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Guest Customization is King for Luxury Travel in 2018

As a more robust travel economy has taken hold over the past several years, the luxury sector has been leading the way with guest personalization and empowering hotel employees to provide the best service possible.

According to a recent Skift article, luxury hotels will continue this evolution in 2018 – with guest customization continuing to rise to the top.

“Customization is the next big innovation in luxury travel,” said Chinmai Sharma, chief revenue officer of Taj Hotels Resorts Palaces and Safaris, in the Skift article. “Every traveler has his or her own requirements. Companies that differentiate themselves will treat each customer as his or her own segment.”

The article also highlights how Marriott will be at the forefront of the customization trend when it launches its new loyalty program that combines Marriott Rewards, Starwood Preferred Guest and Ritz-Carlton Rewards. Part of this vision is to have guest-facing apps that serve as a central repository for everything from controlling room temperature to unlocking rooms to incorporating guests’ music playlists.

However, per the article, there is one elephant in the room – the ability to use innovation to bring this customization vision to life. In addition, many hotel CTOs are tired of launching technology for the sake of technology – meaning that new innovations must be tied to overall strategic imperatives.

This will require a balance between providing innovation and “human warmth” that comes from providing top service for guests. Many hotel leaders believe that luxury travelers have a “millennial mindset,” and are seeking out the right experiences, which will not be fully grounded in just technology.

Moving into 2018, it is clear that guest customization will be king for the luxury hotel arena. The challenge will continue to be how to bring the vision to life in ways that mix innovation and old-fashioned service to be truly personalized for each guest.

 

How to Best Measure Hotel Guest Loyalty

For the past several years, the term ‘loyalty’ has risen to become a major industry buzzword in the hotel arena. As a result, many hoteliers have launched customized loyalty programs, and implemented new innovations to attract and retain guests.

This is especially timely because the competition from OTAs, other hotel brands and AirBNB has become increasingly more intensified. With this in mind, it begs the question: are hotel guests truly loyal and how do we measure it?

According to a recent McKinsey podcast about the ‘consumer decision journey,’ only three categories out of 30 are loyalty driven. While this may not be good news for hoteliers, the data provides an opportunity for hotel brands to develop the right programs to create loyalty.

The best way to do this is to ask the right questions to your guests. Many large brands rely on Net Promoter Scores (NPS) to gauge loyalty, which at first glance seems like a viable program to implement. However, NPS scores rely on asking “how likely would a guest recommend a hotel to a friend or family member.”

Although this seems like a powerful point of data, loyalty is much deeper that just recommending a product or a service. Instead, hoteliers should ask these two questions:

  1. What one thing delighted you about your stay at our property?
  2. Is there anything about your stay that could have been improved?

These two questions tackle both the positives and the negatives of a stay. This two-sides-of-the-coin approach will allow a hotelier to learn about what is working well, and what needs to be improved. From there, they can make the organizational changes required to address these issues, and enhance upon what is already working well.

The McKinsey podcast may offer sobering news for hotel brands about the state of consumer loyalty but by asking the right questions, tailoring day-to-day operations, and developing loyalty programs accordingly, it is possible to crack the code for delighting all guests in ways that they will always want to return.

 

Taking the Next Step on Digital Engagement With Hotel Guests

A new study has found that hotel brands that engage with guests digitally are three times more likely to see them return to the property. The report also highlighted how guest loyalty will be 19 times greater if a hotelier responds to a guest social media post within 30 minutes.

While these takeaways are not a huge surprise, it reinforces how guests see a tremendous value in interacting with hotel brands. In today’s social media realm, the number of “likes” and “comments” serve as a validation for many people, and a response from a brand – or even a celebrity – is cause for celebration.

On the surface, this is a great thing for hotel brands. However, perhaps it’s time for hoteliers to take this idea of guest responsiveness to the next level. Rather than just offering a kind comment on an Instagram post of a guest enjoying the pool and other amenities, provide comments that have context to the guests wants and needs.

For example, arm yourself with data on the guests previous travel habits (i.e., did they enjoy the on-site restaurant, did they use the pool, etc), and offer a comment on another one of their travel-related posts. For example, if a guest puts up an Instagram post about a recent trip – not related to your property or area – provide a highly positive comment about how great that that trips looks, and that you “hope to see them at your property’s pool in the summer of 2018.”

Of course, there is a fine line when it comes to mining guest data and turning guests off. A comment about how you hope they will return to your property and enjoy another steak dinner could raise concerns about hotels knowing too much about a guest. “Wow, they tracked how I had a steak last time I stayed there … that’s a bit creepy – what else do they know?”

The most savvy hotel brands certainly understand this challenge. But, when done right, it is possible to further digitally engage with guests in ways that create long-term loyalty.

An Emerging Digital Divide in the Hospitality Arena?

For the past several years, many major hotel brands have been focusing much of their PR efforts on showcasing the latest innovations – from smart guest rooms that leverage the Internet of Things (IoT) to robotic butlers and beyond.

Several brands have also been developing new incubator locations to help fast track the latest innovations into the marketplace. This cross-section of cutting-edge design and new technologies will certainly pave the way for the hospitality industry to be on the forefront.

