Marriott’s Acquisition of Starwood: Winners and Losers

Marriott’s acquisition of Starwood is great news for investors, but unfortunately not for Starwood hotel guests and employees. The quote that sums up the reasoning behind this deal came from Starwood Chairman Bruce Duncan.

“We are committed to what is best for shareholders.”

Notice that employees and guests are not mentioned. This is because they are not the focus of the consolidation. Industry consolidation is aimed at increasing investors’ profits or killing a competitor in the industry. With this deal, Marriott is hitting both those key points. When a deal like this is made, the numbers have been run and re-run hundreds of times. Everything must look good on paper, first and foremost. Banks and investors are going to be the clear winners in this deal.

However, I’d like to talk about the important players in this deal that are not likely to fare too well: the guests and the employees.

Guests (The Case of the Diminishing Rewards)

The massive march toward total devaluation of loyalty points continues onward. Every major hotel chain has devalued its rewards program in the past five years. Hilton, Marriott, Starwood and Carlson issued major devaluations in their loyalty points in 2013 and again in 2015. Historically, mergers have almost always resulted in devaluation of loyalty programs and inferior service. Anyone who thinks bigger is better when it comes to personal attention has obviously never called his cable company.

In 2013, Marriott created a new (read higher) category of hotels: the super “category 9” hotels, where it takes 45,000 points to stay for one night! They also raised the points requirement per night on 40% of their portfolio, which in their case was an increase of around 5000+ points to book a room. In March 2015, Marriott moved approximately 25% of their hotels into a higher bracket; that means you now need more points per night to get a room in the same hotel.

Starwood has been known to have the best elite program in the game. Even so, earlier this year 20% of their hotels did the category shuffle. The difference is that, in their case, half of the hotels in this 20% segment moved up a category and the other half moved down. Much less drastic than Marriott.

With Marriott taking over and a loyalty program merger inevitable in the near future, the overall value proposition is going to go down. It might be good for low- to mid-level SPG status holders, but the super elites will take a hit. Even the credit card offers from Starwood have always been out of Marriott’s league. There is no other way this is going to play out: the existing Starwood elite SPG program will take a hit.

I was disturbed by the whiny and entitled responses to the merger by the “elites” in this NY Times article. But the fact is thing are going to get worse for them and they know it.

Employees

History and common sense both tell us that consolidation is hardly ever good news for employees. This merger is no different than most in that respect.

Starwood made some mistakes over the years by spreading itself too thin specially that their gable in Asia, Europe and the Middle East didn’t really pan out. If you remember, they took a lot of pride in “moving” their corporate offices to international hubs for 30 days (China, Dubai and India for 30 days). Because, what motivates a team more than jet lag…right? This was nothing more than a gimmick, like that time in 2006 when Starwood Hotels opened in Second Life, which was supposed to be the next big thing. You really cannot be going international when all your core marketing and strategy is centralized in Stamford, Connecticut. 

Anyway, with this expansion came international teams. So guess what is going to happen in Singapore and Hong Kong and New Delhi, where both hotel chains have regional presence? Will they need two Sales Directors, Revenue Managers, or Operations Directors sitting in two offices in the same city? What about in the US where Marriott already has a massive corporate team? Short answer: No.

Marriott has made a name for itself with its efficiency. Kudos for that. But this also means that they are not going to be supporting multiple teams of people to do the same job. This is particularly relevant to employees in senior and cluster management and operations positions.

The market right now is flooded with Starwood resumes. This is especially true in international markets. Since I am very fortunate to have friends working globally for large hotel chains, I know for a fact that there is some panic in the job market.

Most guests will be fine and will deal with the changes in the loyalty program and dwindling levels of personal service over time. But the human cost in terms of disrupted careers and lost opportunities is harder to absorb.

Conclusion

It’s not all doom and gloom. This merger presents a huge opportunity for independent and ultra-luxury hotels. It’s the perfect time to outshine the rapidly diminishing hotel loyalty programs that the behemoth hotel brands are trimming and slashing, by offering a unique experience that includes highly personalized service. Another group that should be celebrating this consolidation, aside from the bankers, is Airbnb and the other apartment/home rental players. This is just what they wanted for Christmas, even if they didn’t know it. More business travelers will be looking to go rogue when faced with diminishing loyalty points, and therefore diminishing loyalty.

Hotel Brands’ Struggle to Understand Airbnb: The IHG Edition

When I’m on Twitter, I’m usually catching up on some of my favorite comedians (mostly comediennes) and posting my own material. But every now and then, some non-comedic items capture my attention. This live tweet caught my eye on September 30.

Sean McCracken* with Hotel News Now posted this update from IHG’s annual conference.

*(Let’s get our “release the kraken” jokes out of the way. I bet he hears them a lot.)

IHG CEO QUOTE

Wow. The “Solomons” referred to in the above tweet is not some mid-level manager at IHG trying to shake up the crowds. He is the Big Kahuna/CEO of Intercontinental Hotels Group! At first I could not believe that the CEO of one of the biggest hotel brands in the world would go on stage at their annual conference and say something this ridiculous and detached from reality. Then I realized that he was engaging in the long-standing tradition of hotel brands building up a boogeyman to rally against. I will elaborate on this later.

Solomons’ comment also sums up the very reason why hotel brands today are struggling with the reality of the rapidly changing travel landscape. If this is the belief held by those on top, there is very little hope that the brands will manage to stay relevant in the near future.

The Struggle Is Real

IHG CEO QuoteInterestingly, IHG is one of the brands I often refer to when speaking about Airbnb and its impact on travel. The ex-CMO of IHG shocked me at a conference three years ago when he did not know what Airbnb was. They now have a new team in place, but the struggle continues.

The fact that the CEO of a company listed on the New York Stock Exchange (aka, Wall Street; aka, the folks who brought us “Greed is Good” is calling Airbnb (unlisted) the product of “Silicon valley greed” is painfully ironic.

The real kicker here is that Richard Solomons’ bio comes straight out of the world of investment banking. To quote his Wikipedia page:

“Solomons worked in investment banking with Hill Samuel Bank for seven years, including two years in New York. He worked for seven years in investment banking, based in London and New York. Solomons qualified as a chartered accountant with KPMG in 1985.”

Meanwhile, according to Wikipedia, the CEO of Airbnb, Brian Chesky, has a BFA in industrial design from the Rhode Island School of Design. And he was broke when he started Airbnb to make ends meet.

This is usually my “drop the mike and walk away” moment. But since this is not a stage, I will keep writing.

Hey Guys… How’s Kimpton Doing?

Brands have been notorious for creating a boogeyman when facing change. The past few years have been all about Online Travel Agents stealing their share. Now they have a new entity to blame for their issues: Airbnb.

IHG’s recent acquisition of Kimpton, which I wrote about here, is playing very much in line with my prediction. The brand that took years to build is succumbing to the giant shadow its new owner is casting. Case in point, the loss of key landmark Kimpton assets in San Francisco:

[table id=6 /]

Kimpton’s single largest market was San Francisco, and they have now lost more than 75% of their presence. This is a much bigger threat to Kimpton than Airbnb and OTA’s put together.

