profiles to price more strategically. The SmartSpace Functionality guides hotels on forecasted demand, performance trends, market competitiveness, and pricing strategy. Through data and visualizations, it provides a guide to pricing decisions, as well as prioritization of RFP responses. Demand-level data can also reveal patterns across many meeting room types, to reveal which rooms are most popular and which were underutilized. These patterns inform the optimal configuration of those event spaces to ensure that supply meets demand. For instance, rarely-used rooms could be combined or repurposed to better suit the needs of today’s event and meeting organizers. “Smart Space makes it a lot easier for us to study our booked and lost business and better prioritize sales team efforts,” said Christine. “To be able to pull vast sums of relevant data and see that presented in an intuitive and consumable format is such an advantage. It’s the first step of some very exciting progress we’re seeing in meetings and events.” -Christine Wassell, director of revenue optimization for Radisson Hotel Group
How Whistle used Lean Startup strategy to become the hotel industry’s favorite guest messaging platform
When non-technical entrepreneurs start a tech company, they usually start by spending ~$50,000 for a software development agency to go build their cool new idea. Startups that begin this way often burn through resources quickly and double down on markets before they even understand them. Steve Blank’s Lean Startup methodology has helped thousands of startups avoid these pitfalls. The methodology teaches startups to run a series of experiments that help founders learn quickly about the markets in which they’re operating without burning through resources too early. Running lean also forces entrepreneurs to get out of their comfort zones (usually behind a computer) and perform deep market research with prospective clients. Blank’s Lean Startup strategy is centered around the concept of an “MVP” (minimum viable product). The idea with an MVP is to build the absolutely least amount necessary to prove or disprove a hypothesis. According to Blank, creating a successful business from scratch begins with developing a hypothesis, analyzing the risks involved, then setting out to disprove each of those risks using the least resources possible. Lean Startup practitioners are non-technical hackers in their own regard, they start by asking the right questions and then build creative low cost solutions to answer those questions. Chris Hovanessian’s journey and the founding of Whistle is straight out of the Lean Startup playbook. Whistle’s guest messaging software is world renowned today, but when Chris started his business most hotels didn’t even know what “guest messaging” was. Chris, like most entrepreneurs, started with a problem. While working in the corporate relocation business he noticed that he was able to give clients great customer service when they were at home but when they got to their respective destinations, many of them didn’t have local phone (or data) plans so they were left in the dark and it created tons of problems from a customer experience perspective. He also noticed that they were communicating on a variety of platforms like SMS, Viber and WhatsApp when they were home and that messaging was becoming both cheaper and more widespread. Chris believed that messaging was the future and had a hunch that it would completely change the way businesses delivered customer service. "Texting is the most frequently used form of communication among Americans younger than 50. Sending and receiving text messages is the most prevalent form of communication for Americans younger than 50. More than two-thirds of 18- to 29-year-olds say they sent and received text messages "a lot" the previous day, as did nearly half of Americans between 30 and 49." ~Gallup To validate his hypothesis, Chris began talking to dozens of local business owners from all walks of life. One day, while speaking with a hotel manager, he realized that messaging could add a ton of value for hotels given their complex operational needs, employee shift schedules and given hotels’ maniacal focus on delivering a great guest experience. After coming to this realization, Chris scheduled a series of meetings with local hoteliers to validate his hypothesis. Before meeting with a second hotelier, Chris created mockups of what the messaging product would look like so that he could get more detailed feedback on the concept. Before the end of the meeting, that hotelier inquired about pricing and asked when they could go live. Chris partnered with co-founder Jonathan Rojas, a sales guru and college friend, then found a technical partner and built an MVP for that client since they didn’t even have a product yet - the rest is history. Chris’ partner Jonathan even started working part time as a front office manager to perfect the product and deeply understand how it was being used by clients. Steve Blank often tells entrepreneurs to “get outside the building” and Jon’s decision to work at a hotel while starting the business was exactly that. Hotels may not have known about guest messaging when Chris and Jon started the business, they certainly do today. Whistle has won Top Rated Guest Messaging Platform in the HotelTechAwards for 2 years in a row and the company is now in hundreds of hotels around the world. The old guard often saw technology as a risk to the human experience of hospitality and messaging has proven to do exactly the opposite by creating stronger connections between hotel staff and guests. Our cell phones are highly personal to us, they’re the first thing we check in the morning and the last thing we see before we go to sleep. They’re how we connect with friends, family and colleagues. Any hotel that doesn’t offer the ability for guests to text for service is missing a huge opportunity to surprise and delight. I had an incredible messaging experience while traveling to Mexico recently. Before we arrived at the hotel we were asked if anyone in our group had allergies - a proactive touch that likely saved us a trip to the hospital due to my friend’s severe pumpkin seed allergy. Our room was below the rooftop bar so when the DJ got too loud we texted the front desk late at night. To our surprise, the hotel staff told us that they felt terrible and were happy to upgrade our room at no additional charge to get us away from the noise. Messaging enabled the staff to turn what could have been an awful experience into a moment of surprise and delight. The best part is that we didn’t even have to pick up the phone. We caught up with Chris to learn about the Whistle founding story, how hotels can transform the guest experience through messaging, the biggest mistake that hotels make today and more. Whistle CEO Chris Hovanessian speaks on a hospitality panel with former Starwood CEO Jeff Lapin Companies mentioned in this article: What was your background prior to starting Whistle? I attended Loyola Marymount University (LMU) in 2011 with a major in Business Administration - Entrepreneurship. At LMU, I gained hands-on experience with starting companies from A-Z, met my cofounder Jonathan Rojas, and was also a chapter founding member of professional business fraternity, Alpha Kappa Psi - Psi Epsilon. During my last semester and after graduating from LMU, I began working in corporate relocation. There, I worked with Fortune 500 companies to relocate their executive and personnel between headquarters, and to the U.S. Through this position, I gained