| Renato |
I am Renato Beninatto |
| Michael |
And I am Michael Stevens |
| Renato |
And this is Globally Speaking, and today we’re going to talk about how top hospitality brands engage with local travelers on a global scale. This is a topic that’s very dear to us, isn’t it Michael? |
| Michael |
It is because we keep these companies in business. |
| Renato |
We travel. We stay in hotels. We eat at restaurants. We take trains. We live in airports. |
| Michael |
We rack up the airline miles. All of it. And the World Bank is estimated that 1.5 billion people are traveling internationally each year. |
| Renato |
And one of the interesting aspects for us in this is that this business happens mostly online. Reservations are made online. Communication is done online, and this is all cross-border. It’s one of the most global industries around. This is why it’s extremely relevant for us. |
| Michael |
It is. And like our industry, it employs people from all over the world as well. |
| Renato |
Absolutely. |
| Michael |
You have people in hotels who speak multiple languages. There’s just so much overlap, and the way that linguists love language, people who work in hospitality generally love to travel, and enjoy the food, and enjoy the scenery, and all that. |
| Renato |
Well, so today we have a very special guest. You were very lucky to meet him at a conference in Las Vegas. |
| Michael |
Yes, John was a little bit of a disruptor at the conference, which is saying a lot when you’re a disruptor at a conference in Vegas. |
| Renato |
Oh, I thought you were just there to gamble or try to… |
| Michael |
That was the other disruption that went on, but this was disrupting during the conference. |
| Renato |
So our guest today works for Interstate Hotels & Resorts, and he manages some of the strongest brands in the hospitality space by managing properties. We’re going to hear what he has to say. |
| John |
Sure, I can do that. My name is John Jimenez. I’m the corporate portfolio director of e-Commerce for Interstate, but really I just see myself as a marketing guy, specifically specializing in the digital space. I have a passion for search engine optimization and all things digital, so happy to be here with you guys. |
| Renato |
And what doe Interstate do? What is your big business? |
| John |
Interstate is a third-party management company, largely for travelers we don’t exist. But when you think about how our industry is composed you have people that buy hotels; you have people that manage those hotels and then you have franchises like Marriott, Hilton, IHG. Our place in the travel industry is to manage these assets on behalf of ownership groups that raise funds to invest in our industry. So, you have companies that are REITs, Real Estate Investment Trusts buy 20, 30, 40, 50 hotels, and then hire Interstate to manage them in the interim, while they are waiting for their asset to develop; eventually, divesting their investment; and selling at a good point in the market. We have about 480-ish hotels. We’re one of the largest third-party management companies in the industry. |
| Renato |
That’s fantastic. How many countries are you currently in? |
| John |
We’re in Europe. We’ve just grown there. We’re in the United States. We’re in India, Russia. So, we have a fairly diverse global footprint. |
| Renato |
And how does that international aspect of your business affect your day-to-day activities? |
| John |
Well, it certainly presents a lot of challenges. We operate in portfolios, so I have hotels around the United States and being able to work in this kind of global environment has presented its challenges, specifically, being able to acquire the right type of customers through the right channels, manage disruptions. Some of the things that are going on in Europe are starting to affect us here in the United States. Take AirBnB as a perfect example. It’s very customary in Europe to use that type of method, there is sharing economy. It’s impacting the United States drastically in certain markets like New York, California and it’s only growing in popularity. So, we see trends globally that are affecting us locally, here as well. |
| Renato |
So, when you talk about a client for you, is the client the corporate real estate investment organization that buys the building and are these the people that you are trying to attract or are you talking about the guests that, actually stay in the hotel? |
| John |
All of the above! And then some! |
| Michael |
Every which direction. |
| Renato |
I imagine that you have also been a human intensive kind of business. You also have to recruit people and attract people to work in your organization, marketing affects that too. |
| John |
Yes, indeed. We have many stakeholders from the investors, like you said. We call them owners, to the guests themselves because we are operating the hotels on a day-to-day basis across the globe and the United States. In addition, we coordinate with the brands themselves; so, Marriott, Hyatt, ISG, Hilton, they have their strategies that they want to roll out and we support them in the deployment within our hotels and come up with strategies where their solution may not fit our specific hotel for that market. |
