With a view to gather further information about the hospitality industry in Switzerland, our GM James Osmond arranged an interview with Mr. Thomas Allemann of hotelleriesuisse. The association is put in place to protect the interests of the Swiss hotel sector, offering hoteliers memberships, partnerships and alternative ways that provide useful educational and technological support within the industry. Ourselves included, Triptease is often recommended by hotelleriesuisse as a potential partner to assist hotels with their direct booking performance and overall revenue.
Here's what we learned:
Switzerland: a Traditional Tourist Magnet
Historically speaking Switzerland has been a longstanding leader on the travel and tourism platform, beginning with the classical hotel model as early as the 1800s. Thanks to these traditional seasonal lodgings popular in both the summer and winter months, Switzerland’s tourism saw rapid growth over the last century up until the seventies.
Being well known worldwide for these seasonal holidays in idyllic mountain and lakeside settings, the country earned itself a reputation as a traditional, go-to destination. Oozing with authentic, olde worlde charm, family-run independents have therefore generally tended to keep afloat thanks to this, but are now facing new problems.
With all the new competition emerging, the country’s older, smaller hotels are beginning to hit some hurdles in recent decades as they are finding that they are all too often simply too small to survive or not finding the right global exposure they need to compete in the current climate.
What’s more, Mr. Allemann informs us that, “We [Switzerland] have 50% of all overnight stays from Switzerland, so 1/2 of the guests are coming from Switzerland. We have a strong domestic market and we have more than 1/3 that comes from Europe, and these markets could also be reached by the old traditional marketing means like advertising, direct mailing and postal mailings.” Given that a large proportion of Swiss people tend to holiday on their own turf means that these rustic retreats are at a domestic advantage, but some OTAs can allow for further reach abroad.
Main Challenges in the Changing Climate
On an international level, and more specifically looking at the Alpine region, Switzerland sometimes struggles to compete against its ski-haven neighbours such as Germany, Austria and Italy when it comes to attracting clientele. Given its notoriously high prices, guests know all too well that they can reserve a stay in a German property, which will provide them the same seamless service, but also offer a more pocket-friendly experience with the euro.
Beside this, many of these family-run hotels are very small featuring a mere 20 to 30 rooms in total against a growing plethora of larger hotel properties. Although this intimate size may of course be very much part of the attraction, relatively speaking it means that unlike before they are walking along a fairly precarious financial tightrope.
Mr. Allemann explains what they need to do to remedy this: “They [hotels] should construct but they do not have the means to. They should cooperate, but they are not willing to cooperate because you lose your freedom, your independence when you have to cooperate with other hotels.” In other words, they need to grow by increasing the amount of rooms or they need to consider communicating with other hotels to gain perspective of the hotel market.
Additionally, somewhat technophobic, these independents may not know, or be interested in knowing, the benefits of technology and how it can act as an expert tool in increasing their profit margins - a staggering 1/3 of these hotels do not even feature an up-to-date homepage with a clear booking system!
Now well and truly in the digital age, hoteliers cannot afford to be digital-shy if they want to achieve a wide engagement with their target audience. Taking advantage of the web to promote their identity and making them stand out amongst their new, tech savvy challengers is a vital step.
How hotelleriesuisse educates Hotels
It is the objective of hotelleriesuisse to educate these hotels through the use of workshops where new technologies can be proved to be in their best interest; not to mention the introduction of innovative ideas and marketing strategies that can heighten their exposure and thus survival.
Reply to Hotel Reviews
Hotel reviews are a major feature that hotelleriesuisse has highlighted to help Swiss hoteliers. Over time smaller hotels have overlooked customer reviews, but with a view to create trust and cement a more personal hotel-guest relationship, hotelleriesuisse has highly encouraged this awareness and urged them to leave constructive responses to guests’ reviews.
In addition, Mr. Allemann stresses that, “You [hoteliers] can learn quite a lot from the reviews to make a better product, to improve quality”. After 5 years, it is understood that a substantial increase in hoteliers now know that they need to analyse reviews with TrustYou Analytics should they want to be on par in today’s climate.
Make a Price Strategy
Price strategy is also significant to consider where hoteliers can assess where they stand in the market against their competitors. The obstacle is defining this term, and specifically the technology Aztec Global, to hoteliers as they do not necessarily understand it or know how to put it into practice, but it is indeed paramount when competition is high.
hotelleriesuisse has teamed up with Aztec Global Solutions and this is what came back: “We [hotelleriesuisse] offered the tool of Aztec Global to all of our members for free, for free, and do you know how many hotels are working with Aztec Global? 350 out of 2,000. 2/3 are not profiting from a tool they get for free because they do not understand that they have to not only make a price strategy and write if my neighbour has this price, then I make this price, but they have to see how I am developing and performing in the market, in regard to the market, not in regard to my competitor.” This digital tool is new to smaller hotels and evidently is not being taken advantage of by the majority due to a fundamental lack of understanding.