exposure to certain aspects of hospitality, and immediately realized the importance of streamlined communication. What made you decide to create a guest messaging company before most hotels even knew that they needed this kind of software? In the corporate relocation world at the time, my clients came to the U.S. and primarily stayed in hotels. Once they arrived, their mobile phones were essentially useless, as they did not have new data plans in place and would have been charged enormous fees. As a result, all logistics were planned weeks in advance via email. If I needed to get in touch with the client, one of the only ways was to call their hotel and ask to be transferred to their room. As you can imagine, they were not regularly boarded up in their rooms. Through this frustration, I quickly found a better solution: ask clients to download various mobile messaging applications that were popular in their country at the time (e.g. Skype, Viber, and many others), and to connect to WiFi as often as possible. With this approach, I was more likely to engage in real-time communication. Then one day, when coordinating with multiple clients at once through multiple channels, it hit me - I need an aggregate solution, which supports all channels! We jumped in and started Whistle thereafter, using the lean methodology and identifying Hospitality as the most apparent application for the software. Who was Whistle’s first customer? Al Munguia, of the Jupiter Hotel in Portland, Oregon. Before we even built a product, we used the Lean Methodology to get off the ground. I was conducting interviews with willing participants to determine the pain points, and eventually to shape the MVP. Al was the second interview I conducted during the “Solution Stage”, which is where you show mockups or a wireframe of the potential product, and then gauge feedback for improvements and enhancements. 10 minutes into the call, he asked, “this looks great, how much does it cost?” I wasn’t prepared to answer that question so I just threw out a number, and he told me to let him know when they could start. I said one-week, and then we got to work building the platform! Most hoteliers know that guest messaging is a must have today and there are lots of players in the market but Whistle has won top rated guest messaging platform for 2 years in a row, why do you think that is? Messaging started off as a nice-to-have, but is quickly evolving into a requirement, similar to WiFi a decade ago. Whistle is the easiest GMP to get started with; we offer a free trial with no commitments, you can get setup in minutes, and you will see results on the first day of usage. Whistle will boost your guest engagement levels, drive up your guest satisfaction scores, provide ancillary revenue, improve your operational efficiency, and streamline all of your departments’ logistics -- our customers can’t live without it. Whistle's guest messaging software helps hotels run more efficiently and deliver impeccable service Who is one mentor that has really helped you scale the business? We’re so lucky to have such a strong circle of mentors, it’s truly amazing - I wish I could name them all! Someone who’s been there with us every step of the way is Michael Panesis: President and Chairman Emeritus of Tech Coast Angels Central Coast, Founding Member of Santa Barbara Angel Alliance, and the Executive Director of the Center for Entrepreneurship for Cal Lutheran. Mike has helped us in nearly every aspect of the company, and we wouldn’t be where we are today without him. The one piece of advice that really stuck with us was, “Keep selling!” We followed through with this approach, gained more ground, and eventually the pieces started falling into place: more people started believing in us, the product evolved, the team grew, and our impact tremendously improved. What's one commonly held belief that most hoteliers believe to be true that actually is false? “Messaging is impersonal, you can’t replace in-person interactions.” The aim of messaging is not to replace in-person interactions or even phone calls, it is to fill the customer service whitespace or void that exists today. There are a large portion of travelers and consumers today who are not communicating with your organization because you may not have the proper means. With the increasing influx of technology separating the hotel staff and guests (e.g. OTAs and Mobile Room Keys), messaging is one of the main components connecting hotels with their guests today. What's the most surprising thing you've learned about scaling technology into hotels? The hotel industry is very hard to break into as a new company, but then gets easier as your brand grows. We’ve all seen overnight virality in the B2C space, but hotels tend to have their guard up more-so than any other industry I’ve experienced. It’s a tight-knit community, and as a result, it takes time to grow organically and reach the inflection point. You can pump out all the marketing and metrics around your company’s impact that you want; if no one knows you, they’re likely not going to work with you. Have been a particularly good partners that have helped Whistle scale along the way? For Whistle, PMS partnerships in general have been especially powerful for both us and our PMS partners. It gives us the opportunity to grow, while providing tremendous added value to our PMS partners, making their product more sticky because we can ultimately extend their reach into the guest journey whereas the PMS usually is just used by the hotelier. Where do you see Whistle and the guest messaging space in 5-years? For the guest messaging category as a whole, artificial intelligence and machine learning will become more prevalent. AI has progressed significantly within the last two years, and we are beginning to see it provide more value. Messaging will also begin to touch more hotel software categories, beyond the guest and past the PMS/CRM. I think we’ll also begin to see consolidation within the category, speaking from the business perspective. We see Whistle in tens of thousands of hotels around the globe, providing a holistic messaging platform for guests and all departments/aspects of the hotel. People think messaging capabilities have matured, when realistically we’ve barely scratched the surface. Is there anything that the hotel tech community can do to be helpful for you? We’d really like to learn more about marketing best-practices in hospitality tech. We have a great solution with strong impact on direct bookings, and we’d like to get the word out more! What's one piece of advice that you have for entrepreneurs looking to get into the hotel tech space? It’s hard, but definitely worth it! The hotel industry is fun, traveling is literally part of the game, and everyone knows the importance of letting loose every once-in-a-while. Just like in any other industry: make sure you do your research ahead of time, find early adopters/partners, and do everything in your power to learn from them over time and keep them happy. What is the best book you've read lately and why? “The Hard Thing About Hard Things”, by Ben Horowitz. It came out a few years ago, but I just got around to reading it last year. This is a book for founders by a founder, now VC. It’s all about the ugly bits and hard truths of entrepreneurship, not the glory. It’s very comforting to learn of others’ horror stories, because it’s usually largely untold. You come away from this book understanding that most of the hardships you go through are actually very common, and that you’re not crazy after all! I highly recommend it. What is your favorite podcast I love The Joe Rogan Experience What is one thing that most people don't know about you? For the past 7 years I’ve practiced a form of intermittent fasting called time-restricted eating, where I eat only one meal per day and am fasting for the rest of the day. Fasting has helped me feel a lot healthier.
