Mr. Bhandari


Your Guests' Booking Habits Are Changing, Yours Must Change Too

By Ravneet Bhandari, Chief Executive Officer, LodgIQ

The only consistent aspect in the way people plan travel is that it's constantly changing. Each decade brings new ways for customers to connect with the hospitality experience because of both changes in technology and customer behavior.

Think about it this way, the industry has come a long way since a sign out front touting air conditioning and color TV were enough to attract a customer; that is, if they could find you. It wasn't all that long ago when finding a hotel meant pulling off the road because you saw a sign, or by researching a potential stay by utilizing thick books published each year by Mobile or AAA.

There were also the big annual printed guides from each hotel brand, which eventually morphed into the first hotel internet sites. Of course these sites were essentially electronic brochures and not bookable, but eventually, online booking came into play. At that point, we entered a decade of where travelers spent long hours in front of a desktop computer monitor researching available hotels. Now of course, everything has changed yet again, and it's pushing hoteliers to rethink how they attract guests.

Society Shifts

The simple answer is that smartphones are changing everything. But it's much more than that. To better understand where are now, we must better understand how people's desires and interests have changed in the last decade.

Prior to the Great Recession, culture and society focused more intently on collecting things. In fact, the consumption of things was such a part of mainstream American consumerism culture at the time, even then-President George W. Bush included a line about materialism in a 2006 speech. "And I encourage you all to go shopping more," said Bush. The idea was that by spending money, we could keep the economy going strong.

That all changed when the Financial Crisis of 2008 struck, cratering spending and rejiggering financial priorities. People began realizing endless spending on things was no longer satisfying. It ushered in the modern "experience era." Rather than spend money on 'things' such as jewelry or a fancier car, people began spending more money on travel and dining out. People started realizing that collecting memories was more rewarding than collecting possessions.

Take a look at global hotel revenue, it's increased from $346.75 billion in revenue in 2010, according to Statista, to an estimated $490 billion in 2016. In 2018, revenue is expected to top $553 billion. The same holds true for U.S. restaurant sales. In 2016, restaurant sales were expected to total $782.7 billion, a near $200 billion increase in sales since 2010.

While other factors do come into play, these revenue numbers illustrate how people are looking more to connect with other people while doing things rather than buying more stuff. At the same time culture shifted, technological advances gave customers new ways to interact with brands, independent hotels and the entire travel booking experience.

According to Statista, the number of smart phones being utilized in the U.S. alone more than tripled from 62.6 in 2010 to 207.1 million in 2016, with an expected increase of another 50 million users by 2020. Together, these two elements are reinventing what customers want from a hotel experience and how they go about booking a hotel in 2017.

Booking Trends

The way people book travel is changing. Sure, there are generation specific trends at play, but for the most part, above mentioned societal changes and massive advancements in at the fingertip-available technology are reinventing how people explore and book travel.

A study completed in Fall 2016 conducted by comScore, and commissioned by Expedia® Media Solutions, looked at the 45-day period prior to a travel booking. The study examined online travel bookings from various device types and considered elements such as content, resources utilized, destinations considered and digital advertising across the three countries.

During this time people crave new information, engaging more often with content via a mobile device than desktop computers. It's why we see research interactions soar during the 45 days prior to booking a trip. Digital users are actively seeking travel related content, and are receptive to new information; nearly one third or more of online travel bookers across the three countries were influenced by advertising.

The research discovered consumption of digital travel content is soaring at a growth rate of 44 percent in the U.K., 41 percent in the U.S. and 18 percent in Canada. Travel content is also widely consumed in each country by 75 percent of digital users in the U.K., 70 percent in Canada and 60 percent in the U.S.

There's an old American phrase regarding travel that "getting there is half the fun." For travelers, research is the new "fun," supplanting the old ideal as people flock to the research process with incredible gusto. According to the report, Canadians visited travel sites 161 times, Americans visited 140, while those in the UK had 121 separate interactions. And the way they are interacting with research information is changing too.

In all, more than two-thirds of travel bookers said search engines, along with recommendations from friends and family, were used most to inspire travel. During the research phase, OTAs and hotel specific websites are considered most frequently. However, the mobile movement isn't just affecting the method in which a customer researches travel, it affects how he or she interacts with information, further upending traditional booking practices. Rather than sit for extended periods of time, research is conducted in short bursts of activity.

Mobile Morphing How Customers Engage

People rely on their mobile devices all day long, and according to Google's "Micro-moments" report, 87% [of users] have their smartphone at their side, day, and night; the average person checks their phone 150 times per day and spend 177 minutes using them. This includes all interactions, not just travel specific ones. Additionally, according to eMarketer, U.S. adults spend nearly three hours per day on "nonvoice activities on mobile devices."

