As new technologies and demographics continue to change how the hotel industry operates, GMs and executives need to have a firm grasp on each catalyst.
Shifting demographics and new technologies are primary catalysts for the evolving hospitality business; however, the impact on management is enormous.
Led by revenue management but now including distribution channel management, social media marketing, Web 2.0, cybersecurity, human resources and more, this industry has been thoroughly transformed. The key is to have GMs and corporate executives who understand this.
Here are a few things to consider.
Revenue management may be the single most important element in driving profitability. Today, it is time for the industry to price based on value perception and not just price relative to a competitor. Understanding the true demand in a marketplace is quite scientific. The large quantities of demographic and psychographic information available about the makeup of today’s traveler requires analytical skills and creativity to correctly respond to the marketplace. Product choices by consumers are influenced by a model of the consumer decision process that stresses the importance of finding the right customer for the right hotel at the right time. Is our guest interested in sustainability, fitness or wellness? Knowing our guest will drive our marketing efforts.
Booking more profitable business is critical as the distribution landscape is expanding beyond online travel agencies, including popular sales vehicles such as meta-search, flash sales and mobile channels. Beyond simple awareness of the different mediums available to sell hotel rooms, hoteliers must know the costs of the variety of distribution channels and the returns expected from each. GMs are the gatekeepers for these channels when a revenue manager is not around.
Next, product quality must be exceptional. Overall service must be at the level of “wow,” and there must be a compelling value proposition for the consumer to choose the hotel. Loss of market share is difficult to regain, which means desertion management (asking guests why they did not return) is paramount today and easy to define via social media. Staff service and attitude make a significant difference in competitive advantage in every market segment and these require strong leadership from the GM. No GM can do it all—corporate support is required.
Hotels that can train and motivate their team members will have a much better chance of getting repeat business. It is beyond the basic four-step skills-training method; rather it is adding the component of why they need that skill.
Millennials have become the fastest-growing customer segment within the industry and also have no problems speaking up. If what they are seeking is not handled to their liking, they will turn to Twitter, Facebook, Yelp or TripAdvisor to voice complaints. Reputation management rules, and this is where the GM must be hanging out in the lobby, at the front desk and in the restaurant.
Customer service must include enabling guests to be self-sufficient. For example: if a guest wants to find information using his/her smartphone, providing an app or mobile website that accommodates that information will appeal to many. The rise of this digital traveler requires the hotel industry to balance the expectation of personalization while enhancing the need to remain independent.
International visitors are here now but have been talked about for years, and this group of travelers has increased markedly this past decade. Management must understand the language and culture of these guests as they are arguably the fastest-growing travel segment today and spend more than any other traveler. With the European Union’s General Data Protection Plan (GDPR) compliance requirement coming later this year, cybersecurity must be at the forefront of our industry. Security in general must be tightened up with active shooter training and drills for each type of crisis.
The path forward
The transition from art to science in hospitality has caught many by surprise and unfortunately, these are the people and the companies that are falling behind. There will always be a need for great customer service, but today’s travelers require both great service and technology. It is crucial that we understand the hospitality industry as it is today because if we focus solely on the art of hospitality, we will be missing out on capturing more business and increasing our profitability. Further, there are legal challenges with human resource management, ADA laws, public relations and crisis management, to name a few.
Are our properties exciting or are they just clean? Do they provide unique experiences or are they just offering the basics? Is there true ownership or management oversight and input or is it absentee management reviewing monthly financial performance? Are our digital assets such as website, social media sites and real-time marketing efforts effective? These four questions will give each of us a hint at where some opportunity lies. Management companies and GMs must utilize this playbook and much more.
Robert A. Rauch, CHA is an internationally-recognized hotelier, CEO, president and founder of RAR Hospitality, a leading hospitality management and consulting firm based in San Diego. Rauch has over 35 years of hospitality-related management experience in all facets of the industry.
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