A channel manager is a powerful piece of hotel technology that increases occupancy, saves time, and maximizes profits. It allows a hotel to expand its reach and visibility online, as well as more easily manage its rates, availability, and reservations. With a channel manager, hotels can connect to hundreds of online distribution channels in real-time. This allows the hotel to boost visibility (and ultimately reservations) with almost no risk of being overbooked. Without a channel manager, hotels must manually update inventory and availability on each channel -- a tedious, time-consuming process that often creates inconsistencies across channels. A channel manager also empowers hotels with greater control over the channel mix. Revenue managers can set specific targets on a channel-by-channel basis, and then adjust inventory and/or pricing on individual channels to optimize revenue. By using this dynamic approach, Revenue managers can more precisely manage a hotel’s distribution and prioritize the most profitable channels at any given time. How hotel channel managers fit into the distribution picture, per Altexsoft. Presently, only about 50% of hotels worldwide employ dedicated channel managers to help them manage and optimize distribution. If your hotel is considering a channel manager, here are the top criteria to use when choosing the best channel manager for your hotel. #1: Real-time connectivity and pooled inventory One of the major benefits of hotel channel managers is real-time connectivity; without it, the risk of overbooking remains. The best way to accomplish this real-time synchronization is through two-way XML connectivity. Instant sync ensures that room rates and availability are current and accurate across all chosen channels. Without that assurance, a channel manager will be less effective in increasing your bookings and resulting revenue. Effective channel management also requires a pooled inventory model, which means that your room inventory is shared across channels, rather than allocated manually on a channel-by-channel basis. Pooled inventory ensures accurate availability so that rooms can be advertised across all channels at the same time, without fear of overbooking. #2: Channel optimization To distribute inventory on the most optimal channels for your hotel, you'll first need to know which channels matter most. Look closely at which channels a potential channel manager supports. If any of your most important channels are missing, consider another vendor. Channels vary dramatically by region. Also: refer to your guest personas (or take the time to do that critical work!) to determine which channels help you reach those kinds of guests. It's also revealing to consult your CRS reports to surface the popular booking channels among your target demographics. “If you’re a hotel looking to attract Chinese travelers, for example, you will want access to the booking channels that Chinese travelers use most, like Ctrip or Fliggy. The makeup of travelers is constantly evolving, so gaining access to these more niche channels, as well as the top global ones, will allow you to broaden your distribution strategy and attract new types of guests.” -SiteMinder director of product Gregor Vogel, in TravelDaily The best channel manager allows you to leverage your most productive channels, as well as experiment with less-obvious channels that might bring you untapped demand from hard-to-reach markets. And it doesn’t hurt to ask vendors for recommendations on which other channels you should consider -- the answer will show you how the company approaches customer service. #3: Training, support, and implementation As with any new system, users will have questions and encounter issues that require troubleshooting, so training and constant support is a must. Depending on the size of your property, this could be a make-or-break item. You need to know what training is available, how much it costs, and if it's offered in the appropriate time zones and languages for your business. The same goes with ongoing support -- you should be able to get a response via chat, e-mail, or phone within a few hours at the most. There are five milestones on the path to implementing a channel manager. These include an introduction, group training, setup, private follow-up, and set live. Free trials typically last about 2-weeks where the hotelier can test out the full feature set and upon completion can immediately activate their subscription or choose not to invest at no further cost. #4: Deep integrations with pricing rules A good channel manager should have the ability to integrate with all the hotel’s existing core systems, such as the PMS, RMS, and CRS. PMS: The property management system is the central hub for hotel management, so data from the channel manager must flow back and forth. RMS: To accurately and effectively manage revenue and profits, the revenue management system and channel manager need to share data. CRS: For seamless operations and a single unified view of property management, the channel manager must feed data to the central reservation system which then links with other systems. An effective channel manager eliminates content inconsistencies by making it easy to update room inventory, availability, and rate plans through a simple interface. This interface should also facilitate cross-channel content updates, you can update your property’s photos, descriptions, room types, and related content all from one central location. No more endless manual updates, or forgetting to update content on a rarely-used channel. “The ability for distribution technology to seamlessly manage and sync content can save property’s time and, more importantly, drive reservations.” -Cloudbeds director of global partnerships Sebastien Leitner Hotels should also be able to set pricing- and availability-related rules to maximize profitability on each channel. These include: Direct pricing rules to maintain the direct channel’s Best Available Rates, setting stop-sells for rooms and packages when a specific channel has met its targets, setting the minimum number of days a booking can be made (to entice specific behaviors on certain channels), and offering discounted rates prior to a guests’ arrival. #5: Intuitive, easy-to-understand reporting Channel managers provide valuable data for revenue managers to adjust their distribution strategy dynamically. The right channel manager for your hotel is the one that gives you the insights you need to optimize your channel mix. It's not enough to just distribute inventory across channels; best-in-class channel managers invest heavily in advanced analytics and easy-to-understand reports that show occupancy, reservations, and revenue for specific periods of time. m. Armed with this information, revenue managers can make pricing decisions based on supply and demand. The reports will identify under- and over-performing channels for further investigation. For channels where the marketing cost per booking is low, it may be advantageous to address underperformance with price adjustments to encourage more bookings. For channels with high commissions or other customer acquisition costs, a spike in bookings may negatively affect a hotel’s Net RevPAR. Choosing the best channel manager for your hotel Channel managers are valuable allies for revenue managers as they balance profitability-per-booking with gross room revenue targets. Distributing your inventory to the broadest base maintains visibility and increases your chances of bookings. The ability to selectively choose channels keeps you in control over the optimal channel mix and profitability at the booking level. When vetting vendors, use the criteria above and ask the following questions to determine the best channel manager for your property: How many channels are you connected to? Are you connected to the most important channels for my hotel? How many channels, room types per channel, and days can my hotel manage simultaneously? How far out can you manage availability? What reports will you provide me? Will you show me which channels deliver the most bookings and which provide the most revenue? Read relevant and recent reviews of the 10 top rated hotel channel managers.
