Disruption:
How Property Managers are Answering Old Questions in New Ways

By Nathan Gawlik

Nathan Gawlik's experience includes being a General Manager of a Hampton Inn and other front line roles such as a Banquet Captain, Front Desk Agent, Housekeeper, Catering Event Manager, and Director of Sales.

If you prefer to watch the webinar instead of reading the transcript below, you can do so by clicking here.

Disruption Defined

What is disruption? Many think the definition is: causing a disturbance or problem which interrupts an event." When we consider this definition, I bet there is one thing that comes to mind: COVID-19

We have been forced to innovate for one big reason. Just because there is a global pandemic doesn't mean the world stopped turning. In fact, in some regards it's just the opposite. We had to reinvent the wheel, go back to the drawing board, get lean, optimize, iterate, and find ways to engage with our customer base - being ultra-focused and purpose based. The pandemic brought with it whole new challenges. Some in the campground industry have had record years while others are cutting back to make ends meet.

"What is now proved was once only imagined"

-William Blake

"What is now proved was once only imagined"

-William Blake

Ask Yourself

Who would have imagined that we would need to find ways to distance ourselves in an industry that is about bringing people together?

Who would have imagined that people working in customer service would need Personal Protective Equipment (PPE)?

Who would have ever imagined that those of us working in the leisure and hospitality sector would have the highest rate of unemployment in the nation?

As of November 2020, the travel sector is seeing 38% unemployment in the USA and the World Travel and Tourism Council economic report stated that 174 million jobs could be lost globally if restrictions aren't lifted and rigorous testing isn't put in place.

Many have said, "Well people are always going to travel."
I used to tell my friends my career path was recession proof because every town has a hotel in it. I can always find another job.

The Other Form of Disruption

Now consider what other companies have done in the past. When we talk about the second definition of disruption, of radical change to an existing industry or market, i.e technological innovation, we think of companies like uber.

Just five years ago there was no such thing as uber taxi line. Today you walk out of the airport and see that the uber line has grown while the taxi line has diminished. Uber and Lyft are disruptors of the rideshare industry.

And just ten years ago, there were no companies going to space - just big government.
For those of you not familiar with SpaceX, It's one of Elon Musk's projects. He looks at complex issues and tries to find solutions by using a method called First Principles Thinking. In this case, he found that he could cut the cost of going to space by tenfold if he made the rockets reusable.

And then of course, bringing it home to the hospitality industry, we have the great disruptor - Airbnb. Years ago they were three guys on a beanbag chair but now they are a massive force and have, for better or for worse, disrupted the hotel space.

Email Marketing Solution

What I think is really cool is just what we see many customers doing. Many are still using email marketing as their bread and butter in this time of COVID. But when doing so, they aren't discounting your cash cow. They are enhancing it. Innkeepers are using their competitive advantage to form relationships with other businesses. This helps them and helps their community. Properties are keeping their rates the same but offering more enriching packages to enhance guests experiences and entice return guests.

Examples of this include, museum pass packages, beach access packages, or a $25 credit to a local carry out restaurant. Many properties are also promoting the "Work from Home can Mean Work From Anyway" email campaign. Nearly 60 percent of business travel is now bliesure travel, as business trips are being extended into leisure travel. There is likely an opportunity for your property to capitalize on longer stays as well.

These are some simple solutions that we have seen in the industry for the last year or more. Who are the disruptors in our industry and what is their strategy going forward?

Strategy

So to determine a strategy going forward, we need to know where we have been and why we see the changes we do. We know that big OTAs were disruptive early on. Some of you might not know that Priceline filed its first patent in 1996 to auction hotel rooms. The internet wasn't really introduced to the masses until the early nineties.

As time goes on, these OTA companies have become more and more disruptive, so much so that large brands and others have started to push back in the last several years and book direct initiatives have become prevalent.

What does this mean?

Hoteliers should use OTAs as a marketing channel to attract new guests. Every time you see an OTA booking at your property you should be thinking, "YES! I have an opportunity to make a loyal guest and get them to book direct in the future."

Did you know that just a 5% increase in retention will create a 25% increase in Profits?

We all know that OTAs are notoriously bad for repeat bookings. A lot of travelers go on OTAs to discover new places. OTA's are basically the phone book. What I mean by that is if a guest sees you on there, some will book on the OTA, sure, but others will call you or go to your website to book direct.

Marketing Channel Defined

A Marketing Channel is anything that leads your customer to find and do business with your property.

These different marketing channels went from something that used to be optional to a necessity. These online travel companies established themselves as the go-to marketing channel. It's important to advertise where your customers and your competitors are.

