Hello ,
I am biased towards building brands, and it probably shows in my writing. I strongly believe that the biggest asset of a company is not their customer list, their products, their location or any of the many other factors contribute to success. I believe the strongest asset is the brand. This is the only way to command price, longevity and a solid customer base. But all the above are needed to build a brand.
Have a great weekend and feel free to share the newsletter and content.
Best, Martin
About me: I’m a fractional CMO for large hotel technology companies to turn them into industry leaders. I’m also the co-founder of 10minutes.news a hotel news media that is unsensational, factual and keeps hoteliers updated on the industry – in their language.
Loyalty programs, relevance
Loyalty programs are really rewards programs. I’ve mentioned this a few times already. It doesn’t make them irrelevant but it does change the angle at which one looks at them. They deliver more value to the brands issuing the programs than the the card holders (in terms of investor confidence mostly). At hotel level loyalty is hard to get, with about 10% of guests returning to the destination over a 12 month period, it is even hard to thoroughly invest in. We still haven’t found the Amazon Prime equivalent for the hotel industry. What delivers so much added value that it is worth paying a monthly subscription for in hospitality? Still an interesting study on loyalty programs in airlines and a bit of hotels.
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Airbnb performance vs. brand marketing
Airbnb, in 2020, reallocated approximately $800 million from performance marketing mainly on Google to brand marketing through videos, social media, and public relations. Despite a modest recent increase in their Google marketing spend, performance marketing remains a minority of their overall expenses, with 90% of traffic coming from direct sources. This strategy highlights the critical importance of brand building beyond mere performance marketing. Airbnb is uniquely disadvantaged in performance marketing, the cheapest keywords (name of the location) can only be sold 1x, hotels can sell them as many times as they have rooms. So moving to brand is a logical idea. They’re a brilliant example of a building the value of brand in hospitality. There’s a lot to learn from them. They have the most inconsistent products, yet their brand is trusted. Hotel chains can learn from this.
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Hotels are not ready for tech
A discussion at the Skift Data+AI Summit, highlighted the need for the hotel technology sector to evolve, particularly in light of shifting traveler behaviors, including those of Generation Z, example the automation of room assignment. The talk also touched on the role of Google and artificial intelligence (AI) in direct bookings as a counterbalance to online travel agencies (OTAs). The talk highlights the need to adapt for to the tech backlog that the hotel industry has accumulated in the last 15 years.
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Payment trends report
The Worldpay Global Payments Report 2024 gives some great insights into the payments industry and the significance of payment processing efficiency and options cannot be overstated, especially in the hospitality sector where the payment experience is a pain point. Streamlining payments can enhance customer satisfaction and reduce friction points during reservation process, check-in and check-out. Integrated payment solutions are the way and they’re low hanging fruit.
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Phonecall reservations coming back?
With the new model from OpenAI (GPT-4o) the voice agents are poised for a return. Hotels could benefit from this, room service, calls from the room about how to turn on the TV or more, and reservations. Phone reservations or pre-checkin could become a thing again. And at scale. I believe the key here will be that the guest knows they are talking to an AI agent, but the opportunity to reopen direct revenue from phone calls and chats at scale are interest.
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Getting properly ready for AI
With data streaming in from various sources such as the web, payment systems, forecasting tools, points of sale, POS and PMS, it is fundamental for hotels to harness this flow of information effectively. Getting AI implemented requires a proper structure of the data underlying it. Not everything can be managed through a ChatGPT box. This infographic is a great primer for the data management levels before it hits AI.
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That Google search leak
On May 5, a substantial leak involving Google Search API documentation of over 2500 pages of technical documentation. This breach highlights discrepancies between Google’s public assertions and their actual practices, potentially reshaping the broader understanding of Google Search’s internal mechanics. The summary however is that businesses need to build strong brands, commoditized search terms are good in the short run, but the only long term solution will be getting stronger brands. If you’re into this, this article is a good read.
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THOUGHTS:
The PMS wars have begun
A new race has started in the hotel technology industry, the race to shifting PMS from legacy to cloud. After more than a decade, the industry has finally accepted that PMS is going cloud. In the cloud space there are three main contenders, Opera Cloud, Shiji and Mews*. They’re the three who have proven they can scale globally and can cater to groups, chains, luxury and limited service hotels and across fiscal regions.
The PMS Wars is the race that these companies have engaged in in switching everyone from legacy solutions to cloud solutions. That’s the first phase. And the race isn’t just about independent hotels, this time the race is for the global industry. In fact one can argue that Independent hotels have a head start on chains as they’ve been switching for some years now. Chains have the added hurdle that not only do owners need to approve the costs, head office needs to over-come the long and painful testing and research on which systems they can use. Legal and fiscal requirements across continents, security and privacy regulations across regions, integrations etc. Which makes the choice quite limited. Hence the three companies mentioned above.
I believe this will start the first global upgrade of the hotel tech industry, which has been mired in PMS confusion for the last 30+ years. Tons of small local players that can’t be aggregated (merging legacy PMS systems isn’t possible so aggregation meant switching system and customers moving away). Thus no economic opportunity, thus no industry aggregation. But now that almost everyone will need to switch to cloud now, the real race is on.
One could say this shift has been happening for a while now, why is it suddenly a big thing? In 2015 I wrote what I think it takes for some hotel tech to go “mainstream” what is the tipping point. In our industry it takes one of the market leaders to adopt it (I will put a link to that article in the comments). Many great PMS companies have been cloud for over a decade, but it was still segment of the industry.
Over the coming years the race will accelerate heavily, vendors will be rushing to grab market share, hotels will need to decide who they go with. What are the key criteria? Most connections? Best service? Easiest to install? Largest on the market? Is the safest bet today the best bet for tomorrow? The old joke nobody got fired for going with IBM was true, until it wasnt.
There is no perfect answer to this, people who are risk intolerant will go with what they know, they would rather regret for 8 years than take a risk today. No matter how good the sales person it, that will not change. But a younger generation is coming in. They’ve live with technology, version upgrades don’t scare them.
The race is on and our industry will be better for it.
(* note I work with Shiji, and am friends with the founder of Mews. These thoughts are my own and not influenced, vetted or approved by anyone else.)