| Michael |
So, you talked about a couple of detailed terms that I want to make sure everybody understands who’s listening. The first one you talk about acquiring customers; what means are you using to acquire customers? |
| John |
Yes, that’s a great question. Well, I mean, let’s face it here today, we say digital marketing, right, that something we just kind of throw out there but the reality is it doesn’t exist, there’s just marketing nowadays, right? Every marketing action usually has some type of digital component within it, essentially, so we can kind of drop that façade. And it’s with that emphasis that when we think about acquiring the customer we’re thinking about it both in the real world, in terms of billboards and so in terms of what they see, they touch, but really more specifically what they consume from an electronic standpoint, whether it be on their smart phone, whether it be on their tablet or their PC and, specifically, the media that they are consuming this information, whether they are looking at Trip Advisor to try to decide “should this be the hotel I stay at?” or they’re actually just on Google, searching for hotels in Atlanta, hotels in New York. And, what makes it pivotal is that we’re reaching a point where cost for acquisition for customers is dramatically increasing with our industry and, probably, can be said universally about many industries. And there are certain ways that customers can buy stuff from us that’s very expensive and some ways that they can buy a product from us that are more profitable, if you will. And, part of the angle is to be able to drive revenues through these kind of low cost channels, more or less. Does that make sense and answer your question? |
| Michael |
Yes, It does and it sounds like you’re describing on one hand the term omni-channel, omni-marketing, that whole movement. And it sounds like it’s a challenge to make sure you are using the most cost-effective means even though you are covering all these different opportunities that you have ahead of you to get the customer in; is that right? |
| John |
Yes, absolutely, the lowest cost channel for us is brand.com. The more people we can get to Marriott.com, Hilton.com, whatever our brand.com the lower the cost is for that acquisition. Many people don’t know this but if you make a reservation on, say, Expedia, or Priceline, or Booking.com, there is a transaction fee that occurs up to 13, 15, 25% per transaction. So, on a $100 room, somebody makes a reservation on marriott.com, we get more of that $100, but if somebody does it on, say, booking.com then it’s probably going to be 87%, 85%, because there is that transaction because they have interjected themselves as an intermediary to bring some value but also to erode margins. Does that make sense? |
| Renato |
So, your marketing strategy is actually to get around the intermediaries. You have to outsmart them. |
| John |
That’s one tactic. We want to work with them but we want to work against them too. |
| Renato |
And what works in that space, does content in any way help you be ahead of the Trivagos and Expedias and so on? What are the tools you have in your arsenal that can make you divert people from the aggregators to your branddot.com as you described it? |
| John |
Yeah, that’s a great question. So, when you think about just the way the traveler goes about the process of booking a room, they are dreaming about their room; then they are researching about their room; then they are actually making their reservation. Along each step, with that process, there is different levers we can push and different channels we can activate. In the dreaming phase you mention content, we want to be on the first page of Google for certain search terms like “hotels in new York; hotels in Atlanta”, and content is king when it comes to search engine optimization, particularly with the updates within Google’s algorithm. And content that’s not just in English but as you are getting to, in language specific to the user. Google has updated their algorithm with rankbrain which is machine learning. It goes beyond just looking at what we tell Google our website is about and looking at links to actually breaking down the language on the page itself and getting a better understanding of what that content is and then ranking based on those types of signals. So, having content relevant for the search review is doing it in Spanish, doing it in English becomes extremely important from our perspective. Then, we have a couple of other tips and tricks we try to leverage to get in front of the customer. Does that make sense and answer your question? |
| Renato |
Yes, absolutely. But you yourself, and this is just curiosity, you don’t have translation budget; that’s not part of your problem. They do that. |
| John |
