In 2019, Hyatt Hotels posted an EBITDA of $707 million. Choice Hotels reported an EBITDA of $291 million. Hilton Hotels came in with an impressive $2.04 billion EBITDA (Q3 TTM). If you’re not sure what EBITDA stands for, let alone what your hotel’s EBITDA is, these numbers won’t mean anything to you. The EBITDA calculation is one of the simplest and most powerful ways to measure your property’s financial performance. The EBITDA margin can be used to improve your total revenue management approach – bringing better profitability and financial growth to your business. Here’s what EBITDA is and why you should pay attention to this key performance indicator. What is EBITDA? EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It’s a basic measure of profitability and can be used as an alternative to simple earnings or net income. The easy way to calculate EBITDA is to start with operating profit – earnings before interest and tax (EBIT) – and then add depreciation and amortization. There is an EBITDA formula, which is: EBITDA = Total Revenue – Expenses (excluding interest, taxes, depreciation, and amortization). You will find your earnings, taxes, and interest on your hotel’s income statement. Look for depreciation and amortization in the notes to your operating profit report or cash flow statement. Why do companies use EBITDA instead of a more comprehensive profit margin calculation? EBITDA became a popular calculation in the 1980s as investors began to look at distressed companies in need of financial restructuring. EBITDA was a way to ascertain whether or not a company could pay back interest on a financing deal. Today, investors use EBITDA to evaluate businesses with different capital structures, tax rates, and depreciation rules. It’s a good way to assess the earning potential of a start-up or a newly restructured company that may have a lot of debt. EBITDA strips out costs that can hide how a company is really performing; some analysts use it as a proxy for cash flow. Applying the EBITDA Formula to Your Hotel Business EBITDA is a particularly useful formula for the hotel industry where many properties have a large number of assets. EBITDA allows you to demonstrate potential profitability and show creditors the amount of money available to pay interest when financing and accounting decisions are taken out of the equation. If you manage a hotel with locations in other countries or regions, EBITDA is a good formula for comparing financial performance without the complication of different tax rates. To apply the EBITDA formula to your hotel, start at the top of your profit and loss statement (P&L). The first section of your P&L will show revenue: total income generated from rooms, food and beverage, and other hotel services – the spa, gift shop, lobby shop, or events. As you continue down the statement, you’ll reach expenses: what you’ve spent on things like payroll, inventory, cleaning and laundry, and other purchases. These are your operational expenses. There will also be some fixed costs and “undistributed costs”, such as marketing costs and OTA fees. To get your EBITDA, simply take the total revenue (from the first section) and subtract your total expenses (from the second section). The Evolution of EBITDA in Hotels Any examination of EBITDA in the hotel industry needs to start with rooms revenue and lately alternative accommodations like Airbnb are making room revenue harder to earn. As a result, hoteliers are turning to new revenue streams, like food and beverage earnings and lobby shops, to increase profitability. “We’re talking about revenue generators—beverage is back with a vengeance,” one hotelier told Hotel Business. “We’ve done three rooftop bars and have four more in the process—great margins, very socially acceptable, makes the hotel stand out. Those are the kinds of things that people are buying into now." Earnings equal revenue minus expenses and on the other side of the P&L calculation, expenses are increasing in key areas. Rising labor costs are weighing on hotels as minimum wage hikes take effect this year in many states. This year, 21 states have raised their minimum wage; states like Massachusetts and Washington require hourly rates as high as $13.50. Payroll accounts for more than 42% of a hotel’s total operating expenses, which means even incremental changes can impact your EBITDA dramatically. Other big changes relate to the exclusions from EBITDA. Hotel financing has evolved, changing the interest calculation for many hotels. Hotels are taking short-term loans: $31.7 billion of which are due this year. These loans were taken as the result of “heavy acquisition and brand consolidation activity,” reports ReBusiness Online. Taxes have also increased in the hospitality sector. The average state lodging tax revenue grew 2.92% from 2017 to 2018; this tax is imposed as a flat dollar rate per night. This tax is passed through to the guest. High taxes discourage guests from staying longer – or at all. This impacts your hotel’s revenue streams and may also change where you make your incremental profit. Lastly, depreciation and amortization have remained relatively constant variables. Amortization is similar to depreciation, but it applies to an intangible asset – a patent, trademark, or franchise agreement, for instance. Franchise fees are obviously very relevant in the hotel industry; these fees include charges for royalties, marketing, frequent traveler programs, sales and reservations, and other miscellaneous fees. In 2010, franchise fees averaged 6.8% of room revenue; fees increased to 7.2% in 2016. Increasing taxes, interest, and franchise fees can’t be ignored when planning your hotel’s operating budget. But, for the purposes of EBITDA, removing these costs gives you a clearer picture of your property’s financial health. How Tech Can Help Your Hotel Better Optimize EBITDA These changing variables mean that hotels must deploy a total revenue management approach to optimize their EBITDA. Total revenue management refers to managing all revenue sources in your hotel – not just room revenue, but food and beverage, spa and gym, events, and tours. Start by optimizing your rooms revenue using a pricing and yield management tool like Duetto’s GameChanger. GameChanger is a powerful revenue management system that simplifies pricing to capture the best revenue possible for your room inventory. Duetto reports that GameChanger customers see an average RevPAR Index increase of 6.5% from using the platform. The tool allows revenue managers to drive direct bookings through enhanced pricing, setting rates and offers at a price point that makes you the most money while still converting. Next, dive into your F&B revenue. Lobby bars have blown this revenue stream wide open. As Hotel Business reports, “lobbies are being redefined, many without registration desks and many that put a focus on the lobby bar. ‘The way we approach it is we see every seat in the lobby as a revenue seat. Why put seats there for people to sit in? Put seats there for people to sit in and buy something.’” Revenue management systems like Duetto meeting this trend by getting better at pricing tRevPAR. This gives your team a better understanding of how to price rooms based on expected F&B revenue, allowing you to optimize total profitability by guest. And finally, don’t ignore your data. Business intelligence tools like Duetto ScoreBoard take total revenue management a step further, allowing hoteliers to make more data-driven decisions with granular real time data around key facets of the business like channel mix and profitability. ScoreBoard provides performance forecasts and analysis across your portfolio, updating in real-time to show you how your different revenue streams are performing. Optimize your decision making to drive revenue through the best booking channel while saving costs from areas that aren’t working. Your EBITDA will thank you for it.
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Do you have a spare $1.6 million lying around? That’s the average amount that security experts now estimate a business needs to recover from a cyberattack containing malware. Hotels are easy targets for hackers. Cybersecurity is not something many hotels feel confident in. "Last year, the two biggest global reports on data breaches, Trustwave’s Global Security Report and Verizon’s Data Breach Investigation Report, both show hospitality continuing to struggle in this area. Verizon, meanwhile, reports that accommodation, food and lodging made up for nearly 54% of their caseload,” says Bob Russo, GM of the PCI Security Standards Council.” Each time a hotel’s guest records get breached, the property is burdened with financial strain and faces broken trust with guests. As a hotelier, you don’t need to be an expert in cybersecurity, but you absolutely need to understand the basics to protect your business and your guests. Here are some ways to tackle cybersecurity at your hotel and minimize your risk as much as possible. Why Hotels are Attractive Targets for Hackers Hotels are easy – and profitable – targets for hackers. Hotels make attractive targets for two reasons: first, cybersecurity at many properties is lax. “Only about 25% of all U.S. businesses, including hotel operators, are fully compliant with current data security best practices. That means that three out of four are not and are potential disasters waiting to happen,” says Russo. Secondly, hotels process lots of transactions and store tons of guest data. A hacker can simultaneously target a property’s point-of-sale and property management system to capture payment card information as well as personal data, like passport numbers and email addresses. Malware can move between POS and PMS systems at different properties under the same brand, affecting guests in locations around the world with no one the wiser. Likewise, there are many access points a hacker can target in a single property. “In February, it was reported that of the 21 most high-profile hotel company data breaches that have occurred since 2010, 20 of them were a result of malware affecting POS systems in a hotel restaurant, bar, and retail outlet,” says Mark Voortman, Ph.D., head of the information technology program at the Pittsburgh-based Rowland School of Business. A small, 100-room hotel with a 50-seat restaurant still processes hundreds of unique payments each day. Those unique