It wasn’t so long ago that hotels held control of the booking process. But those days are over. Today’s traveller won’t even consider clicking the “book” button until they’ve compared prices through online travel agents (OTAs) like Kayak and TripAdvisor, and perhaps even investigated non-hotel options like Airbnb and HomeAway.
With OTAs making up the lion’s share of bookings, many travel brands are pushing to move away from that distribution channel. Only a few brands, such as Southwest Airlines, have made that leap successfully; while Marriott and Hilton both developed major campaigns in 2016 to drive customers to book direct. At the same time, independent bed-and-breakfasts had to slash their rates to compete with peer-to-peer room rental services. Since these brands can no longer compete on the basis of price, they’ll have to find new ways of differentiating themselves in terms of customer experience.
To find out how top hotels and other travel and hospitality brands plan to set their customer experiences apart from the crowd in 2017, I sat down with Julie Hoffmann, Adobe’s head of industry strategy for the travel and hospitality vertical, for part two of this five-part series on customer experience in 2017.
Julie is a data-driven marketer with more than 18 years of experience in the areas of e‑commerce, digital marketing, and customer loyalty. Prior to her time at Adobe, she served as executive director of digital and consumer experience for MGM Resorts International, where she oversaw the launch of the hotel chain’s digital marketing platform, led market-based research to define the brand’s customer journey, and developed the company’s roadmap for mobile application marketing.
JB: Julie, how do you define customer experience in the travel and hospitality industry?
JH: That definition is really evolving lately! For all brands in travel, customer experience is not new as the industry is designed to co-create amazing experiences that enrich lives. Travel is about making experiences that will last a lifetime. Broadly, it’s everything the customer touches and interacts with, whether a digital channel or a physical, along their entire journey. I’d define it not only as the guest’s experience at the airport, the hotel, and the destination, but also the ways in which the customer’s behaviour on mobile and other channels integrates into their experience in those physical locations.
JB: Yes, I’ve been hearing the word “phygital” to describe a sort of integration between digital data and physical locations, like airports and hotels.
JH: Absolutely, but only 38 percent of travel brands have said they’re committed to that level of integration, and only 26 percent have actually carried out tests. In a lot of ways, the data that travel brands gather from different sources remains unconnected—isolated by department and location. That really needs to change if these brands are going to compete effectively.
JB: And that data disconnect isn’t the only big challenge for large travel brands. I’ve been hearing a lot about disruption on the part of OTAs like Kayak, which have taken a big bite out of hotels’ profits. Are the big chains still fighting this, or are they looking for ways to work around it?
JH: Over the past year, especially, I’ve seen a lot more travel and hospitality brands begin to accept this new reality, and look for other ways to differentiate themselves as supply increases and booking functions for distribution continue to expand. In fact, 56 percent of travel brands say guest experience is the primary way they’ll seek to differentiate themselves in 2017. When guests book a hotel room, they’re not only paying for the room, they’re also paying for a journey that will unlock new experiences that shape their perspective even when they head back home. Consequently, a growing number of hotels are widening their scope and providing localisation of services during their visit, partnering not just with OTAs, but also with restaurants, entertainment venues, and other attractions. Through this they are able to provide each guest with a vacation or business trip that’s fully aligned around that individual’s desires.
JB: It sounds like these two issues—disconnected guest data and disruption by OTAs—may be more closely linked than they seem. OTAs have been so successful because they integrate data from huge numbers of hotels, airlines, and venues to provide all guests with exactly the experience they’re looking for. If hotels and other travel brands want to set themselves apart on the basis of guest experience, they’ll need to bring all their guest data together, and look for patterns that predict exactly what a particular guest will want.
JH: Exactly! In my previous role in Travel & Hospitality for two of the largest brands in Las Vegas, it was clear that OTAs had clearer lenses on the concept of the holistic journey. As of today, no one can teleport straight to their destination and their home away from home– and OTAs have expressed an understanding of this fact, with the breadth of their offerings. However, hotels and airlines have a wealth of first-party data on their repeat guests—data that no one else has. That info can provide a major competitive advantage for any brand that can bring it all together, crunch the numbers, and surprise and delight guests with personalised experiences they didn’t even expect.
JB: Like a sort of personal concierge for every single guest. Are there any travel brands that have actually achieved this—brought all this data together and used it to surprise guests with tailored experiences?
JH: Princess Cruises recently faced the challenge of empowering a variety of different teams to share data. The company used a data management platform (DMP) to integrate data collected by a wide range of different sources, including email and onsite, to identify specific guests and create deep, unified profiles of each of them. Princess used these insights to avoid targeting guests who had already booked a cruise, to generate ideal ads and content targeted at individuals who hadn’t yet booked, and to scale out its addressable audiences. The results were striking: a 65 percent savings in cost per landing page, across all its properties, and a 300 percent increase in identifiable audience.
JB: Is Princess just way ahead of the pack on this, or are any other travel brands doing something similar?
JH: We’re seeing a huge drive to improve mobile experience right now. We know that 71 percent of travel customers use mobile devices to check itineraries, while 64 percent use mobile to check into flights, and 49 percent use it to check into hotels. Recently, Marriott shared at the North American Adobe Summit that it’s achieved $1.7B in sales on its mobile sites and mobile app, and has seen 70 percent growth again this year. More hotels and airlines have also begun taking mobile seriously as a core component of their booking systems. For example, Motel 6 recently brought all its booking systems together onto a single digital platform, making sure room prices are updated in real time, according to demand, across all physical locations—as well as on the website and mobile app. As a result, the chain saw a 20 percent lift in macroconversion rates.
JB: Interesting that such a small change produced such an immediate lift in revenue.
JH: It’s striking, isn’t it? Lufthansa/Eurowings recently did something similar. The airlines integrated its reservation and ticketing system into every page of its website, and broadened the range of ways in which customers can book. That seemingly small change netted the company a two-point lift in macroconversion rates. We’re seeing a lot of small steps in the right direction right now, and as more hotels and airlines see the value of bringing their data together, we expect to see these experiences become more integrated across digital and physical touchpoints.
JB: I hope we’ll soon see more hotels and other travel brands bringing their data together on a larger scale. Thanks for joining me today, Julie.
Join me next time, when I’ll be interviewing Adobe’s FSI expert about how financial service companies can differentiate themselves in 2017.