A few days ago in the office we were talking about what competitive advantage means for hotels, when someone said that in today’s market hotels need “sight beyond sight”. In our team we are all children of the eighties so we immediately recognized the reference to the Thundercats.
The Thundercats had something called the sword of omens that allowed them to see things the naked eye couldn’t detect. That was their competitive advantage. Time and time again they’d win the battle because of the insight the sword had given them.
All hotel managers could do with a sword like that, right? Well actually, hotel managers can get sight beyond sight if they want it. But I’ll get back to that (and the Thundercats) later. First, I want to consider how the competitive advantage for hotels has evolved, using the year 2000 as a point of reference for comparison. Why 2000? Because that was when TripAdvisor was founded.
The Secret to Success before 2000
In the pre-TripAdvisor world, guests had less information available to them to differentiate one hotel from another, so booking decisions were often made on the basis of the following three factors:
Travel agent recommendation.
People chose hotels based on the star rating, or the brand, because, in the absence of any better information, those factors at least gave them a general idea of what to expect. Or they chose the hotels their travel agent was familiar with, or was pushing. Guests had to put their trust in stars, brand names and travel agent recommendations because they had little else to go on.
So if we were to summarize competitive advantage in the pre-TripAdvisor years it would be “Prestige + Positioning = Success”.
But then TripAdvisor came along and all that changed.
The world begins to change
The dynamic of the industry had already started to shift, but with Tripadvisor’s introduction of mass user-generated content, the factors on which guests had previously based their decisions (and the factors that gave hotels their competitive advantage) started to pale in significance.
People rarely think about a hotel’s star rating anymore. Now they define hotels in terms of the experience that the hotel offers. For example, is it a boutique, country, adventure, eco, luxury, business or budget hotel?
Brands remain relevant, particularly in the corporate market, for travelers seeking a consistent experience across the world (be it Beijing, Bogotá or Bristol). But guests no longer choose brands because the experience at non-branded hotels is unknown. With all the information now available, tourists can get a good idea of what experience they can expect in any hotel, pretty much anywhere.
Finally, travel agents (be that the traditional model or online) remain an important means of accessing clients, and facilitating the transactions with them, but they are not a differentiator for guests when making their booking decisions.
Information – the new differentiator
So, if those factors no longer provide the key to success, then what does? Information. It’s the information that’s available to guests that will set hotels apart from the competition.
If a guest is trying to pick a hotel, they will probably make their decision based on what they see online. Hotels can do a lot to help themselves. They can, and should, make interesting content available on their website and on social media sites.
But no matter how much content the hotel creates, there’s no escaping the fact that it is now the guests who create much of the publicly available information about a hotel. And that’s just the kind of information that influences other prospective guests when making booking decisions. A 2012 Deloitte survey found that over half of guests read reviews before booking.
So what’s a hotel to do? They can take back some of the control of the message by responding to reviews. But smart hotels will know that the best way, in fact the only way, to influence what guests say is to give guests the experience they want at an appropriate price. (Because no matter how good the experience is, if it isn’t in line with the price paid guests won’t not be content.)
A Sword of Omens for Hotel Managers
So, and here’s where we get back to the Thundercats, hotels need to have “sight beyond sight”. They need to see what’s behind those reviews. Monitoring the reviews will give hotels an idea of guest sentiment, whether they’re happy or not, and some clues as to why. But it won’t give hotels the kind of deep insight they need to ensure that going forward they’ll have satisfied guests who will rave about their hotel to others.
Why not? Because satisfaction is made up of a mixture of perception and expectation. To understand exactly why guests are satisfied or not, you need to know whether the perceived quality of the experience matched the guests’ expectations (both in terms of what experience they were looking for and what experience they expected for the price paid).
To have that kind of insight, hotels need to take an intelligent approach to collating and analyzing guest feedback. They need to know what’s important to guests, and also whether the experience they’re offering guests is in line with the price paid. Simply aggregating ticks on pieces of paper won’t cut it.
Like the lovechild of Stephen Hawking and Heidi Klum
To conclude, I’ll return to another TV show that is discussed often at Hotel Trail HQ – the Big Bang Theory. If you’re not familiar with it (and if you aren’t where have you been for the past five years?), it’s a show about a group of genius scientists and their attractive, but somewhat less intelligent neighbor, Penny.
In one episode, one of the scientists, Leonard, speculates about what his and Penny’s children might be like. He imagines they’d have his intelligence and her good looks. Well, to have a real competitive advantage, that’s what hotels need to be like. Inside, they need to take an intelligent, analytical approach to the information they gather about the guest experience and, on the outside, they need to make sure that the experience is as attractive as possible to potential guests. When a hotel does that, it will certainly stand out from the crowd.
Guest contributor, Caroline Doherty, is Director of Marketing and co-founder of Hotel Trail (www.hoteltrail.com). Hotel Trail provides hotels with a simple, affordable and intelligent turnkey solution to monitor and improve guest satisfaction.