payments are virtually defenseless; few hotels have the necessary security protocols, infrastructure, and training in place to make sure any interested parties are dissuaded from stealing guest information. What is Malware? Key Cybersecurity Concepts Defined Understanding the key concepts of cybersecurity is half the battle. Here are some common terms you will encounter while improving security at your hotel: Phishing: phishing occurs when scammers send you an email, text, or even call you to try to trick you into revealing personal information they can then use to access your bank details or credit cards. A phishing email might look like a message from your bank warning you that it will shut down your account unless you verify your personal information. Encryption: Encryption is a security procedure that involves scrambling data so that only parties authorized to read it can understand the information. The process takes readable data and alters it so that it appears random. The party that receives encrypted information needs a key to unscramble data and turn it into readable plaintext. VPN: VPN stands for “virtual private network.” A VPN will mask your IP address and keep your internet activity largely untraceable. It’s a great tool for making sure your internet connection is secure and private. Malware: malware is shorthand for “malicious software.” Malware is designed to gain access to your computer; spyware, ransomware, viruses, and Trojan horses are all different types of malware. Penetration test: penetration testing is a procedure where a cybersecurity expert tries to identify weak points in a computer system. The expert simulates a malware or hacking attack to find any vulnerabilities that bad actors could take advantage of. APT (Advanced Persistent Threat): an APT is the worst kind of attack, in which a bad actor uses “continuous, clandestine, and sophisticated hacking techniques to gain access to a system and remain inside for a prolonged period of time, with potentially destructive consequences.” Antivirus: a program designed to detect and destroy computer viruses on an operating system Anti-malware: Similar to antivirus software but where antivirus focuses on older/known threats, anti-malware typically focuses on newer unknown threats. Malware protection focuses on identifying unknown threats before they turn into full on mature viruses. Malware removal is typically more difficult than antivirus since there are more unknowns. Rootkit: A rootkit is a clandestine computer program designed by cybercriminals to provide continued privileged access to a computer while actively hiding its presence. Keylogger: A keylogger, sometimes called a keystroke logger or system monitor, is a type of surveillance technology used to monitor and record each keystroke typed on a specific computer's keyboard. Keylogger software is also available for use on mobile devices, such as Apple's iPhone and Android devices. Keyloggers are a legitimate software that can be used for good but are often used as a scam to steal sensitive information like credit card numbers and passwords. Botnet: a network of private infected computers containing malicious code and controlled as a group without the owners' knowledge, e.g., to send spam messages. Using a VPN and encryption, as well as performing regular penetration testing can keep your network secure against malware and APTs. You should also ensure that your hotel's IT team regularly checks on property computers for keystroke loggers and that your staff doesn't open strange email attachments. These are the bare minimum security protocols you must practice regularly to avoid disasters like these high-profile hacks in the hotel industry. High-Profile Malware Attacks in the Hotel Industry Research from Symantec, a cybersecurity firm, found that more than 65% of hotels are routinely leaking booking reference codes through third-party sites. Why is this important? Because the information shared through these codes would allow a bad actor to login to a reservation, view personal details, and even cancel a booking altogether. When this happens, your guest information is vulnerable and you risk destroying the guest relationship. Symantec’s research showed hotels of all sizes are at risk. Major hacks have occurred at HEI Hotels & Resort, Starwood/Marriott and more. Here are just a few high-profile events: HEI Hotels & Resorts In 2016, a data breach impacted 20 US hotels operated by HEI Hotels & Resorts. The attack exposed the payment card data from tens of thousands of food and drink transactions. Malware was discovered on the hotels’ payment systems used to process card information at on-site restaurants, bars, spas, lobby shops, and other facilities. Experts determined that hackers likely stope customer names, account numbers, card expiration dates, and verification codes. Starwood/Marriott In January 2019, Starwood/Marriott discovered that a data breach had exposed the personal information of guests who had stayed at their properties since 2014. Guest data was stolen for around 500 million people – including encrypted passport numbers and credit or debit card numbers. The New York Times reported that hackers may have been working with China’s Ministry of State Treasury, as an attack of this scale is remarkable. Omni Hotels & Resorts Omni was also attacked in 2016 in a malware breach that affected 50,000 customers. Debit and credit card information from 49 of the chain's 60 locations was stolen: including credit and debit card numbers, cardholder names, security codes, and expiration dates. Hyatt At 41 of Hyatt’s hotels, hackers gained unauthorized access to payment card information in the second attack since 2015. Of the second attack, one security expert noted, “It’s possible the steps taken by the Hyatt group back in December 2015 are still being deployed throughout the organization, especially if those systems are dispersed around the globe and not connected by a common network. When choosing your systems management toolset, you need to implement the solution which is secured using 2048bit certificates and two-factor authentication but also works regardless of where the endpoints are located.” Sabre Sabre processes reservations for roughly 100,000 hotels and more than 70 airlines worldwide. The company was targeted in 2017 by bad actors who stole credentials for the Sabre Hospitality Solutions’ SynXis Central Reservations system. Those credentials provided access to customer data, including payment card information and reservation details – customers’ names, email addresses, phone numbers, and addresses. These high-profile attacks grab headlines, but there are hundreds of smaller attacks that happen at hotels each month. Even recently, a massive hack, like the one at Fontainbleu in Miami, has gone unnoticed by the mainstream media. Sources reported that Fontainbleu faced a ransomware attack to their credit card system, forcing the hotel to either compromise guest data by continuing to accept card payments or to ask guests to pay in cash. Guests waited up to five hours for rooms while the front desk tried to mitigate the situation – a scene one person described as “chaos.” “The line was out the door into the lobby,” one executive told Variety Magazine. For a five-star hotel such as the Fontainebleau, an incident like this is absolutely brand destroying. How to Protect Your Hotel Malware Attacks & Cyber Threats What’s the best way to make sure your data stays safe and no guests are left stranded? First and foremost, take extra care in selecting a point-of-sale system and credit card processor. “Agreements with those entities should be vetted and, if possible, modified to add protection and minimum data handling standards for the outside vendor. Compliance with the Payment Card Industry Data Security Standard (PCI-DSS) not only helps to ensure that data security software, hardware, and practices are safer, but also helps to protect against fines and penalties when a breach occurs,” writes one expert. An enterprise-grade provider, like Oracle Hospitality, can secure the vulnerable link between your PMS and POS. Oracle OPERA is a cloud-based property management system that integrates with the Micros point-of-sale system, as well as a suite of other applications. Oracle offers sophisticated security protocols, such as Cloud Security Monitoring Analytics for monitoring the platform both on-site and in the cloud. Oracle tools also include: Cloud Compliance Control (OMC CC) for checking the configurations against company requirements or external regulations; Cloud Access Security Broker (Oracle CASB) to discover shadow IT in the cloud and monitor corporate requirements regarding the use and configuration of Oracle and 3rd party cloud services such as AWS, Salesforce, Azure, Box etc.; Identity Cloud Service (Oracle IDCS) for providing a user management and authentication system for on-premises or cloud services. These security protocols monitor what’s going on in your internal network as well as any external attacks. Working with Oracle gives you multilayer security, data protection, secure transactions, and compliance with payment and data privacy standards. But, as evidenced in the Sabre attack, sometimes even these measures aren’t enough. With the right credentials, anyone can get past your security system. The right technology is only half the equation; over the years, security experts have also identified employees as part of the problem. Hotels must train their staff to handle personal information security, comply with privacy policies, and change user access credentials regularly. This industry has high turnover, which is part of the reason why employees don’t always maintain security standards. Your property should regularly host info-sec seminars to make sure all new employees are trained and veterans stay up-to-date with the latest threats. Even with a great PMS/POS system and the right training, it’s important to perform routine penetration testing and risk assessments. There’s no straightforward answer as to how often you should pen test your network, but experts warn once a year probably isn’t frequently enough. Beyond training your staff, keeping your security software up to date, and investing in a platform like Oracle OPERA that's invested in cyber security, you can encourage your guests to use a VPN and to log out of their WiFi when not using it.