So many of these iconic assets are getting renamed, losing the brand recognition that Kimpton employees built over so many years. I really hope Keane played “How to Save a Life Brand” at the IHG show.

Conclusion

Hotel brand annual shows are squarely focused on hyping the brand, and that is understandable. What is not acceptable is to misinform your franchisees and owners about where the business of hospitality is heading. They are hungry for education and knowledge, not just their Pancake Selfies at the “Stack Station.” Google it.

The Free Website Trap: Lessons From Priceline’s Rebranding of Buuteeq

The Free Website Trap: Lessons From Priceline’s Rebranding of Buuteeq

Last year, Priceline.com made a splash when it acquired Buuteeq, a digital marketing and website “cloud-based system” for independent hotels, for what looks like $98 million.

My detailed analysis of that purchase made a lot of headlines, and also missed a lot of headlines when some of the top hotel news websites did not carry my article. (Buuteeq was a big advertiser for them.)

Last week, Priceline announced that it would no longer let Buuteeq operate as an independent brand, and that they now offer free websites in exchange for a 10% commission on every dollar generated on those sites. Here is my analysis of what this means for the lodging industry.

Goodbye, Buuteeq.

The first thing I observed is how quickly Priceline moved away from letting Buuteeq “continue to operate as an independent business within The Priceline Group.” I was highly skeptical about them being allowed to operate independently when I first wrote about the acquisition in August 2014 (read my conclusion section here). Thousands of independent hotels and B&Bs using the Buuteeq platform were given a “nothing is going to change” story by the founders.

Here is an excerpt from an email that one of the founders of Buuteeq (Brian Saab) sent to a bed and breakfast client:

“We remain an independent brand (one of the prime reasons we considered the merger with Priceline Group) and we continue to run business as usual. That said, I am thrilled to be able to rub shoulders with other brands in the group; we’re already getting great advice on how to improve conversion for hoteliers (who wouldn’t want to get best practices from the likes of Priceline, Kayak, and Booking)!”

How cute! But we all know by now that nobody acquires a small company to make things better for their existing clients. They buy assets to benefit the larger group, which in this case is Priceline Inc. The interests of thousands of small and independent hotels is not the primary objective of Priceline. Their own revenue is their prime objective (as you should expect). Have you seen their amazing stock price lately? And yes, I still use Yahoo Finance.

The hotels who built their entire online presence on the Buuteeq platform – instead of owning their own digital assets – now have even less control over what happens to their own website and marketing. Priceline Inc. will tweak, update and change the new entity as they deem fit.

You must keep in mind that Buuteeq was acquired because it was working. It was built by smart people: former Microsoft executives Forest Key, Adam Brownstein and Brian Saab. They raised the capital, built the platform, and implemented aggresive sales teams that closed thousands of hotels and inns. They even convinced established hotel brands like Choice Hotels to join them. They flourished by playing on one of the lodging industry’s major deficiencies: the fact that people in hospitality do not want to spend time or money on direct marketing/ building a website/ getting a decent shopping cart.

This hands-off, price-shopping hotel culture was the key to their success, even when it’s common knowledge among lodging operators that their website is their single most profitable channel. The same key will unlock BookingSuite’s success. They’re just taking it to the next level. What can I say? It’s as surreal as a Salvador Dali painting.

Hello, BookingSuite.

For quite some time now, I have been seeing the BookingSuite link taking the place of “Hotel Marketing by Buuteeq” on independent websites. How did I know that the Buuteeq brand would be “sunsetted” by Priceline? Because there is so much more money to be made by taking a % of bookings versus peddling “digital marketing platforms” for a flat monthly fee. Where is the fun revenue in that?

You see, if a hotel on the Buuteeq platform decided to spend money directly on Google via PPC (which is their greatest marketing tool!), the hotel itself would profit from PPC success. This of course, is not what Buuteeq/Booking Suite would like to see. They would prefer to cash in on any marketing success you experience.

So, back in August 2014, less than 24 hours after the Priceline takeover, the old Buuteeq pricing chart disappeared. Since nothing can be truly deleted from the internet, here is a retro screenshot showing what Buuteeq was charging:

buuteeq pricing

 

Now let’s estimate what Priceline will make by charging 10% commission on every room booked on your BookingSuite–powered free website:

[table id=5 /]

The chart above clearly shows that even a small inn booking $10,000 in revenue is worth more than the flat-fee “Ultra” client, which only made them $1000 in monthly revenue, and out of which payroll, project management, etc. had to be paid. With the new pricing model, even a hotel booking as little as $5000/month is probably more profitable than offering monthly plans and pricing tiers. Remember, Priceline is not about giving choices to hotels and lodging providers. It’s about giving choices to your guests, and making a ton of cash doing it.

On the other hand, you could make yourself a comparable website that you own for around $1000, or one month’s commission. Even if you splurge on a custom site for 5-10K, you’ll be coming out ahead way before the year is up.

Now with BookingSuite, Priceline is going to do something they are exceptionally good at: make more money for themselves from selling your hotel/inn/bed and breakfast. Not only do they want to make money by selling your rooms on their Booking.com and partner websites for a 20% commission; they also want to make 10% on every room you sell from your own website. Cool trick, eh? They are about to make it rain revenue.

Free Websites? It’s a Trap!

Who can forget that moment in Star Wars: Return of the Jedi when Admiral Gial Ackbar realized what was going on.

“It’s a trap.”

Yes, free websites are a trap indeed. The old adage “there is no such thing as a free lunch” needs to be revisited by anyone in the hospitality business who is considering getting a “free” website. Yes, BookingSuite is a “free” website, but it comes with a very big price. The price is 10% of every single dollar you book on that website.

I am not against paying an OTA (Online Travel Agent) a commission for revenue they deliver to my hotel, when they incurred the marketing cost of bringing that guest to me. I don’t even mind them converting a guest who is hooked on their brand. The thing to consider here is that, when using BookingSuite, you are going to share 10% of every dollar booked on the website, even the revenue that you made because of your own:

  • direct marketing
  • reputation & press
  • referrals
  • word of mouth

Here is a wonderful thought. Instead of paying a flat 10% commission to BookingSuite, spend it here instead:

  1. Spend directly with Google. Buy something as simple and effective as your brand name keyword searches.
  2. Pay a photographer. Photos make or break a website. Better photos = better revenue (update them on all your channels!).
  3. Put more/better content on your website. Convert visitors on your website by giving them better information about your location/destination.
  4. Do some testing. Try out social and meta advertising platforms with minimum budgets and see what works best for you.
  5. Get a print ad. LOL, j/k. Print is dead. Just added this here to make sure you are still reading.

