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Transforming Hotel Industry Growth Strategy

by RobertKCole on August 3, 2011

It is not often that one is able to corner three hospitality industry leaders and ask them about the challenges facing the industry – specifically how marketing, information technology and distribution can be better aligned to satisfy hotel brand growth objectives.

Transform Your Growth Strategy Now - Removing barriers between hotel technology,marketing and operations

Industry Expert Panel: Video of HITEC panel discussing the 'Transform Your Growth Strategy Now' RockCheetah/Amadeus white paper

Recently, at the Hospitality Financial & Technology Professionals annual HITEC conference in Austin Texas, I had the pleasure of moderating a panel comprised of Flo Lugli, Executive Vice President Marketing, Wyndham Worldwide, Mike Blake, Chief Information Officer, Hyatt Hotels Corporation, and Caryl Helsel, Director Central Reservations & Revenue Management, ARAMARK Parks & Destinations.

The three panelists were refreshingly forthcoming and candid in their remarks concerning some of the most daunting challenges facing today’s hotel industry leadership.

As they recover from a dramatic economic downturn, hoteliers are launching initiatives that rely on information technology to accomplish marketing objectives and profitability goals. However, as staffing and financial resource availability remains highly constrained, executive management must employ strategies that most efficiently utilize technology to help drive business growth.

A key conclusion of the white paper was that over the next three years, organizations within the hotel industry require an IT Pathfinder to help align hotel business and technology priorities. Each of the panelists did an outstanding job of providing examples of how their organizations are managing the challenge of advancing technology initiatives with fewer resources than in years past.

Most enlightening were the panel’s comments regarding critical nature of these initiatives and how they would serve as the foundation for brand and operational success over the years to come.

The following is a twenty-seven minute video summarizing the highlights of the white paper and the panel discussion:

A Discussion Between Industry Experts from Amadeus IT Group.

To read the white paper’s executive summary, please see my blog post from earlier this year, White Paper: Bridging Hotel Business and Technology Priorities.

The full white paper is available, free of charge, for download here: Transform Your Growth Strategy Now [Registration required]

My sincere thanks go to Flo, Mike and Caryl for doing a terrific job on the panel and validating the conclusions of the white paper, as well as Amadeus for its industry insights and sponsorship of the white paper.

NOTE: Please don’t hesitate to watch the video – I am not nearly as stern or grouchy as the placeholder graphic might imply… and, despite the severity of the economic challenges facing the hotel industry, that fire alarm to my immediate right was not a prop… ;)

Tagged as: customer relationship management, HFTP, hospitality, hotel, innovation, insight, marketing, mobile, recession, strategy, technology, travel, trends

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White Paper: Bridging Hotel Business and Technology Priorities

by RobertKCole on June 9, 2011

The hotel industry has survived the most dramatic downturn in its history. With a recovery well underway, hoteliers are launching new business initiatives that rely heavily on information technology to drive business growth and profitability.

Transform Your Growth Strategy Now - Remove barriers between hotel technology,marketing and operations

White Paper: Transform Your Growth Strategy Now - Remove barriers between hotel technology, marketing and operations

The challenge is that over the last three years, Hotel IT staffs were reduced, budgets slashed and projects deferred to weather the financial storm of the great recession.

Unfortunately, over the same period, there was also an unprecedented leap forward technologically with cloud computing, mobile technologies and social computing technologies all entering the mainstream.

The result was a more technically savvy guest with increased expectations pitted against a hospitality industry that was struggling in survival mode.

A gap materialized between hotel industry business priorities and IT priorities. Hoteliers will be spending the next three years closing that gap.

With hotel marketing departments, operations groups and information technology teams all seeking methods to advance divisional initiatives, the key question becomes who is responsible for bridging this gap and how can these diverse organizational objectives be aligned?

Amadeus IT Group engaged RockCheetah to explore how hotel companies can align business and IT strategies to drive business transformation during a period of economic recovery; specifically, the three year time period from 2011 through to 2013.

A proposed solution is the identification of an IT Pathfinder.

The white paper provides an overview of the current industry hospitality environment and key business drivers to provide insights into how hospitality executives can bridge business and IT objectives. The report draws on desk research, a global survey and executive level hotel interviews to reach its conclusions.