The AHLA (American Hotel & Lodging Association) wants to know: is your hotel doing enough to protect its most vulnerable staff? Often alone and isolated from other staff, your housekeepers and maintenance workers present an opportunity for guests with malicious (and criminal) intent. And those bad guests are taking advantage of this isolation: 89% of U.K. hospitality workers report having faced some form of sexual harassment from either guests or managers during the careers. In Chicago, 58% reported having been sexually harassed and 49% having been flashed or otherwise exposed to a nude guest. Beyond the psychological toll of these traumatic incidents, the costs to your hotel are steep: Replacing a worker earning less than $50,000 annually—which covers nearly all of the housekeepers in the United States—costs an average of 20% of annual wages. For a housekeeper making the median wage, that’s $4,754. Your hotel’s profitability requires a productive staff that shows up on time and doesn't quit. A single sexual assault incident can leave your hotel understaffed and overextended. The solution is to prevent incidents in the first place, which is the goal of the the American Hotel & Lodging Association’s (AHLA) 5-Star Promise. Here's everything you need to know about this initiative, how it applies to your hotel, and what you need to look for in staff safety technology. What’s the AHLA’s 5-Star Promise? The American Hotel & Lodging Association (AHLA) announced its 5-Star Promise in September 2018. The AHLA calls the promise an effort “to ensure America’s hotels are safe places for all those who work in and visit them.” “The 5-Star Promise is a pledge to provide hotel employees across the U.S. with employee safety devices (ESDs) and commit to enhanced policies, trainings and resources that together are aimed at enhancing hotel safety, including preventing and responding to sexual harassment and assault.” -AHLA The intiative was driven by rising awareness of issues related to sexual assault and harassment in the workplace, an awareness shared by all hotel brands. Hilton CEO Christopher Nassetta said about his company’s commitment to the 5-Star Promise: "Safety and security has never been an area that we compromise on. We realized, over the last year and a half, this is an area — in terms of taking care of our team members — that we [the hotel brands] really shouldn’t be competing on, and that we should have a unified and aligned, and as consistent an approach that we could.” Initially, 17 companies backed the promise. That number has since expanded to 56, dramatically increasing the number of employees benefiting from the roll out of staff safety technology, policies and training. That's more than 20,000 hotel properties, covering an estimated 1.2 million employees. The Promise is also backed by partnerships with national organizations dedicated to ending sexual violence and fighting human trafficking. And it’s not only technology. It’s about finding the best policies and training programs to encourage greater staff safety. The 5-Star Promise has five key commitments, which cover technology, policy, and training: Our People Culture. Build on our industry’s longstanding commitment to hospitality and a People Culture by continuing to provide industry-wide training and materials on safety and security, and retain expert guidance to work with the industry on diversity and safety matters. Mandatory Policies. Ensure mandatory anti-sexual harassment policies are in place in multiple languages. Training and Education. Provide ongoing training and education for employees on identifying and reporting sexual harassment. Technology. Provide U.S. hotel employees with employee safety devices (ESDs) to help them feel safe on the job. Partnerships. Broaden vital partnerships with wide-ranging national organizations that target sexual violence and assault and trafficking and promote workplace safety. When implemented holistically, the 5-Star Promise shifts the narrative around staff safety, empowers staff, and makes hotels safer for everyone. What Does The 5-star Promise Mean For My Hotel? To achieve these five points of the 5-Star Promise, your hotel must blend new technology with augmented training and clear policies around sexual harassment, abusive casts and retaliation against victims. The 5-Star Promise has established a new normal for the industry setting staff expectations around access to safety technology from their employers. As these protections become standard, all hotels (regardless of size) will need to provide them to their house in order to maintain competitiveness and a tight labor market. There's also the potential for litigation, as staff may be able to argue that your hotel was neglectful in providing necessary safety devices in the workplace. Regulators are also paying attention. Panic buttons are increasingly becoming a mandated part of the accommodation industry (for more, check out our complete guide to wireless panic button regulations). Even if your hotel brand is not a part of the companies backing the initiative or not in a region with mandated employees safety devices, it's worth considering adding this technology to your budget. The tech helps protect your staff (and your hotel’s physical property and brand reputation) from a variety of incidents, from sexual assault to guests storing illegal materials (like the dozens of guns stockpiled by the Route 91 shooter in Las Vegas). "The panic buttons, or safety buttons, are useful in that they are a real-time lifeline for women who work alone. It can be used in the case of a sexual assault or harassment, and in other dangerous situations, like if a worker finds a guest who has highly dangerous or illegal materials in their hotel room," -Rachel Gumpert, UNITE HERE To dig deeper into best practices for your own hotel, the AHLA also hosts an annual Safety Summit. The event brings hotels together to discuss the latest technology and most impactful strategies for improving staff safety -- and can be a valuable resource for hotels looking to get up to speed quickly with the latest in staff technology. Staff expectations (and the regulatory environment) are shifting quickly -- so it's important to stay up-to-date! What To Look For In Staff Safety Technology The 5-Star Promise commits to provide employee safety devices (ESDs) to all employees by 2020. The wearable panic buttons give staff a layer of protection and peace-of-mind that help is only a button click away. For most hotels, this commitment involves a major infrastructure project that must be both planned and budgeted for. Since staff safety technology is new to most hoteliers, these are the key features to look for in your staff safety technology provider. To illustrate each of these points, we'll use the top vendor in our staff safety technology category, ASSA ABLOY Global Solutions. Works Everywhere. Connectivity is a top consideration. Without reliable connectivity and complete coverage, the safety devices will not function as intended. ASSA ABLOY Global Solutions is one of the vendors that combines cellular, GPS, Bluetooth, radio frequency and WiFi to provide consistent connectivity. The devices can work off different signals to prevent diminished functionality from signal dead zones -- for example in closets and stairwells. Form Factor. Devices must be easy-to-wear and visible so staff can access them easily. Prominent placement can also be a visual deterrent. ESDs come in two forms: a fob and a card. Always On. Battery life is another top consideration. Since staff wears these devices every day, extended battery life is key. ESDs feature a battery life of 2 years While it's networking Solutions are plug-ins that don't need batteries replaced. Digital Security. To protect your network, and to prevent anyone from disrupting the signals to and from the safety devices, look for encryption. Safety devices feature encryption on the individual device, as well as within the connected network. The system also tracks specific computer IDs (known as MAC addresses) So you can identify anyone that is excessively pinging the network to identify vulnerabilities. Alert Controls. Alerting security to potential incidents is the core value proposition, so look for technology that makes that easy to manage. For example, ASSA ABLOY Global Solutions’ “alert lifecycle management” centralizes distress calls in a single dashboard so that response personnel are instantly alerted to any emergencies. Alerts are also sent out to designated responders via text message, with automated reminders if an alert isn’t dealt with. alerts can also be updated if a location changes, so that responders can be directed in real-time to the appropriate location. Easy Admin. Staff safety systems are quite complex. They involve multiple access points and dozens of individual devices. You'll need a portal that helps you manage these easily and efficiently, without adding a bunch of unnecessary work. For example, ASSA ABLOY’s admin portal is available on any tablet or device with Google Chrome. It monitors the connectivity status of each gateway and ESD, as well as each device’s battery status. It maintains a history log with each other's details, such as location time stamp, operator and responder. For brands with multiple hotels, it's absolutely essential to find a solution that allows a centralized staff to view and access multiple systems. Plug & Play. User-friendliness should also extend to system setup. Technology that is too complex to implement becomes a burden and is much harder to maintain. Management software eliminates many of these frustrations by providing automatic cloud updates, as well as plug-and-play access points called BlueFi Gateways. These AC- or DC-powered devices bridge between the Bluetooth-enabled devices to the property WiFi, ensuring that the ESDs function seamlessly property-wide. Finally, to be certain that your vendor is aligned with these principles, check for 5-Star Promise compliance. Most vendors are familiar with this important initiative and will want to promote that they comply. If a vendor it's unfamiliar, it's not a good sign. Look for one that is fully 5-Star compliant!
When you think of a hotel concierge, perhaps you imagine a stylish, suit-clad professional in a glamorous hotel somehow scoring tickets for a sold-out Broadway show. The ticket-seeking guests, of course, become guests for life and write rave reviews for your hotel across the web. But how exactly did the concierge pull it off while juggling dozens of requests? With technology, incredible guest experiences are accessible to any hotel who seeks to improve review scores, increase incremental revenue, and build guest loyalty. In this article, we’ll review a concierge job description, share some tasks a concierge might handle, and uncover the secrets of that little golden lapel pin on the best concierges’ jackets. Gaining a deep understanding of concierge service can help you decide whether to implement cutting-edge technology like Alliants Concierge to earn better reviews and higher revenues. What is a Hotel Concierge Exactly? Before we dive into the concierge job description, you may be wondering how to pronounce “concierge.” Coming from the French comte des cierges, meaning “keeper of the candles,” old-school concierges assisted the medieval upper-class as they traveled from castle to castle in Europe. Phonetically, the word is pronounced “kaan-see-ehrzh.” Want to perfect your pronunciation? This video can help you say “concierge” like a pro. Now that you know how to say it, what does a concierge do? A concierge is responsible for providing local information and helping guests organize any activities they wish to do during their stay. Sometimes the concierge builds a detailed itinerary for a guest, while other times he or she simply answers questions or points guests in the right direction. Like front desk staff, the concierge acts as a face of the hotel, so they should have a friendly, welcoming personality. Communication skills and attention to detail are important traits in a concierge, since they will be responsible for the intricacies of a guest’s itinerary. If the hotel attracts a lot of international guests, then foreign language skills can help a concierge succeed. A concierge should also have extensive knowledge about the local area, perhaps even building relationships with managers at top restaurants so they can secure hard-to-get reservations. 