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3 Keys to Success in the Hospitality Industry

Heidi Gempel

In this Keynote address, Heidi talks about 3 critical keys the hospitality industry needs to focus on for future success. She provides practical steps and insights for the listener on how to incorporate these keys in their strategy going forward.

We'd love to hear from you. If you have any questions or would like to discuss any of this, please contact Heidi at heidi@hge-international.com.

Transcript

During my 20 year corporate career in  some of largest hotel companies, and even more so when I started my own  business 11years ago, I have supported hoteliers through every stage of the lifecycle  of a hotel. This was intensified since the pandemic – we were busy closing  hotels, opening hotels, repositioning hotels, and rebranding hotels.

In the process I have discovered 3  major problems that are getting in the way of  success and you might want to write them  down

1.      Customer expectations are  changing – marketing to the audience of 1:
 With the proliferation of our distribution in the last 2 decades, Selling  hotel rooms has become selling a commodity. Booking platforms are built for  transaction, market segmentation is defined around buyer profiles or  distribution channels, rather than guests, their preferences and needs.

2.      Rapid acceleration of technological  innovation and digital transformation which is outpacing the capacity of many  hotelier to keep up.  All our lives  have been disrupted in the last 18months.
 1) hospitality is a customer facing and service industry and
 2) Cost of innovation and required internal change that is requires causes  many hoteliers to delay the project.

3.      Finding and retaining  the right talent.
 Prior to the pandemic the accommodation and restaurant industry was  creating jobs at the fastest rate of any sector in the economy according to  the international labor organization. Fueling this growth with the  right skilled labor is yet another concern for owners.
 The industry contributes 10,4% of global GDP, supporting one in ten jobs on  the planet – 319 million in 2018 alone. Furthermore the business recovery is  expected to be slow: the UNWTO estimates a 20-30% global decline in  international tourist arrivals.

 

In addressing these issues, you are  not only future proofing your business not only to issues an entire industry  is facing, you are increasing the your value to the industry

 

So, I want to take a moment and  commend you for taking action and for signing up for this event and for  showing up! Because it is at events like this or in similar settings where  you begin addressing these issues within your team

 

You have made the decision to come  today here because you would to make a difference in your hotel, with your teams  and your career.

By attending events like this to  learn, network and to advance yourself, by joining your local hotel  associations, or global associations like HSMAI, you can make a difference.

Hospitality is one of the oldest  industries and it will come back, because it is relevant and necessary to the  global economy. Hospitality is needed for economic growth across the  continents, it is needed in our local communities – I am sure you agree that  some of our fondest memories of a special family event, a vacation, an  amazing business breakthrough has happened in a hotel somewhere in the world.  

My promise to you is this, in the  next 30min you will pick up tools and insights that will allow you to address  the challenges we are facing in our industry.

We have developed and tested a 5 step  framework that we use for our clients and I will be elaborating on 3 of the 5  steps with practical steps and actions points for you to take home .

Customer Centricity, Customer-first must come first

“What we are  selling is changing, who we are selling to is changing (some are people we  have never sold to before); and how these guests what to be engaged,  marketed, and sold to is changing too” (Michael Gottlieb).

Enough research  has been done to prove that a return on a ‘customer-first’ strategy is  significant.

I am making this  point the first one today at the start of this conference on technology,  because getting to know your customers better must stay the focus.

The pandemic has  changed all humans – the way we go about life, the way we make decisions, the  way we purchase, the reason we do things have changed.  

Customer  centricity done right results in your customers trusting they will not only  get what they want and need, but will also experience the enjoyable and  frictionless service.

Customer  Centricity entails more than just saying the customer is top mind. It is  about truly understanding the customer so that you can anticipate their  wants, needs and preferences, create meaningful experience and build lasting  relationships with them.

A Customer  Centric hotel or organization takes steps to understand the customer and  act on the understanding by creating a culture that empowers the team to  make the best decision for both guest and the business in parallel.

Customer  Centricity is as much a strategy as a culture. It must be ingrained in an  organization in order to be recognized by the final decision maker – the  guest.

It may seem a  simple concept, it requires a cultural strategy at the center of everything  we do. Every decision you make,

If that alone  would not be reason enough, a CEI survey found that 86% of buyers will ay  more for a better customer experience. But only 1% of customers feel that  businesses consistently meet their expectations.

