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4 key takeaways from International Hotel Investment Forum 2016
Analyst Macy Marvel recently attended the International Hotel Investment Forum (IHIF) in Berlin, where current trends in hotel distribution were discussed and debated by key industry players, representing online travel agents (OTAs), as well as small and major hotel chains.
Here, Macy underlines the key findings of the conference.
Smartphones taking over
According to Booking.com’s Peter Vanhoeven, one out of every three accommodation bookings is done on a mobile device and, of those transactions, half are booked within 48 hours of arrival. At the same time, there is an increase in travellers using a long booking window of six months or more. Marriott’s Osama Hirzalla notes that mobile is the fastest growing direct channel for the chain and that most of these bookings are within 48 hours, which leaves considerable potential to drive mobile reservations with a longer booking window. Investing in content, optimisation and personalisation offers major opportunities to grow direct bookings, especially in emerging markets like Russia, Turkey and China, where mobile penetration is higher than in the developed countries.
Engagement is the new branding
Are hotel brands still relevant in a market increasingly dominated by OTAs and social networking? The answer, according to Choice Hotels’ Carl Oldsberg, is that brands must now proactively seek customer engagement, whereas in the past brand image alone was sufficient to attract guests. In any case, independent non-branded hotels are operating at considerable disadvantage from a distribution point of view and are often obliged to depend on the expensive OTA channel for up to 80% of their bookings.
Big data is the way forward
Compared to other consumer sectors, the hotel industry is behind the curve in terms of harnessing client data in order to better engage with its customers. There is apparently a skills gap with respect to those managing hotels, who often don’t have the ability to interpret the data so as to make the right decisions regarding distribution channel mix and reaching individual customers with properly targeted messages. The problem is particularly acute at independent hotels, where staff often lacks this skillset.
Google wants to provide answers rather than just links or suggestions. As travellers visit an average of 28 different websites overall during the search and booking process, the goal is to shorten the number of steps to booking through providing tailored, relevant offers. To this end, the giant search engine has launched Google Destinations, a mobile app which provides customers with ready-made offers of trips to specific destinations. Once a destination has been selected, the traveller taps “Plan a trip” to see rates for hotels and flights and the price trend over the coming six months is displayed. The results are instantly updated with real-time fares and rates, pulled from the trillions of flight itineraries and hotels priced daily on Google Flights and Hotel search. A tap on the pencil icon further customises results, allowing for the introduction of more criteria regarding flight and hotel preferences, including number of stops, hotel class, and number of travellers.
All in all, we see the need to break down the silos between the sales, marketing and revenue management functions in order for them to work together as a cohesive team. This will propel the industry forward.
Macy Marvel is a consultant at Opus Hospitality in Geneva and an advisor to Lausanne Hospitality Consulting – a division of Ecole hôtelière de Lausanne. He is a frequent presenter at international hospitality and tourism industry conferences.
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