That’s right. The brands do it. I don’t have a line item tagged as translation. We have some for digital marketing that we end up having to pull from but it’s not something, frankly, that’s talked about when we come to P&L or budget reviews each year. |
| Renato |
Well, this is the reality that we know. We have a saying in our industry that translation is like toilet paper; it’s only important when it’s not there. So, you probably have a line item about toilet paper in the hotel business! I’ve always tried to create this translation to toilet paper ratio but nobody tracks how much they spend on toilet paper so it hasn’t been possible! |
| John |
We certainly spend money on toilet paper! It’s funny you say that too. In some countries, like I’m from the Philippines, they sell toilet paper in the public rest rooms. |
| Michael |
In the public rest rooms; that’s a business opportunity in the making. |
| Renato |
Yes. But, you mentioned the element of search engine optimization and you brought great examples like New York and Miami, not only for the US speakers but also others. I’m from Brazil, so the Brazilians, the Japanese and the Germans are the people who spend the most money in New York, but they spend it differently. The Japanese will come and spend three days and spend a lot of money on shopping. The Brazilians will come and they will stay 10 days to two weeks and they will spend more money on the hotel, for example. So, do you adapt your search engine optimization to some of these targets and statistics or did I just give you a great idea? |
| John |
You’re full of good ideas, I’m sure Renato, but that isn’t something we haven’t looked at. So let’s take an example. We have a hotel in Miami, the Hyatt House, Miami. We were trying to optimize it for what we would think people search for, “hotels in Miami, in Spanish, but what we’ve learned is that the hotel is not the draw, the shopping is, like you mentioned, specifically. People go to Miami not necessarily thinking they’re going to go on vacation but to buy stuff, lots of stuff, and then take it back to their home country. So, there are cases where we have to shift our strategy and understand why the consumer is there, and take part in that conversation as they begin that search, if you will. They might not initially be searching for a place to stay but if we can get some kind of visibility by saying that we’re by this mall, that mall, and enter into the conversation through their search process, then that’s when we can build awareness—awareness that leads to transactions down the road. |
| Michael |
So, John, the travelers have changed; they’ve gone more digital. How has your engagement with them, how has ecommerce changed since you’ve been doing this, specifically in hospitality? |
| John |
Yes, that’s a great question. Back in the day, search engine optimization was so much easier, to be honest with you. You just put your title tag, your key words in the title tag, you make sure it’s full of your key words on the page itself, you make sure it’s indexed and then you call the job done and it’s very easy to get on the first page of Google. When you look at the search results today, particularly for the travel vertical it’s very competitive. Even in your computer, you bring up hotels in Atlanta, you will see the first half of your screen devoted to monetized channel that Google has created that take people, instead of brand.com to Expedia, or keeps it within their ecosystem. So, our strategy has changed in terms of identifying content that will resonate with the consumer but also opening up other avenues where we can engage them outside of, perhaps, SEO. We’re trying to develop what we call a personal relationship with them in a digital capacity. You guys are probably members of some type of travel club, right, either Marriott rewards or Hilton rewards? |
| Michael |
Renato, I think, 20 or 30 travel clubs you’re a member of. Mine’s a little limited capacity but, yes, we both are. |
| Renato |
Starwood, Hilton, all of them. Accor. |
| John |
So, let’s take that example,ok?. You are probably aware right now there is a war going on between what I call OTAs, Expedias, and Pricelines of the world and the brands. So, the big push from the brands is that you can find the lowest price on our website if you’re a rewards member. So, if you are a Marriott rewards member you are going to get maybe $2-$3 off the room night if you go to brand.com. Now, part of that strategy is one to drive you to our channel but the other part is to develop that relationship because once you are a Marriott rewards member we have your information. Once you download the app we have a way to communicate with you. Maybe I’m pulling back the curtains here but if you have the Marriott app and you walk into some of our Marriotts we know you’ve walked into that Marriott and we can send you a customized message saying “Renato, your virgin Pina colada is ready” because we know from the past that you purchased that on a regular basis so you can enjoy it. |
| Michael |
He found that about you. He did! He knew! |
