Industry Update
Opinion Article 3 April 2018

Food for thought: Accor, Hilton and more CEOs discuss brands, Google is really going the OTA route and more

By Martin Soler, Partner at Soler & Associates

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As an industry we're at the cusp of much more growth than the last many years. Not only is technology going to help improve guest experience, but it is making travelling easier. And the more people travel the more they need a place to stay. This week, some interesting thoughts and links that hopefully will help fuel some new ideas. Have a great week.
Best, Martin


Brand CEOs agree that brands are great

Are hotel brands the future or have they passed their prime. Hotel CEOs meeting at IHIF in Berlin and speaking to investors agreed that brands are great, that OTAs and guests love brands and want more of them. The arguments aren't totally wrong, but they do seem a little bit too "peaches and cream". The fact is for the majority of guests, the actual brand matters less than the comfort, price and location of the hotel. Obviously brands have better negotiation power with OTAs and suppliers, and there's a definite advantage. But it will take more than that to win the hearts of guests. One great hotel expert once told me the way to differentiate the hotel brand from another is the color of the curtains... I think he was being sarcastic.


Google isn't an OTA, they say

I'm not a fan of the "is Google becoming an OTA" headline. But when I look at the evolution of their hotel search product (and how they are adding hotel+flights packages) it is just hard to stick with the line that they're just an advertising platform. The design, the way the filters are working and the whole tendency is moving much closer to the OTA than to the Advertising business. In advertising there's a concept of helping people discover products being advertised, which Google's hotel product lacks. It is more about monetizing after the guest has discovered. So no matter what they say and we try to think, the fact is the line between Google Hotels and OTAs is blurring more every day. But then again, who wants to go out to hotels today and say "Hi, we're a new OTA".


Cost of Acquisition per Ad Channel

Everything has a price, also means everything has a cost. At the recent Fastbooking Digital Lab they shared an interesting slide I haven't seen before listing the cost of acquisition by hotel advertising channel. The results are quite interesting. I don't know how they came to those figures (did they factor in the agency costs?) but with this data and adding it to the other channels one could make a pretty good estimate of the various channels and where to invest the most.


Voice for travel booking, it's complicated

The possibilities for voice and chat systems in the travel space are huge. With the breadth of data that computers can analyse one could quite safely say that in 10-20 years this will make travel a much easier product to buy and it can help balance the over-tourism risks that loom over certain cities by proposing alternatives. The results would be quite good for all the secondary and tertiary locations that could see traffic grow tremendously. But for now, that remains a futurist vision. Because a) searching by voice is really weird and convoluted. Looking at a calendar of rates is so much easier for example and b) The understanding the questions are more often wrong than right. There is still a lot of work to be done there.


Artificial Intelligence, thoughts

Following the above piece, this very factual (if not too flattering) look at artificial intelligence in travel is quite correct. The problem with AI is we tend to expect it to get plugged in and revolutionize everything. It will most probably not happen that way. The truth is, AI will change everything and we will not notice the shift. Small incremental improvements in hotel websites managed by algorithms that learn and improve. Or pricing systems that become better at predicting upcoming surges and lows. In operations, systems that optimize the sequence of room cleaning based on guest habits, similar trends, upcoming occupants. All these systems exist already and bit by bit we're going to change a lot.


The evolution of Digital Marketing

I was invited as the Guest Editor in Chief for the Hotel Yearbook 2018 that is coming out in October. It made me think hard and long about what is happening with Digital Marketing for hotels. The fact is that the days of looking at digital marketing as a pure clicks and conversions game are numbered. Digital marketing has grown up. Hyper optimising was great a few years ago during the "SEO gold rush" but those days are over. We're coming back to marketing basics of brand building, telling great stories. The question remains, how does one do that in the digital space?


Martin Soler

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