GuestSpan Speaks!

Creating a great guest experience is fundamental to building successful long-term guest relationships and brand loyalty. Hoteliers in the current environment are requiring a holistic view of their guests to understand who they are and what their needs are likely to be. This requires integrating business intelligence (BI) into virtually every facet of their properties’ guest touch-point activities.

Current hospitality industry market intelligence supports the trend that Hoteliers require more than just the traditional static, backward-looking reports: They require insight to support collaborative analysis, forecasting, and decision-making so that their analysis and planning can help drive more ineffective business decisions – and ultimately enterprise financial performance. This requires an integrated and feature rich solution that provides complete and accurate information that is easily accessible to management and workers throughout the company.

Key challenges facing hospitality industry executives include:

The benefits of successful business intelligence are as follows:

I have been reading a lot of marketing articles, blogs, white papers, and books lately.  All in an effort to become better equiped to bring GuestSpan’s solutions to market and make the customer want to buy.  We have conducted market research, spoken to hotel owners and travelers, attended trade shows and conferences, and pretty much talked to everybody we could to promote our concept and gauge market reaction.

It has occurred to me in all of this that all of the time and effort we put into cleaver marketing schemes and research is really an effort to get back to the days of the country general store.  We’ve all seen them in movies.  And some of us have even lived in small towns that still have something like them.  In early America the general store was the hub of economic activity in small towns.  Everything happened around the store- mail was delivered there, telegrams were sent and recieved, and every good imaginable from animals to household cleaners were sold there.  But the centerpiece of the general store was the shopkeeper.

The shopkeeper knew everyone in town, knew what they bought and sold, knew who the sent mail to and recieved mail from, knew where they lived and what they did for a living-He knew pretty much everything.  It wasn’t this knowledge, though, that made the shopkeeper so good at what he did.  He really knew his customers.  He lived with them.  He knew, for instance, that Mrs. Jones hosted a party every Thursday and liked to serve carrot cake.  So he made sure that he had it in stock and fresh for her when she came into the store.  He also knew that the Smith children didn’t care for licorice, but liked horehound.  So when Mr. Smith came in for the groceries there was always a package of horehound sent home with it.  It was these little personal touches that made the shopkeeper indispensible.

Modern technology and the supermarket essentially did in the little shopkeeper, and ever since then businesses have been trying to get as close to their customers as he was.  Technology has come a long way in helping business accomplish this, but there is still a great deal of distance between the business and it’s customers.  I think that when we truly start to understand our customers one an intimate level, for instance, knowing which hotel guests like to order extra pillows, and which restaurants the most frequently visit when they stay at our hotel that we will truly be closer to the kind of relationship the shopkeeper had with his customers.

This is something GuestSpan is striving to deliver to the hospitality industry.  I don’t know what the end game looks like at this point.  But bringing guests, hotels, and the surrounding community closer together makes things better for everybody.

How many different services and advertising channels can you pack into one television? HITEC in Austin provided us with dozens of vendors that seek to make money through televisions installed in hotel rooms.

And, most of it is just garbage. At least, that’s what the Marriott hoteliers are telling us.

These vendors are trying to feed advertising, hotel information and paid content through the primary entertainment device. For the most part, their value proposition is poor. The television can’t carry all of those businesses. Unfortunately, it is an easy target for expanded services simply because it already exists in every room and tapping into an unused channel is too tempting for vendors.

The problem with TV content providers is that people aren’t looking for information there. When a business traveler turns on the TV, they are heading toward a specific channel or program. So what if Lodgenet is the default channel to pop up? They are one remote control click away from being invisible and irrelevant. Usage and linger rates show that Lodgenet appeals to a very, very small subset of travelers overall. Some people check their bill on the TV. Others order the occasional movie. But, about 98% of hotel guests flip right past those information channels and never return.

These vendors suffer from the same problem that all of those sponsor-driven internet access sites experience; the kind that immediately take the user to the sponsor’s screen upon logging in. When I head to the internet, I’m likely headed there for a purpose (check email, sports, maps, etc…). When the sponsor screen pops up, I don’t even see it. I’m headed toward my destination and that sponsor screen isn’t even a speed bump along the way. When I turn on my laptop, I’ have a purpose and that’s where I’m going.

Same thing with Lodgenet and the other hotel service guides that feed through the television. When I turn on the TV in the hotel room, even if I don’t know the specific channel to watch, I know I’m looking for entertainment and channels that sell me stuff are rarely entertaining.

The best chance I saw at HITEC was a couple of companies that provide scrolling television programming guides. They have timed the guides to take a while and the most appealing stations are always at the end of the list. While the guide scrolls, advertisements are shown. Because they provide useful information, they have the highest likelihood of attracting eyeballs for a few minutes each day. (For an entertaining conversation, call HotelGuide and ask them how they feel about the fact that EGSTV guys broke off and formed a competing service. Three words: “Bitter Cat Fights.”)

In the next couple of posts, I’ll give my thoughts on the proper place for providing information and putting advertising in front of hotel guests.

In the meantime, happy traveling.