The “We Do Not Have Website & Marketing Budget” Myth

Ok, this one is one of the most irrational arguments against building your own website and brand presence. Even in their Wall Street Journal announcement, Priceline highlighted that:

“BookingSuite is aimed at independent and boutique hotels without the deep pockets.”

This has to stop. Buying a website and investing in direct marketing is not like buying diamonds or an island or a luxury yacht. Not only are websites inexpensive, but as a lodging operator you simply cannot decide to skip direct marketing. As for booking engines, there has never been more choice than today. I think a new booking engine might even get launched by the time you finish reading this article.

Here is what a hotel website will cost you if you would like to get one today:

  1. Download WordPress: $0. Download is free, but you have to know a little tech. Don’t worry, you can do it with a very small amount of online research. (See…no free lunch!)
  2. Get hosting: $10–$15/month. Try: Bluehost, Host Gator.
  3. Pick a design theme: $0–$80. There are many pre-designed templates to choose from if you’re on a budget. Look at Elegant Themes, WooThemes.
  4. Stitch the site together: $600. Add logo, content, photos, etc. You’d be surprised at how much you can do yourself. But if you’d rather not, developers are available for $20–$60/hour. They can make your site in 8-10 hours, at a cost of approx $600.
  5. Start running ads on Google: $500/month. Open a Google Adwords account ($0). Get support to write an ad for your brand name searches, and set a budget that is right for your market ($200–$800/month).

So the question you have to ask yourself is: who is this hotel with deep pockets? In the age of WordPress, can you really not afford your own website? Can’t afford and being lazy are not the same thing.

The article in Wall Street Journal also mentioned that BookingSuite already has 2,800 lodging partners signed up and another 3,600 joining soon. Amazing, to read that so many people are willing to share revenue for the lifetime of their website rather than make a direct investment of their own time and a little bit of money.

Lodging operators who have no money to get a website should probably look for a new line of business. Only, no business today can really survive without the web. And no business can survive without direct revenue and innovation. Just ask music industry executives, or Blackberry (RIP).

Conclusion

Is there hope for hospitality? Yes! Actually it’s a simple 2-step program:

  1. Always own your digital assets.
  2. Be wary of free lunches. There is no free lunch in this life. You will pay for it one way or another.

If you’re ready to take the brave leap into being responsible for your own website and marketing, I’m right here for you. Email me. I’m always ready to talk with you or help you with a project. You just need to take the first step.

Google’s Mobile Update: Keep Calm and Get With the Program

google mobile update for hotels

Every time Google issues an update, hotel marketing agencies have a field day writing articles and trying to give you a reason to panic about your online presence. To provide you with a respite from the hyperbole, I would like to assure you that:

  1. Everything is going to be okay.
  2. This update is actually a great opportunity for you to take your online presence to the next level.

Here are my answers to some of your burning questions about the Google Mobile Update of 2015.

Why is Google doing this update?

Good question. The simple answer is: Google wants to make more money. (Just for reference, this is always the reason Google does anything.)

Google is at the forefront of mobile web. They have seen mobile search surge past desktop usage over the past several years. Their significant investment and success with the Android ecosystem further cements the fact that Google plays to win. In its continued dominance of global search traffic, Google has a clear agenda: to provide its users with the best possible search experience so that they stay loyal to Google. More Google searches means more chances for users to click on Google Ads, which means more AdWords revenue for Google.

With the majority of web traffic shifting to mobile over the past decade, Google needs to ensure that the websites providing the best mobile experience get top placement in their mobile searches. Think of it as Google’s Spring Cleaning for Mobile Search, where they want to “incentivize” you to have a better mobile presence. Instead of wringing your hands, consider that Google is doing you a favor by reminding you to bring your mobile presence up to par. Complying with Google’s guidelines is a win-win; it’s not only good for your business, but also great for their business. Google will not be relinquishing their mobile search dominance anytime soon, so…yes, it’s time to get with the program if you haven’t already.

What will happen during this update?

First things first. This is not an “apocalypse” or an “Armageddon” event, as many hotel and web marketing agencies might have you thinking. By using the word “significant” in their announcement of this update, Google made Christmas come early for hotel marketing agencies and their press release machines. But you don’t need to purchase any special marketing services to comply.

Here is what is happening:

On April 21, Google will be rolling out an update to its algorithm in which mobile-friendly websites will be given preference in rankings. This update is just a reflection of the fact that mobile web is a way of life for humans worldwide, and Google wants to show those humans better search results and more ads.

Likewise, if you have a website, and you want people to find it and use it, you should be providing them with a good mobile experience. Being mobile-friendly is a good common sense practice, like eating more vegetables. (Google is just like your mom, who still reminds you to do it every once in a while, for your own good.) Or, think of those ‘no shirt, no shoes, no service’ signs outside some beach restaurants. This update is Google’s indication that they have standards too, you know, just in case you have been living under a rock for the past decade.

Unlike previous updates that looked at your website/domain as a whole, the Google Mobile Update will look at your website on a page by page basis. A few pages that are not mobile-optimized will not “blacklist” your entire website. Of course, the pages that are mobile-optimized on your website will get preference in rankings.

Is your website mobile-friendly?

The good news is that you do not need a fortune teller, a “site audit,” any sort of advanced digital screening, nor any DNA splicing.

Just test your website here: https://www.google.com/webmasters/tools/mobile-friendly/ 

Think of this as Google’s very own Hogwarts style mobile-Sorting Hat. You will know where you stand in a few seconds. You’re welcome!

Disclaimer: Please know that this test is not perfect. There is no substitute for human testing, and I don’t mean your agency account manager. I mean you need to do it yourself. As I recommend in all my speaking gigs: go to a mobile phone store, and start pulling up your site on different phones and tablets. You might need some device-specific help from a developer for minor issues, but you’ll know if your site works on mobile or not. End disclaimer.

What’s the worst case scenario?

With every Google update, nobody but Google engineers knows exactly what is going to happen. But what’s the worst-case scenario if your website is not mobile-optimized? Google might remove the non-mobile-optimized pages from their mobile search results, or at least push them down a few notches.

If this happens, you will notice a change in your organic traffic. Then you’ll know that it’s time to update your mobile experience. Do that, resubmit it to Google Webmaster Tools, and you will be back in the index next time Google robots crawl your website. Easy like Sunday mornings.

A lot of you have read and reviewed and commented on my article on the SEO Bubble, and how it has already burst. I recommend re-reading that article and focusing on the big picture that lies ahead.

Nobody will be annihilated or lose any limbs/appendages because of a Google algorithmic update. And while you are reading this guess what will happen to your pay per click ads? Nothing! You see, when you pay Google, they are your best friend. Like I ahve said before- Pay Per Click is still a hotels best marketing tool. 

How do you become mobile-compliant?

  1. Do not panic.
  2. Get off your marketing agency’s proprietary CMS system and move your website to WordPress ASAP. (Need more information on that? Read this and this. If you ever needed an incentive to properly own your digital assets, this is it.
  3. Once you get yourself onto a nice responsive WordPress theme, go into Google Webmaster Tools, resubmit your website, and check for any other errors.
  4. Check your analytics data after resubmission observe your website performance changes. The web is always evolving: test, observe, repeat.