10 Things a Hotel Concierge Can Do For Guests Though we often think of concierges booking show tickets, that’s not all they do. No two days are the same for a concierge, and they often receive requests for unique, one-of-a-kind experiences. Next time you meet a concierge, ask them about their most interesting guest request - if they’re not busy helping a guest, of course! What are some things a concierge might do besides booking restaurants and tickets? Sign them up for a loyalty program. Guests often ask concierges for discounts and perks, so if your hotel has a loyalty program, the concierge acts as the spokesperson. Teach local must-know lingo. Concierges want to help guests enjoy their city to the fullest, and one of the easiest ways to do that is to eliminate confusion about local words. Before you taste Miami’s best cafecito or ride the L in Chicago, you need to know what a cafecito and the L are. Track down forgotten or lost items. Have a guest who forgot to pack toothpaste or misplaced their passport? Leave it to the concierge to find a solution. Find kid-friendly play areas. Concierges are the go-to area experts, and their knowledge isn’t limited to nightlife. They can share recommendations for playgrounds, parks, and even babysitting services. Arrange a room upgrade. Concierges aren’t just knowledgeable about the area - they’re also treasure troves of information about the hotel itself. Want a room with a landmark view or furthest from the elevator? Guests can get the room of their dreams - and your hotel can earn some incremental revenue. Book spa or beauty services. Need a bit of R&R or a glamorous look for an event? Let the concierge help your guests find the perfect massage, hairdresser, make-up artist, nail studio, and more. Help with medical needs. Forgot a prescription or need a last-minute dentist appointment? A concierge can assist out-of-town guests with health needs too. Share tips on avoiding traffic. Google Maps can only tell you so much; a concierge knows the busiest times on the road from their own experience and can recommend alternate routes, public transit, or ridesharing. Plan activities or book restaurants before arrival. You might think your relationship with the concierge only begins when you arrive on property, but concierges can help you plan your trip as soon as you book your room. Not forget about furry friends. Pets are guests too! Besides arranging for a pet bowl and a pet bed in a guest’s room, concierges can recommend pet-friendly restaurants, dog parks, and activities for four-legged companions. The World’s Best Concierges Belong to Les Clefs d’Or If concierges are athletes, then Les Clefs d’Or is the Olympic team. This exclusive organization has about 4,500 members worldwide, which is just a tiny percentage of the world’s concierges, and chapters in dozens of countries. These concierges are the ones who can make any guest’s request become reality, “so long as it is morally, legally, and humanly possible.” Luxury hotels often include the number of Les Clefs d’Or concierges that they have on staff (usually it’s not more than 1 or 2) in marketing materials - it’s that big of a big deal. Becoming a member of Les Clefs d’Or is no easy feat. In addition to several years of hotel work experience, prospective members must submit letters of recommendation and may need to pass a written examination. If accepted, then the concierge earns his or her badge of honor: a small golden lapel pin with two crossed keys, representing that they now hold the keys to the city. These concierges are expected to make the impossible happen. Want a driver in a red Corvette to pick you up at the airport in Paris? How about a photoshoot with Persian kittens in the hotel’s penthouse? Or a midnight shopping spree at a mall in Hong Kong? A Clefs d’Or concierge will work their magic and make it happen. Behind the Scenes: How the Best Concierges Use Tech to Surprise and Delight Concierges - even those wearing the golden keys - are only human, so they can’t deliver these amazing experiences entirely on their own. Technology is a concierge’s secret weapon, which helps them communicate with guests, analyze trends, and organize guest requests so nothing slips through the cracks. Concierge systems can even offer insights into a guest’s likes and dislikes so a concierge’s recommendations are extra-personalized. Great concierges, like the ones in Les Clefs d’Or, use platforms like Alliants Concierge as an all-in-one technology solution to manage & fulfil guest requests. The system doesn’t just manage requests, but it also tracks guests’ preferences and stores information about nearby vendors so concierges have everything they need at their fingertips. By providing data-driven recommendations based on guest trends and preferences, concierges can offer more relevant suggestions and increase conversion - the percentage of guests who accept their suggestions - to drive incremental revenue to the hotel’s outlets. To make operations seamless, platforms like Alliants Concierge even integrate with complementary systems like HotSOS and Oracle Opera PMS. Eager to learn more about technology solutions for concierges? Check out our concierge software buyers guide to find the system that works best for your hotel. Although technology will allow a concierge to provide better recommendations and ensure every request is actioned, he or she must still boast an impressive network of contacts and local insider knowledge. We’re still wondering how this concierge was able to arrange a private visit to Buckingham Palace for an art-loving guest!
Most hoteliers don’t use Snapchat or know what TikTok is. Generation Z’s, however, are flocking to the platform in record numbers – making it the world’s second most downloaded app of 2019. TikTok is the epitome of what it means to be a Gen Zer. It’s also a perfect symbol for how few hotel marketing managers really understand this demographic. Few hotels are making any effort to capture the attention of this younger generation – and this attitude is catching up. Those who understand this new generation of post-millennials leverage marketing influencers and tap into passion points like climate change to drive business. Generation Z is already one of the largest consumer groups, despite the fact that some members of this demographic are younger than age 10. They “control $200 billion in direct spending. In the meantime, they influence more than $600 billion in spending by their parents,” according to one research report. Members of generation Z are expected to account for 40% of all consumer purchases by the end of this year. It’s tempting to apply the same approach you take marketing to millennials to Gen Zers, but this strategy won’t win you any younger guests. Don’t underestimate this group: yes, they’re tech savvy, but they’re also budget-conscious, globally-minded guests who wish to be taken seriously. It’s not all about the next hottest social network. These travelers require an additional level of personalization, authentic messaging, and plenty of digital touchpoints to streamline the journey. Generation Z: Who are They? Generation Z is generally regarded as those with birth years between 1995 and 2015. They are the youngest generation and many of these young people are still in high school and below. It would be a mistake to conflate Gen Z with Gen Y, also known as Millennials. While these groups may share some characteristics, they have very different perspectives, habits, and attitudes that impact their purchase decisions. Generation Z is the first generation of “digital natives,” a buzz phrase that means this group has grown up completely immersed in the internet through platforms like Google at a very young age. Smartphones, touch screens, and apps have been the norm since birth, unlike Gen Y, who can remember a time before wireless internet. Gen Z has strong tech skills, the ability to multitask, and the desire for personalized, custom-built experiences. At a high-level, here’s what this generation is all about: They’re discerning. Cynics say that Gen Z members have “an eight-second attention span.” More to the point, having grown up in the age of the internet, this group is able to quickly sort through and assess huge amounts of information. They can quickly tell when they’re being sold to and what’s worthy of their attention. They define personal interaction differently. Despite their reputation for constantly spending too much time on their phones, Gen Z takes face time seriously. “74% of Gen Z would rather connect with colleagues face-to-face than via other formats. But here’s the catch: Gen Z doesn’t equate face-to-face with in-person,” one CEO told Fast Company. For Gen Z, conversations happening on social media or over text are just as real as in-person conversations. They’re the “sober generation”. Gen Z has grown up in the post-9/11, post-recession world. They’re pragmatic savers who seek value, rather than luxury. They look to be defined differently than Millennials and work hard to avoid the “lazy” stereotype. This is a group that believes strongly in “diversity, equality, nondiscrimination and the alleviation of poverty.” When it comes to travel, Gen Z may share similar values to Gen Y – but how this group goes about booking a hotel, engaging with a property, and enjoying their stay differs dramatically. Generation Z vs. Generation Y and Baby Boomers Older generations like Gen Y and the Baby Boomers are the two other largest consumer groups hoteliers need to know. Gen Y, known as Millennials, were born between 1980 - 1994; Boomers were born between 1944 - 1964. Boomers came of age during a time of post-WWII optimism. This generation turns to traditional media like Facebook and TV advertising, and seek travel experiences by deciding on the destination first. Millennials, Gen Y, are much closer to Gen Z in their spending habits. They rely on social media platforms more than traditional media to get information about brands: Gen Y uses their mobile device for most things, but 32% still use a computer to complete a purchase. “As is well documented, many of the millennial generation's life choices, future earnings and entrance to adulthood have been shaped by this recession in a way that may not be the case for their younger counterparts,” reports Pew Research Center. Technology that Baby Boomers and Millennials have had to adopt has been part-and-parcel for Gen Z. The iPhone debuted in 2007 when the oldest Gen Zers were 10; since then, social media, constant connectivity, and on-demand content have become the norm. As a result, Gen Zers are thought to be better at multi-tasking, more knowledgeable about politics and the world, and have more diverse tastes – the internet has made the world their oyster. Gen Z and Boomers share a love for discounts; Gen Z and Gen Y share a level of comfort with interacting with brands on social media. Gen Z Travel Preferences This technologically-savvy group expects next generation digital experiences and wants your hotel to provide genuine, ethical experiences that can be booked through a smartphone. Gen Z takes “mobile-first” to the next level. “As with all other things, Gen Z expect to be able to handle all advance transactions on their phone or tablet: from selecting their destination to booking all the details, including flights, ground transportation, lodging and restaurant reservations. They want to be able to ask questions online and get immediate answers as they make their decisions,” writes VisionCritical. For this group of travelers, that they can book experiences, rooms, ancillary services, and text with your property is should be a given, rather than an exception. This generation also grew up traveling: travel company Contiki reports that 79% of Gen Z have traveled overseas by age 15. Their travel experience, combined with their values of diversity and inclusion, mean this generation sees themselves as part of a “global village.” Gen Z plan trips that prioritize experience ahead of price and these travelers have an open mind when it comes to what that experience could be. When they decide to take a trip, they’re undecided about where they want to go; Gen Z turns to social media to find both inspirational content and travel deals. And, finally, this group travels with a conscience. Gen Z is drawn to hotels and travel companies that show a commitment to sustainability and socially-conscious travel. This group is much more ethical than previous generations; conscious consumerism is more than just a buzzword to Gen Z. McKinsey research found that: 70% of Gen Z survey respondents try to purchase from companies they consider ethical 80% remember at least one scandal or controversy that involves a company 65% try to learn the origins of the products they buy 80% refuse to buy from companies that are involved in a scandal Gen Z will do their research and stay at properties that pay fair wages, commit to sustainability, and give back to the local community. These are important aspects of their travel experience, not just checkmarks in a corporate sustainability report. Tips for Attracting Gen Z to Your Hotel What does all this mean for your hotel? The good news is that you don’t need to amass a following on TikTok to try to recruit younger guests. That said, you must have a strong digital presence. One way to build a digital footprint is by marketing local experiences through display ads and social media. Approximately 1 in 3 Gen Z travelers reports that they want their next vacation to be an adventure. Display ads attractively showcase destinations, experiences, and sustainable travel in a way that still allows Gen Zers to “discover” something authentic. Unique, Instagrammable – yes, even TikTok-able – experiences will draw in the Gen Z crowd. The importance of foodie experiences has increased significantly: McCrindle’s market research for Contiki found that 35% of Gen Z prioritize food experiences. More than 90% of Gen Z research where to eat before they travel. A firm like D-Edge that can target Gen Zers seeking foodie experience by managing and optimizing display ads on major platforms, like AdRoll, Criteo and Sojern. Expedia reports that appealing deals and images are impactful for more than 60% of Gen Zers who say advertising is influential. Capitalize on the fact that Gen Z prefer spontaneity by highlighting some of the local tours and highlights of the area throughout your hotel website. A hotel website design partner like D-Edge can help you build a website that isn’t just mobile responsive, but totally mobile-optimized; this means guests can quickly find what they need without having to navigate complicated dropdown menus and slow-loading images. D-Edge even has an in-house media production team that can support your brand with great content – content that will hold a Gen Zer’s attention for more than eight seconds. -- Bottom line: it’s time to find a marketing partner who understands how to target the Gen Z guest on their customer journey. Start marketing to this consumer group now to get ahead of the competition as their buying power continues to increase over the next decade.