Below is the white paper’s executive summary: continue reading →

Tagged as: customer relationship management, HFTP, hospitality, hotel, innovation, insight, marketing, mobile, recession, strategy, technology, travel, trends

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Hotel Industry Survey – How to Align Business and Technology Priorities?

by RobertKCole on April 13, 2011

One of the most pressing issues facing the global hotel industry as it slowly recovers from the biggest economic downturn in its history is how to most efficiently bridge the gap between business and technology goals.

Survey Interview
Creative Commons License photo credit: keiichi.I

Make your opinion known. Contribute your insights to a hotel industry white paper focused on best practices to close the gap between business and IT objectives

With plummeting occupancy and depressed rate levels, the hotel industry radically cut spending, reduced headcount and deferred projects to survive the great recession. Now, with demand returning and some signs that rate increases are beginning to hold, many hotel group business leaders are betting that technology will help them maintain operational efficiencies and keep costs low as business volumes return to scale.

The challenge for hotel industry information technology executives is that in many cases, funding and staffing resources may be locked in at these reduced levels. Pressures are reportedly intense for technology teams to work smarter, faster and to be more productive when addressing the increased business demands.

The subject of the white paper is Bridging Hotel Industry Business & Technology Priorities. As opposed to providing generic platitudes and hypotheticals, the specific focus is specific plans of action over the next 36 months.

The objective is not to create a document that solely speaks for the hotel information technology community, but something that also provides perspectives from hotel marketing and operations leaders.

Excellent feedback has already been received from a number of leading hospitality industry Chief Information Officers, Chief Marketing Officers and Chief Operating Officers. The next step is to gain insights from those fighting on the front lines of the battle – hotel owners & investors, hotel management companies and property level management.

This is where you come in – Please take the survey and weigh in on the most pressing business challenges facing the hospitality industry, the top priorities for hotel IT groups, and most importantly, how can the gaps between these two areas be bridged over the next 36 months? continue reading →

Tagged as: hospitality, hotel, insight, marketing, poll, recession, strategy, survey, technology

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Five Year US Hotel Occupancy – Average Rate – RevPAR Comparison

by RobertKCole on January 7, 2011

First, thanks for all the positive feedback from my earlier post, What’s Wrong With the US Hotel Industry Recovery? Regardless of the pithy and enlightened analysis provided (my personal and unbiased self-assessment) there was a select group of readers that remained unappeased.

More Numbers
Creative Commons License photo credit: Patrick Gage

For those who requested a broader statistical comparison, all I can say is 'You want more numbers... Are you serious?'

There appear to be two categories of hotel industry data aficionados – gourmets and gourmands. You may know them better as the Smith Travel Research, Colliers PKF and PricewaterhouseCoopers fanboys & fangirls you see hanging out by the stage at the Hotel Data Conference.

The gourmands revel in devouring every data point in sight. They like their data raw and in large quantities. One would imagine these folks drink their wine from boxes and buy sides of beef that they cut themselves. Not afraid of getting their hands dirty, they have no use for utensils, but prefer to dig their teeth directly into their meal like lions savaging their prey.

The gourmets are a but more refined – They savor the nuanced flavors of the freshest, meticulously prepared, and most creatively presented information available. They prefer the finest cuts from the finest chefs, with portion size and cost being irrelevant as long as the quality is there. They even look at well aged data like wine – given expert handling and loving care, even the oldest statistics can yield valuable insights and points of comparison for the latest growths.

Despite my initial inclination to help organize interventions to get these individuals into some form of hospitality stats junkie 12-step program, I cooked up a few more data dishes as a belated holiday buffet. continue reading →

Tagged as: average rate, history, hospitality, hotel, occupancy, recession, RevPAR, statistics, travel, trends

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What’s Wrong With the US Hotel Industry Recovery?

by RobertKCole on December 20, 2010

If the US economy is in recovery, why is the US hotel industry still in rehab?

Online Hotel Booking Junkie
Creative Commons License photo credit: nataliej

It starts out innocently enough... A couple spot promotions and internet-only specials. Then it spirals into merchant rates, opaque deals and most-favored nations clauses - such goes the story of hotels becoming online travel volume junkies...

A year ago, I authored a post titled US Hotel Performance – Time for a Baseline Reset? – it was a follow-up to a post from four months earlier titled US Hotel Industry Recession Enters New Rate Erosion Phase.

In the 12-16 months since those posts were written, I am very pleased to report that hotel demand in 2010 has grown more rapidly than predicted by myself, Smith Travel Research, PricewaterhouseCoopers and Colliers PKF Hospitality Research – I love being wrong – especially among such esteemed company.