Conclusion

I feel really old when I think of the “Mobile Web Marketing” speeches I used to give circa 2006 at hotel marketing events all over the world. All web is mobile web today. Google is just trying to make some stubborn folks join 2015. For those folks, it’s a perfect time to catch up on some long-needed updates. For the rest of us, it’s business as usual.

Keep calm and stay mobile.

 

Expedia Acquisitions Signal Tougher Times Ahead for Hotels

Expedia, Travelocity and Orbitz walk into a bar. 

“We do not serve second and third rate Online Travel Agents here,” says the bartender.

“Well, they are now with me,” answers Expedia, “and the drinks are on me!”

The room erupts with joy. Drinks are flowing.

When Expedia bought out Orbitz within a few weeks of gobbling up Travelocity, it was great news for a lot of stakeholders. But it’s probably not so great for the hotel industry, which relies heavily on online travel agents (OTA’s) for their revenue and profits. Read on before you raise your glass.

First, A Trip Down Memory Lane

One of Expedia’s greatest assets was its first batch of market managers and directors. While Travelocity, Priceline (before booking.com) and Orbitz fumbled, Expedia built strong relationships with hotels and hotel personnel. Aggressive but likable market managers went out in person and made one exclusive deal at a time, pushing its competitors onto the sidelines.

Fast forward to 2015: Expedia acquires the remaining (and still flailing) OTA’s. Meanwhile, Priceline acquires Booking.com, a miracle move that puts Priceline in its own league of awesomeness. It’s shaping up to be a showdown of epic proportions.

Why This Is Bad News for Hotels and Travelers

Travelers, hotel brands and hotel operators all have good reason to fear this sort of consolidation in the OTA market. Let me explain why.

Higher Costs for Hotels

Orbitz and Travelocity lost out to leaders Expedia and Priceline a while back. Still, they had their market share and their contracts in place with hotel suppliers. With this latest consolidation, the option of selling your rooms on a different channel is gone. Your new “Expe-Orbit-Ocity” contract now will contain much higher margins for hotels because there’s nowhere else for hotels to go.

Now, why do hotel brands and operators need Expedia? I’ll say it one more time. Because they do not dominate the search engines, nor do they have a particularly good grasp on their own marketing, direct revenue and ecommerce. Just remember… if you don’t like Expedia, now you can also forget about Travelocity, Orbitz, Wotif and Trivago (all now owned by Expedia).

Airlines, on the other hand, do not have much to fear; they just walk out on the OTA’s like clockwork every year and then get back on board when the margins are corrected.

Industrial Style Customer Service

Supersizing things is generally not a healthy choice. This is especially true when it comes to larger enterprises and customer support. Try calling the ultra-consolidated United Airlines, American Airlines, Comcast, Vonage, UPS, or Network Solutions when you need assistance (as I’m sure you all have). All of these companies have grown through acquisitions, and every step has been a nightmare for their customers. This is yet another reason why Expedia’s shopping spree does not translate into anything good for the hotels that will now have to deal with a behemoth team.

Higher Prices for Travelers

Let’s not forget about the travelers. We all learned in Econ 101 that less competition breeds higher prices. Anyone checking the airfares since the Continental-United and American–US Airways mergers knows what I am talking about.

So what happens the next time you need a hotel room? Sure, go to Booking.com ( rooms only) or Priceline ( Room + Air) and check the rates or  go to Expe-Orbit-Ocity that’s the choice. Even with the astronomical growth of Airbnb, you still might require an airplane to get to your destination. You see? Owning the travel cycle is the name of the game.

Of course, several industry experts are not convinced about price increases for the end customer because travel is such a big market. It may take a longer time for these acquisitions to impact hotels than airlines, but the rise is coming.

“Coke vs Pepsi” for the Hotel Industry

First things first: Priceline’s acquisition of Booking.com under the leadership of Jeffrey Boyd still stands as the greatest acquisition of all time. It should be required reading for all business and hotel schools worldwide. Taking Priceline from a loss of $19 million in 2002 to a profit of $1.1 billion in 2011 is legendary.

Expedia’s acquisition strategy clearly reflects its need to stake out a strong market position in relation to a formidable adversary that started in Europe and is now giving them a run for their money in the US and Asia. It’s disappointing to see Expedia mismanaging its Air Asia partnership in the Asia Pacific market. Having people in the US and Europe manage Asia Pacific is a pitfall that a lot of US-based companies fall into. (APac expansion by a non-Asian company or hotel group is something that deserves its own article.)

A common theme for the two remaining OTA’s is their astronomical spending on online marketing. All this while, hotels (independent and brands) continue to bring a knife to an thermonuclear war. Even if you don’t want to admit it, you know that signing up for a $99- $599/month agency solution is not going to help you reach your full online revenue potential. Neither is hiring an agency with hundreds or thousands of clients.

According to CNBC, Expedia’s marketing costs (direct selling, Google Adwords, display, etc)  jumped 32% in 2014 to $2.26 billion. Priceline hasn’t filed its 2014 annual report yet, but in 2013 the company spent $1.8 billion on Internet marketing. This was a 41% increase from the prior year! Mark Mahaney, an analyst at RBC Capital Markets, estimates 90% of that went to Google. (To put that in perspective, I have worked with major hotel portfolios who balk at a yearly increase of $250/month in AdWords budget.)

For now, Expedia is like the Pepsi to Priceline’s Coke. It’s putting all its US-based failed adversaries out of their misery and playing desperate catch-up to mighty Priceline. As these giants fight it out, brand and independent hotels are just waiting to see what happens. They never took charge of building their own direct revenue and distribution, so they are at the mercy of whoever wins. Their marketing departments have fiddled with buzzwords like “millennial traveler,” shared “social media success” articles circulated by the hotel news media, and cycled through one internet agency after another in a race to pay less and less. As those activities have not done much to build their market share or revenue, hotels now have very limited choices.

So, would you like Coke or Pepsi to be your distributor? And, as in restaurants across the US, the answer is going to be “NO, we don’t serve both.”

Conclusion

In December of 2003, I visited the Dallas HQ of Hotels.com. The market management team had a funny cartoon pinned on their desks of a menacing looking Hotels.com valet using the Expedia.com suitcase to whack the Travelocity Gnome (which was lying sideways on the floor). I look back and realize I was getting a glimpse into the future.

I’ve been saying this for a while, but here I go one more time. It’s going to keep getting harder for hotels to make a profit unless they take control of their online distribution and dive into some real innovation. Instead of trend spotting, agency hiring and firing, and other hi-jinx the focus needs to be on owning and building your own digital assets and direct revenue.

