For years, Expedia, Orbitz, and Travelocity have been entrenched OTA players in a static hospitality landscape. With back-end connectivity to the GDS, these OTA giants represented a simple, at-home entry point for many travelers. Over time, aggressive marketing and rate parity have established OTAs as a reliable retail outlet for hotels, airlines, and rental cars.
But in the past 18 months, a seismic shift has begun to change the landscape for the online travel agencies. Foreshadowed by Google's 2010 acquisition of ITA Software, the rise of "big-data" represents the greatest challenge to OTAs in more than a decade and is beginning to change the landscape for many of the largest online travel agencies.
Armed with data on preferences, interests and even search histories, big-data providers like Facebook and Google have built platforms by which hoteliers can offer highly targeted packages and promotions to small groups of retail travelers. The result looks to net higher conversions at a lower cost of sale for hoteliers, all while delivering a more satisfying retail experience for guests.
This shifting landscape could bring the eventual downfall of the parity-based model for OTAs. Just this week, Expedia CEO Dara Khosrowshahi confirmed to CNBC's "Squawk Box" show that Expedia is looking for ways to shift its offering to hoteliers away from parity towards a guest-targeting model. (Note: Khosrowshahi's comments about Expedia's future model begin at 2:20 into the video.)
I believe that the pressure to build a more profitable, guest-targeted model may drive OTA consolidation. It's also quite possible that we will see the larger OTAs pursue big-data through acquisition of social media properties such as Pinterest or Gogobot.
Does this mean that Expedia, Travelocity, and Orbitz are about to fold up shop? Not at all. Although consolidation within OTAs is possible, the likely path for OTAs will be less emphasis on non-targeted results through the GDS and more focus on generating guest-targeted offerings at a higher margin.
Here are three short, compelling reads regarding luxury sales and marketing in the hospitality segment. I found each of these very poignant for guest service and hotel sales in our industry:
Twenty percent of Virtuoso's customers drive 71% percent of sales
This statistic speaks to the old adage of how important it is to take care of your best customers, especially in the luxury hospitality segment.
Biggest risk to luxury brand dilution? Partner Offers
A new study finds that luxury brand cross-marketing is a dangerous tightrope, bringing in new customers when done well but risking market share for both brands when poorly executed.
Four Seasons Hotels are active on 393 social media channels
Is there an effective limit to the "be where your customers are" mantra that has driven CMO and social marketing? Also, is there a limit to the effectiveness of "be where your customers are" in the luxury segment?
Interested in seeing more about luxury hospitality sales and marketing? Follow me on Twitter
"Knowledge is knowing that a tomato is a fruit; wisdom is not putting it in fruit salad." – Miles Kington // Love this quote!
— Kevin Donahue (@mrkevindonahue) September 23, 2013
Take New York City, for example. A recent ranking of hotels by TripAdvisor found the Best Western Herald Square to be among the top hotels in Manhattan.
No disrespect to the Best Western, but many travelers may be asking just how this limited service property is ranked higher in New York City than the Trump International, Four Seasons New York, and – of course – The Ritz-Carlton, New York Central Park. (There's also a pretty good chance that hotel owners and managers are asking the same thing!)
The answer, according to TripAdvisor, is that hotel rankings are determined by the following:
TripAdvisory Hotel Ranking Criteria
- Number of Reviews per Hotel
- Recency of TripAdvisor Reviews
- Rating given to Hotel by Reviewers
TripAdvisor takes these three core elements – quantity, quality, and recency – and runs them through their proprietary algorithm to determine the rankings for hotels in each city.
The more highly rated reviews a hotel receives in a short-period, the higher their ranking will be on TripAdvisor.
It's worth noting that TripAdvisor rankings are updated for each city are updated approximately once per week, to incorporate new reviews and ratings.
So, there you have it… the "secret" to how TripAdvisor calculates rankings for every city.
Source: TripAdvsor Help Center
Felt great to recognize each member of my team for their strengths & achievements today. Recognition energizes both giver & recipient!
— Kevin Donahue (@mrkevindonahue) August 9, 2013
I can't believe how many emails I receive every weekday morning that ask this key question:
"Do you want to connect with more customers?"
And the answer, of course, is "Well, yeah! Don't we all?!"
A study by GetResponse.com suggests that the timestamp on emails might be as important as your message.
GetResonse analyzed more than 21 million customer emails and found that while almost 50% of all emails arrived in customers inboxes before noon, customers opened a much higher percentage of mails sent between noon and 6pm.
Additionally, the study found that 23.63% of emails are opened within one hour of when they are received. The number falls by half in the second hour and more than 90% after five hours. Clearly getting your email into your customers hands during the business day is key.
So, does this mean I have to stop being a morning person? Well, maybe not. But, if you are connecting to customers via email, you may have increased success if you time your message for receipt between 12 noon and 6pm.
Though highly, highly unscientific, my own study finds that the best time to send a handwritten card is… ALWAYS .
If you consider the number of problems that can befall hotel customers during a stay, it can be a bit overwhelming.
Broken remote controls. Plumbing problems. Noise from adjoining guestrooms. Incorrect orders from room service. Room key issues. HVAC issues. Kids running in the halls. Not enough chairs at the pool. Slow service in restaurants. Incorrect room type at check-in.
And the list goes on and on.
Studies show that product problems account for nearly sixty percent of all guest complaints.
But there is one problem – over and above all others – that causes not only dissatisfaction, but a complete break in a hotel customer's trust.
What could negatively impact hotel customer loyalty so greatly? According to data-analysis firm Market Metrix, staff-related problems in hotels can lead to a whopping 26.2% drop in guest loyalty .
Service problems, on the other hand, make up a much smaller portion of reported problems, but have a much more dramatic impact on guest loyalty. Just look at staff-related problems in the table below. They are only 4.7% of reported problems. But staff problems punch way above their weight causing loyalty to plummet by over 26 points when they do occur.
On the other hand, the nearly 60% of hotel customer complaints COMBINED only account for a 12% drop in hotel customer loyalty.
This study begs the question: With such a large number of guest product complaints, how much time is your hotel spending to fix staff problems?
Television remotes can be replaced, but a disengaged hotel customer may be lost forever.
Here are three short, compelling reads regarding customer service and sales. I found each of these very poignant for guest service and hotel sales in our industry:
- 3 Keys to Customer Service Training and Retention from Ritz-Carlton VP Diana Oreck
Ms. Oreck expresses Ritz-Carlton's passion for customer service training through empowerment and selection.
- Hey You—Your Elevator Pitch Stinks. Fix It.
Hannah Morgan points out that, while our jobs and roles as salespeople have evolved, our quick sales pitch has not kept up with the times. I found this to be a great wake-up call read for the hotel sales profession, in particular.
- You ALWAYS Need a Business Card
Even in this connected era, that little paper card remains a game changer for sales and service (even if you have the best iPhone/Android app for sales and service!)
For more customer service and hospitality sales insights, please follow me on Twitter: @mrkevindonahue.