Increasing your  customer retention by just 5% can increase the profits by 25% according  Frederick R Reichheld and Phil Schefter – the Economics of E-Loyalty.

As human beings  we can sense we all can sense authenticity and we can see through empty  vision statements and meaningless value propositions. So the question is how  should you go about evaluating your customer centric strategy:

I will share 3  steps with you that you can research in more detail than what we have time  for today.

1)      Build  a customer journey Map (see slide) templates are available

2)      Build  customer persona -

3)      Review  your success metrics –  if you are going  to make changes to  your strategy, it is critical for you to define what success looks like for  accurate goals and determine whether the change  has been successful. We cannot claim to be customer centric if our  performance is measured predominantly by financial results.

There is a  real tension in our industry between customer satisfaction and profit.

As you begin  your journey to customer centricity you may have some questions in your mind:

1)      Is a  Customer personas the same as the market segmentation we use across the  industry?
 The Market segmentation t based on buyer profiles, distribution channels,  such as OTAs.
 - does not provide a lot of insight on the motivational behaviors of your  guests.
 A customer persona describes tries to describe the motivational behaviours of  your guest that causes them to make decisions.

2)     Does  that mean we should stop focusing on financial results?
 No, the implication is not that profit-related metrics should be disregarded  for metrics on guest satisfaction.
 need to review is what adjustments we need to make to performance indicators  with regards to customer centricity.

Automation –  embracing Tech and Machine learning – Digital transformation

Apparent  reasons:

-         Labour  shortage

-         Cost  efficiency

-         Workflow  efficiencies

However, with  Covid-19 the goals of automation has changed!

Prior to  pandemic reasons were : lower costs, enhanced performance and revenue growth have decreased in importance,

Now automation  is considered: improving customer experience, improved business  continuity, need for easier generation of business insights and lowering risk  in general (Bain & CO Automation study 2020)

Companies’  automation priorities now extend beyond saving money – automation is a  driver in the process of reinventing business and industries. Company are  looking to automation to create more room for growth and build scalability,  they consider automation to make their operations more resilient. Automation refers  to any platform that performs certain functions independently of a human  telling it to do so.  

Accenture’s  Finance 2020 report states, that automation will eliminate up to 40% of the  transactional accounting work the finance department does today. Work is  changing far faster than many realize - over the next 20 years, nearly half  of jobs in America could be automated. This will be accelerated by the  intense pressures on hospitality during the pandemic. The next 2 days  we will hear a lot about technology solutions and automation models, AI,  chatbots, etc. but automating things simply for automation’s sake would not  be the right approach either.

So how can you  unlock the value of automation beyond cost savings?

Here are 3  principles that can help to see automation in a new light and pushes on the  potential to look for more from these technologies.

1)     Assess  whether automation will be a threat, opportunity, or both to the business.
 consider the role they could play in reinventing your customer experience  and business model. Consider the impact automation will have on your specific  guest experience and business processes, so that you can start building a  roadmap and business case for it.

2)     Reinvent  business processes with automation inside, rather than finding lots of individual tasks to  automate. Whilst automating single tasks can yield savings, doing so is often  too fragmented to have a real impact across the whole organization. Consider  broader automation frameworks for real impact instead and reinvent your  processes around that.

3)     Treat  automation as a major change to your business. Whilst automation become attainable and accessible,  it still requires proper planning, resourcing and a plan to execution.  Successful automation requires more than great technology.

 

Some questions  you and your team might have to deal with:

1)      Will  my job become redundant through innovation?
 Automation is progressing fast and can already replace a lot of repetitive  routine tasks, which may require some of your team members to upskill to stay  relevant. Automation, when thoughtfully applied to a hotel operation, can  unlock more revenue, increase guest satisfaction, boost staff productivity  and make operation run more smoothly and profitably.

2)      It  is just not a priority at the moment – we have no budgets right now.

As you engage this week the options that are available,  consider the far reaching changes to our industry.

For those of you  who have not met me before, my name is Heidi Gempel and something you may not  know about me is that 21 years ago I found myself on the island of Phuket as  one of the first revenue managers in Asia in a major Resort in Thailand.

