11pm Tuesday, its fine, dry and 30C.
“Hello” I eventually awake and answer.
A voice trembles on the other end “Hola Andrew, esta policia en el hotel……”
“Ok, ahhh ok, I’m on my way” I nervously respond.
I arrive at the hotel, the car-park out front is full. This is usually a good sign, if the car-park is full at this time of night that means a good number of rooms are full. A full hotel is a happy hotel, lots of guests, lots of eyes across the property, lots of revenue and fixed costs well covered.
Alas the car-park is full, but it is possibly one of the worst sights a hotel General Manager can expect to view on his second day on the job.
With rifles drawn, armored vehicles running and looking like a cross between power rangers and the navy seals, the local S.W.A.T have taken over.
Note: Picture is for illustrative purposes only. This is the local S.W.A.T team and closely resembles the same scene but this is not the hotel or night in question.
So I enter, walking past the elevator which has a team of five officers going in and out of the doors and playing with the controls. I end up finding the police officer in charge and after a conversation with the operations manager, get a reasonable picture on what is going on.
A hotel guest in the hotel’s rear building had rang 911, they said they heard a gunshot. They were screaming that the gunman had shot a guest and someone was now trapped in the elevator. Alerted to this the local constabulary paid the rear building of the hotel a visit. They found a blood trail down the hallway wall from a rampaged room to the elevator. The elevator was stuck between the 2nd and 1st floors. There was every suggestion either the gunman or a victim or both were trapped in the elevator. The officers shut down the hotel and called S.W.A.T.
Thirty minutes later, desert storm was launched. The men and woman in black were highly efficient and did not intend to waste time. The elevator I had earlier walked past was being used as practice area to test how to break into the shaft and secure whatever situation they would encounter. Practice took less than an hour.
During that time I had talked to guests via phone who were still in the same building as our gunman. The S.W.A.T officer’s instruction to me to tell all guests in that building was very clear. Lock your door. Stay in your room. Stay away from the windows – that I was told was because if the gunman was outside he may shoot at any movement behind a window.
Hmm, just two days in, to managing the inn, this is not the type of information you need to keep you up at night. Revpar (revenue per available room), occupancy rate, ARR (average room rate), forward bookings, average length of stay, fixed cost per room, incremental cost of new customer and plenty of other measures are where the mind should be this early into the role.
Then S.W.A.T went on the offensive and raided the elevator in the rear building. Two minutes later after finding nothing they left. I received a follow up letter a week later in the mail.
There was no gunman. There was no shooting. There was a fight, some blood and maybe a rifle had been sighted by the anonymous guest. But whoever the culprit and victim were they had disappeared. We never saw the guest who checked into the rampaged room again either and they had used fake ID.
The next day the hotel opened and continued as usual and a whole new batch of guests checked in, none the wiser.
We were very lucky we hadn’t yet addressed our hotel’s limited online presence and therefore there was almost no opportunity for a guest to post an online review describing that fateful night.
I had just taken over GM duties basically to try a fresh (albeit completely inexperienced) look at improving net revenue. My original role for the hotel was to develop it into a $100m mixed use project with for-sale condominiums, offices, rental apartments and some retail. However, that vision faded as the peak of the property cycle passed and now the previously neglected hotel had to help pay the mortgage during America’s great recession.
Most residential development projects take years and within that period you sell each unit once. A development manager on a reasonable sized project may deal with up to a couple hundred sales over 3 to 5 years. So I had to readjust very quickly when I looked at the first report on my desk on day one of my GM duties. The report displayed how many of the 166 rooms were sold tonight. Report 2 showed each night for the next 30 nights and report 3 showed monthly bookings over the next year.
Over the next 12 months I was looking down the barrel of having to manage 60,590 room night sales !
Hotel rooms are perishable, like airline seats, rental car bookings and even golf course rounds. If a room stays empty one night you can not recover that revenue. Airlines have sophisticated automatic algorithms assisted by revenue managers to help optimize occupancy – that is why the price changes depending on when you book and how many seats the airline has available and other factors.
The budget hotel industry I was involved in was relatively unsophisticated in revenue management. It was more of an art based on local knowledge and experience than anything like a mathematical algorithm. I was in daily contact with the franchisor and I attended the parent company’s General Managers course in Orange County to learn the tricks of revenue management – or at least increase the franchisor’s profit!
However, even with thousands of hotels worldwide, across price points and a substantial support network for franchises, there was not much practical usable help on automated or assisted revenue management.
[I am convinced the mega hotel-casinos in Vegas had it sorted – even if I just base that hunch on the sheer number of bookings they managed to get out of me!]
One of the key areas where increased hotel revenue seemed obvious was to achieve a strong online presence and to maximize online bookings with third party booking engines. We had recently changed franchises (also in the attempt to improve revenue) and whilst we were now part of a new centralised booking system that included web bookings we had not actively sold rooms via the third party sites, nor had we engaged with guest review sites.
Basically we were starting fresh, with a clean slate for reviews. Over the next 12 months a substantial amount of my focus was devoted to revenue managing third party web booking sites.
