Why hoteliers should jump on the personalization bandwagon

Personalization is all the rage in the travel industry, and the accommodation sector is no exception. While technology plays a critical role on the facilitation side, the primary push for personalization is coming directly from consumers.

In a recent study conducted by Google and Phocuswright , nearly six in 10 U.S. travelers said that brands should tailor information based on their personal preferences or past behaviors.

According to the study, personalizing the experience for travelers can go directly to the bottom line: if a travel brand tailored its information and overall trip experience based on personal preferences or past behavior, 76% of U.S. travelers would be likely or extremely likely to sign up for the brand's loyalty program, and 36% would pay more in return for receiving more tailored information and experiences.

“Clearly, personalization is where things should be going,” says Robert Cole, founder of RockCheetah , a hospitality and travel technology consulting firm.

“The bottom line is to make it all about the guest and the guest experience, what they want to accomplish on their trip to their destination, and how the hotel can make that a better experience,” Cole says.

“There are so many opportunities for hotels to facilitate everything that guests could do, which should mean a greater share of wallet for the hotel and higher satisfaction levels, and surprise and delight, for the guests. That’s the great opportunity and that’s what drives customer lifetime value.”

Defining personalization: What it’s all about

The definition of personalization is evolving alongside the principles and practices of what is fast becoming a transformative trend in the hospitality industry.

“Personalization and customization can mean a lot of different things,” says Jenny Mays, vice president of product management for Sabre Hospitality Solutions.

“It can mean knowing the guest’s name when they walk up, about specific offers from the hotel that really speak to a particular guest, or it can be guest options around the in-room experience, like selecting their pillow type or an aroma scent for the room. It’s really about making the customer feel they are not just getting another big box experience.”

Why personalization matters

As illustrated in the research from Google and Phocuswright, creating memorable experiences is not the only reason hoteliers should make efforts to personalize their guest stays.

“Every hotelier would like their guests to have a wonderful experience, and that gives us our own level of satisfaction,” says Mays.

“But the real reason hoteliers want guests to have a lovely experience is so they will come back, and talk to their friends about how great it was to create some word-of-mouth referral business. The end game is all about building loyalty by giving customers a reason to like you and return to your property.”

Relevancy is the core issue for hoteliers wondering if or how personalization can translate to the bottom line, according to Max Starkov, founder and director of HEBS Digital hotel marketing firm.

“The relevancy of the offers always produces higher conversions on a website,” Starkov says.

“This is what made Amazon a global monster. They know who you are and what’s relevant to you, and that’s what they present to you.Download speed and user experience as a whole and the relevancy of the content are the two main converting factors on any hotel website.”

Starkov believes that personalization will follow a dynamic and broad trajectory that will eventually enable hoteliers to push out highly individualized offers to guests.

“The ultimate goal of personalization is if 1,000 people come to the hotel’s website they see 1000 different rates for the same property based on who they are, their lifetime value, their loyalty status, their demographic, their browsing behavior on the website and so forth,” he says.

“That’s the ultimate goal—to present not only the most relevant content and promotions but also highly individualized pricing that fits each visitor’s unique characteristics. That’s the future.”

Data’s role in personalization

One major impediment to personalization in the hospitality sector is the gap in data exchange between reservation systems and hotel operations.

“The challenge has been that reservations systems do not talk particularly well with the systems used at the front desk,” says, Sabre's vice president of product marketing, Mike Rodger.

"“You can get the basics, like guest name, credit card information and arrival time, but you don’t get anything that gives you context around a guest’s stay. There are so many fragmented systems in hospitality that it’s been challenging to do this, but the larger system providers are moving in this direction.”

Major technology providers like Sabre as well as point of sales and product management systems are making data compilation that enables personalization a reality for accommodation providers in all segments of the market.

“Technology democratizes hospitality,” Rodger notes. “Big box chains and independents have access to comparable technologies out there.”

“What’s important is for hoteliers is to capture data at the point of reservation and make sure it’s transferred to the front desk so they get enough information to deliver personalization for the individual,” he adds.

“Some hoteliers focus too much on distribution and others focus too much on operations, and you need a balanced view of both. My advice is to ask questions around operations technologies—can you service both my distribution needs and provide insights on my guests for the staff at my hotel?”

The challenge: Up your digital maturity

Hoteliers also need to up their digital know how, according Richard Wiegmann, managing director and chief commercial officer in the EMEA for Sabre Hospitality Solutions.