However, when it comes to bringing these innovations to life, will we see this tech adoption only at key properties in major cities on the U.S. coasts? These are typically the locations that ideally serve as the test markets for the new innovations – further supported by the tech talent, companies and early adopters who tend to live and operate in these regions.

But what may occur is that only properties in these regions will have the latest innovations, with many others in the middle of the country lagging behind. This could result in a new hotel digital divide, which could rapidly widen based on how quickly new innovations are adopted.

Of course, since this is a new frontier, larger hotel brands hopefully will be developing tech expansion plans that could stretch across the entire country. Although effectively implementing this expansion could be a costly proposition for any hotelier. And once this goal is achieved, a new batch of technologies could quickly emerge, which would require even further investment for another round of expansion. And, so the cycle continues …

If hotel brands are challenged with making this investment cycle, this digital divide may continue to grow, and since this is a new frontier … nobody really knows how it will all play out.

Hospitality Loyalty Program to Learn from the Decline of “Daily Deal Mania”

As our economy climbed its way out of the “great recession” of 2008, companies like Groupon and LivingSocial quickly emerged by providing much needed daily deals to consumers.

For a period, these types of companies performed well, but since they were built on only providing short-term loyalty to brands, they did not translate into long-term revenue opportunities. The consumer took advantage of one discount opportunity, them moved onto other things – without remaining loyal to the business that offered them the “latest deal.”

Fast-forward to today, and Travelzoo, a newsletter-focused daily travel deals, is finding itself in a similar situation. According to this recent Skift article, many of the company’s challenges come down to “daily deal mania” declining due to a stronger economy where consumers are no longer seeking short-term travel deals. In other words, consumer confidence is high right now, and seeking deals is not a priority when many have extra money for leisure travel.

For hoteliers, perhaps this could be a lesson in how to best maximize their loyalty programs?

Rather than focusing on providing last-minute deals, it might be a good time to shift the strategy to target the buyer with the goal of helping them to plan a trip out in the future – based on their previous purchasing patterns and personas.

As we have highlighted before, this approach looks not only at the persona, behaviors and experience ratings of the guest, but also takes into consideration the same data points gathered from guests with similar personas. It can also create an intelligent query for the guest’s persona that can be triggered on demand.

It’s not a huge surprise that companies like Travelzoo are experiencing some challenges right now, which could certainly turn around when/if the economy takes a downturn.

The key right now is to take these business lessons learned and develop loyalty programs that are specialized, leverage data, and are designed to create lasting guest loyalty.

 

When Will OTAs Offer Bundled Packages to Counter Hotel Efforts?

Without a doubt, the travel sector is highly competitive and many of today’s players – whether it be OTAs or hotels themselves – are quick to shift their strategies to drive more revenue.

This concept was recently brought to life by new efforts by hotels and resorts to divert revenue from OTAs by offering bundled vacation packages. With packages that include airfare, it’s much easier for hotels and resorts to enhance direct bookings, and ultimately increase conversions with a “one-click” effort.

Since OTA’s are very nimble and competitive, it is only a matter of time before they start to offer similar packages, securing guaranteed rates from airlines, hotels, car rental agencies and much more. In addition, if these packages are presented as a “single-click” package, we may see travelers quickly swinging back towards using OTAs.

The primary driver for this? Most travelers want and demand convenience and simplicity. Everyone is overwhelmed with data and information overload to the point that we will often take the easiest route to get what we want. The same happens when booking travel, whether it is for pleasure or for business.

So, with the pendulum between hotels and OTAs rapidly swinging back and forth, what should a hotelier do to counter this? The key is to continually make guest loyalty about loyalty, and not just about targeted discounts.

As we have highlighted before, the core focus in the hospitality arena should be about fostering relationships with guests that truly matter. Hotel guests want to have an emotional connection with their preferred hotel brands. This concept is critical for developing high-level strategies that build loyalty.

Hoteliers also need to understand what is important to the customers of their hotel, and its market segment, in order to develop and offer specific products and services that matter most to guests and ensure that their staff members know how to deliver on those guests’ preferences.

Of course, hotel brands often have complicated relationships with OTAs, where they often compete, yet try to play well together in the sandbox by developing the right channel pricing and approaches. For this latest battle over bundled offers, hoteliers can certainly emerge on top if they continually focus more on fostering true guest loyalty.

 

Hotel Loyalty Programs and Brand Ambassadors

While there have been many hotel industry articles about how to turn guests into “brand ambassadors,” large hospitality providers may want to consider ways to ensure that all staff also play this vital role.

In other words, to transform guests into loyal advocates, the foundation needs to be in place – with every staff member on a property at the hotel first. One way to achieve this is by making loyalty programs truly about loyalty.

As we highlighted before, the core focus in the hospitality arena should be about fostering relationships with guests. Hotel guests want to have an emotional connection with their preferred hotel brands.

This concept is critical for developing high-level strategies for building loyalty. And this goes beyond what many highlight about the value of education and hotel loyalty programs. A guest should have an experience that feels completely personalized, which can increase chances that they will sign up and take advantage of the actual loyalty programs.