It takes years of study and multiple degrees to become an expert in data science – time that hotel industry professionals don’t have. But, understanding the basics of data science can increase profit at your property with very little studying required. The latest hotel technology, like a smart revenue management system, makes data science accessible – and even easy – to hotel owners and revenue managers, no matter what your level of expertise. This guide will take you through the elements of data science that apply to running your property more profitably, starting with a quick overview of what data science actually is. We’ll show you how a revenue management tool can utilize machine learning to make the more technical aspects of data science easy for your managers. Read on to learn how to use data science to take advantage of customer data, pricing trends, and industry data to increase profit. What is Data Science? Data science is the practice of extracting information from data. Data science involves analyzing large amounts of data through programming and data mining to uncover useful insights and intelligence for an organization. There are five commonly accepted phases to the data science life cycle. They are: Capture: data is acquired or extracted (for example, Google Analytics logs the number of unique visitors to your hotel website); Maintain: data is cleaned and stored in a data warehouse (Google Analytics stores the number of unique visitors over five years); Process: data is classified, modeled, clustered and/or summarized (Google Analytics can reorganize unique visitors by time of day, geographic location, and referral source); Analyze: through predictive analysis, regression, qualitative analysis, or other (Google Analytics can tell you where your bounce rate might be causing you to lose unique visitors); Communicate: insights are reported and used for business intelligence and decision making (Google Analytics reporting can tell you whether a marketing campaign is adding unique visitors to your website) Data science is an increasingly popular field due to the rise of big data. Big data describes the large volume of structured and unstructured data that a business collects every day. Data scientists analyze big data in order to provide hotels with insights to beat competitors, learn about their customers, and run targeted marketing and pricing campaigns. What Does a Data Scientist Do? If the description of data science sounds broad, that’s because it is. Data scientists perform a wide range of data-related tasks, from “optimizing Google search rankings and LinkedIn recommendations to influencing the headlines Buzzfeed editors run,” writes Harvard Business Review. Generally speaking, data scientists go through this process to analyze big data: “First, data scientists lay a solid data foundation in order to perform robust analytics. Then they use online experiments, among other methods, to achieve sustainable growth. Finally, they build machine learning pipelines and personalized data products to better understand their business and customers and to make better decisions. In other words, in tech, data science is about infrastructure, testing, machine learning for decision making, and data products.” Data scientists are in high demand. LinkedIn ranked data scientist as “the most promising job of 2019.” Data scientist topped Glassdoor’s list of the ten best jobs in America. Data from Indeed’s job openings show data scientists can earn between $86,000 and $123,000 per year. Often, the terms “data scientist” and “data analyst” get used interchangeably, but these roles are slightly different. A data scientist focuses on creating the questions; a data analyst focuses on answering an existing set of questions. For instance, a data scientist tries to estimate the unknown with statistical models and predictive analytics. They mine existing data points from your hotel’s CMS, PMS, marketing campaigns, and more to shed light on areas like customer behavior, operational efficiency, pricing, and demand forecasting. A data analyst, on the other hand, might dive into big data to answer a specific question, such as “why did my RevPAR drop in the third quarter?” Analysts are more focused on solving problems than data scientists. How is Data Science Different from Machine Learning and Data Analytics? Things get even more complicated when you add the field of machine learning into the mix. Machine learning deploys algorithms to extract data and to forecast future trends. Machine learning is a subset of data science; the rise of big data means that data scientists can’t efficiently manipulate data sets by hand anymore. Machine learning processes data sets autonomously so that data scientists can focus on the bigger picture. Machine learning can be seen in everyday life; Netflix uses machine learning to recommend new shows and movies based on your viewing history. Facebook uses machine learning to predict interests, recommend friends, and notify you of potential pages to follow based on user behavioral data. Amazon uses machine learning to recommend products based on your browsing and purchase history. Machine learning also plays a big role in the hospitality industry, specifically in advanced revenue management systems. An RMS like IDeaS G3 utilizes machine learning with statistical methods to produce cutting-edge forecasting and decision optimization. IDeaS’ algorithm factors in data from competitor rates, search penetration, booking trends, and optimization scores to power a continuous pricing model. The tool can automate many of the tasks a data scientist would have had to perform manually; the pricing model pulls information to continuously update pricing decisions based on the latest information. How Can Hotel Groups Leverage Data Science? Smart pricing is just one instance where data science can make a big difference in your profit margin. Yield management is a similar process that involves the use of dynamic pricing to control profitability around fixed inventory supply. Yield management is tricky: set your rates too high, and demand drops. Set your rates too high, and you sacrifice revenue for volume. IDeAS’ can overcome these challenges by using machine learning to forecast demand. The tool looks at patterns in historic data from your properties and the market at large. It then forecasts demand for smarter rate recommendations, which can be automatically applied in real-time to keep inventory priced optimally. “IDeaS revenue management systems do more than determine the best price, they also provide hotels with the power to yield and analytically price by room type and determine the most profitable group business to accept,” writes one reviewer. Data science can also drive smarter customer segmentation and marketing automation. A typical marketing tool like Mailchimp can’t automate segmentation – meaning the platform can’t decide when is the best time to send an email to a specific guest category. Only a platform that uses data science can factor in existing data points, such as recency, frequency, monetary value, and length of stay, to time the right message to the right audience perfectly. “For example, if a hotel targeted guests who would likely take advantage of spa services, golf and restaurants, rather than guests who only generate room nights, they could significantly increase revenues and profitability. Unfortunately, money often gets spent on blanket campaigns that don’t target individual guests or segments with offers they’re most likely to respond to,” writes one industry analyst. Getting more targeted with data science helped Starwood Hotels determine how to get the best value out of translation services for its property websites worldwide. Starwood turned to data scientists to determine if it was worthwhile to spend time and resources translating some of their branded websites into certain languages. They used a model that weighed revenue over two years versus the full on-going cost of translation at the market level. The formula delivered huge business results – up to 97% more revenue, according to Skift. Data mined from your website can be used to improve conversion rates by experimenting across a range of user experience variables, as Skift’s example conclusively proves. A data science approach can successfully improve conversion rate optimization. Through experimentation, a manager can learn which metrics to influence to test different landing page configurations, analyze the data, and repeat. Test each aspect of your website experience, from the headline to the size of the “Book Now” button, to make sure every design detail is primed for conversion. Finally, market intelligence data, from competitors’ RevPAR, occupancy rates, and average daily rates from STR to event data and rate parity data, is critical to optimize how you price your rooms. Rate parity is the difference between prices quoted on a hotel’s branded website compared to prices quoted by an OTA. This data set is often obscured by non-contracted OTAs and other third parties. Rate shopping tools serve to mitigate this issue by showing how your direct competitors are pricing their rooms. You Don’t Need to be a Data Scientist to Embrace Data Science at Your Hotel Being a data scientist takes years of training. Instead, IDeaS revenue solutions can give you immediate strategic advice and tech tools to improve your revenue management. Learn from their team of data scientists and use their software to perform analyses that would otherwise take a Ph.D. to accomplish. Here are just a few of the features a revenue management software can offer: Demand-based pricing by room type: when demand for your suites rises, automatically increase the price of a suite without also increasing the price on a double room. Virtual Revenue Management Service: get an assigned industry revenue expert to work directly your staff to accelerate your revenue strategy Continuous pricing: the tool mines search penetration, competitor rates, booking trends, and reputation scores, to forecast demand, continuously updating as new data comes in Rate publishing: consistently and accurately update rates across channels to achieve the highest booking value at the lowest acquisition costs, with no manual updating Work with limited data: if your data sets are limited, IDeaS can clone data from existing hotels to provide baselines for demand and predict guest behavior. As a hotelier, it’s important to understand the basics of data science. Leave the actual data science up to a firm like IDeaS with dedicated data science teams that can deliver solutions for all of your data needs.