 

 

Marriott’s War on Wi-Fi: Hotels Need to Stop Fighting the Future

Marriott's War on Wi-Fi

Big hotel brands have seen unprecedented growth over the past decade. Even when the global financial engines slowed down, they grew exponentially in global markets (ie, Asia, Middle East, Latin America). But unfortunately, they have forgotten what every Stan Lee fan already knows: with great power comes great responsibility. One of the leaders of the pack – Marriott – has decided to appropriate one of the most important aspects of modern human existence: Wi-Fi.

Let’s start with why Wi-Fi is such an integral part of guest experience in a hotel.

Now, here are your Captain Obvious facts for the day:

  1. Wi-Fi’s impact on hotel bookings: 73% (Yes, it’s beating your location.)
  2. Guests will not come back if they’ve have a bad Wi-Fi experience.
  3. Guests don’t only want Wi-Fi, but they also want it fast. Yes, they, like Tom Cruise in Top Gun, have a need for speed.
  4. Your positive reviews, which have a massive impact on your direct revenue, are directly proportional to the speed of your hotel’s Wi-Fi network.

So that’s why you have to make sure your Wi-Fi is up to your guests’ standards. But what if it’s not, or they just want to use their own? Well, Marriott has a big problem with that.

What Marriott Did

Marriott wants its conference guests to use only their proprietary Wi-Fi network when they are on property. Sounds pretty ridiculous, right? It gets better. At the end of 2014, Marriott Hotels was fined $600,000 dollars by the Federal Communications Commission (FCC) for blocking Wi-Fi signals at one of its hotels. Basically they were preventing guests from using their own Wi-Fi enabled devices, instead forcing them to use the expensive and unreliable “official” Wi-Fi network installed at their convention center.

Anyone who has ever attended a conference knows how annoying and unreliable open hotel convention center Wi-Fi networks are. That’s why anyone in the Internet trade (myself included) carries a broadband Wi-Fi device for two very specific reasons:

  1. Speed and reliability
  2. Security

Can you imagine giving a product demo or presentation on a hotel’s network? *Shudder* So, how much negative press did this get them? Plenty! The story was covered by the Economist. And CNN. Even Huffington Post took time off from covering celebrity wardrobe malfunctions to write about it. Here is the FCC’s official take on the investigation.

How They Did It

One word: jammers. Not to be confused with the little known band from Sioux City, “The Jammers.” Wi-Fi jammers are illegal devices that can be bought cheaply online and then used to block Wi-Fi signal. Here is the full definition of what the FCC considers a jammer. And here’s a quote from FCC’s head of enforcement, Travis LeBlanc: “It is unacceptable for any hotel to intentionally disable personal hotspots while also charging customers and small businesses high fees to use the hotel’s own Wi-Fi network. This practice puts customers in the untenable position of either paying twice for the same service or forgoing Internet access altogether.”

Sore Loser?

So, you’d think Marriott would take this as a (big, flashing) sign of the times; maybe they could work on improving their Wi-Fi policies, and maybe their Wi-Fi service too? No, that would be too easy, and also the right thing to do (two things which rarely go hand in hand). Instead they recruited the American Hotel & Lodging Association (AH&LA) and have petitioned the FCC asking for a declaratory ruling making Wi-Fi jamming legal. Is this real? Yes! You better believe it. Actually, don’t take my word for it…you can just read the official FCC filing.

Their official reason for doing this is even more ridiculous. Marriott argues that its hotels should be able to block guest Wi-Fi devices in the meeting spaces because their network provides:

  1. Increased reliability (LOL*)
  2. Better “cybersecurity” (LOL x2**)

*Personal Mi-Fi device can kick any convention center Wi-Fi’s behind.

**Cybersecuity is an illusion. If someone really wants something you have stored online, they can get to it no matter how hard you try to prevent it. The world is full of teenagers who hack the Department of Defense because they are bored.

Here is a quote from Marriott: “The question at hand is what measures a network operator can take to detect and contain rogue and imposter Wi-Fi hotspots used in our meeting and conference spaces that pose a security threat.” They are basically planning to use “legalized jammers” only in their meeting spaces…but for our own protection, of course. How thoughtful.

Conclusion

There is no way this is going to end well for Marriott, or any other big hotel brands that want to jump on the “security and reliability” bandwagon. Marriott, here’s the way out:

Step 1. Drop it like it’s hot.
Withdraw your FCC filing, issue a simple apology, and then issue guidelines on securing Wi-Fi connections in your meeting spaces.

Step 2. Give your guests free Wi-Fi.
Think bigger than “ancillary revenue.” Offer free and fast Wi-Fi to everyone, and win hearts and minds.

It’s possible that Marriott will ignore my advice and continue on their current path. But this time they are not going up against small individual owners or investment funds they can crush with their legal teams. This time they’re battling Google and Microsoft, who have deeper pockets, more lawyers, and stronger lobbyists than Marriott.

What other massive obstacle are they up against? Sheer public will. You can quote me here: “Charging for Wi-Fi in any form will soon lead to the quick and decisive decline of any hotel in the court of public opinion.” Think of it like indoor plumbing…hotels need to roll it into the cost of the room. Nobody is going to pay extra for “security and reliability” while using your toilet inside the room they paid for; what makes you think they’ll want pay extra for W-Fi inside the meeting space they paid for?

Marriott: Please get real. Wake up and smell your bulk-purchased, medium-quality coffee. Spending money to petition the US government to change its laws in order to make a few extra nickels is wasteful. Why don’t you spend your money on a worthy cause instead, like marriage equality, medical research, or world hunger? Even if you miraculously win the legal battle against FCC +Google + Microsoft, you have already lost in the court of public opinion. It’s a #FAIL no matter how you look at it.

If you’re a hospitality business who’s still charging for Wi-Fi:  Stop fighting the future. Internet is almost as essential as plumbing to today’s guest. Don’t hold them hostage and expect them to like you, or to ever return. Be gracious. Meet the future with a smile and some good, blazing fast, free Wi-Fi. It will do wonders for your revenue in the long term.

 

My Top 6 Articles of 2014

It’s time to say goodbye to 2014. It was an epic year for me, and I especially loved sharing my thoughts about the industry with a wonderful group of loyal readers.

This year my articles were read by visitors from 126 countries! I was most excited to see Bhutan on the list, also known as the happiest country in the world; they actually measure happiness and not GDP as their metric for being a successful country. Let’s try and get some inspiration from Bhutan and do things that make us happy. Producing meaningful content, and having you enjoy and share it, has been a great source of happiness for me.

As always, I had a very international year:

  • I famously said this year at a family party: “I’d rather fly than drive.” I completed 1 million miles in the air with American Airlines in 2014! Nine million more and, according to Clooney’s movie, they will have to name a plane after me.
  • I spent the summer working in Singapore, adding some heavy hitters to our revenue management and asset takeover team. These guys are not only the smartest, but some of the nicest guys in the industry. Also, I love Singapore!
  • I got to work in the Middle East on an amazing project, developing tourism potential for the hotel brand and the country. It’s very exciting, and a wonderful place to work.

In 2015, I plan to continue offering content that you can use to grow professionally without getting bored to death.