Three days at the show, miles of isles and great people. Plus tons of shwag for the kids. Not to mention the atmosphere of Austin, Texas and barbeque-o-plenty…

Where was I?

Impressions:

1. A $278 billion industry is bound to spawn a few parasitic companies and the hotel industry certainly has its share. Good to see people getting so excited about door locks,

2. Room of 2010 – Interesting ideas. Sign me up for a Wii in every room. I’ll play baseball against anyone in the hotel that wants to take a beating. The mattress-less bed looked intimidating, but must be comfortable. Else, why would they let it be part of the exhibit? And, Sony had a very small 11-inch organic LCD widescreen monitor that was absolutely gorgeous! If you have a HDLCD TV now, you’re going to chuck it out the window when you see the OLCD. (Yet another reason why I still have a TV from 1993. I’ll buy a new TV when the promise to stop inventing cool stuff.

3. The Brand is the Dream – Most of the small to mid-sized vendors in the room are living for that day when a brand says, “You’re now standard install.” We’re part of that group. The real magic is making sure that you have business to keep the doors open in the meantime. Hope is not a strategy. Selling lots of product is.

4. How much can you really fit in a television? – We saw at least a dozen vendors that want to pipe information/content/communications/guestspeak/marketing/stuff through the television. Understandable. The TV is everywhere. All you need is a signal and you have access to the guest.

Of course, I’m glossing over so many hundreds of stories and people we met. There were a couple of competitive vendors in the crowd that visited with us for quite a while. I’ll let their identities remain a mystery, but you’ll know what I’m talking about if you were there.

And, the booth babe from Image Technology Systems was memorable. Holy Cow! What was that red thing she was wearing on Tuesday? I’m not sure what Image Technology does, but they will forever hold a special place in my heart. (I hope my wife isn’t reading this blog entry.)

Chris and I attended the Hitec trade show in Austin, TX last week.  It was a very interesting experience after being severely spammed for the previous two weeks by seemingly every technology vendor in the hospitality space.  It seems that technology is trying to creep into every space in the hotel.  Whether it be using your cell phone as your room key, video concierges in the lobby, new and improved room safes and mini-bars, or super control centers for the entire hotel room there are companies trying to automate every part of the hotel experience.  And that doesn’t even begin to cover the number of backend operating, management and tracking systems we say at the show.

Attending this show one might be convinced that the modern day hotel was the bastion of technological advancement.  However, reality is quite the opposite.  For instance, the hotel we stayed at in Austin offered free internet and even had a digital city guide in the lobby, but that was about the extent of the technology offered.  The room key was still a plastic card advertising Pizza Hut, the room safe was still fairly basic and that’s more than I can say about the TV service.  All in all hotels are still slow in adopting new technologies.  I think that is changing, but not as rapidly as I or my colleagues in the industry would like to see.   Our role is going to have to be identifying “stepping stone” technologies that allow hotels to advance technologically without biting off more than they are ready for.

A good example of these technologies was services delivered through the television.  Ten years ago this was an innovative approach to guest services.  The problem now is that guests are more technologically advanced than their hotel rooms and TV is not where it’s at.  With services such as Netflix downloadable movies on demand guests no longer need the TV in their room for entertainment.  Not to mention the usage rates are very low.  It is now time for the next step in the evolution of guest services technology.  This may seem self aggrandizing, but that is exactly the mission of GuestSpan.  We are offering a solution that is more on par with what guests are used to and something that hotels can implement and embrace without having culture shock.

It is going to be interesting to see the evolution of hospitality technology.  GuestSpan will be there as a part of it for sure.

Next week, the HITEC (Hospitality Industry Technology Exposition and Conference) kicks off in Austin.

We’ll be there.

This will be our first time.

It must be a huge show because hundreds of vendors have spammed me with email and snail mail to get me to visit their booths.  With all the hoopla, cocktail party invites, marketing and such, this is going to be big.

But, one mail piece really made me think about marketing to the hotel world. 

On the postcard, the following claims were made:

-Add incremental revenue streams
-Enhance your guests’ experience
-Increase operating efficiency and productivity
-Help reduce overall operating costs

These are almost the very same things that we have said about our product since we solidified the concept.  Since these are the driving value propositions in the hotel industry, it’s not uncommon to hear them from multiple sources.

But, the part of this that troubles me is the fact that these statements were made by Brother, a company that sells label makers, printers and fax machines.

Holy Crap!

If every peanut butter maker, horseshoe-er, mail carrier and window washer is using these value propositions to try to sell to hotels, I’m going to guess that most hotel execs are almost tone deaf or snow blind to those words.  In fact, when a vendor says that they provide incremental revenue streams, the hotel suits must go running for the hills.

I mean, they want incremental revenue, but if one more manufacturer or maid carts tells them that they will add incremental revenue streams, they’re going to start splattering on the pavement below their lovely corner office windows.

Just for the record, Brother makes fine products.  I haven’t ever owned one, but they sell a bunch and some people like them.

But, to market to this group of hotel decision-makers, we’re going to have to show value rather than just talk about it.  That’s the only way were going to make a splash.