Together, these stats point to a massive sea change regarding how customers interact with hotels and are reinventing booking patterns. Take the average commuter who steals glances and interacts with their phone throughout the day. When a trip is approaching, they're most likely researching travel products in bite-sized slivers while on the go, perhaps reading hotels reviews, watching social media consumer created content, or exploring local offers pushed directly to their smartphone as stated above. This means now is the time for hoteliers to rethink how they connect with their customers because instant and meaningful connections are what matter most Then being able to deliver the right price at the right time, every time to secure that booking.

Adapting to the New Reality

Creating the right price for customers espousing these new booking habits is about understanding the overall value of the individual consumer. For hoteliers, this means we've moved beyond basic revenue strategy into the era of more nuanced revenue optimization.

It's such an unanticipated change, it requires reinventing how pricing is achieved, starting with eliminating the departmental silo approach to fully maximize opportunity across the entire consumer journey described above. Analytical capabilities, coupled with the art of designing a consumer specific message, are required to reach today's consumer. An outside-in viewpoint, while keeping the customer perspective in mind, allows hotel executives to understand the full picture, the entire journey, and therefore enabling them to optimize each part of the value chain. This means examining and weighing more data points than ever before. It's no longer good enough to rely on historical data combined with what the perceived competition is charging on any given evening.

It's about acknowledging all relevant demand and price-elasticity signals across the consumer journey that provides a common thread of information to the savvy hotelier.Whilst we established that the game, the rules, and the players are changing, it is imperative to be cognizant of emerging and waning channels as consumers move in tribes from one technology platform to another.

On average, global media revolutions occur every 50 years. Think about how society shifted from reading multiple newspaper editions daily to radio. Then onto television, electronic brochure style websites, and now social media where reviews and user generated travel content dominates. It moved not only tribes of like-minded people, but shifted generational information consumption.

It's therefore critical to be cognizant of emerging channels, and the waning ones too - for example, video viewed on the internet is soaring, while traditional television viewing wanes; mobile devices overtaking laptops and researches anticipating that generation alpha will not use laptops at all whilst Wi-Fi for connecting is out and Li-Fi (Wi-Fi via Light waves) is in. And as every one of these information resources becomes more prominent, it shifts customer booking habits.

Modern Metrics

Additionally, we must recognize that each consumer has different priorities for each trip he or she takes - meaning, during each excursion they're more apt to be seduced by a different price, upending everything the industry has held sacrosanct regarding perfect pricing. The rules of customer engagement have permanently changed, and revenue managers must recognize and adapt to this new reality.

The old metrics are outdated, and despite the smart advancement of looking at RevPAR, we're now entering a post RevPAR metric world where considering Net RevPAR is essential to better connect with the modern travel buying customer. Whilst definitions can vary, this metric accounts for what the hotel earns after guest acquisition costs are considered, including distribution costs and commissions. This sharpens focus for hoteliers to understand the channels more deeply in which their guests are coming from, while providing insight into how to better appeal to that customer and their behavior displayed.

To fully achieving optimum financial results at the property level, the industry must wake up to this powerful realization: Mobile technology and changing customer behavior is inexorably altering the way in which customers interact and engage in the hotel booking experience. Because potential customers are booking differently, hoteliers must work differently to connect with those individuals. The good news; hoteliers reinventing their revenue optimization strategy will not just connect more meaningfully with potential customers during one of those myriad micro-moments, they'll achieve better pricing.

Technology, culture and customer behavior have all conspired to change guest booking habits. However, by clearly understanding just how customers interact with hotels in 2017, smart hoteliers cannot only adapt to these changes, they can be better leveraged for both higher profitability and customer loyalty.

Mr. Bhandari is the Founder and CEO of LodgIQ™; a start-up dedicated to providing advanced revenue optimization technologies to the travel industry. Mr. Bhandari was the first-ever Head of Revenue Management for Hyatt International, and subsequently for Caesars Entertainment, and is credited with creating and leading the integrated discipline of Revenue Strategy, Marketing and Technology for Trump Entertainment Resorts. He also served as an Executive Consultant for Starwood Capital, where he advised on, and managed various aspects of business strategy and portfolio optimization for Louvre Hotels. Most recently, he was the Chief Commercial Officer for Nor1 Inc. Mr. Bhandari can be contacted at 646-453-7699 or Extended Bio... retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by

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