Is that going to change?

The reason why you need OTAs is that you will never compete with them on organic traffic or paid ads, but you can disrupt the OTA's with the Billboard effect. There is the desire of properties to sell directly to the guests. It's sort of ironic that a Trivago study said that in 2020 properties will be spending more time, money and effort on building brand recall and loyalty to boost direct bookings. They went on to say that properties should first focus on a well-designed website and a high-quality booking engine.

The strongest tool you have to cut back on those OTA commissions is a great looking website. OTAs aren't going away but we are starting to see the trend of booking through them go away. People will go to your website as the source.

Google

Now, Google has stepped in to help guests book direct. Google has disrupted traditional OTAs. Google hotel ads has been a long time coming; as we all try to chart a path to recovery, every penny counts. But, Google too will still take a percentage. However, they will help you determine your budget and have the option to pay per click or pay a commission per completed reservation - which is huge. Let's do a deeper dive on Google Hotel Ads and what that means for you and the future.

Before I get into this, I will say that there is a difference between Google Hotel Ads and Google Ads. On the left side of the screen at the top you can see that this property has a google ad. On the right is the google hotel ad. We will go into this in greater detail below.

If you look here, you can see that in line on the right are the OTAs and the official site is second on the list. What is even more compelling is that the official site is the lowest price.

Google wants to have their cake and eat it too. They have made billions on Pay Per Click ads from these OTAs so they don't want that to dry up but they are experimenting by joining the OTA game. So they are trying to charge their competitors for advertising and then undercut them at the same time. Google essentially has cut out the middle man.

According to a Nielsen study the average return on ad spend across industries was nearly $3 for every $1 spent. Meaning if you spend $1 advertising anything, you can expect to get $3 in return. Google Hotel Ads' return is over seven times that figure with $22 return on ad spend for every $1 spent.

This is an example of one of our properties in Kentucky and again on the right hand side you can see that this owner has chosen to participate in Google Hotel Ads but not google ads allowing guests to book direct. This ad placement could change the way people book rooms.

Traditionally people are placing ads based on location. This one is based out of Chicago. So what comes up for this search is all your competitors. Booking.com, Kayak, and other OTAs all come up - very competitive.

However, to be strategic and to be disruptive against that model, a better trend is to go off of an attraction in that city. Instead of paying for "chicago lodging," you as a small business can be strategic and compete with the big boys just by using this strategy.

Your property could rank for searcher intent on your Things to Do page, for example.

Case and point let's look at Zion's national park lodging vs angels landing which is a popular destination at Zion's national park.

Here we see nothing but ads for VRBO, hotels.com, airbnb, & booking.com. Really hard to compete with right?

Now, getting more specific with the activity, we see that there are no ads, so you have a better opportunity to rank organically for this search term - meaning you don't have to pay for the ad. Consider ways to apply this to your property. Is there a popular destination close to your property? Can you promote them on your site and get some SEO juice from them?

Also, With Covid-19, we know outdoor destinations are going crazy right now.

Google isn't the only one trying to get into the book direct space - TripAdvisor has now done that too. This is called TripAdvisor's Business Advantage, which is TripAdvisor's direct booking tool and seems to be a worthwhile marketing channel.

You can link directly to your website from TripAdvisor.

Here we can see that OTAs are allowing the billboard effect to take place, allowing guests to contact you directly.

We also see this big ad from Booking.com but you can place your own ad here.
Now you can compete directly with the OTA by providing your own link.

Then when they get to your website, you can have things to do to attract and entice guests.
Shopping behavior shows people want to book direct. Reduce that friction.

Also, do the mobile test. Look up your property website on your cell phone, if it seems clunky or inconvenient to you - trust me it won't be for your guests, they will just find another provider and book with them.

Another quick thing about websites, I heard it said the other day that Trust in the New Loyalty.

In order to build trust with your soon to be customers you need to showcase your efforts to control the virus. If you don't have a Covid page on your website, you have fallen behind.

Just know if your website isn't up to date you may be left behind. For example,

Which would you rather experience?

This or this?

There are simple things our design team can do to help entice guests to stay on your site and book direct.

Have your phone number up at the top so they can text you.

Have cart abandonment so they get an automatic email if they don't complete the booking.

Adapting your property

Of course we know that many properties are transitioning or considered moving to the airbnb model of not serving breakfast and having far less guest interaction. While Airbnb was a big disrupter before Covid-19 we can see how the social distancing mindset has meant that more properties are leaning this direction and then detailing the required host and guest cleaning standards. This might be a good way for your B&B to get lean.