Way back then,  there was no or very little training available for revenue managers, there  was no frameworks, very few systems or much support. It was a new position  and I had to learn fast and build tools, systems and learn about strategy.  Within a few years I found myself developing the function of revenue  management for 16 hotels from the South Pacific to Southeast Asia.

15 years ago, I  became the VP Revenue Management and Distribution Minor Hotels a major  regional hotel operator in Thailand. We had 4 hotels operating as Four Season  and 4 hotels under Marriott and we were also building our own brand of  Anantara hotels. It was a role of building company frameworks, educating a  fast-growing organization and creating policy, whilst doubling in size every  year.  In my heart of hearts I always wanted to help independent, family hotels and  smaller hotel chains and help them succeed in this environment.

So 11 years ago  I founded my company with the intent to partner with independent hotel and  smaller hotel chains which usually do not have access to this level of  support or thinking.
 We have since served an amazing collection of hotels – from very small to  very big and it has been an exciting 11 years.

In 2014 the  President of HSMAI Asia Pacific, Ms Jackie Douglas approached me. HSMAI  wanted to get the revenue management leaders of the region together to  provide some much needed training around the topic of revenue management, but  also to educate the industry at large on industry trends. I have served on  the Revenue Management Advisory Board Asia Pacific ever since  

We arranged  Revenue Optimization Conferences in Singapore and Bangkok over the years and  we organized training courses, research material and case studies for the  industry. You might have  worked out by now that I am an idealist at heart and motivated by those  ideals and dreams. And that is  exactly why I decided to invest my time and effort to educate, consult and  advice hoteliers on that journey. Building robust, relevant and sustainable  revenue strategies. The HSMAI  roundtables of the each function are designed to talk about these systemic  issues to help the industry navigate through this. We incorporated  tools and methodologies that were not usually applied in hospitality to help  our clients address these issues we are talking about today.

Intentional Innovation

COVID-19 has accelerated the emergence of new revenue streams and innovation was forced up us as ‘business as usual’ shut down rapidly. We saw in many market the    local, independent hotels and F&B operators responding fast to  lockdowns and the shift in demand to local and domestic markets. We saw    great adoption and integration of new revenue streams like food delivery and self-pick up.

The key we learned here is that hoteliers need to build a framework for intentional innovation that becomes part of the internal process and integrates with the way we approach our hospitality business.

Covid has proven that there are opportunities to create new revenue streams and revenue models. The experience teaches us that there are opportunities for us to improve and shape our Business model.

Terms that are generally referred to are product innovation, process innovation and business model innovation. All 3 of them can be applied to hospitality.

Innovation is  not the same as a renovation!

Innovation structured  process that is challenging an product, service or business model and how they are approached, seeking to understand what underlying needs are that should be addressed to them

you might have heard of Design Thinking or Disruptive Innovation – where you take a topic, process, department or a problem and create meaningful points of difference for it versus current alternatives.

 

The reactions you’d be looking for is “Isnt’ this clever?”, “What a great idea!”, and    “Why didn’t anyone ever think of doing this before?”

Design Thinking is a process you need to learn how to apply. You will require    someone in senior leadership or ownership to support the initiative.

Once you have cleared that hurdle and learned all about the process of Empathy, Problem    framing/define, ideating, prototyping and testing it is time to implement.

We have used this process successfully to redefine check in processes and as a result    the hotel’s ranking on tripadvisor has improved significantly.

We have also successfully    worked through this cycle to innovate the online customer journey and seen    improvement in direct booking conversions, ADR growth and channel shift    from OTA to hotel direct.

You might think that this sounds a bit too difficult to do for you and wonder if it will be worth your time.

My answer to you is Yes, and Yes. Yes, creating a intentional process of innovation is not easy and requires a different approach to your everyday routine. But    considering the challenge that you are facing, I’d like to submit that this    is a relatively small price to pay.

You might    think that you will not find someone to teach you these techniques and mentor in these processes where you live.

 

Let me just  recap before we open for Q&A:

3 Keys (show  slide) of the 5 keys I shared with you this morning are

1)customer  centricity

2) automation

3) intentional  innovation

They are  absolutely key for us to embrace and consider as we go on this journey of  recovery.

 

The 2 additional  steps to complete the model are leadership transformation – which is coaching  and structured HR approach to help us as leaders set up for succuess.

And finally, the  best results in each of those steps are achieved if you have someone to  actually help you through these challenges.

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