"Technology will get you 70% of the way"

Technology can solve most of your hotel’s problems, but you must overlay it with smart and considered strategies. That’s the message from SiteMinder CEO Mike Ford, who spoke on a panel at Maximum Occupancy 2017, alongside Amadeus and RMS.

Maximum Occupancy is an annual event, educating hoteliers in the Australia-Pacific region on the latest trends in travel and technology, as well as key performance metrics and forecasts. Once armed with this vital data, they learn how to implement effective and profitable strategies for their hotel business.

Optimising distribution and driving direct bookings

Distribution and direct bookings are an ongoing focus for hotels. Finding the right balance between technology and distribution channels can mean the difference between a profitable business and one that falls by the wayside.

Speaking on day one of the conference Mike Ford urged hotels to better understand how they can connect to their customers.

“I think one issue facing hoteliers these days is the type of customer they’re starting to market to. How and where do you find those people in order to connect to them? Not all customers engage in the same way”, he says.

“Some channels like Facebook Messenger are really strong. Google is really starting to knit land and air travel together, and amenities too. So you have to think about what your strategy is to take advantage of that because there is technology which allows you to do it directly.”

SiteMinders' Mike Ford says an issue facing hoteliers is finding the customers they market to.

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Are direct bookings the best option for hotels?

It would seem obvious that avoiding the commission paid to online travel agents is ideal for hotels, but online travel agents (OTAs) play a vital role for hotels customer acquisition and Mike stresses the importance of balancing the two channels.

“If you get direct right it’s potentially a cheaper channel and one that engages the guest more effectively via a closer relationship through the booking process”, he states. “But it’s important to be realistic about your hotel goals and what kind of segments you’re looking to attract. You might find that other sources give you a more profitable guest. Certainly you should optimise for direct bookings, but also be aware of your channel mix and what is going to give you the right outcome for your business.”

Looking more closely at this, hotel’s need to make decisions about how they invest their money in technology. Direct acquisition is only cheaper in certain circumstances, says Mike.

“For example, $400 per month can get you an amazing booking engine and website, so for hotels focusing on single technology builds is a waste of time. At the end of the day, technology is a commodity and it’s about how you use it. It will get you 70% of the way there and then it’s up to your common sense and smart marketing strategies to attract new and return guests. The basics can be achieved very quickly with technology today but then you have to overlay that.”

The changing nature of channel management

Historically, channel management has been a connection tool to broaden the reach of hotels and sell their hotels on a larger scale. However, Mike believes channel management has become much more in recent years.

“It’s evolved towards integrating a number of systems together, and is almost becoming a guest acquisition platform. Every tool alone is a mechanism, but if you use them at the right time in the right way, they become part of your larger revenue strategy. I like to think of channel management as more of an enabling piece of technology rather than a connection mechanism to OTAs.”

Hotels can see a greater benefit from channel managers by connecting their property management system (PMS) and revenue management system (RMS) to optimise the rates they set and streamline their everyday hotel operations.

Looking ahead in the world of distribution

Change is an overriding theme in the hospitality industry, especially in regards to technology and distribution. In the constant flux, Mike suggests the future will be about improved communication between technologies.

“Our view is that siloed products are not really the future for hoteliers. There’s a lot out there that are using a booking engine, a channel manager, a business intelligence suite, customer relationship management etc. It’s okay for them to come from different vendors but it’s important for us as providers to weave it together and let them speak to each other; allow them to be intelligent and draw conclusions from each other. This gives hotels more options in choosing what works for them. So for us, integration is a big focus moving forward.”

To hear more from Mike Ford and gain valuable insider knowledge, take a look our ‘Meet the Creators’ series.