As Hilton releases its Q2 earnings tomorrow, let’s take stock on where the hospitality industry was a year ago versus today.
If you are one of the millions of travelers, who had to cancel their vacation plans this summer and you are likely looking dubiously at your winter vacation, imagine the pain for premium hospitality companies like Hilton, Marriott, IHG, Wyndham or Hyatt. If you add smaller chains or boutique hotels to this list, you can imagine the dire straits the industry is in right now and will likely remain in for quite a while.
Even if stay-at-home orders remain lifted, how likely is it that millions of travelers will get on the road for business, let alone for pleasure, especially if it includes their kids?
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This is not only crucial for the organization but extremely important for the wallets of employees and suppliers. Similar to fast food’s drive through model mitigating the financial impact of the virus, home and designer goods seem to be doing just fine during the pandemic due to their customer demographics and shift to work-at-home. As consumers and businesses alike rethink the the daily office commute, making a cosy nest may turn out to be a permanent trend.
Become an experience-based, friction-less, digital purveyor of fine goods and services every time a guest has a superior experience at your property.
This is not really new. Hyatt launched its online store in 2006. What is new is the need to offer a wider product selection and real-time, contextual marketing based on the superior experience hotels aim to deliver every day. By sheer coincidence, this was also the topic of a recent customer meeting. The occasion was eerily timed as well as Pier1 seems to have finally succumbed to Etsy. This may possibly the best time to go deeper into home goods eCommerce, especially as firms rethink the home office paradigm.
Selling bed sheets was the toe-in-the-water
This may be a frivolous, first-world problem but when my wife and I struggled with getting a good night’s rest, she bugged me for months to purchase a Westin Heavenly Bed. These have been around for over 20 years based on the seller’s website so the idea of selling products you already “rent” to your guests is not new. When I finally caved, I became a convert overnight – literally. When I marveled at the Hilton shower curtain fabric years ago, I wanted to find out where I could get it because I was fed up with the cheap plastic ones you could get at your local home furnishing store. When I took the family to Venice a couple of years ago, I was in awe of the gray designer couch in the lobby. When I tried to find it or something similar online – no dice.
Over the years, I encountered a variety of “experiences” in hotels and resorts including freestanding designer bath tubs, poolside lounge chairs, shower rain heads, flatware, incense and even vases in the lobby. On our honeymoon in Mauritius, I was so enamored with the “pate-de-fruit” the hotel catered as a check-in present, I asked for it to be delivered to our room every day, and they did. Guess what the first thing was I tried to find on a business trip to Paris years later? I ran all over La Defense’s Christmas market and law-and-behold, I found it. Let me tell you; it tasted amazing, and it better had, for what I paid.
I could go on and on about these experiences and quests to repeat them. Ultimately, I wish I could have been able to get my hands on all of these after my first encounter in a hotel because I had to furnish my home or bring a gift to party. If you think about it, most of you are behaving in a similar way if you had a good travel experience. This is why you never want it to end and you buy yourself a carpet, a handbag, a dress or a pair of shoes on your last day of your trip. These things remind us not only of the location but the vacation and feeling we had when we experienced something beautiful, innovative and new.
Purveyor to the Imperial and Royal Court
Pandemic-disruption aside, travel will resume at some point and it is preprogrammed that the upper middle class and the rich will be just fine for the most part. They will continue to spend and self-actualize by contracting with purveyors of luxury goods. Surprisingly, only some hotel chains have a decent online store peddling items beyond bedding and towels but why are most items not even hotel-branded? Why not go all in and either license their premium brand to third parties and market leather goods, flatware, jewelry, perfume, light fixtures, clothing, food, furniture, art and even services, like cooking classes online? Why not sell some substantial white-labeled or bespoke manufactured merchandise online instead of relying on swag or gift store merchandise?
Hotels in major tourist destinations already have established connections with many local artisans who are chomping at the bit to expand their market reach. It would certainly diversify a hotel’s revenue base and boost their brand. The Hotel Sacher in Vienna sends tens-of-thousands of the famous Sachertorte (not just any chocolate cake) in branded wooden boxes overseas. Why did our hotel in Marrakesh not sell the orange blossom incense we fawned over every morning on the way to breakfast? Why did we have to rely on my local tour guide to scour the Souk to get our hands on a matching traditional Moroccan mirror? How come one of our safari lodges in Tanzania did not sell us a family tree sculpture but a tourist trap disguised as art institute? Why did our Canadian ski resort’s guest service have to scramble to send us a simple email with their amazing banana bread recipe?
And even if you have some of these products available, do you market them actively and timely or rely on guests accidentally stumbling across your online store?
If Sky Mall can pitch you a garden gnome while sitting in a crammed economy seat on the way to O’Hare and being crunched by a profusely perspiring offensive lineman-sized travel companion, you can sell a premium toiletry set when indulging on room service breakfast-in-bed. Hotels already work with an experienced hotel designer for their lobby, restaurant or guest rooms. This relationship can extend to market the very same products you find in these spaces.
Pitch to me when I rave about my experience
The good news for hospitality organizations is that, just like Apple
Apple’s ecosystem of designer consumer electronics and services like Apple Pay, iTunes and Facetime in conjunction with partnerships all leverage the excitement you feel when you hit its store. Unlike Google, which is using user data to allow partners to better target advertising, Apple does not. A hotel will likely choose to do the same but the reservation, facility access, POS consumption of in-house and affiliated services all the way to wi-fi beacon data about your whereabouts can be used to understand your preferences. As long as these data points can be uniquely attributed to you, patterns can emerge quickly about your affinity for surfing, golfing, fine dining, dancing and if you prefer traveling to New York for New Year, Alpine resorts for Christmas, Phuket in the summer and some college town for March Madness. Machine learning can uncover these patterns even more readily to even predict the likelihood of you reacting to ad hoc destination specials, a round of Black Jack or travel disruption insurance. The closest I have ever seen the use of data in steering consumers within a hotel property was – you guessed it – Las Vegas.
Imagine the ability to combine the insight of all these orders (room, jet ski, beach chair, cocktail bar, restaurant table) and in-person and digital interactions with your membership profile and offer you a product you are likely to enjoy owning? If this offer is made just when you are likely to reminisce about your vacation, i.e. the first workday after your return, the next paycheck showing up in your account or a seasonal holiday; a correctly priced product delivered to your front-door will suddenly make you forget about Amazon. I am sure there is academic research on such an algorithm as I frequently find suspiciously well-timed airline package offers in my inbox. The point is that hotels have all of the raw ingredients already; a known guest, a positive experience and a massive showroom network, which can be curated. What they don’t have are the right products, trusted and connected guest journey information to capitalize on their raw data volume.