Here's what I'm reading this week to stay aware of emerging trends and opportunities:
Travel Weekly Consumer Trends 2014: Explosion in Mobile Bookings
With the launch of the new iPhone 6 by Apple this week, larger phones and "phablets" will continue to gain mobile share. The larger interface is a great canvas for hospitality sites and apps, which rely on rich media and large photos. Phablets have just 6% of the market share but 11% of the app usage, meaning owners of these devices are heavily device dependent and actively engaged.
Measuring Acquisition Cost alongside RevPAR
As focus shifts from gross revenue to net profit, acquisition cost per room night has come under more scrutiny. Is it acceptable to measure total RevPAR, or should hoteliers focus more closely on net RevPAR and ProPAR (Profit per available room)? This is a very intriguing topic and one conversation that most revenue managers are not fully prepared to have with their ownership.
A detailed discussion of new benchmarks for hoteliers, including ProPAR, ProPOR (profit per occupied room), Net RevPAR, Net RevPOR, and COA (cost of acquisition). This article, along with the previous piece, represent a strategic shift in revenue management. Great read.
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?
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"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 .