Disruption will continue to affect the hotel industry and will become more innovative, collaborative and customer-centric, according to two experts in the travel sector.
NASHVILLE, Tennessee—Disruption is set to become ever more complex and interesting, according to two top executives from airline and reservations firms who also have done time in the hotel industry.
Speaking at a lunchtime keynote session titled “A conversation about disruption, collaboration and business” at the 2019 Hotel Data Conference, Heather Richer, chief marketing officer at vacation-homes marketing and reservation firm RedAwning, said technology remains the catalyst for change.
“When I started, there was not even instant-booking capability, and you would need to bring cash to stay there, so technology has allowed supply that has always been there to be booked,” she said. “The serviced-apartment inventory has been around a long time. Of course it has different zoning, but it, too, is now bookable and is largely not known.”
Richer spent two-and-a-half years in revenue management at Swissôtel and 16 years at Kimpton Hotels & Restaurants. She said other lodging options will cause more noise going forward, citing the pop-up hotel concept WhyHotel in Baltimore.
She added that in some destinations such as Gulf Shores, Alabama, and Lake Tahoe, hotels are and have long been the alternative.
“There are those looking to see how there can be a different structure on real estate and rates,” she said.
Alison Taylor, SVP of global sales and distribution at American Airlines, said that airlines also will experience a great deal of change in the coming years, or perhaps “in the coming days.”
“You will see the Uber of the skies in the next eight to 10 months, and we will partner with them. To be quite frank, we have a pretty good idea who they will be,” said Taylor, who also spent 29 years at Starwood Hotels & Resorts Worldwide and worked in eight countries.
Other airline disruption will focus in on private security and check-in, private airport suites and service in the corporate space.
“This will be for those who are well-off but not super rich. … And there will be disruption on what the inside of a plane will look like,” Taylor said, who mentioned nail salons and masseurs in first-class and the addition of destinations currently unserved or underserved.
“Even in families, there’ll be disruption, with the grandparents in first (class), the parents in business and the teenagers in economy,” Taylor said.
Richer said her sector, too, realized it operated in a definite community.
“We’ve made connections with (destination management organization). We recognize (a short-term rental) is someone’s home, so we’ve helped DMOs get booking engines and looked to have a healthy balance of lodgings options in each market,” she said. “(Our sector) is more fragmented and difficult to make the short-term rental community to become members, but they are becoming more active. The lines between us and other lodging sectors are becoming blurred.”
Traditional firms will counter threatening start-ups either from their positions of strength or through newly found strength via collaboration, the two experts agreed.
“Ultimately, it is about recognizing when a traditional hotel and short-term are competing for the same demand,” Richer said.*
In the last two decades in the airline industry, disruption has come from low-cost airlines, Taylor said. In the hotel industry, the equivalent are short-term rentals and portfolios of rooms or homes marketed by such firms as Airbnb.
“We will see more low-cost airlines,” Taylor said. “The reason we started a Perth (Australia)-London route was to get market advantage and introduce premium economy classes to stop a low-cost carrier, but you will not stop them completely.”
Taylor said the airline industry is more advanced in some ways compared to hotels.
“That segmentation does copy the hotel model, but airlines have a lot more transparency in pricing,” she said. “We have advanced algorithms and AI, which is proprietary. At the center is network planning, as we can move our ‘hotels.’ Highly centralized revenue management is very dominant, and it comes with pricing that can move up to 52 times a day.”
She added that a healthy airline industry behooves everyone in travel.
In Richer’s business, it is the speed of transformation in technology that has moved the needle.
“Portfolios of homes or condo units need to be merchandised with a single unit or clustered approach,” Richer said. “Legacy (property management systems) in the short-term rental space that have made it difficult to achieve seamless revenue management and distribution. More advanced technology has helped overcome this challenge. There is a learning curve in the industry overall, but also a lot of great momentum to improve pricing strategies.”*
Disruption in short-term rentals will center on making the booking and stay safer, easier and better, while in the airline industry there will be more real-time initiatives.
Taylor said American Airlines has partnered with hotel firms so that if a flight is delayed, a customer’s car-rental agreement and expected hotel arrival will be automatically delayed by the same amount of time.
“It is this seamlessness that will become a new disruption, too,” Taylor added.
*Correction, 11 September 2019: This story has been updated to change two quotes attributed to Heather Richer.