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Stop protecting and start connecting—Tapping into guest mindshare

How hoteliers can establish a differentiated and defensible position along the traveler journey

Overview

The hotel industry is fundamentally shifting. Customers are demanding a new value proposition for travel, and disruptors are stealing both revenue and margins. The growth of online travel agents (OTAs), increased price transparency, peer-to-peer options, and a rise in comparison-shopping are eroding brand loyalty and changing many parts of the travel journey historically directed by hotels.

As they do so, hotels have a competitive weapon at their disposal. They possess a valuable and largely untapped asset that could help them enhance guest experiences and solidify their customer relationships. They have unique access to data from which they can understand customers’ preferences and build relationships. But turning this asset into a lever for growth requires making a strategic decision about how to approach data and relationships to create lasting customer mindshare.

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"Hotels have a competitive weapon at their disposal. They possess a valuable and largely untapped asset that could help them enhance guest experiences and solidify their customer relationships."

Background

In the connected world, where consumers have access to limitless information and options, the battle is one of customer mindshare.

Consider the travel journey dissected into four basic parts: search, buy, stay and reflect.

Hotels have largely lost the search, now predominantly online and OTAs, with a full competitive set as their database, are used more often than hotel branded sites to both research and reserve business and leisure hotel stays.

Many hotel companies are now fighting to own the “buy” portion of the journey to protect their revenue streams and to own the customer relationship from the start of the journey. Whether or not hoteliers can win this war is yet to be seen, but it may not be the primary battlefield.

The “stay” portion of the travel journey is the hotel’s lifeblood. It represents the majority of the hotel’s revenue, and it’s also the primary means by which the hotel can affect the customer experience.

What experiences can hotels drive to gain mindshare? What data can they leverage to own the stay? The answers to these questions are the difference between evaporating revenues and growing revenues.

Key Findings

Loyalty strategies have lost their luster

Accenture research shows that about one-fourth of hotel and lodging customers participate in loyalty programs—a rate on par with other industries. However, the feeling of loyalty toward hotels is less than many other industries.

Further, 39 percent of hotel and lodging customers report a loyalty program has no effect on persuading them to stick with a hotel.

Loyalty programs are even less influential among the millennial generation. This group is significantly less likely to belong to a loyalty program and, if they do, it is more likely to be one offered by an OTA.

Experience = Mindshare

As customers consider their hotel choices, they are increasingly placing a premium on experience. 72 percent of millennials value experiences over things.

To improve their experience, many consumers welcome relevant personalization and tailored recommendations, while maintaining control of their choices. In fact, Accenture research shows 75 percent of consumers want personalized services. As described in recent research on Living Services, personalization and purpose are important for brands working to win consumer affection in this digital age.

The demise of ancillary revenue

Many aspects of the stay are becoming commoditized, including ancillary services. US hotel ancillary telecommunications revenue dropped by more than 42 percent from 2007 to 2014, and movie rental revenue dropped more than 48 percent. Hoteliers must embrace disruption and develop new revenue streams or, alternatively, watch revenues and relevance continue to dissipate.

Analysis

Data as the key to unlock the connected space

To date, hotels have been slow to integrate digital value drivers into the stay experience. While some are creating digital experiences for guests (including features such as mobile check-in, advanced room selection, and personal services), and these experiences are starting to get more local and property-specific, these efforts are still in early stages. They have yet to step beyond simply digitizing existing experiences to merge the physical and digital worlds and create whole new experiences. In fact, only 13 percent of respondents to a 2015 Accenture survey said they find digital and physical offers to be well aligned.

Building an experience that helps hotels to “own the stay” involves using mobility, platforms and personalization, not products.

Utilizing data is fundamental to determining what experiences should be offered to customers. The mobile channel is fundamental to providing the experience, as it is both personal and pervasive. Mobile apps have overtaken the desktop for digital engagement as 54 percent of US digital media time is now spent on mobile apps compared to 38 percent of time on a desktop. The amount of time people spend within apps has increased year over year, signaling they are the right way to connect and engage with people to drive mindshare.

So, how can hotels tap into the connected space?

"Building an experience that helps hotels to “own the stay” involves using mobility, platforms and personalization, not products."

Recommendation

Tapping the real-time customer in a connected world approach requires new strategies around commercial terms, brand control, digital trust, local curation & the overall business model.

The key is not to deliver a hotel room but to deliver an experience that guests value. As guests "reflect" on their stay, those hotels that are offering a meaningful experience will monopolize mindshare, which can lead to ongoing customer relationships and new economic propositions. Utilizing data is fundamental to determining what experiences should be offered to customers. Hotels have valuable data about travelers. Through this data, they can build an understanding of customer preferences to provide highly sophisticated and relevant offers that will enhance the stay experience. The mobile channel is fundamental to providing the experience, as it is both personal and pervasive.

The possibilities are endless. However, hotels must act before other competitive data networks are formed. Intelligent assistants such as Siri, Cortana or M could quickly take control of the "stay" experience within the travel journey. Connected environments are the future. Mindshare is the new loyalty and, to dominate mindshare among guests living in a connected world, a new collaborative approach is required.

For further reading, view our latest perspectives piece with Facebook’s Lee McCabe discussing how Travel can move forward by getting back to basics.​


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