Technology assimilation in day to day operations has created a new set of challenges, forcing hotels to pursue innovation relentlessly to stay relevant in an extremely dynamic marketplace, says Arif Patel. A detailed interview follows:
How do you ensure ‘best rate guarantee’ on your hotel’s website, especially at a time when you have also offered it to OTAs, many of whom are subsidizing room rates by paying out of their own pocket to garner a bigger market share?
For OTAs and even e-commerce companies in general, all players essentially sell the same stuff from the same merchants to the same customers at the same prices. With no difference in merchandise, they often resort to price variation to attract customers. But in my opinion, burning cash through subsidies and discounts is not a sustainable model. While it may help with first time customer acquisition, a very small percentage customers acquired through such unprofitable methods stick. AccorHotels has taken a tough stand on pricing parity as we promise “best rate guarantee” for our guests. If you book an AccorHotels property online on any AccorHotels Internet site and find an equivalent offer within 24 hours on another website for the same hotel at a lower price, we will honour the lower rate and give you a further reduction of 10%. This goes on to demonstrate our commitment to price parity and how it is a non-negotiable point for us.
We always say that OTAs are great for customer acquisition. A potential guest in Nagpur who wants to stay at a Novotel hotel in Kolkata probably might not have heard of Novotel Kolkata Hotel and Residences if OTAs did not exist. They are providing us with a first-time client, at a cost which is cheaper than us creating a sales engine in Nagpur. Basically, when the guest visits our hotel, we need to ensure that they feel welcome. We need to also identify him or her, and invite them, whenever they visit the AccorHotels network, so next time around they don’t have to go back to an OTA. We call this the retention program.
We are doing it in a very transparent manner, even vis-a-vis OTAs. They know we are doing it, and they are fine with it. Because most of their volume is first-time customers, which means we don’t have common interests, but we have common ambition, which is to develop the travel and tourism world. My thoughts may vary from that of a small independent hotel owner and operator. Because if I have a retention program, that means I want that customer to benefit from the other brands, and the other 3,999 hotels (besides the one he stayed at), which is my strength. If you are an independent hotel, and you only own one hotel, and every time you are going to have to pay an OTA, because you don’t have something else to offer.
Do you reckon that your own website would be able to match the might of OTAs ever in terms of outreach?
OTAs have and will always be extended partners for leading hospitality players like ourselves. Like I mentioned earlier, they are great for first time customer acquisition. But one cannot only rely on OTAs to reach out to the target audiences. As the landscape continues to evolve, a well-balanced distribution and sales strategy which includes both directly-generated as well as OTA generated bookings is key. Over the past couple of years, we have accelerated focus on our own sales and distribution engines. We are making bold moves to get a bigger share of the pie via direct channels and control our costs by cutting down on often steep commissions. Today, we are willing to make big, effective and influential marketing investments to dispel the myth that the lower rates can only be found on OTAs. As a matter of fact, AccorHotels is known world over to offer the “best rate guarantee” to guests when they book with us instead of choosing an OTA. We do realise that we need to focus on conversions while also driving better user experience, data management and data analysis to make this happen. The silver lining and where we clearly have a competitive edge is understanding the needs of our customers and driving enriched guest experience to engender loyalty amongst our customers. It is crucial for hotels to make guests’ travel experiences easier overall with the use of mobile apps, to know how to surprise and delight guests, and to find the best ways to engage and communicate with guests the way they want to interact with the hotel. I’d again like to say that OTAs are in no shape and form a ‘challenge’ for us. It is the start-ups and newer models that are disrupting the landscape, and although we continue to grow bigger, there is no better time to start now.
Innovation is a critical component to technological growth. How are you going about enhancing the online experience of the consumer?
Innovation is the cornerstone of success for any industry and hotels are no different. We are operating in a highly competitive business environment, with technology disruptions and changing guest behaviours creating newer and more complicated challenges for industry players. It plays a pivotal role in promoting tourism, especially inbound travel, to ensure steady inflow of guests to help sustain and grow businesses. Hotels also need to innovate and reinvent on a daily basis in order to stay relevant and distinguish themselves amidst intense competition.
Take Goa for example. AccorHotels is the largest hotel operator in the beach state with three properties and more coming up this year. However, the competition in Goa is intense with plenty of standalone properties as well as branded hotels to choose from. So how do we stay relevant and differentiate ourselves? The key lies in innovation. For the launch of India’s first ibis Styles hotel in Goa, we not only invested in content that markets the property but also content that evokes and appeals to the audience the hotel targets. Through the creative use of popular channels, including social media, we were able to reach as many as 20 million potential guests through Facebook alone. Promotional videos we created, including “Fake a Vacation to Goa” and “Things parents NEVER say about Goa”, went viral as they attracted as many as 5.5 million views and over 80,000 shares, and counting. We have come up with similar innovative digital media campaigns for some of our other recent openings and existing properties. The key to their success was not in promoting the hotel or the brand alone but the destination itself, thus boosting inbound tourism and helping increase footfalls and recall over a period of time.
If we look at guest experience, we are leveraging technology to enhance it and add value before, during and after a guest’s hotel stay. Last year capped off the “Digital Transformation” plan for AccorHotels which addresses a full range of digital channels, making AccorHotels the leader in a fast-changing industry. We are investing 225 million Euros over a five-year period and are leading the charge in the hospitality space.
What is the share of the business coming from the cumulative online space, including your own website, domestic and foreign OTAs, and how do you intend to take this forward? What is your business plan for the next couple of years?
In terms of pure top line performance, 2017 looks to be a very promising year for AccorHotels in India and we anticipate a very healthy double digit growth year-on-year, at a much higher pace than what we experienced in 2016. We are moving quickly to invest in digital infrastructure and invest and nurture talent within our organization. It requires entire rethinking step by step. We need to ramp up our investments in infrastructure, optimize all platforms and provide a customised experience to our guests. We need to be where our customers are today and ensure that we are present across platforms and devices, and have a sharp focus on our mobile-led plans for future where the transactions are with much shorter lead times and are extremely price sensitive. Additionally content would form the backbone of our overarching digital plan – be it video, visual or text.
Is web booking increasing your average realisations?
Like I mentioned earlier, our businesses are growing and the consumer behaviour is fast changing. Internet proliferation and mobile penetration is rapidly increasing in India and our consumers are researching and booking us across various platforms and devices. They are having a 24X7 dialogue with us through various social media platforms. As we take a more content driven approach and are able to engage and create more personalized experiences for our online guests, our conversions would only grow with a better return on our investments. With technology comes better access to deeper consumer insights, data trends and analytics, and if we are able to marry our strategy and tactics at both corporate and line of business levels, we would be able to maximize our ROIs. Technology-led innovations have opened up the horizon for hoteliers and the opportunity for growth are aplenty, provided we not just respond to but proactively anticipate how our guests consume information on these platforms and put technology to use.