Food for thought: The future of Revenue Management and maybe Starbucks + more
By Martin Soler, Partner at Soler & Associates
It is always interesting to stop and look back at where the industry is going. We can imagine a future from our current stand point but as things happen that future is rarely what we imagined. And while it may have some parts of it, there are always twists and turns we didn't predict. Our industry has the advantage of being one of the few that can't entirely be replaced by tech or other solutions. As long as we live, we'll need a place to sleep, but that doesn't mean things wont change. Amazon's founder famously said they focused on what wont change and tried to build for that, the trick is pinpointing what wont change. Whichever it is, technology will play a role.
Food for thought
Hotels Moving Into Adjacent Spaces
A while ago AccorHotel's CEO correctly pointed out that Hotels have been slow to catch onto trends and thus lost some competitive advantages to the likes of OTAs, Metasearch companies and Airbnb. Determined not to do that again, hotels have been looking at growing their offering into additional channels. Some have gone out to buy apartments to rent them out with hotel services, some are starting coworking services within their hotels, there's no lack of ideas. But which one will stick? Wework's apparent success does makes one wonder why more hotels aren't going that route. In the end, when it comes to building and managing assets for services, hotels know a thing or two.
Will Guests Outsmart Revenue Managers?
Google's recent "Price Insights" for hotels open a crack in the perfect paint job of revenue management. What if the (often random) price fluctuations of hotel rooms suddenly become predictable by the guests? What if Google and Hopper (and probably many others) begin to analyse patterns in rate fluctuations and guests start to know before hotels when is the best time to book. And what if that get's automated on a large scale and guests just book with some bot in the background cancelling and re-booking every time the price goes down. It's not that hard to do. Will room prices even-out or will the fluctuations increase? Hard to say but the possibility it there.
New Retail, We Still Don't Get It
There's a concept in China that we're not grasping. It's called New Retail. We look at Amazon Go as a weird experiment of the future thinking it will probably fail, while China is moving along building a whole new retail concept. While we watch out retail industry slowly get eaten up by online sales. Probably because we've been so good at retail for so long we think it's too big to fail. And yet, it is doing just that. Few question the process of making a customer drag their goods to a Cashier, wait in line, fumble around with bags and credit cards while the next in line looks at us as if we're forcing them to hold their breath. Yet it is the epic example of putting the customer second. Starbucks, for all their success, is more important than their customers. If it wasn't so we wouldn't wait in line. Probably because China is just getting started at retail they're more akin to question everything. And the way things are going, they're more likely to succeed.
Hotels and Tech Companies Need to Figure it Out
A few years back the future for hotel companies was obvious: become tech companies and stay relevant. It was obvious because they weren't bringing in new clients anymore (OTAs do that) and brands were less relevant than before (the internet took care of that). But AccorHotels has been trying and just like marriage, it's not as easy as it seems. If brands would provide all the best IT tools, management skills, operations standard, negotiated discounts etc one could imagine it would be a no-brainer. But when it comes to IT, hotels companies just don't really seem to know what to do with it. Agile, Scrum, Standups, Horizontal structures, Brutal Candor and all those things just don't work with hotel companies. Who have built political empires founded on processes that go back, way back. It's a tough marriage, but it might be a necessity. Because the competition isn't coming from the brick and mortar world, it's coming from the tech world.
Brands are not Dead
Thinkers in the advertising world seem to believe that advertising is dying and so are brands. That the internet giants and distributors favour only product and price and that building a brand no longer is relevant. The idea is daunting. On the one hand we want to believe that huge change is coming (and we're a little comforted to believe we predict things) on the other, we like to know that our zone of comfort will work for a while. I don't believe brands are dead, but I agree that their, almost religious, positions are being chipped at. In the hotel space we've a lot of this. Probably the future is niche, and that might be a great thing for hotel brands (who seem to be working their way there already). But it's also a great thing for entrepreneurs who can create a group of hotels and actually make a statement.