As for 2014, the tribe as spoken. Here are the top posts based on traffic, engagement and social sharing:

  1. Priceline’s Acquisition of Buuteeq: Why Hotels Must Own Their Digital Assets  
  2. How Airbnb Is Crushing Traditional Hotel Brands
  3. Reality Check: 7 Questions for Your Hotel Marketing Agency 
  4. It’s Time to Burst the Hotel SEO Bubble: What Hotels Really Need to Know
  5. Hotel Pay Per Click: Your Single Most Powerful Marketing Tool 
  6.  Why You Shouldn’t Sell Rooms for $7 on Hotel Tonight 

Happy New Year, everyone!

 

The End of an Era: IHG Acquires Kimpton

How much is that boutique hotel in the window? Well, it’s around $430 million.

Yes, that’s the price InterContinental Hotels Group (one of the biggest hotel companies in the world) paid to acquire Kimpton Hotels, the original boutique hotel group, which includes 62 hotels and 71 hotel-based restaurants and bars. The number might sound big, but in reality it’s a drop in the IHG ocean of hotel brands and assets.

Having lived in San Francisco, I saw the best and most vibrant years for the local Kimpton hotels. Now it’s come to this: the latest and, I think, fatal blow to Kimpton as a boutique brand, and the Boutique Era itself.

Kimpton, Schrager and Conley walk into the hotel business.

The 80’s were a wild time. It was also the time when the concept of a “boutique hotel” was born. The three people who took this movement mainstream (in chronological order) were:

1. Bill Kimpton, 1981 – Clarion Bedford Hotel, San Francisco
2. Ian Schrager, 1984 – Morgans Hotel, Madison Ave NYC
3. Chip Conley, 1987 – Phoenix Hotel, San Francisco

These three men had one thing in common: they wanted to do something different than what the established brands were doing. Free thinking is something that does not fit the traditional style of a hotel brand (not in the 80’s, and not today). These guys transformed one boring hotel/building at a time into a hotel that had a soul and something unique about it.

Where are they now?

1. Kimpton just sold to IHG (a brand that owns Holiday Inn Express).
2. Ian Schrager is now designing hotels for Marriott.
3. Chip Conley has quit hotels and is now working with the fastest growing lodging distribution company, Airbnb. (Still crushing hotel brands.)

If the three original innovators are abandoning the boutique concept, I’d venture to say that the concept needs to change. This leaves us with only two kinds of hotels: those that are owned by a big brand (Brand Hotels) and those that are not (Independent Hotels). Soulfulness is no longer part of the equation. You just can’t be boutique and big brand at the same time.

Your call is important to us. Please stay on hold.

KimptonTweetsHow quickly things change! Check out the two standard tweet replies now going out from the @kimpton hotels Twitter account. These are used to reply to all tweets, no matter how positive or negative.

Moving forward, everything goes through IHG legal, no matter how “quirky” you say you are. Want quirky? Go to your local independent coffee house. With big brand comes bigger legal teams. No matter how you hard try and spin it, things are going to be different.

The fact is that IHG already owns two “boutique” brands: Hotel Indigo and Even Hotels. Don’t feel too bad if you haven’t heard of them. They are way under the radar, and IHG casts a pretty big radar shadow, making it hard for an independent concept to take off.

Culture Club

I love the typical response that a lot of big brands give when acquiring “boutique” hotels: “It’s the fastest growing segment in the industry.” The fact is that the best kind of independent hotel grows organically. Once under a big brand umbrella, it’s almost impossible to maintain its original culture. Reports of a big hotel company “nurturing” an independent brand are highly exaggerated. Keep it real: nobody spends $450 million and then doesn’t change a thing.

Keeping the culture of an acquisition alive is especially hard for brands because it almost never makes much business sense (at least on paper). Not that big companies are evil. It’s just that everything is based on maximizing efficiency. Culture is never given priority over shareholder value. Remember (and you can quote me): Big companies measure success in dollars and not smiles.

This trend can be seen everywhere. The technology world is riddled with small, amazing product companies that were slaughtered or ingested by larger corporations. Sure, selling to bigger brands makes the founders a lot of money. But in the long term it kills their product, which is what it was really about. I still remember when Google killed Sparrow, and when Yahoo killed Flickr. There are so many small fish (really cool ones) that will never be the same inside the belly of the big fish. Free market capitalism giveth, and free market capitalism taketh away.

What happens next?

IHG, with the limited success of its Indigo/Even brands, capitalizes on the established Kimpton brand. The focus will be on reproducing more hotels under the Kimpton banner, including sub-brands under Kimpton (Monaco and Palomar). There are already 16 Kimpton hotels in the pipeline that are going to experience the full force of IHG’s development team. Next, IHG’s owner connections, and their massive-scale distribution and procurement teams, are going to hit Kimpton, taking it beyond the US market to Europe and Asia. File it under the “big brand buys an independent brand and takes it global” storyline.

Conclusion

Independent hotels will always thrive with outside the box thinking, service and products, and a strong focus on guest experience. By contrast, a hotel brand’s focus is to have McDonald’s style efficiency and economies of scale. This approach is just not compatible with independent thinking. Sure, you can try and buy innovation, but maintaining it with your industrial-strength departments and strategies in place will be really hard, if not impossible.

The hotel industry today is ripe for innovation. As I have said many times, innovation will not come from brands, but from independent hotels and independent thinkers. We are ready for the next generation of hotel people like Kimpton, Schrager and Conley. We’re ready for the next concept. Who is stepping up to the plate to bat for innovation vs mass production? Maybe you?

 

Priceline’s Acquisition of Buuteeq: Why Hotels Must Own Their Digital Assets

The hotel marketing and distribution world was recently shaken when Priceline Group (aka, The #1 Lodging Online Travel Agency in the World) acquired Buuteeq for an undisclosed sum. This officially makes them the first OTA to directly enter the B2B hotel marketing services sector.

Can you hear me now?

For over nine years, in every one of my lectures, workshops, consultations – just about every interaction with hoteliers – I have tried to stress the importance of owning your digital assets (your domain, website, analytics, etc). I have evangelized WordPress to the hotel sector for quite some time now. I could not have more strongly urged hotels to own their own website, their single most profitable marketing and revenue channel.

If you haven’t been listening, this acquisition should be a huge wake-up call. Ownership of your digital assets is more important than ever before in the history of the lodging business. Who provides your technology and in what format really matters. In this case, if your hotel is using a website made by Buuteeq, your site is now essentially a subsidiary of one of the biggest OTAs in the world.

If you find your hotel in this situation, you’re not alone. The majority of hotels worldwide are renting their digital assets, and this is hurting their long term direct revenue potential. Every time a hotel goes through a change in vendors, ownership or management, they are practically starting from scratch with a brand new website, marketing campaign, etc. In fact, in my experience, many hotels make their digital asset purchasing decisions on the basis of the lowest possible cost, likeability of sales people and existing relationships, with little regard for long-term profitability.