In a recent Marketplace interview, Arne Sorenson, CEO of Marriott International, discussed the importance of providing guest experiences. “We’re delivering experiences which people can count on and where they want to come back to us and have those experiences,” said Sorenson. This includes catering to guests’ needs both on- and off-property.

By focusing on providing these experiences, as well as pushing for all staff members to be brand ambassadors, it is possible to achieve the highest level of loyalty – where the guests themselves actively advocate on behalf of your brand.

 

Dry Hotels Point to Need for Niche Personalized Guest Experiences

“Dry hotels”, those that do not serve alcohol, are growing in popularity, even with guests that do drink. In fact, the dry hotel market is growing at between 4.5 percent and 5 percent per year, and will be worth $200 billion in the next three years.

For hoteliers, especially in predominantly Islamic regions such as in the Middle East, alcohol is just not a relevant part of profitability for their hotels, a statement said by the panelists at the recent Gulf & Indian Ocean Hotel Investors’ Summit. They know how to make a hotel successful, even without a bar.

Mohamed Awadalla, CEO of Time Hotels Management, which has four brands, said dry hotels simply make good money.

“They are profitable. The (food and beverage profits) might be lower than 25%, but other than that we have seen no discernible difference across our hotels, and we have between 82 percent to 88 percent occupancy,” he said.

What do dry hotels know that non-dry hotels don’t?

That today it is more important then ever to provide highly personalized experiences to guests. And since dry hotels are in competition with non-dry hotels and guest apartments such as Airbnb, they must not just provide these services, but at excel at them.

Awadalla added that in the current economy, an accurate profile of your guests is what counts. “You have to know your market [guest] in order to provide the relevant returns to owners,” he said.

Continually being able to please the traveler in ways that are highly personalized is key. A plan to implement and use guest recommendation solutions that support very niche needs and dive one layer deeper on the usual recommendations – such as local restaurants – is a very important.

Hoteliers should consider taking it one step further such as recommending the perfect yoga studio, church, marijuana dispensary, or even the best place to get a growler of kombucha. It could also mean a specialized recommendation for guests who are in town for a wedding – not just where to drink after the rehearsal dinner but, the one place to go bungee jumping at midnight.

Non-dry hotels should take note that guest retention goes well above and beyond alcohol and their bar area, but requires leveraging deeper guest persona data to understand their wants and needs. It’s clearly working for dry hotels.

 

 

Cornell Study: Top Hotel Amenity is Free Bottled Water (is it that simple)?

For many hoteliers, providing unique amenities can help drive differentiation and long-term guest loyalty. While many luxury brands tend to focus on things like private cycling guides, VIP shopping assistants, even a “soap concierge,” the simplest of amenities can sometimes stand out.

For example, a recent Cornell University study found that offering free bottled water translated into a the highest ROI for returning guests, when compared to Internet access and fitness club use. One of the interesting aspects of this report is it focused more on upscale and luxury brands.

While this study is limited to just high-end brands, it speaks volumes about what guests actually want, and provides insights into the drivers that motivate guests to return. In addition, the many publications that covered this study were more interested in one key data point: that hotel gyms actually don’t get much usage.

From a larger perspective, this report reinforces how illuminating it can be when we actually mine hotel guest data. We often make assumptions about guest preferences, which can only be truly validated by the data itself.

Based on this study, we imagine that many hotel brands are now focusing on providing more free water in guest rooms, which is a sound data point. However, the real motivator should be “how can we glean these types of insights on guest preferences”? On top of this, if hoteliers are mining guest data, are they using this knowledge to quickly develop the right amenities that truly resonate?

Of course, providing bottled water is important, but this is only the tip of the iceberg. When taking a deep and analytical look at guest data, hoteliers may find something surprising. This new-found knowledge could then ultimately be used to develop amenities and offerings that are truly wanted.

 

Making Hotel Guest Loyalty Programs Truly About Loyalty

A recent study showed that U.S. travelers are shunning airline loyalty programs. The core driver for this change is that travelers seek out the lowest fares, rather than having a relationship with a particular airline.

In addition, there’s a perception that these loyalty programs don’t offer any true benefits, which has been reinforced by airlines like Delta reducing the number of perks for frequent flyers.

For hoteliers, there are some parallel lessons that could be learned from this study.

First, the core focus in the hospitality arena should be all about fostering relationships with guests that truly matter. Hotel guests want to have an emotional connection with their preferred hotel brands. This concept is critical for developing high-level strategies for building loyalty.

In addition, hoteliers need to understand what is important to the customers of their hotel, and its market segment, in order to offer products and services that matter most to guests and ensure that staff members can deliver on guests’ preferences.

Leveraging the right innovations that allow hotels to gather guest data to develop the right programs that best meet their needs should also be considered. This extends well beyond offering various perks and discounts, which fall more into the tactical side of building guest loyalty. In today’s commoditized era, hotels should seek additional value for guests by using software applications, guest-specific data, and a vision for tying them together to better understand guest preferences.

Travel loyalty does not need to be a thing of the past. And, by taking the right strategic approaches, it is possible for the hospitality arena to avoid the current fate of the airlines – where price trumps everything else.