Over the last several years, the hotel industry has undergone different stages of acceptance when it comes to losing guests to Airbnb. Airbnb started off as a menace, evolved into a temporary fad, and is now begrudgingly seen as an accepted competitor. According to AHLA reports, Airbnb is growing faster than all of its hotel industry competitors; It’s grown in all of the top 13 US markets, and more than 100% in some of these. Different cities and states are putting new regulations in place based on Uber’s regulatory history. Airbnb, fresh off of a $1B round of fundraising, will be a formidable challenge for the industry.
The industry is fighting for one thing: Customers. These customers can be divided into three different categories:
- Transactional based customer: The majority of these hotel customers are transactional by nature. They make purchasing decisions based on the value they seek (price, location, convenience etc). You need these guests the most because they are the ones who spend the most.
- Relationship based customer: These are the customers that remain loyal to your hotel or brand because of some sort of “stickiness” (corporate discount, loyalty card member, etc.). You love them, and they show you love back because of the incentives you offer. For example, American Express had a huge drop in stock prices after Costco moved to Visa. These Costco customers were willing to change their credit card companies if that meant maintaining a good relationship with the store. Likewise, when these “relationship based” guests are asked to side with one hotel they will remain loyal regardless of any inconveniences they are faced with.
- Experience based customer: These are the customers who not only love you, but love your hotel brand as well. They feel a deep emotional attachment to you and your brand, making your hotel absolutely irresistible, like smelling grandma’s cooking during the holidays – how can you say no!? They are your repeat customers, you’re raving fans – the ones who will, with great enthusiasm, talk about you and your hotel to everyone they know. If you can convert the majority of your transactional based customers into experience based customers, your competitors don’t matter because you have already won!
If hotels are going to win the game, they have to convert their transactional customers into higher forms of “customership”. Experience is no longer limited to physical amenities, it needs to expand to other customer needs. Based on the lessons of the retail, movie, and music industries, the winner will have a customer value driven product, a customer centric service, an internal organization which prides itself on a learning based culture, and a technology driven unfair competitive advantage.
For many hoteliers, ‘technology’ is a scary word and creates an instant painful memory from their past. The right technology solution will be easy for the staff and the guests to use, and will:
- Automate manual tasks to bring efficiency
- Create new opportunities with customers
- Provide seamless communication with customers
Creating a customer-centered experience is not a singular event, but more of a journey and a path. It will take a paradigm shift to continuously learn about the guests’ needs, wants and desires. It’ll also take a culture to enforce as well as channels to present the experience to your customers. It is an ROI conversation with a long-term perspective but none of this matters unless you have a visionary leader to sponsor it.