A lot of the units selling on AirBnB are the ones with a kitchen and a work space.

Over one-third (37%) of those asked in a Booking.com survey have already considered booking a place to stay for a welcome change of scenery while working. These travelers are mostly looking for accommodations that have home office facilities, fast Wi-Fi, and, most importantly, a beautiful view or cozy area to make the work day fly by.

We also see that families want to travel together so they want kitchenettes and they want a desk so they can work from anywhere in their guest rooms. One strategy some are taking is to stop serving breakfast and offer a hot plate, microwave, & mini-fridge in your guest rooms with a small work space.

People are vacationing as they are working, and bringing their family along. Thats the disruption that's currently happening.

Work From Anywhere

Even hotels have taken advantage of these trends we are seeing. MintHouse is a new apartment chain that has just been around for a few years. They offer contactless check in at their 16 downtown locations. They have a very lean business model so they have seen stronger occupancies & profit then most.

But they are able to charge significantly higher rates because they have in-suite laundry, High-speed internet for work, a full kitchen and on-demand grocery delivery. They cater to the weekday long term business traveler who might be staying a couple weeks. This could be your competition. I would imagine that we will see this trend continue.

Not sure how to get started on a limited budget? AlongSpace.com will pay you to feature their affiliate products. They will send you an expresso machine at a discount that your guests can buy and you make commission off of. How cool is that! They have wireless speakers and smart thermostats, furniture, cosmetic samples, several different brands of food and beverage, and much more that you can promote at your property.

Now I think this particular company only operates in Europe but I had to share because I thought it was such a disruptive idea.

Wifi Locks

And with that a convenience for guests is contactless check in.

Some properties have even said that having the wifi locks has reduced their payroll drastically. If you know that you have a late arrival, you can provide them their room code and tell them to give you a call if they need anything. Many hotels already provide a way for their guests to bypass the front desk.

Can wifi locks help you get lean or maybe give you a night off?

New Tech

Another option that is really popular right now is TouchStay. They are your digital guest book. They work offline and in multiple languages. And you can text right from this app.

Wishbox is another web service that guests can use for contactless check in.

Minut.com Is your smart noise monitoring solution. Maybe your out of town while you have guests at your property so you don't want to get an alert every time someone walks in front of your security camera. With minute you can set your decibel limit and receive alerts if it gets too loud. Or just check noise levels on the exterior of your buildings after quite hours. No more angry neighbors.

People aren't traveling as far. Since 50% of customers are booking within 300 miles, capture all those running away from home and bigger cities.

Which brings us to Campgrounds. This segment is really growing right now. Why?

Because families bring all that stuff I just mentioned with them. The kitchen, microwave, work space, and they don't have to social distance.

The OTAs were basically ignoring the campground industry. But Now we see OTA taking interest in Campground properties in the thousands. As a vacation rental, how can you compete? With RVs they bring their kitchen with them. That's why this segment is seeing growth. Campgrounds are now your competitors. That's why we see solutions like Mint, like Airbnb. We will continue to see offerings like this more and more.

Even Booking.com is promoting this work from anywhere, with their "bye bye 9-5" campaign.

When these campgrounds see the commissions they are paying, I would imagine they are going to want to have a great website so guests can book direct.

man working on laptop near cabin in woods

Social media

Another tactic is to regularly post on your facebook or other social accounts branded with your property. Make it easy for your guests to book now through your facebook page.

Now is not the time to take a break. Double down on your marketing efforts and sure-up your long term strategy. Offer baking tips on your youtube channel that you then link to your website. Post photos regularly on instagram or other social media pages to grow your following.

Or consider posting videos on TikTok and appeal to a new audience. 80% of tiktok users are millennials

TikTok is the tool that makes, producing videos super easy.

Now produce a commercial for basically free. TikTok is the new commercial.

Live stream a virtual tour of your property.

And if the content is popular then it sticks around for a while. In fact one of the benefits is that it doesn't say when the video was uploaded. That means viewers don't filter it out like we do on other sites because of 2 year old content.

Take advantage of this new technology.

Text Messaging

Same thing with text messaging. The world is moving digit and mobile at an accelerated rate. We all know that people read their text messages far more then they do emails. This is also a great way to appeal to the younger traveler. And you should certainly use this for promotions. This is just another way to survive this disruption and it will save your staff a ton of time!

We had text messaging at a hotel I worked at and I used it all the time to promote happy hour. I would also send out a text message to all of our in house guests Saturday saying if you stay Sunday night, its 50% off. This was an exclusive offer only for our inhouse guests. Get creative at your property.