Stop Renting Your Most Profitable Channel

Owning and managing a lodging business worth millions of dollars and then renting its website from a vendor is a bad idea that has become very popular with hoteliers. I have never passed up an opportunity to try to steer hotels away from proprietary content management systems (CMS). It’s fine to hire someone to do your online marketing, as long as they build upon a platform that you control. This ensures continuity in your online marketing efforts.

Each of the leading  hotel marketing agencies has its own “special” system that is billed as being “much safer and magically superior” to open source platforms like WordPress. These agencies boast of having hundreds or thousands of hotel clients; the size and ubiquitousness of these agencies is exactly what makes them feel like safe choices when they are being hired by hotel marketing departments. But it’s the agency who gets security from this setup: hotel websites built on their proprietary platforms make it difficult for those clients to leave.

The Art of Misdirection

Last year, I wrote a popular article about why hotels should ignore the hyperbole of software vendors and hotel marketing agencies, and should embrace WordPress when selecting a content management system for their websites. (You can read it here.) I was specifically addressing a ridiculous article that Buuteeq’s SEO manager had written about WordPress being a bad choice for hotels. His agenda was clear: spread misinformation about the open source systems hotels were starting to ask their sales teams about.

How bloody ironic it is that less than a year later, Priceline has acquired Buuteeq along with the content management system that now powers hundreds (thousands?) of hotel and B&B websites. You cannot buy this kind of irony with bags of cash, even Priceline’s cash. Buuteeq obviously had a goal: to steer hotels and other lodging clients into their proprietary system in the hopes of gaining enough volume to cash out. Mission accomplished.

Hotel owners and marketers who made the choice to forfeit the ownership of their most profitable channel are the ones who lose in this deal. Today their website is owned by a company with market capitalization of 63.17B. (Yes, that is billions).

The Truth About Your Agency’s Website CMS

There are a quite a few mega hotel marketing agencies in the US and Europe that boast of having thousands of hotel clients. They all have one thing in common: hundreds upon hundreds of hotel clients sitting on a clunky, proprietary CMS platform that is years behind WordPress (and they know it). Here are the three real reasons custom CMS platforms exist in the hotel marketing industry, despite what your sales rep might tell you:

  1. Sales: They help the agencies make a phony but appealing sales pitch. Fake awards are won, security touted, new versions released with much fanfare; even CMS systems with “secret SEO sauces” are peddled. Salespeople know that hotels will not be asking them digital asset ownership questions; they will keep making sales as long as customers are willing to be dazzled by superlatives and a low price. So the reviews and awards keep getting shinier, and the prices keep getting lower. The systems, however, aren’t getting any better. (Psst: WordPress gets better all the time. That’s the beauty of open source technology.)
  2. Efficiency: A proprietary website platform creates massive efficiencies in website hosting, production and management. This is the reason you can get a website for as low as $100. Overworked, underpaid project managers use the CMS to manage hundreds of websites. You too will have access to change your content and photos, but only the limited access that is built into the system. Please don’t think you will ever own your website. You are just renting, as they intended you to do. You don’t have ownership or control.
  3. Pain: The CMS delivers a potent kiss of death when a customer decides to leave. You think you have paid for a website, but without the content management system it’s worthless. When you leave, you take only the contents of your former website with you (usually in a Word document that is emailed to you). The platform – the framework that holds the whole thing together – doesn’t belong to you. Sometimes even the photos don’t belong to you; certainly not the SEO ( Search Engine Optimization) efforts you paid for over the years. Every time you switch, you leave it all behind. You start from the beginning and lose all momentum, so you can experience the pain of revenue loss as a penalty for leaving.

It’s an Epic Race Down to the Bottom

Forest Key, one of the founders of Buuteeq, said in an interview in 2011 (that you can read here), and I quote: “Our biggest competition today is the legacy relationships that the hotels may have with a web design agency. These agencies tend to be very small, often individual proprietors, and provide custom design and development services to the hotel, usually charging $60-150 USD per hour.” He clearly identified the one thing that hits home with a lot of decision-makers in the hotel and lodging business: They view online marketing as an expense. Something that needs to be controlled and kept in check.

Many hotels and consultants happily jumped on the Buuteeq bandwagon due to their price point, with zero thought given to digital asset ownership. Since this interview three years ago, Buuteeq created an aggressive sales team and offered rock bottom prices that no agency could match. The result: Hotels were steered away from open source platforms they would have owned in favor of an inexpensive closed system they rented.

Even brands like Choice Hotels  jumped on the Buuteeq bandwagon. Buuteeq custom-designed an integration to the Choice Hotels’s CRS (central reservation system) that they branded as  “Digital Direct Program” which is now available to 5,000 Choice brand hotels. What can I say? It’s a classic story of “brand meets new low-cost vendor,no real questions asked, brand falls in love. the end”

Choice Hotel’s intention here was probably to  help the hotel owners generate more direct revenue. Instead, their “Digital Direct Program” did not give any thought whatsoever to digital asset ownership. It’s classic sort term thinking that kicks in when hotel brands go technology shopping. Choice Hotels could have directly invested in open source for their franchisees, but it chose not to because the harder thing to do and the right thing to do are usually the same thing. Instead, now their franchisees can have a “website ready in less than a week” for $99/month, but the will never really own that website. Additionally, those hotels who opted into the program now have their most profitable channel (their websites +analytics +online marketing) owned by Priceline.com’s newly acquired subsidiary. Let’s not forget, Priceline already sells several of these very same hotel rooms on  their own website, of course for a commission to the same owners.

So, we come to the real question. If hotel owners are getting (renting) their most profitable channel (their website) from Buuteeq for $100/month, which is basically the cost of one Starbucks latte a day…do you think they really care about or understand the value of direct revenue? The answer is no, just in case you are wondering.

Furthermore, how many hours do you think the agency spends on improving their clients’ $100 – $500 websites every month? (And how many hotel clients ask this question?)

I am a huge fan of efficiency and new technology, but it’s this race down to the bottom that bothers me. The acceptable level of spending on a hotel’s most profitable channel is getting lower every day, which, I might remind you, is the very opposite of what the OTA’s are doing themselves!

Remember this: It will always matter who maintains and owns your digital assets, no matter what sales people tell you. If you have any doubt, look at what their own company is doing, not what they’re saying.

Conclusion

Online marketing vendors have always been bought and sold. Buuteeq is one of the many hotel marketing vendors that have recently been acquired. Priceline, unlike most of the hotel brands, has always invested in the right digital assets and their results speak for themselves. It’s only a matter of time that Priceline will spin Buuteeq into a highly profitable moneymaker for them rather than let them run as an independent platform for hotels.

Hotels should take a cue and  stop viewing their digital assets as rentable commodities. They must stop viewing their website and online marketing as expenses, and start recognizing that their digital assets and marketing are investments in their future. Nothing will change unless hotels and brands embrace open source technology, own their digital assets, and stop outsourcing their strategic thinking to the lowest bidder. Vendors come and go; your online presence needs to be consistent and lasting.