“The digital maturity level of the industry is just not where it should be in terms of what the customer is expecting,” Wiegmann says.

“Hotels need to accept the fact that business models and markets are changing massively, and customers expect a different, more tailored, more customized level of service. Personalization combined with the right retailing approach is what we believe hoteliers will go for, and this is what we are investing in to create better conversion on the direct booking channels.”

Cole of RockCheetah believes that many hoteliers need to approach personalization by first focusing on understanding different data sets.

“A lot of hotels are still looking at demographics and which channel the guest came through, which doesn’t really tell you why they are there or what type of experience they are looking for,” Cole says.

“The guests don’t really care about the channel. They are just trying to get something booked that’s going to give them a great experience at a great value. Hoteliers are looking inside when all the answers are provided by the guest.”

He recommends that hoteliers find a way to understand why their guests are traveling, who they are traveling with, and what they are looking for in their travel experience.

“Hotels need to look at the demand generators for why individuals are traveling, and then figure out how to get access to those things and facilitate them so it’s really simple for the guest to accomplish,” Cole says. “You don’t need the most amazing marketing system to do this.”

His favorite example of the approach he outlined is Library Hotels, a small chain with properties in New York, Budapest, Prague and Toronto.

“They do some really simple stuff around engaging customers,” Cole says.

Once a guest has booked on Library’s website they receive a confirmation email that includes a short form with basic questions about the reason for their trip. Depending on the answer, the hotel will send the guest opportunities to buy experiences specifically related to why they are traveling.

“And if you check anniversary or honeymoon, they also give you a split of champagne just to be nice. That’s hospitality. That’s the way the business should be,” Cole says.

“The best relationship to have with your guests is to make sure you can nurture the experience for them. Just asking those questions—why are you staying and how can we help you—is everything.”

The future of personalization: Partnering on experiences

Partnering to provide guests with unique local experiences is a dimension of personalization that’s currently garnering a lot of interest from hoteliers and guests, and gathering fuel from new providers entering the market.

The success of Airbnb’s Experiences platform is also spurring interest and involvement in the lodging sector.

The opportunity is there, according to Starkov. “80% of travelers do not book local experiences in advance, they book them while they are in destination,” he says.

“This is why the hotel is the perfect seller and promoter of such experiences, starting with the hotel website and the confirmation email—now that you have booked your hotel why don’t you consider these local experiences around the hotel.”

Hotels have historically been in the business of offering experience and booking recommendations via the concierge, and excursion and activity opportunities and recommendations from outside operators in destination markets.

“The hotels all want to do it, but very few, individual hotels or chains, have figured out to how to do it perfectly,” Wiegmann says, adding that marketplace dynamics are rapidly transforming opportunities for hoteliers, guests and experience providers.

“The level of interest is huge and the marketplace is developing because there are new providers and startups with great ideas who are basically trying to move what was an analog business onto a digital platform,” Wiegmann says.

“Hoteliers are interested in it because business models and markets are changing and it’s much easier for them to pick this up now. Clearly the hoteliers are interested in the margin as well.

"This is additional business that wasn’t captured before, or wasn’t captured in such an organized fashion. There is demand meeting a new supply, which is the ideal base for a new market.”

A lot of that demand is being generated by younger travelers, notes Mays. “Younger travelers are more interested in having an experience rather than just staying somewhere,” she says.

“They want the experience and they want it to feel authentic and differentiated, and that leaks into personalization. They want to have something to SnapChat or Instagram about. That trend is going to continue.”

Despite growing demand, making local activities and experiences bookable on a hotel’s brand.com website is, at least for now, beyond the reach of most smaller chains and independent properties as it requires aggregating content.

“People will expect to be able to book more of their overall trip, including experiences and activities, in a single place online wherever they are making their decisions. I see this happening in the future but I see the OTAs leading the way on it,” Mays says.

“Expedia and booking.com are starting to pull in a lot of this content and if they can enable it out to hoteliers then it becomes a lot more scaleable and easier for the hotels to do it on their own,” she adds.

“On the one hand, they are sometimes thought of as the evil empire, but on the other hand they can accomplish things individual hoteliers can’t do. If we can figure out as the hotel community how to work with them and leverage the benefit of the value they can offer, that can be a much better strategy than going it alone.”

As consumer demand for personalization increases and technology developments and marketplace dynamics support the growing trend, deeper data understanding and creative partnerships will be fundamental to how hoteliers tap into the trend.