Back in September we were excited to see RLH Corporation partner with data integration firm Hapi to streamline connectivity and be one of the first hotel brands to embrace a truly open technology architecture. Since then, the company’s tech stack has grown to include companies such as IDeaS Revenue Solutions, Monscierge, Oracle, and CRM and CRS platforms, among others. The benefit of an open architecture is that 3rd parties can seamlessly plug in to systems with very little time or cost associated with implementation. This mentality in theory should allow RLH Corporation to become a lean hotel company with capabilities to quickly experiment and iterate with new technologies with minimal upfront investment - a critical ingredient for innovation. Our optimism, however, has been somewhat paired back with the recent announcement of RLabs by RLH Corporation, a “technology-based innovator that houses and builds on the groundbreaking technology platform the company has created.” When enterprise companies spend loads of money on technology they usually think about building tech in house so they can have more control over development and ultimately save money. Sometimes this equation favors building tech in house and other times it does not. Several high profile failures in the hotel industry include a collaboration amongst all major hotel groups to create an online booking platform called Room Key which was eventually shuttered. We’ll discuss this initiatives and more in detail below. Most sophisticated enterprise companies (think Nike and McDonalds) understand that they are not tech companies so they effectively outsource their tech R&D spend to 3rd parties that are focused on innovation. Could McDonalds build software to help franchisees manage their listings? Yes, but they partner with Yext. Nike could definitely build prototyping software in house for its digital products, but it chooses to partner with InVision. Firms like Nike and McDonalds have become innovators by being experts at identifying trends and partnering with top tech companies to meet their core business goals. So the question is, if McDonalds and Nike outsource their respective technology needs - should hospitality companies really be building tech in house and trying to hock it to independent hotels? RLH Corporation is taking a cue and is instead opting to monetize the tech stack they have already compiled (and that has proven successful for nearly 1,500 franchised hotels), by offering it to other hotels as an independent solution. From our conversations with RLHC management, the firm wants to offer its support infrastructure, preferred pricing and instant integrations to independents. The firm has not yet scaled up its customer service infrastructure to support additional independents so it is to be seen whether they will be able to support a larger volume of support requests. RLHC has also indicated that it is still negotiating with it's tech vendors to secure preferred rates for independents which would effectively turn Red Lion Hotels Corp into a technology reseller. There are certainly reasons to believe that technology companies wouldn't want RLHC to mark down their products and resell them to non-franchisees. The instant integrations component is interesting and RLHC management told Hotel Tech Report that the firm was able to switch from the Serenata hotel CRM platform to Cendyn's eInsight in under 90 days with no interruptions - a feat that usually takes months to implement. Migrating a hotel CRM is complicated because it involves so much sensitive data - so this is a promising value proposition if it can be delivered at scale. We believe that when hotel brands try to build tech in house it ultimately brings them into precarious waters for 3 key reasons: It distracts management from their core business They lack the resources to compete with pure play technology companies Hotel brands usually underestimate the ongoing effort required to maintain and scale a technology business (let alone multiple business lines and products) Views or opinions in this article are not intended to malign any organization, company, or individual. These views are intended to highlight an important debate in the hotel community about whether hotel brands should build technology in house. Statistics and data have been pulled from publicly available information and the opinions stated are the views of the author. Running a public company is no easy feat and for every public company CEO there are 1,000 critics. Our intention with this article is not to become number 1,001 but rather to leverage our position to start a meaningful conversation intended to course correct the industry and ultimately add value for hotel organizations, guests and shareholders alike. Reason #1: When non-tech focuses on tech they get distracted from their core businesses When non tech companies start to build tech in house they tend to get distracted and RLHC's stock chart certainly seems to support that argument. Presumably RLHC has been gearing up for the launch of RLabs for the last 6 months and during that period it’s stock has dramatically underperformed Marriott, Hilton and Hyatt losing more than 36% of its market value. Red Lion Hotels Corporation has dramatically underperformed its peers leading up to the launch of RLabs (Yahoo) While we certainly understand that there are other factors involved in RLHC’s recent stock performance - last 6 months results compared to its peers fire a warning shot to RLHC investors and franchisees about management focus. Adding fuel to the fire, a 36% decline in stock price is likely to raise flags with activist investors. If RLHC isn't able to turn around results, management will be forced by investors to cut costs and the first cuts would hit non-core business expenses. So what do you think would happen to RLabs' under that scenario? Not only that, but if the RLabs budget gets cut (or it becomes a complete write-off) what do you think happens to their hotels using the software or other independents they sold to (assuming they were able to convince anyone other than their hotels to buy it). Needless to say, they are in precarious waters. If an activist investor or private equity firm became involved in RLHC, RLabs would certainly be a contender for the chopping block leaving franchisees and any independents that bought its software on the hook. Reason #2: Hospitality companies don't have the resources to compete with tech companies Charles Schwab is a massive financial institution worth more than $60B. The firm could easily