Really, another acronym? You might feel as if your mind is already boggled by all the hotel industry terminology that you’re expected to know, but we have some good news about APIs. You likely already use APIs on a regular basis, and APIs can play a big part in making your hotel’s technology work seamlessly. By developing a deeper understanding of what an API is, you can better understand the systems at work in your hotel and make more informed technology decisions. And when your technology works effectively (and economically!), your hotel can benefit from more efficient employees and happier guests. In this article, we’ll break down what is an API, describe some API examples, and show how you can incorporate APIs into your hotel’s daily operations. If you’ve been in the industry for a while - or even a technology user in general - you have probably noticed the huge shift away from analog systems and toward software. APIs are at the core of how the software “revolution” is possible. We can explain the rise of software through economist Adam Smith’s theory of specialization. In economics, he explains that instead of every country producing all the goods they need, each country can produce only what they’re best at and trade with other countries to get the things they’re missing. This system decreases production costs and creates economies of scale. Thinking about software again, APIs enable software companies to become specialized, that is, only building software that has a specific purpose. A network of systems that each provide specific services can work together seamlessly thanks to APIs that act as translators and messages between them. What is an API? The acronym “API” stands for application programming interface, although for most hoteliers it might as well be gibberish. Don’t stress though, because the concept is actually quite simple. In the early days of software, systems were server based which meant that they rarely (if ever) spoke with each other. Think about that first Mac in your house before the internet - it was very much a lonely island. As processing power advanced and internet speeds increased exponentially, software became easier to develop and more accessible. As the world shifted from a myriad of lonely server based systems to an ecosystem of hyper connected platforms, there became a need to enable seamless communications amongst those systems - enter the API. Ok, let’s use a hotel analogy to better understand the concept. Imagine you’re sitting at a table in your hotel’s restaurant. The kitchen is the part of the “system” that will prepare your order. What’s missing is the critical link to communicate your order to the kitchen and deliver your food back to your table. That’s where the waiter (or API) comes in. The waiter is the messenger – or API – that takes your request and tells the kitchen – the system – what to do. Then the waiter delivers the response back to you; in this case, it’s your food. APIs are effectively messengers of data between applications. Every time you book a flight on Expedia you are using an API that delivers pricing and availability from the respective airline’s database onto Expedia’s website. That same dynamic now happens between hotel software and hardware systems. API Examples in the Hotel Industry Now that we’ve established that APIs serve as links between two systems, you might have an idea of why they’re so important in the hotel industry. In order for a hotel’s systems to provide value, they need to be able to communicate with each other - and with external players like online travel agencies. What do APIs look like in a hotel environment? Let’s dive into some API examples. Connecting an RMS to a PMS In order for revenue management systems to deliver valid and relevant pricing recommendations, they need information from the hotel’s property management system, like occupancy numbers. Some property management systems, like protel, have developed seamless integrations with specific revenue management systems, which are possible with APIs. Protel, for instance, uses an API to integrate with Atomize, which receives a 24/7 feed of data from protel to deliver insightful pricing recommendations. The API converts the stream of occupancy and rate information from protel into data that Atomize can use in its rate and market analysis algorithms. Connecting a PMS to upsell software Is speaking with your front desk staff still the only way for guests to upgrade their room? With an upselling software that connects to your PMS, guests can purchase room upgrades or add-ons without the need for staff assistance. If your upsell software didn’t communicate with your PMS, front desk agents would need to manually enter every modified reservation. Thanks to an API, the “interconnectedness” of the two systems can lead to more efficient operations. Protel offers an integration with upselling platform Oaky, so hotels that use protel’s PMS can also benefit from the upselling services that Oaky provides without disrupting current front office operations. Connecting business intelligence software to a PMS Your hotel produces so much data on a daily basis that it can be hard to make sense of it. A business intelligence tool can synthesize data from the front office, your F&B outlets, and even competitor hotel performance to deliver valuable insight into your strategy. Was your marketing campaign successful? Do you need to add another cocktail server to your bar staff? BI software can answer many data-related questions about your hotel operations. However, a BI tool is worthless without a reliable feed of data from your PMS or any other systems that provide operational data. BI software uses APIs to connect to your hotel’s other systems in real-time. A BI tool like OTA Insight’s Rate Insight offers a seamless integration with protel, which is made possible through an API. Rate Insight receives a steady stream of PMS information from protel so that it can analyze trends and provide recommendations. By now we hope you can appreciate how API isn’t just another acronym. APIs make technology more user-friendly and efficient, and they’ve made a world of innovation possible in the hotel software industry. If your hotel’s technology solutions don’t have open APIs yet - which allow complementary systems to integrate - then we recommend opening a conversation with your software vendor to explore options for building an API in the future. If your systems do have APIs, then we encourage you to work with your vendors to leverage their technology most effectively and maximize the value that your hotel receives. Interested in switching to a system that offers a broad catalog of integrations? Check out protel’s partner marketplace to see examples of how APIs connect their hotel technology ecosystem.
Last week I lead a panel at HEDNA’s LA conference about 'Evolving Business Models in the Hotel Industry' where we discussed one of the most popular hotel trends in today’s mainstream media landscape. The idea for the panel actually formed a few months earlier. Back in September, I published an article titled Sonder is Not a Tech Company where I argued that an excess of venture capital and a bad case of AirBnB FOMO (fear of missing out) was driving exciting new hospitality brands into dangerous waters. I wrote the article on a Saturday afternoon and by Monday it had more than 7,000 hits. My inbox was flooded with emails from industry colleagues sharing their take on the article. I hand picked three of the experts for this panel based on those who had the most insightful perspectives. All three of these responses came from people with significantly more intellectual horsepower than me who also disagreed with me on key arguments in compelling and articulate ways. I have spoken at length with each of these individuals on the subject matter but learned even more by putting them all in a room together. In this article, I’m going to share how each of them changed the way I think about alternative accommodations and the future of the hotel business. Here are the panelists I chose and why I chose them: Rami Zeidan (CEO & Founder, Life House) told me that he disagreed about my point that hotel groups shouldn’t build any tech in house and that it’s a fools errand. Rami shared data on how Life House has built backend tools for revenue, marketing and distribution to acquire direct business far more efficiently than typical hotel groups. Adam Harris (CEO & Founder, Cloudbeds) disagreed with my definition of alternative accommodations. Adam’s software is now putting heads in more than 1M beds each night so he has a unique view on new hospitality products working with accomodations players ranging from RV parks and campgrounds to hostels and upscale hotels. Drew Patterson (formerly founded, Jetsetter and now Chairman, Transparent) disagreed with my point that alternative accommodations will negatively impact hotel rates anytime soon and through his analysis of Transparent’s proprietary dataset showed me that these alternative accommodations players were not even close to having scale that could impact a market. Elizabeth Winkle (Chief Strategy Officer, STR) is the one panelist who I hadn’t met prior to writing the article but she had read it and definitely had a unique take from our first conversation. I asked Drew who he thought had the best insight into this subject from his impressive network to which he immediately replied that we needed to get Elizabeth on the panel. The intent of the panel was simple: to have an unfiltered, real and yet respectful conversation about how business models are evolving in hotels. Mainstream media hypes these companies up as they raise boatloads of venture cash without ever taking the time to understand the underlying businesses. Journalists then proceed to immediately turn on these companies and their founders when they inevitably show cracks, kicking them while they’re down. The panel (and this article) is intended to break the “boom or bust” media cycle and take a closer look at where the hotel industry is actually going. What Counts as 'Alternative' Accommodations? As I read up on the emerging sector coming into the panel I couldn’t seem to find a clear definition of what ‘alternative accommodations’ meant. To me it was something between an AirBnB and a hotel with a tech focused positioning that attracted venture capital (investors who usually don’t invest in hotel companies). When speaking with the panelists prior to the event, each seemed to have their own definition so I wanted to ask what it meant to them during our live discussion. Rami went first and gave such an articulate response that the rest of us just nodded in agreement. Rami’s definition seemed incredibly obvious in hindsight as most great ideas do, “alternative accommodations refer to the alternative use of residential spaces for lodging purposes.” This new definition meant that companies like Rami’s Life House Hotels and even the controversial India based OYO Rooms aren’t actually ‘alternatives’ despite taking on venture capital. They are just hotel companies with different investor profiles. Why Alternative Accomodations Isn’t a New Category I joked at HEDNA that without Drew Patterson, Hotel Tech Report wouldn’t exist. I won’t go into the full story here but in many ways without Drew I would never have got into this space where hotels meet technology. Needless to say, when Drew talks I listen. With our new definition of alternative accommodations Drew added a critical layer of nuance. He pointed out the fact that while these assets might be alternatives in urban markets, they’re actually the status quo in leisure markets like Myrtle Beach and Breckenridge. In highly seasonal leisure markets property managers have for many years tapped underutilized vacation homes and condos as professional short term rentals to provide extra income. In