A Look Forward

Unfortunately it is kind of back to the basics. Dial into the data and consider what works really well for your property. I was looking at a property the other day that made the same this year as they did when they opened about 10 years ago. Back to square one. So hustle while you wait. Educate yourself on your business and continue to educate yourself on current trends.

Discount remains king but don't devalue your cash cow - enhance it.

Rate Management

Don't over discount your rate. Another trend many think will continue is that people don't want to spend as much on travel. This is essentially true for the 18-34 year old traveler. Discounts will continue to create the greatest value for guests. That and they want flexibility with refund and easy rebooking options.

If you do provide a discount, make sure you track it and put a fence around it. Some properties are providing a Covid 25% off relief package discount. This distinction is important because you need to manage guest expectations that these aren't your normal rates.

Another property kept their rates where they are but offered a $250 gift certificate that doesn't expire at a 25% discount. There are a lot of different strategies when it comes to rates.

Another property is offering a 40% discount to locals. Rediscover your backyard. Promote those attractions that we talk about earlier. In 2019 it probably had long lines, now you can promote your property as a lodging option for a great destination to locals to do a staycation.

And market to the guests you already have HARD.

A Look at the Industry

So you might be feeling down as you look at your revenue but consider this. I have some statistics from two of the largest hotel brands in the world.

I just saw last week that Wyndam reported 35% year over year Revenue per available room decline & IHG saw their Revenue per available room fall by 53% in the third quarter ALONE and they said that they expect similar results for the fourth quarter. Look at your RevPar, if its declined less than 35% you're doing better then wyndham.

So why are these big hotel brands seeing such decline, well of course fewer people are traveling but there also is this mass exodus from major metropolitan cities to more rural areas and suburbs. Large hotels have standardized cleaning practices but smaller properties mean less traffic and less exposure.

The trend we are seeing is that of course the industry is down as a whole but smaller accommodations that offer unique accommodations married with a discount or value add are doing better on average.

But these are things you know. Stick to what works and eliminate what doesn't. Sometimes all you can do is ride out the storm.

Understand that it's going to take time. I think this pandemic has really lingered on, longer then anyone ever expected. Most experts say that we won't see our Average Daily Rate recover to 2019 levels until 2024 or 2025. Prepare for the long haul, get lean, and make changes now that are sustainable.

The single best thing you can do right now is consider your expenses for last year and consider your expenses this year. Where can you reduce costs without sacrificing on experience?

Use your strengths to disrupt. The reason why you go to a B&B is the unique personalized friendly experience. It's time to double down by providing the best service possible. There has been this wave of Stay Safe Stay Small mentality. B&Bs and campgrounds need to capitalize on that and make loyal customers for life.

Provide hot towels, personalized notes, great breakfast are all great ways to provide that exceptional service.

It's these changes that we make in efficiency that make us stronger. Focus on the things you can change and apply some of the strategies I just laid out for you.
If you haven't read, Who Moved my Cheese, its a great book by Spencer Johnson. Change is inevitable but it's what we take away from the experiences.

I always want to be progressing. It's amazing how much pain we will endure before we make a change. We as human beings are stubborn in that way.

"You can't solve a problem on the same level that it was created. You have to rise above it to the next level".

-Albert Einstein

"You can't solve a problem on the same level that it was created. You have to rise above it to the next level".

-Albert Einstein

Summary

Extended stay options are doing better with this work from anywhere mentality. This was a trend we see accelerated by the pandemic. It used to be that people would hit multiple destinations on their trip, well now travel is restricted so people are staying longer.
And With that Promote Savings or Value Adds. Providing discounts still moves the needle the most but Packages and bundling options or facilities credit is a great way to create value.
Promote corporate rates or if your rooms are larger then the average hotel room. Local businesses might be looking for solutions for people to stay while they quarantine after arrival from out of state or out of the country.
Provide No Risk Booking. Travel is changing every day, with restrictions being imposed and then lifted again, having that flexibility to cancel is key
Promote Clean: Trust is the New Loyalty.
Promote Contactless if you can and optimize for mobile with mobile websites and texting.
Reach out to prior guests OFTEN. Studies show that it's far less expensive to keep an old customer then to find a new one. Remind them you are open! Offer a repeat guest discount.
Consider your local partner assets. Who can you partner with to give a great experience. I spoke with one property that partnered with a local boat charter company that would take their guests out to an island and the property provided a picnic basket. Go to local chamber and tourism board meetings.
And of course Google is set to disrupt but I would certainly suggest using more than one channel to advertise.

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Disruption:How Property Managers are Answering Old Questions in New Ways