In this special edition of Ask the Hotel Heroes, we’ve sat down with two of the founding members of the Hotel Heroes program: Inderpreet Banga, Vice President, Channel & Distribution Strategy at Wyndham Hotels, and Katherine Solomon, Corporate Director of Revenue Management at Arlo Hotels. Both expert hoteliers joined us at the Direct Booking Summit: Miami to share their insights into the hotel distribution tactics for 2020 that can help hotels of any size generate more profit.
If you were to open an independent hotel, what would be your must-haves for ensuring that it’s profitable?
Katherine: It depends on the size and location of my imaginary independent hotel! If I won the lottery, I’d be running an experiential, buzzed-about BnB like The Dutchess - a secret hotel in upstate New York that only sells its rooms at Mr & Mrs Smith or, on a rare occasion, HotelTonight. But that’s only if I didn’t have to worry about generating revenue!
To establish a highly profitable independent hotel, I’d start by hiring a Director of Revenue and an eCommerce Manager. I’d analyze my independent hotel’s net profit. At Arlo, we calculate net ADR yield (the portion of a hotel’s average daily rate after subtracting the channel costs that produced the room sale). You can take out the corporate negotiated fees and global distribution system (GDS) fees, and compare your calculated net ADR to OTA bookings.
At Arlo, we used to outsource PR, social and eCommerce, but as we grew we’ve realized the value of having these people internally. We’ve seen a real difference when we’ve brought in PR and social media managers. Instead of paying an agency, we invested an equal salary in someone who spends 40 hours a week only focusing on Arlo - and what a difference it’s made!
Inderpreet: If my independent hotel is in a secondary or tertiary market, the strategy can be very different. Either way, I’m all about building a strong revenue foundation. The industry tends to look at the STR report to benchmark their hotel’s performance against the competitive set, but I'm not a fan of it. There are so many pieces going into it from channel and segmentation perspectives, but you can only get a high-level view of a hotel’s performance.
In a corporate-heavy environment, I’d take control of my hotel’s revenue management and start by hiring an experienced Director of Sales. I’d also invest in reputation management. A lot of independent hotels can attribute their success to great online reviews and TripAdvisor scores! Good reputation management can get you up the ranks on any review site faster and in a more efficient way than if you were to spend your dollars on the OTA schemes such as the Booking Preferred Partner Programme or Expedia VIP.
What did you enjoy the most about the Direct Booking Summit in Miami?
Inderpreet: As well as the fantastic sessions such as the keynote from Dan Wacksman (Principal at Sassato) and a head-to-head with Rob Torres (Managing Director at Google Travel), I was very impressed with the high level of engagement coming from independent hotels! Through talking to them, I’ve realized that we have many similar challenges but different ways of solving them. That’s why it was equally beneficial for big groups and small independents to share their best practices at the Summit! After all, we’re all here for the same reason: to drive more direct bookings.
Katherine: The interactive Direct Booking Playbook session, where hoteliers got to build their own direct booking tactics there and then, was great! It has brought together big and small hotels and encouraged them to share and discuss their strategies.
For example, I’ve spoken to a hotelier from an independent hotel in Napa Country. Despite not having a bigger hotel chain’s budget, she continuously creates new ways of attracting more direct bookers - some I’ve never heard of before! It proves that big hotel chains have a lot to learn from independents - not only the other way around.
For independents, an industry event like the Direct Booking Summit is an opportunity to connect with hoteliers from different kinds of hotels and learn from their experience in a more intimate setting. For example, coming from a hotel group, I can share with other hoteliers my experience in driving innovation at Arlo and switching vendors to increase profitability.
Hotel Hero Inderpreet Banga, Vice President, Channel & Distribution Strategy at Wyndham Hotels & Resorts, at the Direct Booking Summit: Miami 2019.
When should independent hotels start investing in their direct booking strategy?
Katherine: Even prior to the opening, you can organize tours to your property. Creating a buzz around your hotel’s opening can help you drive direct right from the start. Inviting potential clients to see a construction site can help you make them feel special and build a direct relationship.
Inderpreet: Creating experiences for customers prior to the opening is one way how we as hotels can strongly differentiate ourselves from OTAs. They simply can’t give this exclusive experience to the guest.
What will be your focus in 2020?
Katherine: New York is an interesting market - it’s currently not projecting strong growth numbers. For Arlo, 2020 is all about shifting segmentation. At the moment, we run at about 97% occupancy for the year. My revenue team will come together in January to focus on our Q1 strategy with a STAR report to see what we can shift to drive even more profit!
Inderpreet: Wyndham has over 9200 hotels globally, and to ensure that they’re all running efficiently we’ll be going back to basics: rate parity, property-level agreements and moving to dynamic pricing across our properties. In the past, we’ve afforded many properties to be flexible with their partners - and that’s where the rate parity issues keep coming from. Disparities have an enormous negative impact on every distribution touchpoint. We won’t be giving OTAs any preferential pricing.
Next year, we’ll also be educating all our properties on how to build the right channel mix for them. We will also continue questioning incrementality of our distribution partners and shifting from third-party distribution to voice search and direct. When it comes down to profitability, direct bookings is the key to success.