build custom marketing automation solutions for the business but they choose to work with with Marketo because they know that Marketo will be able to innovate over the long run. Even Citrix and Microsoft, technology companies themselves, use Marketo’s marketing technology so that they can focus on their core businesses. While it’s great to see a hotel company like RLHC interested in technology and we commend them for the intention, there appears to be some severely flawed strategic reasoning here. RLH has grossly underestimated the resources required to compete with tech companies and hasn’t properly analyzed feasibility of the project. At the time of writing, RLHC’s market capitalization hovers around $200M - there are many independent hotels with single property valuations in excess of the entire RLHC company. In 2018 RLHC achieved $2M in net income, even if the firm was to invest every penny of that into RLabs - that number is less than the monthly technology investments made by many hotel tech companies. To put this in perspective, IDeaS is the revenue management software company of choice for RLHC and it’s parent company SAS just announced a 3-year plan to invest $1B in artificial intelligence. SAS is a company that deeply understands the power of focus and investing in its core competencies. "If I want to host a SaaS application, I choose a cloud host. If I want to manufacture a consumer product, I partner with a company like Foxconn. If I need delivery for my restaurant I work with a delivery company. Yet, brands without a technology focus still believe it will be cheaper and more effective to build their own software internally when history has shown us, time after time, that these projects will be over budget, unsustainable, and competitively weaker than the professional tech products in the market." ~Adam Harris, CEO, Cloudbeds The median publicly traded software company spends 23% of revenue on R&D with many high growth firms spending 50% of revenue. It’s hard to imagine that RLHC can afford the spend levels to develop one competitive product let alone multiple product lines that compete with a myriad of different specialist software businesses. Reason #3: Technology is not a static good and sophisticated enterprise companies buy into the future of a tech product as much as the present Technology requires immense amounts of capital to scale and increasing investments to remain competitive. Technology requires even more upkeep than hotels. Where hotels build up their capital reserves and renovate roughly every 5-7 years, tech companies are constantly “renovating” their products daily through product sprints. When enterprise companies “buy” tech they are partnering with tech companies for the future as much as selecting products for the present. The reason that the SaaS business model (recurring subscriptions) aligns value so well between buyers and sellers is because the product is constantly being reinvented so it forces tech companies to maintain their end of the bargain. When you sign up for SaaS (software as a service) you are not only signing up for the product today but you’re buying into its roadmap for the future. Hotel companies that try to build tech in house are rarely prepared for the constant investment required to maintain let alone scale products and keep up with the ongoing massive investment, iteration and innovation of tech firms. So what does history tell us about hotel companies who have miscalibrated this decision? Starwood was bought by Marriott for $13B so it’s ~65x bigger than RLHC and itself has taken huge losses on technology investments when they were no longer able to invest enough to remain competitive. According to Starwood’s (now Marriott) 2015 10K filing, the firm took a $6M charge for “technology related costs and expenses that were no longer deemed recoverable.” Go back further to Starwood’s 2013 annual filing for stockholders and you’ll find a $19M charge related to “technology related expenses” that the firm “decided to absorb” because they couldn’t collect from managed and franchise properties. When we draw the analogy between maintaining software and maintaining a hotel, Starwood was effectively unable to properly renovate its technology and investors paid for it. Every hotelier knows what happens when you let a property go too long without renovation and the same happens when software isn’t maintained properly. RLHC TripAdvisor reviews show what happens when hotel companies don’t renovate their product frequently enough, the same happens with software. Similar to Starwood building tech in house and having trouble maintaining the infrastructure, Choice created Skytouch PMS internally with the vision of transforming the tech market and has similarly struggled. “In 2014, it [Skytouch] generated a net loss to the company of up to $20 million. Investors have pressured Choice to either make SkyTouch profitable, sell it, or close it down.” Choice stopped reporting the results of its Skytouch division and now includes those results within its “Corporate & Other” expense line (pg. 102 of Choice 2018 10K filing). So while Choice no longer gives updates on how Skytouch is doing - it is highly inprobable that a company like Choice would decide to include the a business unit as an expense line if that unit was doing well. In addition to the Skytouch debacle, we've also heard that Choice is winding down its own version of RLabs. Accor, too, recently reported a $288M write-off on tech investments such as AirBnB competitor Onefinestay and concierge service John Paul. Accor even tried to sell it’s distribution to independents and shuttered the project after 2 years, here’s what happened in the words of Accor’s own spokesperson. “This initiative is no longer relevant in regards to the Group’s strategy and its new profile as per today. Results are below expectations” The thesis with Accor was actually pretty similar to RLHC and in our opinion was actually even more compelling for independents. Accor wanted to plug independents into its massive distribution which in theory could add a ton of value if executed well and even that didn’t work. RLHC isn’t even promising distribution - in many ways the RLHC offering isn’t clear at all. In the same article Hotel Management reports that RLHC aims to sell technology to independents and also use the same software vendors that independents use. “RLab’s is focused on creating travel technology and products like RLH’s RevPak revenue-management software. RLabs eventually will develop more elaborate technology for hotels including robotics and artificial intelligence...RLH said it uses technology currently accessible by most independent hotels for revenue management, channel management and global sales” ~Hotel Management RLHC has publicly stated that it partners with IDeaS for it’s massively popular revenue management software and based on this introductory video about RevPak on RLHC's YouTube channel - RevPak isn’t actually revenue management software but a data warehouse that integrates data from their 3rd party vendors (this warehouse, too, now seems to be outsourced to Hapi so it’s unclear whether RLHC is building anything unique in house at all). So RLHC is actually using the same systems that independents are using - what unique value will RLabs offer them? Adding to the confusion, RLabs claims to be working on a housekeeping robot. Hardware and robotics are entirely separate businesses from software and distribution - again indicating a lack of focus or intention with RLabs that will likely lead to subpar