| John |
So it’s developing that personal relationship and leveraging technology to be able to communicate and engage with a customer and offer something above and beyond the price. Does that make sense? |
| Renato |
Yes, it makes total sense. My personal experience, Starwood Hotels have this keyless entry now. so, you can use your app, you don’t need to even, I went to a hotel in Barcelona, there was a huge line in the hotel, and I check in on the app, I get the key on the app, I get to the door. I just put my phone close to the door and it opens. |
| Michael |
And there is so much opportunity in this space; there is so much opportunity. And yet, going to a hotel, often, is still not the experience I want it to live up to. Can you talk about some of the mistakes that you see out there that are regular occurrences? We are so digital; I just want more; I want more. What do you see? |
| Renato |
Sure, yeah I mean, it’s tough, right? Because, on one level we’re trying to satisfy people’s needs, right? On another level there’s a diversity of people out there now. We have more different people out in the world than we ever had because there are just more people in general. So, we have what they call millennials, that essentially want a minimalistic hotel room, they probably don’t even want a desk in their hotel room itself, and you saw that press release from Marriott saying they’re getting rid of the desks. They want USB chargers by their bed but not everybody wants that. A perfect example is Marriott’s AC. It’s a new brand that they’ve launched, essentially, targeting millennials. We put it in Kansas City, the heart of America, thinking “this is great; it’s by Westport; it’s a developing community; Google’s in Westport” and to some degree we’ve had some success but to another degree it’s very polarizing. Some guests love it because it just fits their lifestyle; some guests hate it because it’s the mid-West, people like big things in the mid-West. If they walk into their room and see a kind of minimalistic set-up in terms of the sink, it creates issues. Does that make sense? |
| Renato |
Was AC a Spanish chain, did Marriott buy them? |
| John |
It actually has its roots in Spain. AC originally started in Spain and Marriott purchased them and is integrating them into the US market. |
| Renato |
I didn’t know that. I love that chain of hotels, it’s a great hotel chain. |
| Michael |
But I love your concept of there are more people in the world and there are more people travelling. The cost of travel has actually come down for the consumer and so you push that out globally, there are people at many different levels of income. It used to just be the elite who got to go everywhere. Now, you are seeing people who are coming that may not be in that same bracket. So, push this concept out globally as well and, boy, does it become a wild matrix of decisions as to what a hotel should be providing. |
| Renato |
But, if you had a crystal ball, how do you think that the ecommerce and digital markets will change and global hospitality as we move forward? |
| John |
I think there’s three trends to pay attention to as we look into the future. The first trend we’ve already kind of touched on and that is personalization. I think the customer’s going to expect us to know them better and they’re going to expect us to communicate with them in their language, in their preferential ways, if you will, so having a strong database of who our customers are, what they like, how they behave, is exceptionally important moving forward. The companies that can win that battle will have an edge, if you will. That’s why there’s this push for loyalty programs whether its Expedia, Marriott, Hilton, IHG, that’s going to become that much more prominent and that customer information will get deployed across several different strategies. One would be apps and just engaging people on a one-to-one basis; secondary on the internet as we’re marketing to them to be able to market to them specifically through those ads. But, the second trend that I see is still kind of balancing that tech and touch universe. So, most of our conversation has focused on tech but there’s still this component of the human element in hospitality that has to be maintained somehow and the tech has to enhance that and not disrupt that. |
| Michael |
You said there was a third future point? |
| John |
Yes, it’s that value, ways that companies can create value, not only from a price standpoint but from an experiential standpoint, does that make sense? By again personalizing that communication, if you will. Maybe it’s not giving them the lowest room but having the comforts that they’re used to, already prepared for them as they arrive at the hotel—that personalization even in that experience. |
| Michael |
Yes, that’s great John. This is good stuff. Renato has a page of notes. That’s awesome. |
| Renato |
Yes. Very informative; this is great. Thank you so much for making the time. And having the patience to let us set up this contraption. |