I would look at the forward booking schedule for the week almost every couple of hours, down to the minute when we were filling up and had just a few rooms left. We tried and tested different revenue management tactics that included ideas from hotel experts, analysis of all our competitors and research into hotel best online practice.
What become glaringly obvious was the immediate power of the guest review on bookings. It has literally changed the hotel industry. Trip Advisor, Hotels.com, Expedia, Orbitz and Lastminute.com were some of the ones we focused on. There are a lot more of these sites now and Web 2.0 social media are moving reviews and recommendations into a whole new world. Cornell University have done comprehensive research on the impact of social media on lodging performance.
A bad review on its own can be seen as sour grapes or just an out of character situation, but if 50 out of 100 reviews are negative it is going to significantly affect your potential to sell a room to any potential guest reading – at least without discounting the price. Many read the reviews across multiple web sites before they book, even to our surprise for a budget hotel.
We learned to try to manage reviews proactively. Travellers who had bad experiences were more than likely to post a review than those you had a good or standard experience.
This preemptive guest review management included:
1. We encouraged those who thanked us at the front desk (for having a pleasant stay) at checkout to post a review – we even had a computer set up in the reception where we showed them how to do this. For repeat guests (they kept coming back for a reason, hopefully because we were doing something right) or whenever there was a positive encounter we encouraged the guest to post reviews while it was still fresh in their mind.
2. We were conscious during the guest’s stay if they had booked online via a third party site; they had more opportunity to post feedback as most of the online engines would later email guests asking them if they would rate the hotel. Yes it probably meant we were more proactive with these guests as they had a greater chance of influencing the hotels future business.
3. We actively monitored online reviews daily. If there was a negative comment we would always address it online (some websites allowed hotel operator feedback or right of reply). Typically we would not argue the point, but we would point out our very low pricing, or future planned capital upgrades. More often than not, the comments were out of line when considering the low price guests had paid. If negative feedback was not justified we fought (to the bitter end) to get the website to remove the post. Third party websites now look to be more actively addressing unwarranted negative reviews.
4. We obviously did everything we thought we could to make sure the hotel was as clean and maintained as possible. This was a major problem for the hotel; it was old, had been neglected for years and there simply was no budget for significant capital expenditure until we were forced to spend it. Burst plumbing was especially problematic and never easy to locate and repair. Guest satisfaction and cold showers are not compatible.
5. We had a customer is always right attitude and gave refunds where justified – and even when not justified if that was going to be more cost effective approach in the long-run and not put our reviews in jeopardy. Yes some people tried it on and threatened to post a negative comment if they did not get a refund. We actually would preempt those guests when they left and immediately contact the site they booked through and Tripadvisor explaining the situation in advance – to grease the wheels for a review removal if it was ever posted.
6. We went out of our way to provide customer service if there were issues. Moving someone to a new room was done without question. I found if our staff were super friendly and helpful, that could turn around the guests opinion from a negative to a positive.
For example if the guest wrote ‘I stayed at X hotel, the room had a faulty air-conditioner, but staff were very helpful and moved me to a different room…’ it is actually a positive review and assuming we had free rooms (which most often we did) only cost us the variable increase in housekeeping that room – about $10
Compare that to this ‘I stayed at X hotel, the room had a faulty air-conditioner, so I pleaded to move rooms because my kids were sweltering, but staff were so rude and wouldn’t do anything about it. They sent a maintenance guy but he couldn’t fix it and couldn’t understand me so I was so tied I just gave up and we had a sleepless night. In the morning the staff didn’t even apologise.’
This is a dramatic difference with the potential to affect hundreds of future room night sales, all for a lousy tenner.
7. For a while we made it clear that the low price was because the hotel was undergoing an upgrade or other works, before they checked in – to lower expectations before they think of commenting.
8. We made more money when our guests booked via the franchisor booking system than the third party website, so all attempts were made to direct bookings that way. That helped because the franchisor booking system either did not allow comments or could manage it much more responsively. The problem was, despite their marketing attempts to retain the online booking role, third party website bookings were much more aggressive and successful five years ago. According to a Hotel News Now article this trend may be peaking.
9. Selling more rooms via Travel Agents, although typically more expensive meant groups of guests for longer stays without any reviews. In our case Contiki was a big contract (and surprisingly few problems) and we also had visiting school sports teams (however, with parents on edge, complaints could easily escalate). Budget hotels are also not always top of mind for the kinds of guests that now use Travel Agents and often the room rate had to take a hammering to secure this volume business – so opportunities to increase net revenue were limited.
All of the above helped the online reviews, sometimes staff were diligent in applying customer service, other times we let ourselves down. You simply had to continue to be super vigilant as online reviews were becoming increasingly influential.
Online ‘references’ are firmly entrenched in the hotel industry and managing their impact is now a significant part of revenue management. I can’t bear thinking what would have happened after the S.W.A.T raid if our online presence had been up to speed.
Coming in a future post. What about other industries and service providers – is the online feedback review catching on in the professional world and what are the implications?