results. Even when all the big hotel groups banded together to build the online booking platform Room Key they failed (Choice, Hilton, Hyatt, InterContinental, Marriott, Wyndham) - isn’t it time that hotel companies learned this lesson? Even Booking.com had to shut down it’s hotel software operations after some high profile acquisitions - a testament to how tough the business really is. Conclusion: Hotel brands shouldn’t build tech - they should get better at buying it The lesson here is clear, RLabs is likely to go the way of the Room Key booking platform and other projects where hotel companies chased higher multiples by attempting to call themselves “tech companies.” Hotel brands need to focus on what they do best. They should leverage their scale and clout to secure great service and attention from tech partners. It’s up to franchisees and investors to ensure that operators like RLHC stay focused. Unfortunately RLHC has lost 36% of its value in the last 6 months and we expect this trend to continue while focus on the core hotel business is blurred by the shiny new RLabs. This should be deeply concerning for investors and franchisees alike. Hotel brands have insanely complex businesses managing many stakeholders who often have conflicting interests. The business of running a hotel is a huge feat both operationally and from a revenue/distribution perspective. Because of these factors, hotel companies who want to succeed in the digital age should be experts at technology procurement and management. Historically hotel brands have been very weak when it comes to technology procurement and management so many have tried to compensate for that weakness by building tech products in house. Unfortunately this strategy often leads to write-offs, burning piles of cash and consequently the executives who lead these disastrous projects being pushed out. "Great technology products enable a valuable job to be done to be easily performed with maximum success and consistent results. With the blistering pace at which the world is changing, our expectations change. That means jobs to be done change. And that means software needs to rapidly iterate and evolve. That is why the world is headed to simple, modular solutions that can nail jobs to be done as they evolve. The smartest brands know that to create compelling and lasting technology advantage, it’s now about identifying and bringing best-in-class interoperable solutions together into powerful system that gives lasting advantage. From a cost, resource, time to market and life time value perspective, you’ll waste literally millions of dollars even before calculating the opportunity cost. Brands need to get amazing at hand-picking and investing in their strategic technology partners who are proven to design, build and iterate the purpose-built software hotels require, so they can then focus on delighting guests, growing locations and enhancing the value of their networks for franchisees." ~Marc Heyneker, CEO @ Revinate Large enterprise brands have some clear motivations: (1) They want to expand to more and more hotels worldwide, and be able to do so quickly and efficiently. That means needing a consistent stack of solid technology that can be deployed, enabled and operationalized to run and add those hotels to the overall system. (2) They want to proudly position their Technology Stacks and enabled programs as unique value-adds that differentiate their Brand and their Brand value. So they can both convince Owners why they’re better, and monetize and justify their Brand fees in an age where consumer preference for brands is in decline. This sometimes gives large enterprises the false sense of belief that they need to build their own. In fact, building your own puts both goals in jeopardy, almost immediately. These multi-million dollar, multi-year, multi-faceted technology projects become sinkholes for capital investment, anchors to business progress and optimization, and turn into tough write-downs as we saw in the examples above. RLHC and its peer hotel brands should instead be focused on rethinking their technology organizations to be better buyers and managers. Corporate hotel purchasing units have historically focused on price negotiations and software customization (i.e. product roadmap hijacking) but in order for brands to thrive in today’s hyper competitive markets they are in need of a massive strategy shift. Digitally savvy hotel owners want technological choice and they want the procurement benefits that brands command with scale. The brand development teams that win in the digital age will be the ones who are able to deliver choice to owners around which technology vendors to use, the scale that comes with warehousing and leveraging data from that warehouse and the cost benefits that come from bundled negotiations with vendors. Recommendations to hotel brands who want tech to be a core differentiator Map out clear technology systems required to deliver on core business goals and all potential providers Lay foundational infrastructure for open systems and clean data (e.g. to RLH’s credit, their partnership with Hapi is a good first step) Design scalable processes to constantly beta test competitive products in the market and identify new products that can drive core business goals. Set aside designated resources for technology management. Hotel groups should maintain a vendor CRM and dedicated staff for managing vendor relationships. This staff should also be tasked with collecting market insights and sharing new technological developments as well as vendor status updates on a regular basis with leadership. Set clear and tangible KPIs with each vendor that must be met in order to retain the contract (e.g. customer support response time) Create clear roadmaps for switching systems in the event that suppliers do not deliver on KPIs Invest in tech startups that fit your strategic criteria above! Highgate (invested in Stay Wanderful, Travel Tripper, LodgIQ, OTA Insight) and CitizenM (invested in Snapshot, exited to Shiji) have been incredibly successful executing on this strategy. They put strategic money to work then derisk their investments by giving those startups proof of concept in their properties. For hotel companies like RLHC that don't have the resources to start a fund internally like them there are great strategic venture capital firms that are focused on real estate and can do the heavy lifting for you - check out Metaprop VC and Fifth Wall Ventures. Investing enables you to gain access to innovation and lend your expertise without snuffing out the creativity. Leadership is about investing in great people and trusting them to do the work, not about micromanaging every aspect of the process yourself.
