Uber and Chinese car company could teach us a lesson for additional hotel revenue. It seems there’s such a thing as too much digital transformation. Bathroom photos in restaurants are a thing.
Hello,
The retail industry gets a lot of headlines about going digital, 24h delivery etc. There’s a lot we can learn from them, such as advertising. But let’s not forget that transitioning to digital distribution is an old problem in our industry, we’re past that. We have seen the future (mostly it is about trying to claw back some direct revenue). But enough of that, here’s the newsletter.
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. 
I’m also a co-founder of Klairhaus, a premium desk accessories brand that makes products with particular care for craftsmanship and design.
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When is digital too much digital?
For years, Starbucks has been praised for their exceptional work on their digital transformation. From gift cards, to in-app purchases and growing their app use, pre-orders and pickup stations etc. But now it seems like they have too much digital and it is hurting sales. Customers don’t linger around. The analysis is that the reason to pay $5 a coffee was for the experience, but if one orders online and picks-up then there’s less experience. So they’re commoditizing themselves through digital experiences. Hotels have a long way to go before that happens, but it’s an interesting lesson. Ensuring we keep the experience great, by using digital to remove negative friction.
STARBUCKS DIGITAL DILLEMA
Hotels and the Uber + BYD partnership
In the retail industry, every company that has first-party data is becoming an advertising company. What is interesting with the Uber + BYD partnership is how this becomes a method for BYD to showcase their cars to thousands. Drivers get a good deal on the car, but more importantly passengers get to experience a car that they would likely not have tried otherwise. There’s a parallel here for hotels and consumer goods, where hotels could become a place to showcase new products but offering to sell or give products through hotel stays and hotels get paid to place the products in rooms. It’s not a totally new idea, some companies already offer similar services. And it could become a new revenue stream for hotels. The bigger the hotel group the bigger the opportunity. And with the huge increase in consumer goods companies today (Amazon alone has over 9 million sellers), the supply is huge and they all need means to promote their products.
UBER+BYD PARTNERSHIP
Have you stayed here before?
Following last week’s column on personalization, I was invited on Hospitality Daily to speak about the hyper-personalization trend / revival. We’re over-thinking it when we talk about hyper-personalization. Let’s start with simple-personalization. I think we should remove the “have you stayed here before?” question from hotel vocabulary. It is literally the worst thing we can ask a guest. You’re basically telling them you have zero-idea who they are, our systems should tell us if they have or haven’t been there before. The options should be “Welcome back” or “Here’s we work”. Even the latter done to the a Regular is better than the fatal “have you stayed” question. You can listen to the short episode.
TECHNOLOGY AND PERSONALIZATION
Bathrooms
When I first moved to Paris, I started taking pictures of restaurant bathrooms and was tempted to create a blog with the photos. Good and bad. Plenty of friends encouraged me to start it we joked about calling it “Bathroom Advisor”. Thankfully for my career, it never happened. Today #bathroomselfies are a trend on TikTok, which is probably a more positive incentive for restaurants and hotels to level up their game in bathroom design (and cleanliness). The Londoner hotel, has done an incredible job there, bringing in heated toilet seats and all kinds of cool gadgets. It’s the little things that make the big experiences.
RESTAURANT BATHROOMS
Phone is still the AI travel gadget
I’m a believer that a new category of gadgets will exist such as glasses or pins which will bring AI tech between the phone and us. Something that isn’t a physical barrier between us and our environment. But despite my enthusiasm and using my Rabbit R1, I realize that the current iterations are not there yet. Which is probably a good thing for the hotel industry. For now we just need to focus on one device, the phone. But we need to hurry up and get up to the point where the guests’ phones become an interface within the hotel. Because the next device is on the horizon and it has taken us almost 13 years to still not have a solid and uniform mobile hotel experience.
AI TRAVEL GADGETS
THOUGHTS:
Mega events
There’s a recurring issue in the industry of misestimating mega-events. Over-pricing and ending up with lower than usual occupancy/revenue. It happened at the Paris Olympics, London Olympics, Las Vegas F1, Milan Expo etc.
Hotels and Airlines over-estimate demand, raise prices too high to early and even end up suppressing demand due to high prices. By the time prices come down, people have booked their trips for somewhere else.
I spoke to some revenue managers and asked why they did that, several told me they didn’t but were over-ridden by owners. Owners who “followed the trends”. And recently we have a very tangible collective experience of what happens when social-influence-mentality sets the strategy.
It’s incredibly hard to predict demand accurately. But the real signals such as pick-up and pace work quite well. True one might be leaving some money on the table. There’s always that risk. But rapidly adjusting rates based on actual demand and filling the hotel at decent rates not only guarantees a solid revenue. It also creates happier guests who know they got their money’s worth, and they help spread the word.
To help revenue managers in the future, I was discussing with some people who understand the issue much better than me (I’m not a Revenue Manager). We were thinking what if we could make a real research document with real data and a definitive study on this. And work with researchers from a university to ensure this is actually data. If you have contacts to some good universities, send them this email. I’d be interested to discuss it.