these markets it’s relatively difficult to justify hotel development given the large supply of rentals already servicing lodging demand. To see how an oversupply of professionally managed short term rentals impacts hotel development - we can look to these markets as pretty clear case studies. These “alternative accommodations” players are doing the same thing in urban markets that vacation rentals have done to an extent in seasonal leisure markets for many years. Drew has leveraged proprietary data to do deep analysis around the market dynamics and nuance that's definitely worth checking out for those interested in this rapidly changing market. The scary thing here is thinking about the types of investors backing these players and how that impacts the trajectory of these businesses. Could you imagine Softbank backing Joe Shmo’s Vacation Rentals business in Tampa, Florida? Joe Shmo probably makes a really nice living but he's not exactly running a venture business. How Hometels Are Impacting the Apartment Industry Drew helped me realize that alternative accommodations aren’t a new concept like they’re being portrayed. Elizabeth pointed out some of the impacts these ‘hometels' were having on local housing. A super interesting element of Elizabeth’s perspective is that her company STR was recently acquired by commercial real estate data giant CoStar for a cool $450M. That means that Elizabeth now has exposure to commercial real estate datasets reaching far beyond the hotel market. Every major media conversation about alternative accommodations talks about how they are disrupting hotels, but Elizabeth was the first person I’ve heard to posit that they’re having a greater impact on the multi-family space. What did she mean by that? Elizabeth noticed that deals are getting underwritten in the multi-family world that are structured in non-traditional ways and that some of those deals wouldn’t have ordinarily been done at all without a player like Sonder or Stay Alfred coming in and leasing up units out of the gates promising revenue guarantees. She also introduced me to WhyHotel, a company that in concept could be the most interesting of them all. WhyHotel runs pop up hotels with the specific intent of helping landlords drive revenue while they lease up their units on new development. It's a super focused and clear vision which I respect and if they can figure out how to make the economics work, they will create a very nice business off of this that would be very attractive for a major multi-family REIT like Equity Residential to acquire one day. But in the case of these other players, they're attempting to create long term hotels in multi-family spaces. Let’s say that you had a questionable multi-family development that wouldn’t get underwritten by banks or investors because the rental market was oversupplied - now that deal might get done because the alternative accommodations component is tied to the lodging market and not to the multi-family market. In new builds this dynamic can potentially lead to an oversupply of housing which drives prices and real estate values down. In multi-family conversions this could occupy rental supply driving exacerbating the new housing crisis and making rentals even more expensive. It's important to really think through (and model out) the potential long term impacts of new business models on our communities to the best of our abilities. They're Actually a Response to Brand Dilution Shrewd venture capitalists question the underlying assumptions baked into the success of a business prior to making an investment. Rami built Life House as a next gen hotel company that uses a new organizational structure (brand + management) and technology expertise to simply deliver hotel owners better economics and performance. To be bullish on an investment in Life House, Rami's investors like Ashton Kutcher and Thayer Ventures needed to agree with two core assumptions about the hotel industry: Hotel brands mean less today: Online reviews and digital media (e.g. photography) make brand awareness less valuable because travelers can compare accomodations products like never before. The major chains are launching more brands each day meaning that each brand means less to consumers than the last (all else equal). Adam Harris brought up the great point that when you search on an OTA today you see all of these different accommodation types side-by-side which is direct result of this shift. Technology is core to hotel management: Old school hotel management companies for the most part don’t understand technology all that well. These companies built their businesses on expertise in operations, marketing, human resources revenue management and administration. Each of those competencies where a huge value add for hotel owners 10-20 years ago but in today’s world, an efficient organizational structure and a smart technology strategy makes most of these areas relatively easy to manage for owners. Rami is unlike most of the founders in the adjacent alternative accommodations space in that he brought significant hotel and finance experience at top firms like Sydell Group and Starwood Capital to the table. It was through those formative experiences that Rami realized he could do things better. Life House’s business is built on the idea that management and brand are no longer as compelling of value propositions when pulled apart than they used to be. It’s also built on the belief that a large swath of traditional management companies don’t understand technology which renders them incapable stewards of precious hotel owner assets. I tend to agree with Rami on both fronts. Life House is building a new kind of hotel company brick by brick where alternative accommodations players have creatively found ways to growth hack their way to scale at the risk of coming out the other side with a shakey foundation. Alternative accommodations players have raised venture capital to chase a broader opportunity for disruption in the traditional hotel market under the guise of delivering a meaningful unique or disruptive model. So how are alternative accommodations players growth hacking their way to credibility? If someone were to come from outside the hotel industry and tell experienced real estate investors that they were going to create the next Marriott they’d get laughed out of the room. Consequently, these alternative accommodations firms have shrewdly gone to venture capitalists with a case of AirBnB FOMO and told them that they’ve found a loophole in the system. While they can’t go out and start managing hotels from day one like Life House is doing, what they can do (and have done) is convince struggling multi-family owners that they can make their lives a little bit easier by master leasing floors of their apartment buildings and guaranteeing revenue on risky assets. They then compare the P&Ls of these assets to traditional hotels and say that they’ve been able to use technology to operate more efficiently than hotels when in reality most of what they’re doing is avoiding the need for hotel permits, savvy investors and labor law compliance. The smart part is that it’s super easy to persuade landlords in the benefits of guaranteed income and no work in the short term so these companies have been able to scale up quickly. The problem is, now that they’re getting to scale and have venture milestones to hit - going floor by floor just doesn’t scale fast enough. Don’t believe me? That's why you see most of these companies opening traditional hotels of late and more will continue to do so. A critic might say that they shrewdly see the writing on the wall. Regulation always trails innovation so being stuck with a bunch of leased long term liabilities in tandem with short term assets doesn’t seem like such a great idea when you’re looking at the end of a bull market and the prospect of local accommodations labor unions who want to regulate you the same way they do hotels. A conspiracy theorist might sing a different tune, namely, that these firms used alternative asset use to build a brand, raise institutional capital and ultimately get a seat at the hotel development table long dominated by the Marriotts, Hyatts and Hiltons of the world. Regardless of which side you’re on, it’s clear that all of these companies and their venture investors think that the traditional hotel market is long overdue for a shakeup. What’s happening here parallels what we saw in retail 10-20 years ago. The 90s spurred insane growth in cookie cutter branded retail like Abercrombie and Aeropostale but recently these stocks have gotten clobbered to say the least. Consumers don’t want cookie cutter and omnichannel has won the day in dominant new age brands like Warby Parker, Bonobos and Stitch Fix. Investors in those businesses saw the writing on the wall for the tired old school brands who didn’t understand digital and overexpanded their real estate footprints. Venture investors today are betting that the same thing is going to happen in hotels and alternative accommodations is their preferred trojan horse (or go-to-market strategy). Digital's Biggest Lodging Opportunities Have Nothing to Do With Technology Let’s hop back to the original question, “what are alternative accommodations?” Cloudbeds founder Adam Harris generally agreed with our definition of alternative accommodations but posed that mass media is missing the most exciting part of the “alternatives movement.” Earlier we put forth the idea that brands (generic ones) mean less today because (1) there are so many of them and (2) consumers have access to information that helps them understand products without needing the crutch of brand associations (e.g. reviews and photography). These forces have fueled a powerful movement, namely, hyper specific alternative accommodation types like glamping villas, cannabis hotels and wellness tourism (think surf resorts and yoga retreats). Ultimately, low cost digital distribution has powered the long tail. 25 years ago yoga lovers would have relied on friends in their direct network to find a great yoga retreat. Today, 49,500 of them search on Google each month for that offering which powers experiential niche travel like never before. Adam believes that the most exciting trend happening in alternative accommodations isn’t about the way hotel companies are tapping multi-family real estate but it’s about the way that accomodations providers are able to build wonderful businesses off of niche interest groups by delivering truly unique and catered experiences. Ultimately, new marketing and distribution channels have unlocked the long tail and allowed niche accomodations businesses to thrive like never before while generic hotels squabble over guests who will never be loyal to them no matter what they do. What Does it All Mean? Rather than conclude with answers and recommendations I think it’s important to conclude with questions. These are questions that everyone in the industry should be asking as these business models evolve because if we don't we're likely to experience a significant amount of turbulence across the industry. These are also the things that journalists need to dive into before writing the next “doom or gloom” article about disruption in the hotel industry. What is the long term impact of excess venture capital going into traditional hotel businesses? A platform like AirBnB created immense value by activating inaccessible capacity, is the alternative accommodation sector actually creating value or is it just gaming the system? What are the long term effects of alternative accommodations on both multi-family and hotel assets (and their local communities)? How will unlicensed hotels in multi-family assets impact hotel industry jobs and broader employment? Does the alternative accommodations model work in all portions of the market cycle or is it only a quick fix here and now?