Being a hotel GM takes finesse and creativity. You have to be both analytical enough to manage your hotel’s P&L and personable enough to interact with guests. Usually employers have to choose between a people person and a numbers person but when searching for a good hotel GM owners need to look for both. Ultimately, a hotel GM is a business owner responsible for everything that happens between the four walls of a hotel. You have to handle situations ranging from a staff member who needs to be rushed to the ER for cutting their finger on the job to hiring talent and figuring out how to increase revenue per available room when occupancy is down. In case you couldn’t tell already GMs are stretched in a million directions and are expected to excel at everything, always. Due to the demanding nature of the GM role, it’s important to also spend time educating yourself on a variety of different disciplines and lots of this requisite knowledge can be found in books. Rather than tell you what books we think GMs should read we asked some of our friends who happen to be top hotel GMs about the books that have helped make them such incredible successes. We have got recommendations from GMs around the world - from Belgium to Mexico, Spain, the United Kingdom and everywhere in between. The book topics range from practical guides that help you run your hotel to productivity hacks, self improvement books and stories about how to be resilient under immense pressure. Without further adieu - here are the 16 books recommended by top GMs for their peers. 1. The 7 Habits of Highly Effective People by Stephen R. Covey Recommended by Simone Harms from Sage Hospitality in Santa Clara, California, Campbell Lee from Quest Apartment Hotels in Melbourne, Australia and Alex Obertop from SIDE Hotel Hamburg in Hamburg, Germany The 7 Habits Of Highly Effective People teaches you both personal and professional effectiveness by changing your view of how the world works and giving you 7 habits, which, if adopted well, will lead you to immense success. Habits one through three are focused on self-mastery and moving from dependence to independence. Habits four through six are focused on developing teamwork, collaboration, and communication skills, and moving from independence to interdependence. Habit 7 is focused on continuous growth and improvement, and embodies all the other habits. Hotel GMs can all relate deeply to these principles and for any GMs in a rut, Quest Apartment Hotels GM Campbell Lee told us, “7 Habits was a turning point for me. I was forced into reading it a decade ago by my GM at the time (which I did kicking and screaming!), but found it so engrossing to have a fully documented system for essentially being a better person; especially one that is so easily communicated to others you yourself are helping to mentor and grow. Within 6 months of reading it, I took the leap and quit my job and applied for a Hotel GM position without any prior experience, and have never looked back!” 2. Emotional Intelligence: The Groundbreaking Book that Redefined What it Means to Be Smart by Daniel Coleman Recommended by Imran Jivani from Bedderman Lodging in Chicago, IL and Silvia Nadal from Hotel Jazz in Barcelona, Spain Emotional Intelligence explains the importance of emotions in your life, how they help and hurt your ability to navigate the world, followed by practical advice on how to improve your own emotional intelligence and why that is the key to leading a successful life. Being the general manager of a hotel can be highly emotional with extreme ups and downs. Understanding how to channel those emotions is absolutely critical for keeping your staff productive and happy. "Understanding a person is much more complicated than a position, but that understanding brought on by emotional intelligence will help create a future leader who has a vested interest in the success of the company, property, and (most importantly) themselves," says Imran Jivani of Bedderman Lodging. 3. Start with Why: How Great Leaders Inspire Everyone to Take Action by Simon Sinek Recommended by Enoch F. Nimene from Bridge Hotel Group in New York, NY and John Kirk Wright from Banyan Tree Companies in Roswell, Georgia Start With Why is Simon Sinek’s mission to help others do work, which inspires them, and uses real-world examples of great leaders to show you how they communicate and how you can adapt their mindset to inspire others yourself. Sinek’s belief is that the important thing is not what you do (run a hotel) but why you do it. It’s important for hotel GMs to understand why they run their hotel - is it for profit? Is it to make guests feel at home? Once you understand and communicate your own motivations you’ll be better able to motivate your team. 4. I Like Giving: The Transforming Power of a Generous Life by Brad Formsma Recommended by Paul Patiño from The Saguaro Palm Springs in Palm Desert, CA Paul Patino runs one of the most coveted hotels in California - the Saguaro Palm Springs. Paul believes that the essence of being a great general manager is not in your ability to simply own the P&L but in your unique ability to give of yourself. Paul told us that, “What I’ve learned in my long run in hospitality is that running an operation and answering to a P&L to ownership at the end of the month/year is all the same. Anyone can do it once they have had enough practice but the true challenge is being that leader that can move everyone in the same direction together and bring out the best in each person. Not everyone can do it and most days with social media and the world we live in, everyone wants that quick instant gratification. When in reality all great things take time, patience, and lots of love. The book I’m reading now is teaching me what I have done for a long time for others but just giving me a sharper knife. Doing right by others and leading by example, having a true connection with each person and inspiring them to be better versions than they already are is what’s truly important in this industry now a days. Once you have that the whole operation runs itself and people or group of happy people can overcome any obstacle, move any mountain. This book highlights that in so many ways and I encourage you to read it if you haven’t and go change someone else’s life and most of all have fun discovering how much you can do for others with very little.” 5. Setting the Table: The Transofrming Power of Hospitality in Business by Danny Meyer Recommended by Gary Gutierrez from HRI Lodging in New Orleans, LA This is not a typical business book, and it’s certainly not a how-to book. For hoteliers, what’s most meaningful is creating positive, uplifting outcomes for human experiences and human relationships. Running a hotel, like life, is all about how you make people feel. It may sound easy but this is actually pretty difficult to execute on. Danny Meyer, founder of Union Square Hospitality and the global hamburger empire, Shake Shack coins what he calls ‘Enlightened hospitality.’ Danny’s lessons help you put hospitality to work for first for the people who work for you, guests, community, suppliers, and investors — in that order. 6. The Obstacle Is the Way: The Timeless Art of Turning Trials into Triumph by Ryan Holiday Recommended by Peter Smiley from Hotel Nexus in Seattle, WA This book is a modern take on the ancient philosophy of Stoicism, which helps you endure the struggles of life with grace and resilience by drawing lessons from ancient heroes, former presidents, modern actors, athletes, and how they turned adversity into success, thanks to the power of perception, action and will. Many CEOs joke that their job is to be a plumber, finding holes in their respective businesses and plugging those holes. As the CEO of their hotels, GMs are constantly facing obstacles and adversity - this book gives GMs tools to turn obstacles into success. 