Barcelona regulations, the DMA debacle, Should Revenue per Square Meter replace RevPAR, How travel inspiration happens today and more.
Hello ,
A lot of readers are probably at HITEC, I didn’t make it this year but hope it was a great show. Selfies on LinkedIn seem to indicate it was. Some conversations of how CTO/CIOs are merging with Digital teams inspires confidence about tech in our industry. But more on that another day. Enjoy the newsletter. BTW the 10minutes news International edition is launching. Check it out here.
Best, Martin
About me: I'm a fractional CMO for large travel technology companies helping 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 – also it is the most read hotel newsletter in Europe. See the international edition of the newsletter and subscribe to it here. 
Revenue per square meter?
It has always puzzled me that we use ADR, Occupancy or RevPAR as metrics in the hotel industry. They’re quite incomplete and one can achieve great success in one of them while cannibalizing the other. In addition it ignores how much space is not being used in a hotel. The ideal measure in my opinion would be revenue (and profit) per type of square meter, i.e. lobby, rooms, meeting areas, F&B etc. It would also give a good comparison between properties of similar type to see where one can improve. It is easy to write a paragraph like this, and harder to implement. Especially that, as I learned when working with BI tools, not everyone is keen on really looking at the real KPIs. Because… cherry-picking is real.
RISKS IN REVENUE MANAGEMENT
Banning rentals in Barcelona
Barcelona plans to ban the renting of apartments to tourists by 2029 to control housing costs, with rents having increased by 68% and home purchase prices by 38% over ten years. But it doesn’t really mention that Catalonia’s GDP has increased by 45% in the last 10 years and 100% in the last 20. So are the raising costs just a reflection of a growing GDP? And how much of the economy, jobs, earnings come from the increased tourism? Are rentals really the reason or are they just the easy target?
BAN SHORT-TERM RENTALS
All brands want more control
Over the last two decades the travel industry has pioneered a digital distribution transformation that no other industry has experienced yet. I would argue that travel is the most mature market in digital distribution. Many of the retail and ecommerce industry’s problems today are 5-10 years old in the travel industry. That being said, the much more scientific and efficient approaches of the retail industry are something we can learn from. Retail brands are experiencing the dizzying problem of marketplace dilution where independent brands can get more traction due to online marketplaces (sound familiar?). This report about the power shifts in the retail industry is worth reading. Ideas like exclusive products per channel are food for thought.
SHIFT IN RETAIL POWER DYNAMICS
We need better ads for hotels
Google analyzed over 8,000 successful ads and revealed that campaigns with inclusive narratives, and those emphasizing individuality and personal stories are more efficient. In hotel marketing we’re rarely inspirational. But maybe some new ideas would help. Personal storytelling, as seen with Tissot and Audi, can humanize a brand, making it more relatable and building a stronger connection with potential guests. Creating a sense of belonging, similar to the approach taken by BMW and Nintendo Switch, can enhance the appeal of hotel loyalty programs, which, as previously mentioned, are more about rewards than true loyalty. With newTV the living room screen is becoming more accessible to smaller brands. Maybe this is the time to get better on that creative.
ANALYZING 8000 ADS
The continuing DMA debacle
The DMA law is surprising in its ability to break things for consumers and vendors. In the hotel space it has given the OTAs (marketplaces) the ability to push out independent hotels from the ad space. In the rest of the tech industry it is breaking things for developers and customers. And will also put Europe behind the rest of the world in terms of new technology. While regulations are important, in the technology space so far, most of them have had the opposite effect each time. GDPR and DMA being two quite important failures. Most of this could have been avoided, through selective testing, beta versions and some scenario planning. I simply struggle to understand how so many smart people can spend so much time to create something like this and then be surprised by the problems they have caused.
APPLE, THE DMA AND THE REGULATOR, D-EDGE STUDY
Travel Inspiration
Exploring the sources of travel inspiration, 39% of global travelers are influenced by social media, while 45% rely on recommendations from friends and family. As the hospitality industry seeks to capture the imaginations of potential guests, it is clear that personal connections and the digital landscape are key drivers in vacation planning. In fact social media and friends are quite close. How much is influencers, how much is friends on social channels. But the key point is that word-of-mouth should not be underestimated, and hotels should monitor reputation more than ever to encourage referrals.
GLOBAL TRAVEL INSPIRATION SOURCES
TV Series Inspiration
It seems series like Emily in Paris and White Lotus have inspired thousands to visit new locations. I once consulted for San Domenico Palace in Sicily (before it was renovated into the Four Seasons hotel seen in the White Lotus series), I never would have imagined it becoming a TV series back then, ask Simone for more details. What is interesting here is how TV series can help inspire new destinations. Largely the problem with over-tourism is lack of variety in inspiration. TV series could help spread inspiration to lesser known locations thus putting less strain on the usual destinations and improving distribution.
SET-JETTING TV FILMS
FROM THE ARCHIVE:
AI for Hotel Distribution
I’m baffled that so many of the people I speak to today about AI, still think it is a fun party trick. OK, many are 45 years or older. But they truly can’t see how AI finally matured at a point where it will change everything. TLDR; If you deal with data and build human interfaces to manage that data, AI will disrupt you.
One subject that is going to be totally upended is Hotel Search. Hotel search is currently a truly horrible experience. It literally takes hours of mind bending indecisions and freshly served reasons to doubt our choices, when we finally made some.
I think the paradigm that AI search should know all your preferences is overly romantic and impractical. Too many factors change between bookings for most people. Is it work, is it family, is it short trip, long trip, are one’s economies up, down, etc. Just too many unknown variables.
What will work is huge search prompts where one can dump all one’s conditions in a prompt. “find 10 hotels within 20 min walk from 13 St Giles High St, London, arriving on wednesday, staying 2 nights with a max budget of $200 per night and make a comparison table of them” and a couple of follow up prompts such as “only 4 star” or “add direct Tube access” and “summarize the reviews of option 3” etc. The same way one would work with a human assistant if we could afford one.
Search engines have taught us to adapt our language and search methods for machines, we expect the machine to be dumb and thus search to be long and painful. But AI is about to change that.
The question now is where does OTA and hotel direct fit in this? Do they become mere databases for the big AI interfaces to pull data from? Of course they will integrate AI into their own search, but why would I go there when I can do it from Bing or Google? (crazy that Bing is now in the conversation).
Oh, and for hotels Google already has most of the data thanks to Hotel Ads. In fact they have direct API access to a lot more than any AI solution on the market.
(For the e-commerce world out there, this will change a lot for Amazon as well. Filtering through the dozen of is-this-exactly-the-same-products-with-a-different-name on Amazon is worth a separate post one day).
For the professionals who still think this is mostly a party trick, try to use it every day you’ll soon find ways this will or could change your products and work flows. Fund a skunkworks project in your company. Prototype things fast. If you don’t, some startup will.
As I said above, If you deal with data and build human interfaces to manage that data, AI will disrupt you. Period. Any level of data management and human interface for data processing will change.
This could be the next big shift in hotel search since the internet where we could search our own hotels.
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