To put a lid on the cost and complexities of acquiring, converting, and keeping customers, TravelClick can be a valuable partner. Its comprehensive suite helps hotels achieve maximum revenues through stronger guest acquisition, conversion and retention, as well as more accurate pricing, data analysis and guest profiles. The rise of alternative lodging, with its scalable model and strong quality controls, has added to the hyper-competitiveness of acquiring customers. Acquisition costs are rising as these new brands, such as Sonder, compete for the same customers on third-party platforms. In this environment of expanding supply, you must be as efficient as possible with your digital marketing -- waste nothing, optimize everything. Here's a deep dive into how TravelClick empowers your team to achieve their revenue goals by acquiring, converting, and retaining more guests, and growing demand over time. Whether your hotel relies on a few or all of these tools, they are designed to work together seamlessly to reinforce the top objective: more profitable and reliable revenue. Acquire: Capture More Demand With Distribution And Digital Marketing Tools TravelClick streamlines the guest acquisition process with several distribution tools, as well as a robust digital marketing suite that drives demand. Here’s what you can expect from its guest acquisition tools. Channel manager. By enabling a broad base of distribution, your hotel can diversify its sources of demand and build a resilient distribution strategy that helps you meet (or beat!) your revenue and occupancy targets. The TravelClick channel manager connects to over 600 channels and partners serving over 170 countries, ensuring that your latest rates, availability, and restrictions are updated across all channels. These connections include revenue management systems and property management systems, so your real-time data can be easily disseminated to tools that help you optimize your pricing and run your property. In addition, there’s iHotelier GDS, which increases exposure and visibility among travel agents (an especially lucrative channel for business travelers) and Demand Services, which connects to metasearch channels (popular with leisure travelers). Central reservation system. Managing your reservations shouldn’t be complicated. By integrating the iHotelier CRS into your distribution technology, you'll have confidence that your latest availability and reservations will sync with your channel manager. This eliminates overbookings and powers your direct bookings. A web-based central reservation system that connects to multiple distribution channels and offers distribution modules for web, mobile, voice, travel agent and online travel agent (OTA) channels Booking engine. A conversion-optimized booking engine is a critical part of acquiring customers and building direct bookings. And if your hotel’s website doesn't offer self-serve booking or has a dated booking flow, your direct bookings will suffer. TravelClick’s iHotelier Booking Engine positions your hotel to capture your fair share of direct booking demand. As part of its Web Solutions division, TravelClick will also help you build a responsive website that slots right into its other products. Guests expect a modern experience and you must deliver! Digital marketing for hotels. When it comes to acquiring customers, digital marketing is king. While it's certainly important to have your inventory in front of customers across as many channels as possible, it's equally important to have an effective digital marketing strategy. The strategy must be efficient, as far as delivering bookings at a low cost, and reliable, as far as delivering bookings at a consistent and predictable pace. TravelClick Media Solutions focuses exclusively on advertising your property across a variety of digital media channels, including travel agents. These customized media plans will drive more profitable bookings by putting your property in front of the right prospect at the ideal time. The objective is to increase conversion, direct bookings, net revenue and return on ad spend (ROAS). With proper digital media marketing, TravelClick data shows a 20-50% lower cost of acquisition when compared to OTAs. The company segments its media solutions by Single Media Subscription, Travel Agent GDS or as part of an entire Media Suite. Convert: Optimize Revenues With Data Analysis And Business Intelligence TravelClick puts data at the center of everything. The data becomes the glue that binds the products together and ensures peak performance -- and maximum revenues -- across the entire ecosystem. “The biggest challenge with revenue is that good is not always good enough,” -Joseph Bustos, director of revenue, YOTEL New York With business intelligence tools, you can convert more lookers into bookers and optimize revenues across your entire demand ecosystem. These are the dashboards that monitor your performance and surface any potential issues automatically, so you're not forced to spend hours in Spreadsheet Hell or potentially miss something important because you're doing other important work. The TravelClick business intelligence tools include: Parity management. Holistic cross-channel optimization requires effective rate management. If your rates are not consistent across channels, you're losing business and causing distrust with potential guests. TravelClick’s Rate360 optimizes your hotel’s pricing strategy by keeping your rates competitive compared to others and increasing visibility into areas where competitiveness is slipping due to parity violations. Disparity is especially insidious when bad actors undercut your rates and pull business away from your direct channel, reducing your profitability. Rate shopping and market intelligence. Historical and future performance are valuable inputs for pricing and market positioning. TravelClick’s Demand360 put this into perspective, showing how your property compares to your competitive set, as well as by segment and channel. With the Demand360 business intelligence tool, you can see where you stand today and use data to predict outcomes for tomorrow. These predictions then drive better profitability, as the insights around forward-looking demand influence pricing, marketing and operational decisions, responding to the market in real-time. TravelClick’s Agency360. A business intelligence tool, which aggregates travel agency bookings across all agencies and consortia. With data on agency booking trends, you can craft strategies to increase your bookings and shift share from competitors. Hotelligence360. The flagship business intelligence tool puts market data at the center of your decision-making process. Data can be segmented by guest segment, property, portfolio, and channel. The suite includes Demand360 and Rate360 (covered above) as well as GuestView360. Retain: Know Your Guests With CRM and Marketing Automation With hotel CRM and email marketing powering your guest engagement and retention strategy, your hotel will capture more repeat business. The value of keeping existing customers is significant: Bain & Company research found that increasing customer retention rates by 5% increases profits by 25% to 95%. At scale, this can really add up. TravelClick’s retention-focused products are under the umbrella of Guest Management Solutions (GMS). It's more than just a customer relationship management solution. The GMS as it includes a robust set of marketing automation tools to engage guests across the guest journey. From upgrades to nurture campaigns, hotels earn incremental revenue by matching message to guest and building long-term relationships. These are the core features in the GMS suite: GuestView360. As the reporting module with Hotelligence, this is a business intelligence dashboard that visualizes guest profiles. Customizations. All confirmations, cancellations, modifications, and pre/post-stay messages can be customized and configured to your own priorities. Marketing automation. Automate your marketing workflows and leverage your rich guest profiles into loyalty bookings with an end-to-end marketing platform, Loyalty program. All of these features tie into a dedicated loyalty program module, so you can recognize returning guests and create exclusive promotions. All-in-One: The iHotelier Suite For those hotels looking to take advantage of a single integrated solution, TravelClick also offers an all-in-one package. Called the iHotelier Suite, The solution can be customized to your unique needs, Including whatever combination of tools that you need. The all-in-one option is a great way to take advantage of the power of an integrated set of tech tools and lock in substantial cost savings compared to a la carte. For anyone who’s waded through a confusing web of vendors (and their invoices), there's also a lot to be said about having a single central tool, all invoiced on the same bill each month. You also gain cost control and budget certainty with set monthly pricing that doesn't fluctuate. That peace of mind is worth a lot! TravelClick Pros and Cons According to its Customers We’ve pulled some pros and cons directly from TravelClick customer reviews. While there are a few reviews related to customer service issues and data latency issues, the majority of reviewers appear satisfied with the responsiveness of the team and the accuracy and features of the product. Since there are many products, we've identified the relevant product, if mentioned, and the reviewer’s hotel category. As we all know, it's important to choose vendors that have responsive customer service and a penchant for taking care of their customers! Pros: One manager at a branded property applauded TravelClick as the “best marketing intelligence tool “ and the “most reliable Rate Shopper technology. A boutique GM echoed this, saying that Demand360 is “one of the best intelligence products available out there” As it's simple to use and easy to integrate into the decision-making process. The outcomes have been favorable for another hotelier using the TravelClick booking engine, with an “undeniable” increase in income, as well as attention to their needs by the customer service team. Another booking engine user called the support “excellent” and the platform “easy and practical.” Cons: A few users reported issues with support, such as one branded hotel who used the Media Solutions product and found little support from the Account Manager or customer support teams. Training was also “not sufficient” for one booking engine user. The sentiment was echoed by a branded hotel using Media Solutions, who felt that online training and webinars were not enough for their needs and in-person, on-site training would be more effective. One Airport GM told us that the TravelClick GMS wasn’t user-friendly and “definitely” needs to be improved. Data recency also came up for one Branded GM, who Wanted more live data and increased usage from other brands on the Demand 360 platform. Getting Started with TravelClick Given how many products the company has, you’ll have to enter a sales process to get started. This is most definitely not a single click on-boarding! TravelClick is therefore most ideally suited for larger properties and portfolios that are operating on a somewhat longer lead time and implementation schedule. While TravelClick certainly counts independents among its clients, smaller properties may get lost in the mechanics of a larger company. For brands looking to simplify and streamline their technology, TravelClick is one to consider. This is doubly true for hotels looking to build an integrated technology strategy that reaches across all aspects of its operations. Those hotels may also want to consider other products within the Amadeus ecosystem, such as its property management products, sales and catering module and service optimization tools. With such a global reach and deep bench of expertise, coupled with products for nearly all aspects of the hotel's operations, TravelClick by Amadeus can certainly power significant transformation for hotels.