7. Leading with Questions: How Leaders Find the Right Solutions by Knowing What to Ask by Michael J. Marquardt Recommended by Joseph Kirtley from Highgate Hotels in San Francisco, CA This is a highly acclaimed book that blends theory and practice on a leadership skill that is universally appreciated but seldom illustrated - asking the right questions. Joseph Kirtley, GM at Highgate Hotels says it best, “Leaders often feel that we are supposed to have all the answers. In actuality, being a great leader takes humility, and asking the right questions. Opening yourself to the strengths and knowledge of those around you takes you to another level.” Throughout the book, he demonstrates how effective leaders use questions to encourage participation and teamwork, foster outside-the-box thinking, empower others, build relationships with customers, solve problems, and much more. 8. Zapp: The Lighting of Empowerment by William C. Byham, Ph.D Recommended by Gary Gladstone from Diamond Mountain Hotel & Casino in San Jacinto, CA “Zap taught me to think a different way. When making a decision about how to handle a guest problem I now remember to ask the agent involved their opinion and what they recommend,” says Gary Gladstone of the Diamond Mountain Hotel & Casino. Employee motivation is often a difficult idea to truly grasp, yet alone to influence and leverage. Yet, if companies are to continuously improve, as is necessary for survival and success, everyone in the organization needs to be engaged. Byham writes that people with this engagement (those who are "zapped") have "responsibility, a sense of ownership, satisfaction in accomplishments, power over what and how things are done, recognition for their ideas, and the knowledge that they're important to the organization." 9. How to Win Friends & Influence People by Dale Carnegie Recommended by Guillaume Verchere from Radisson Hotels in Brussels, Belgium How To Win Friends And Influence People teaches you countless principles to become a likable person, handle your relationships well, win others over and help them change their behavior without being intrusive. Many GMs even go on to take the Dale Carnegie course which teaches interpersonal skills and public speaking to help them become better leaders in their respective communities. Some of the concepts that Carnegie outlines seem intuitive and simple but are fundamental to creating and fostering strong interpersonal relationships. 10. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt Recommended by Liutauras Vaitkevicius from Good Hotels in London, UK Freakonomics helps you make better decisions by showing you how your life is dominated by incentives, how to close information asymmetries between you and the experts that exploit you and how to really tell the difference between causation and correlation. This is a somewhat nontraditional pick for GMs but provides a valuable framework to think about incentivizing team members on property to consistently deliver the best experiences to guests. Luitauras told Hotel Tech Report, "this book helped me to become more efficient, more effective in my work. Once I understand correlation, reasoning, needs of my guests and my team, I can make right decisions quicker. It has also taught me to look into data more closely and challenge 'old ways' of doing things. And that really pays off long-term in building structure, new processes and helping my team achieve more in shorter periods of time." 11. Switch: Hot to Change Things When Change is Hard by Chip Heath & Dan Heath Recommended by Mohamed Elbanna from Four Seasons Hotels & Resorts in Palm Beach, FL Switch is about how you can lead and encourage changes of human behavior, both in yourself and in your organization, by focusing on the three forces that influence it. You might have heard the analogy of your brain as a rational rider, sitting on top of an emotional, stubborn elephant, trying to direct it, which makes it easier to understand how your brain’s rational and emotional side work together. Hotels are often thought of as slow to adapt when market dynamics shift and Heath gives a strong framework to help get your team ahead of changes to beat out the compset. Heath argues that what many think is resistance to change is actually just a lack of clarity around how to change. Setup incentives correctly and give a clear path forward for your team and even ownership for that matter - you won’t regret it. 12. Don't Sweat the Small Stuff: Simple Ways to Keep the Little Things from Taking Over Your Life by Richard Carlson Recommended by Rob Flinter from PPHE Hotel Group in London, UK Don’t Sweat The Small Stuff will keep you from letting the little, stressful things in life, like your email inbox, rushing to trains, and annoying coworkers who drive you insane and help you find peace and calm in the stressful world that is your hotel property. This is a great book that gives you tools to cope with those days when it just feels like the whole world is on your shoulders and you can’t do anything right. 13. Good to Great: Why Some Companies Make the Leap and Others Don't by Jim Collins Recommended by Heather (Dighton) Strauss from Prime Group US in Miami, FL Good To Great examines what it takes for ordinary companies to become great and outperform their competitors by analyzing 28 companies over 30 years, who managed to make the transition or fell prey to their bad habits. With companies like AirBnB and the OTAs, hoteliers are no strangers to disruption. Unfortunately this is just the beginning. While many GMs have thrown their arms up in defeat - there is still time to reinvent and out innovate some of these newcomers. 14. How to Run a Great Hotel: Everything you need to achieve excellence in the hotel industry by Enda M. Larkin Recommended by Brandon Sheldon from Mission Point Resort in Mackinac Island, MI According to Brandon Sheldon, GM of Mission Point Resort, “How to Run a Great Hotel really taught me to think about goals, but also how I will achieve the goals.” This book is based on the premise that being good is just not good enough in today's competitive environment. For hotel owners & managers who want to achieve lasting business success through a root & branch review of key business processes, 'How To Run A Great Hotel' is a 'must read'. 15. 100 Tips for Hoteliers: What Every Successful Hotel Professional Needs to Know and Do by Peter Venison Recommended by Jil Vivienne Berghäuser from Hotel Brandenburger in Potsdam, Germany Hotel Brandenburger GM Jil Berhauser told Hotel Tech Report that it’s important to lead with passion: “[as a general manager] you must be passionate about your job. You must have a clear vision about what you hope to achieve and find ways to share this vision and passion with everybody in your team. - If you're not passionate about it, who else should? Not having complaints does not mean that you are satisfying your guests. Find time for feedback and listen to your guests. To meet guests effectively, a manager needs to be around in guest area at business time. 100 Tips for Hoteliers details the strategies that have helped Jil channel her passion into results. 16. Nuts!: Southwest Airlines' Crazy Recipe for Business and Personal Success by Kevin Freiberg Recommended by Xavier Moulin from SH Hotels & Resorts in Cabo San Lucas, Mexico “Strategy and leadership publications offer relevant concepts and systems that are, in most cases, adaptable to a given business model. Beyond the theory however, lies a host of creative yet often unconventional solutions that have not only proven wildly successful in real life, but at times helped transform the very fabric of an industry. Immersing myself into the thought process and reasoning of business visionaries such as Kevin Freiberg in his book Nuts! helped me define fun and motivating productivity techniques that truly resonate with a team and are particularly well aligned with the emotional nature of our hospitality trade. Beyond the direct financial impact, the sheer associate engagement, fulfillment and retention observed as a result proved overwhelming.”