Euromonitor International Interview With Vikram Singh

 

I was recently interviewed as part of the Euromonitor International Interview Series conducted by Michelle Grant, Euromonitor’s Travel and Tourism Manager. Here’s the article that was published.

logo-euromonitor-international

Euromonitor International is pleased to present an interview examining online distribution for hotels. Euromonitor International Travel and Tourism Research Manager Michelle Grant spoke with Vikram Singh, Co-Founder of Evision Worldwide (2006) and Madbooker (2013). Both companies were established to improve ecommerce for hospitality businesses.

What is your background?

After graduating from hotel school, I started my career in hospitality with the Taj Group of Hotels, Resorts & Palaces, and then moved to Pan Pacific Hotels & Resorts in San Francisco. These experiences gave me the chance to cover every possible department in a hotel and truly understand how hotels operate.

My career in hospitality veered toward technology while I was in San Francisco. I decided to move into online revenue, distribution and optimization technology services. I took a deep dive and instantly loved it. Working with and developing clients from San Francisco to NYC, London to Tokyo, was simply exhilarating.

In 2006, I co- founded Evision Worldwide, which continues to provide high-level strategy to private equity and hotel companies. We have worked with some of the top real estate investment trusts and investors worldwide, on asset deals worth well over $1 billion. Our comprehensive strategies have helped clients achieve tremendous success with their new acquisitions, existing assets, and hotel rebranding efforts.

In 2013, my partners and I started our newest venture: Madbooker. It offers the most streamlined and productive reservation system in the travel and lodging industry. It is built to excel on all devices and harnesses open source power at a great price point for hotels, bed and breakfasts and vacation rentals. Madbooker customers can also take advantage of our team’s extensive online marketing experience via affordable monthly packages.

How should hotels approach the development of a rate and distribution strategy?

Guests are booking their accommodations quite differently than they were just 5 or 10 years ago. The hotel industry needs to change their approach as well. Many of the current rate and distribution strategies rely on historic data and focus on price trends. I think it’s time to focus on value, rather than obsessing over your rate and what your competition is doing. Creating a value proposition needs to be Step 1 before embarking on any kind of detailed rate and distribution strategy.

How is online marketing evolving, both search engine marketing and social media marketing?

I do not like the concept of “social media marketing.” I think hotels should be doing more “social media conversing,” where they use social media to communicate with their guests: listen and respond, not just push out offers. Paying an agency to handle social media communication is a big misstep that a lot of hotels make. The voice has to be authentic and original, and not the mass-produced noise that we are often seeing these days.

Search engine marketing is getting much more targeted as Google is now using its massive online powers to:

1. Make the process of searching for travel more efficient, and
2. Ensure that they continue to make money from click- and impression-based advertising.

Specifically, the concept of ranking for high-volume keywords using search engine optimization is no longer a feasible inbound marketing tactic. Creating quality content to provide answers and build your brand based on value (not hyperbole) needs to be the core focus for any lodging business.

The final step is to make sure you set aside enough budget to spend on Google to harvest all of your brand name searches. In other words, when I look for your hotel by name, I should see your enticing ad right on top of the page. Otherwise, Priceline, Booking.com and Expedia will have their pay per click ads ready to harvest that sale for you.

What should hotels be doing to have an effective online marketing strategy?

Every hotel needs to decide what their value proposition is going to be. They need to build a story around their location and value. The focus needs to move from marketing platforms like Facebook and Google Plus toward compelling location marketing and storytelling.

It’s amazing how little local information many hotel websites provide to a prospective visitor. Design-heavy, content-light websites are wreaking havoc on direct conversions. Google will be glad to answer questions about any location in the world; don’t be surprised when they also sell the room, tours and activities because you were too busy yelling “Book Now!” on your website rather than answering your guest’s questions.

How do you view the role of online travel agencies in online distribution and marketing?

I respect the OTA’s and admire what they have achieved in a relatively small amount of time. They dominated search engines in what I like to refer to as the  “golden age of search engine optimization” by launching hundreds of content-rich affiliate websites. Around the same time, the big hotel brands were serving notices to owners to shut down their local independent websites – a grave error.

OTA’s also have heavily spent where it really mattered – Google AdWords. By buying keywords in every stage of the travel search and booking funnel, they ensured that they would not only build trust, but also made it very easy to buy a room from them.

I think every hotel should aspire to run their online marketing program like an OTA, with the determination to get the click and the booking.

Does online marketing level the playing field for all accommodation players, or do the brands still have an advantage thanks to their resources?

Internet is the great equalizer. Over the past few years, it has helped some amazing new concepts in hospitality surpass everyone’s expectations (eg, Airbnb, Hotel Tonight).

The big hotel brands definitely have the resources, but I see them focusing on the wrong things. They are just building their brand, and not working to improve the travel search and buying cycle. They are buying online marketing and strategy like they buy toiletries. However, unlike soap distributors, one marketing agency cannot power the strategy for 1000+ hotels in different locations across the world. This is the biggest challenge, I think. There is no urgent danger to brands but… to quote PB Shelly, “nothing wilts faster than laurels that have been rested upon.”

How important is Google for hotels, and in which way? What do you think will be its role in the future?

Google has always been a travel powerhouse and is not going to let go of its #1 spot. Their recent updates have ensured that:

  • Hotels that are building their brand get rewarded, and
  • Anyone trying to game the system for a few extra clicks gets penalized.

There has never been a better time than now to produce location-based content on your hotel website. Even though the overall volume of referral traffic that hotels get is gradually declining, Google AdWords is still very relevant, and every hotel needs to participate in that program. Especially when it comes to brand name keywords. You must buy your brand name keywords or the OTA’s will be happy to do it for you, and get your clicks and your bookings.

As for the future, I think Google is looking for revenue streams beyond its one-trick pony (pay per click) in the world of travel. Products like Hotel Finder are an indication of things to come.

What are the prospects of the mobile channel for the hotel industry for bookings and as a customer service tool?

All commerce is mobile commerce. I have been talking about mobile marketing since 2010 at hotel conference and events. It’s amazing to see every projection about popularity, usage and growth hold true. Unfortunately, as with everything else, hotel marketing agencies have used “mobile marketing” and “mobile website” as buzzwords to sell products and services. They haven’t truly embraced mobile as a fundamental part of the overall marketing strategy.

There is a lot of improvement that needs to be done. One of the biggest reasons we launched Madbooker was to update the mobile commerce experience for guests and hoteliers. Our system breaks down all stats by device right on the dashboard, and works great on all devices whether you’re using the front or back end.

Nothing beats a mobile device when it comes to giving on-the-spot customer service.  Every hotel must get comfortable with the fact that guests are using phones and iPads to search, book, and communicate. To keep up with Google and the OTA’s, make sure you’re reaching today’s and tomorrow’s guests where it matters – on their phones.