An unapologetic look at Hospitality

Entries from January 2011

Why hotels should care about Foursquare…

January 29, 2011 · 1 Comment

Location Based Services are all the rage at the moment. That is, if you have to believe the iPhone toting hipsters that use their expensive smart-phones to update Twitter more often than to make phone calls. They “check in” to the grocery store, the coffeeshop and even work using applications like FourSquare, Gowalla and Facebook Places. So what is the point?

I drive into a neighborhood, I look at my phone and an app like Gowalla uses the GPS (and network) data to let me know what interesting places (like restaurants or museums) are nearby. I can investigate how many other people checked in somewhere (the idea is that the venue with the most check-ins is the most popular) and see what other people had to say about it. For the ultra-self-important it’s yet another platform to publish every aspect of their existence.

You can also follow your friends and see where they like to go. You could decide to crash your buddy’s anniversary dinner if he is “smart” enough to publish his whereabouts with a Facebook Places check-in.

But while a GPS-based yellow pages with recommendations from friends instead of ads (at the same time allowing me to see where my friends are) makes location based services useful, there is no doubt (at least not in my mind) that the Foursquares and Gowallas of the world get their popularity from another aspect. It’s a game, that is addictive as crack!

Foursquare has over 6 million users and 112 thousand check-ins at JFK (the airport) alone. The Hard Rock Hotel & Casino in Las Vegas has been checked into more than 30 thousand times. Each  individual that checks in somewhere can unlock certain merits for doing so. Foursquare gives out badges (digital ones) and if any one user checks into a place more often than others she is awarded mayor-ship of that venue. I currently am the mayor of the local Target store (as well as 10 other places).

Apart from bragging rights, there are some real perks to being on top of your location based internet usage. Hotel Shangri-la in Santa Monica gives free cocktails to their Foursquare mayor on each check-in. Hotel Murano in Tacoma Washington enters anyone who shows their Foursquare check-in at the front desk into a drawing for a free night stay (and I like to think they decided to do so after something I said on Twitter). One more example:  Oporto (an Autralian fast-food chain) offers specials — usually a free upsize — for every fith check-in.

Don’t think that these location based services are just for kids with too much summer vacation time and a cell-phone plan paid by mommy and daddy.  A study shows that the large majority of Foursquare users is over 25 years of age, has a disposable income of over 25K a year and a large portion of them has at least a Bachelors degree.

I would say that makes it a very important demographic for the hotel industry. Also, looking at the check-in stats for your own property can give you more insight to your guest’s behavior. The hotels I have been looking at on Foursquare seem to (mostly) share a 2:1 check-in ratio, or two check-ins per person. What that means can only be verified against your own sales data, but here is one possibility…

Your average Foursquare guest (but don’t forget to check Gowalla and Facebook Places) is in town for one night and checks in upon arrival and once more before checking out. That being the case, you mayor (if your property has one) needs to have checked in at least three times in the last 60 days, because a mayor needs to have at least one more check-in than everyone else. After verifying that the mayor is not one of your employees (and for CRM purposes it would be good to request them to NOT check-in at work) you should offer your mayor something extra.

While most users automatically let their location based activity  flow to Twitter and/or Facebook (so that is free advertising for you) upping the ante a bit with a personalized offer may just get you an extra mention on these sites. In this day and age, where peer recommendations are becoming the de facto standard for buying decisions, that’s word of mouth that your biggest (traditional) marketing campaign can’t buy you!

Categories: Hospitality · Social

Rate Parity, what the hell is that?

January 28, 2011 · Leave a Comment

This article first appeared on jeroenschouten.com

In the hotel industry (I work there) the big thing at the moment is rate parity. What that means is this, if you sell a hotel room you want it to be the same price on say Expedia, Orbitz and your own web site. This, is to not confuse the customer the hotel says. Everywhere they look, same price. Cool!

Easy for the consumer, bad for the industry. If I am buying a TV, I shop around. I might find that the Samsung I am wanting is is 2500 dollars at Best Buy, 2359 at Target and only 2200 at Amazon. Why would I buy it anywhere other than Amazon? Well for starters, Amazon has to ship it to me. Not only do I have to wait for the thing to arrive, it’s now also going to cost me more money (IN SHIPPING). At Target I can pick it up today. However they are not a dedicated electronics outlet and their service is just not as good as Best Buy.

Should I decide that I really just want a second TV in my kitchen for when the world cup is on, I might go to Target. I have the option… Back to the hotel industry. Let’s replace the word Samsung above with Marriott. Let’s also replace the words Best Buy, Target and Amazon with Travelocity, Orbitz and Expedia respectively. You would think it works the same way… Marriott (the supplier) wholesales a room for 100 dollars. It’s now up to the retailer (Expedia and them) to decide what the mark-up on that room is going to be. Right??

Wrong!! The OTAs (that is what those web sites are called; Online Travel Agents) demand rate parity. If Marriott gives a room to Expedia for 100 dollars (that’s the retail price) then Travelocity also wants to sell that room for 100 dollars. Fine, but Expedia says my commission is 20 percent so Marriott, wholsesale me that room for 80 dollars. Well… says Travelocity, I don’t care what Expedia says we charge 30% commission so you better be selling me that room for 70.

I am not an economist, but it seems to me that something clearly is broken here. As far as I know, in every other industry in the world the supplier (Marriott) sets the wholesale rate and the retailer (Expedia, Orbitz and all them) sets the mark up and thus the final price. If Sanyo sells a clock radio to Walmart for say 10 dollars wholesale then Target needs to buy just as many of them to get the same wholesale discount. Otherwise Target is going to pay 15 dollars to Sanyo.

Not so, when it comes to hotel rooms. And to me that seems wrong. If a retailer says to me I want to mark up your TV by 100% and therefore you have to lower your wholesale rate otherwise I can’t stay competitive… I say go screw yourself! Take a lower profit! I know what it costs to manufacture that TV. Hotel owner, do you know what it costs to manufacture a TV?

Categories: Hospitality
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One loudmouth does not a mob make…

January 28, 2011 · Leave a Comment

DISCLAIMER: This article does not represent the views of the company I work for nor any of its employees. They are mine and mine alone. In other words, it’s an opinion piece. Take it or leave it!

This article first appeared on jeroenschouten.com

With that out of the way… Some of you may be aware that I work in the hospitality industry. The company I work for specializes in competitive analysis. In short, that means we spy on hotels on behalf of competing hotels (that’s the best explanation I can muster in half a paragraph). I am also a social media junkie, have given presentations related to social media at several conferences and pretty much live on Facebook and Twitter.

I am compiling stats on social media and hospitality for a presentation I am working on. Looking at some of these, I was reminded of the complaints being voiced by a large contingency of hoteliers on LinkedIn.

While I understand that if it’s your job to make people feel welcome as best you can, you get peeved when one of them starts badmouthing you all over the Internet, it’s really not that bad! At least, that is what the data I am looking at suggests (and may I just add here that it seriously speeds up the research, that a new product we — my company — are working on deals with social media). (more…)

Categories: Hospitality · Social
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