However, this better than expected uptick has resulted in considerable discussion painting a rosy picture of the US hotel industry recovery. Based on many glowing reviews citing double-digit occupancy percentage (Occ %) growth and solid increases in Revenue per Available Room (RevPAR), one can easily arrive at the conclusion that the US hotel industry recovery is in full swing and that the industry is nearly back to normal.

Unfortunately, most of these evaluations only reference US hotel industry performance relative to 2009, which was the worst year on record for hotel performance. It is not particularly beneficial to benchmark the industry against those record depressed levels, so it is much better to frame the recovery relative to hotel performance in earlier periods.

On that basis, the US Hotel Industry has recovered to somewhere near 2005/2006 business levels.

2011 will undoubtedly be a challenging year for the US hotel industry. Certainly results will exceed 2010, and be well beyond the despair of 2009, but nowhere near levels that could lead one to characterize the hospitality business as healthy. continue reading →

Tagged as: average rate, history, hospitality, hotel, occupancy, recession, RevPAR, statistics, travel, trends

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Travel Industry Site Traffic Rebound – Not a Hotel Slam Dunk

by RobertKCole on December 15, 2009

Compete recently presented a report based on data through September 2009, concluding that different travel categories (hotel, cruise, air, car rental) have recovered at different rates. Hotels and cruises were highlighted as recovering more quickly than airlines and car rental.

Basketball Tip
Creative Commons License photo credit: Emery Way

US Hotels are having to jump through hoops to fight competitors and Online Travel Agencies for leisure customers seeking unprecedented deals

It may give some comfort that year-over-year website traffic is increasing in the travel sector. Understanding that this is normally considered a leading indicator, this could serve as a basis for optimism. Unfortunately, for the US hotel industry, increased website traffic has not translated into incremental bookings and the business transacted online is at dramatically lower average rates.

Compete’s panel of Two Million US internet users should hypothetically provide a statistically significant barometer for the US hotel activity levels and would ideally correlate well with the performance of the US hotel industry. Unfortunately, it does not. The US hotel industry is a complex, multi-dimensional vertical that sources business through a variety of distinct market segments and distribution channels.

What the analysis captured was a radical change in consumer hotel travel shopping practices in light of a deep economic recession. Several different factors contributed to the disruptive change impacting the US hospitality industry that emerged in November 2009 and has continued over the past year: continue reading →

Tagged as: average rate, Compete, hotel, occupancy, online travel companies, recession, RevPAR, statistics, travel search, trends

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US Hotel Performance – Time for a Baseline Reset?

November 12, 2009

US hotel industry performance has not yet shown signs of recovery. Declines in all key industry metrics – occupancy percentage, average daily rate (ADR) and revenue per available room (RevPAR) continue to decline in 2009 when compared to comparable periods in 2008. Smith Travel Research (STR), PriceWaterhouseCoopers(PWC) and PKF International (PKF) all forecast that ADR and RevPAR will continue to decline in 2010. Reviewing peak period weekly performance statistics, it appears that the US hotel industry needs to prepare for “A New Normal” with lower corporate and group business and value oriented leisure travelers when supply and demand reach equilibrium.

Read the full article →

Freedom of Choice in Expedia Contract Negotiations?

October 19, 2009

Contract negotiations between Choice Hotels International and Expedia have broken down, resulting in Choice brands being removed from Expedia’s websites. As negotiating power now favors Online Travel Agencies, hotel brands must maintain discipline to retain mutually beneficial terms. Seeing continued declines in both occupancy percentage and average rate, hotel owners may be willing to exchange future margins for immediate business volume. Hotel brands are challenged to maintain chain-wide pricing integrity and competitive positioning the economy improves. Hotel brands able to maintain strategic alignment with its hotel portfolio will have the best prospect to emerge stronger when the industry recovers.

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US Hotel Industry Recession Enters New Rate Erosion Phase

July 25, 2009

The United States hotel industry is experiencing an unprecedented downturn. All hotel industry performance metrics, Average Daily Rate, Occupancy Percentage, and Revenue per Available Room have all trended downward over the past year. At the end of June, based on reporting from Smith Travel Research, national average room rates began to drop at a more rapid pace than occupancy percentages, marking the start of a new phase in the recession. The deeper discounting that has begun is on top of rate cuts that have already return average room rates to 2006 levels.

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