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The Transformation of the Hotel Industry from Art to Science


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The venerable institution of hospitality has been turning around over the past two decades. The combined impact of shifting demographics and new technologies are the primary catalysts for this metamorphosis. The Internet provides consumers an opportunity to think of the hotels as commodities. Hotels had been lowering prices to gain a competitive advantage from 2009 to 2013 but are now raising prices as quickly as possible, hoping that the music won't stop soon. The many changes occurring today are proof positive that this industry is no longer limited to being an "art." We have officially moved into the John Naisbitt coined "hi tech, hi touch" world. Led by revenue management but now including distribution channel management, social media marketing, Web 2.0 or 3.0, call it what you like and more, this industry has been transformed.

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The Transformation of the Hotel Industry from Art to Science

  1. 1. The Transformation of Hospitality from Art to Science Robert A. Rauch, CHA
  2. 2. Factors of the Transition from Art to Science  Revenue Management  Distribution Channel Management  Reputation Management  Social Media Marketing  Web 2.0
  3. 3. Revenue Management is the set of techniques that determine which reservation request to accept and which to reject to optimize revenue Hotel Pricing
  4. 4. Revenue Management  Manage OTAs  Packaging  Risk factors  Evolving traveler
  5. 5. Today, it is time for the industry to price based on value perception and not just price relative to a competitor. Understanding the true demand in a marketplace is quite scientific.
  6. 6.  OTAs  GDS  Hotel Direct  Voice  Hotel Website  Social Media (the new player) Distribution Channel Management for Driving New Revenue
  7. 7. Reputation Management Travelers’ ability to access social networks anytime, anywhere empowers them to create and consume more content than ever before 70% of travelers make decisions based on reviews and responses on review sites. Photo:
  8. 8. Social Media • Capitalize on guest created content • Create a virtual concierge through the property’s website or other digital app • Implement concise and impactful videos to enhance dramatic imagery • Utilize content marketing and real-time marketing 90% of travelers trust recommendations from their friends and family more than any advertising
  9. 9. Consumer Behavior A = B x W x N A- Attitude toward the business B- Belief of a consumer that the business possesses a particular desirable attribute W- Weight of importance of the attribute to the consumer N- Number of attributes important to consumers
  10. 10. Science of Marketing • Digital marketing • Mobile • Real time marketing
  11. 11. Digital Marketing Digital marketing is the use of digital sources based on electronic signals like Internet, digital display advertising and other digital media such as television and radio.
  12. 12.  47% of travelers research options using their mobile device  31.6% will actually book their travel on a mobile device
  13. 13. Real Time Marketing  Real time marketing (RTM) isn’t planned, it just happens NASA’s Tweet During the Oscars Oreo’s Tweet during the Super Bowl
  14. 14.  Utilize Facebook apps to highlight unique features  Feature guest generated content  Guest should be able to communicate with property  Video campaigns generate guest engagement Real Time Marketing
  15. 15.  Millennials  Expectation of more international visitors  Booking more profitable business  Innovative technology  Sharing economy/Disruption Today’s Top Hospitality Trends
  16. 16. Party for one, but hanging out together  Fastest growing segment  Special designs with Millennials in mind  Will turn to social media to voice opinion  Lack loyalty Millennials
  17. 17. Chinese Travelers 2015 and Beyond  Visa Waiver Program  Longer stays  Spend more money  Mandarin Chinese is the most spoken language in the world
  18. 18. Booking more profitable business • Improve distribution channel mix • Less reliance on relationships with OTAs • Content is King • Provide WOW customer service Photo: investingtra
  19. 19. Copyright 2015 R.A .Rauch & Associates Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Threat of Substitute Products Rivalry Among Existing Firms PORTER’S FIVE FORCES
  20. 20. are your strategies in line with hospitality as a science? Read more on the transition of the hospitality industry from an art to a science here
  21. 21. Thank You @truehotelguru CEO, RAR Hospitality