In order to prosper it is clear that the independents need to learn to embrace and invest in technologies and work together with their neighbouring competitors to invest and compete with the multitude of hotels in rival regions.
How to maintain Rate Parity and the "Book Direct" Movement
Due to “Competition Authority” industry competition is encouraged so in order to keep on top of parity, hoteliers must keep a watchful eye on OTA prices compared to their own hotel’s. hotelleriesuisse has a prominent role to play in this field and most of all suggests that hoteliers consider making a more attractive price on their homepage.
On top of this, the enticing idea of loyalty can be introduced. For example, Mr. Allemann describes the concept of keeping rate parity, but adding a promotional code which could state: “Dear Guest, from the moment that you are on my homepage, you are in my fidelity programme and I can offer you a better price.” This would in turn encourage more direct bookings and be beneficial to the given hotel.
Most topical, it’s clear that booking direct is high on the agenda for hotelleriesuisse with Mr. Allemann explaining that, “‘Book Direct’ is a campaign which we [hotelleriesuisse] are leading with all of our colleagues in the European Union and we even have specific signs and promotional material in order to be sensitive to the guest, saying ‘Go on the homepage, write an email, make a phone call because you always get the best offer possible. It’s not automatically the best price, but the best offer you get from the hotelier directly, not from the OTAs”.
Their “Book Direct” campaign also centres around the possibilities open to hotels so that hoteliers know what is officially acceptable and what would be deemed against the law. A prime example of this lack of education is evident between Mr. Allemann and a Swiss hotel he contacted as the given hotel did not know whether it would be able to match the cheaper booking .com price for one of its rooms. This is factually wrong and there needs to be more clarity around this and this is why technologies such as Triptease are being highly recommended.
What is Switzerland’s Attitude toward Airbnb?
There has been much conversation around the rise of Airbnb and the threat it poses and the lessons to be learnt. Generally Switzerland sees Airbnb similar to other booking engine platforms alongside the likes of booking .com and Expedia etc. According to Mr. Allemann, hotelleriesuisse recommends that hotels which feature apartment rooms consider utilising Airbnb as their OTA since they only charge 3% on commission as opposed to the higher costs from alternatives. It is evident that booking .com dominates the Swiss online market with a whopping 75%+ share so Airbnb also allows for a more healthy competition amongst the OTAs.
Bearing in mind Switzerland’s past, Airbnb is not especially alien to the hospitality industry unlike with other parts of the globe. Mr. Allemann tells us that, “Rooms were the first tourism offer in Switzerland in the 17th/18th century, so we [Switzerland] started with the rooms long before Airbnb”. Together with rooms, holiday apartments as opposed to classic hotel rooms have had a longstanding tradition there with statistics showing that triple the amount of customers choose the apartment room style over the classic hotel room.
Unsurprisingly Airbnb has posed a threat to the survival of some traditional apartment-focused distribution channels such as Swiss-born "interhome". Beyond the ever popular apartments out on the ski slopes, urban apartments are now becoming more and more of an alluring tourist draw in Swiss cities such as Zurich and Geneva with Airbnb no doubt being the prominent player behind this. Due to this rise, competition is certainly brewing between hotels and Airbnb as they continue to shift the balance.
Touching on the fact that Airbnb bypasses the regulation process, there’s no question as to why inflamed relations are surfacing. Mr. Allemann informs us that, “On the one hand, politics are regulating the traditional industries more and more, not only the hospitality industry, but also the taxi industry, the restaurant industry and so on. On the other hand, they say this is a new business model - a disruptive economy that we can learn from - so no regulation for them because this will enhance competition.”
Alongside this, Mr. Allemann accepts how Airbnb can still be good for the economy but stands by the fact that it should follow the same legislation, “In big cities like Zurich and Basel there is an international event - European athletics - so all hotels were fully booked so this offer is additional to the hotels and people stay in Zurich. If this offer didn’t exist then they would go away so it’s okay, but they have to have the same rules as we [hotels] have.”
Partnering up with the "European Hotel Association" amongst others, hotelleriesuisse is in motion surrounding the fight for equality between Airbnb and hotels.
You can watch the full interview below: