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Revolutionising lodging options

Hotel Business 29 July 2015
Revolutionising lodging options
MaryamWehe-s

Maryam Wehe, Senior Vice President, Travel & Hospitality, APT

What Airbnb’s growth means for hotels… even if they aren’t paying attention.

Much like Uber has changed the way consumers think about getting from point A to point B, Airbnb is revolutionising the way travelers consider their lodging options. Airbnb’s rising popularity can be attributed to many elements of the service such as its diverse booking options, sleek digital reservation process and unique marketing strategy. While many hotel executives do not view Airbnb as a direct threat to their core revenue stream (e.g., accommodating business travelers), a recent study released by Boston University estimated that Airbnb can have as much as a 13% impact on hotel revenue in some markets. Nonetheless, improving the guest experience through highly relevant marketing strategies and an effective digital presence are key priorities for many leading hotels seeking to remain competitive as traveler trends develop.

There are several different actions hoteliers can take to appeal to the evolving consumer preferences that Airbnb targets (e.g., seamless reservation/check-in interface, experience-focused messaging) – such as investing in digital initiatives or developing more content marketing – and many already are. However, hotel executives must consider how these actions impact their core guest base and the incremental impact such investments have on RevPAR, occupancy and ADR. Prior to making any sweeping changes, hotels should take a scientific approach to adapting their strategy.

Content Marketing

From the outset, Airbnb’s marketing strategy has focused on conveying the unique experience it provides to its guests and establishing an emotional connection, often via content or social media marketing (e.g., visual marketing on Instagram). For instance, Airbnb publishes Pineapple magazine which it describes as “a printed magazine where honest stories are told by the unexpected characters of our community.” The company also has a YouTube channel where it hosts various short films that promote its mantra “Belong Anywhere,” such as its new Wall and Chain video. The idea of a unique and authentic trip experience is a prevailing trend which Airbnb aims to embody with these initiatives.

Many hotels have also adapted and continue to introduce similar strategies. Marriott, for example, recently launched its own Content Studio and produced a short film entitled Two Bellmen, an action comedy that tells the story of two Marriott employees who save the day by thwarting a group of art thieves. Other hotels have introduced initiatives related to review websites like TripAdvisor, such as programmes to more closely monitor and respond to reviews or even to offer the option to book directly on the site.

As hotel executives experiment with innovative marketing strategies, in addition to measuring whether each campaign is successful they must also determine in which markets it worked best, which types of guests responded most favorably and which version (e.g., messaging, creative) was most impactful. Such methodology enables hotel marketers to refine programmes that improve RevPAR and discontinue those that erode profitability.

Digital Initiatives

Much like Airbnb, many leading hotels are pushing on innovative digital initiatives. Some, like Accor, are increasing their investment in digital capabilities to create a more user-friendly and seamless experience for consumers booking travel. While Accor is undergoing what it calls a complete digital transformation, Starwood is integrating the new Apple watch into its on-site technologies such as mobile check-in and keyless entry and Marriott is beginning to accept Apple Pay. Such advances have the potential to improve guest satisfaction and to facilitate real time, personalised messaging to guests around key marketing initiatives or promotions. However, they may also have unanticipated implications, such as lower Medallia SALT scores due to the lack of in-person service or decreased ancillary revenues due to a more streamlined check-in process.  Further, it is difficult to understand if these drive sufficient incremental RevPAR to pay back expensive implementation costs. Therefore, hotels should test these initiatives with a subset of guests or properties to ensure they are profitable despite potential drawbacks.

Using this Test & Learn® methodology ultimately improves the profitability of decision-making, as executives can both determine if an initiative is successful, and also identify the optimal version of the programme and the specific properties or customers in their network where each programme should be introduced to maximise ROI.


 

By Maryam Wehe, Senior Vice President, Travel & Hospitality, Applied Predictive Technologies