And, thank goodness for the great people that have allowed us to connect, drive us to the right guys and advised us along the way. 

That will end up being much more important than all of the hyperbole on trade show postcards.

(Ask us about our research about the connection between fax machines and enhancing guest experience.  In brief, there isn’t one…)

Yesterday Chris and I attended a coaching session put on by FundingUniverse in preparation for their speed pitching event on June 4, which we will be participating in. Kent Thomas, CEO of CFO Solutions, made a presentation on how to handle deal specifics and offered his 10 Tips for Raising Capital. I thought they were good so I am posting them here for your enjoyment.

1. Use Your Own Money First-even though the prevailing thought for some time has been to build a company on other people’s money it is a sign of confidence and preparation to investors that the entrepreneur has some skin in the game as well.

2. Friends & Family- If mom won’t invest in you why should others? Now, there may be many reasons that friends and family don’t invest ranging from their financial situation to holding dilution to a minimum, they should at least be approached.

3. Act Like It’s Your Own Money- Kent said that during the dot come bubble entrepreneurs were spending large sums of money irresponsibly. That is the reason the bubble burst. Being able to give investors a detailed report of where any money to date has been spent will tell them if you are treating the money as your own.

4. Market Research- This is a big, big problem for entrepreneurs. Know your market. There are many free or cheap options out there to allow companies to conduct some basic market research that will give them valuable insights into their market. For instance, Chris and I have launched a survey to travelers asking for their feedback on our idea and have spoken to and continue to speak to hoteliers to get their feedback.

5. Cash Flow Projections- If someone were to invest, how long would their money last? Knowing your monthly burn rate and how long money will take you is key. If you are wrong or worse, don’t know, then it is likely these same investors are going to have to put more money in or help you raise more much sooner than either of you expected.

6. Valuaton-Get Real- Something Kent said repeatedly was “Put yourself on the other side of the table.” Investors are looking for a 10x return on their money. To achieve that they are going to need to end up with a substantial enough equity stake so that even if they are diluted by future rounds of funding they still hold enough to realize that return. He said the sweet spot for most investors is between 20% and 40%.

7. You’re Responsible- In running a company entrepreneurs can delegate a great many things. But one thing they cannot delegate is fundraising. Investors want to see a dedicated, passionate entrepreneur behind their investment.

8. Smart Money- Look for money that comes with more than just dollars. Investors that bring expertise or insight into your particular industry are the best ones. Also, just as investors will be checking you out, make sure you check them out before accepting anything.

9. Accounting Records- Know your books. It is very frightening to investors when entrepreneurs are in the dark when it comes to accounting. There are smart people and services out there to help out those who aren’t financial geniuses, but don’t neglect this part of your business.

10. What’s the Offer/Instrument?- Come to investors with a deal in mind. They aren’t going to negotiate against themselves so don’t ask them for a number, they will just move on. Know what amount of equity you are selling for their money or what type of instrument you are looking to use to raise the funds.

Chad and I spent two days in Las Vegas at the Hotel Design Expo (May 14-16, 2008).  The convention was housed in the Sands Conference Center and must have included nearly 10,000 exhibiting vendors.  Two full floors were devoted to displaying every conceivable item that could possibly be stuffed into a hotel room to improve its design and functionality.

This was our first trip to this conference.  I couldn’t believe how many companies manufacture intelligence doorknobs for commercial purposes.  Self-locking, personnel-tracking, microbe killing doorknobs were everywhere.  (Did you know that they make a doorknob that kills about all of the bacteria and viruses that come off of your hand within 20 seconds?  The coating is supposed to last for 20+ years!  Jim Pinter or TownSteel was happy to show us how it all worked.  With 6 kids, I’m going to install those doorknobs through my whole house.)

There was very little in the way of electronics at the show.  A couple of vendors stood out, and I wish I had written their names down to give individual shoutouts.  A few phone manufacturers were there.  The coolest place we stopped was a virtual reality company that is doing amazing animation to preview cityscapes, design concepts and architectural renderings.  The quality of their animations was top notch.  (I can’t think of any use of their application in my life, but I’m going to work on it.  I want my own virtual reality studio)

Chris’ HD Expo Conference Grades:

We met great people, but unless we’re a vendor there next year, I’m not sure if we’ll get excited enough to see a million shower heads, fabric textures and pillow displays again.

I don’t talk to librarians anymore.  Can’t think of the last time I spoke to someone at the bank.  Airline counters are a thing of the past.  If I have 10 items or less at the grocery store, I don’t talk to a cashier (unless I have produce. Produce is complicated..).  By the time I arrive at the movies, I go right to the concession stand and into the theater.  When was the last time I went inside a convenience store to pay for gas?  I’d never have to go into the store if they would simply put a drink dispenser next to the gas pump.

Every one of these areas in my life (and more) provide a self-service option.  I am willing to take them up on their offer more often than not (except of course, in the case of produce.  I can’t figure out how to ring up the right lettuce…)

And, judging by the number of growing terminals and the people at those terminals, I’m not alone.  User interfaces are simple.  The technology works.  I can get what I want.

And, I’m not anti-people.  I tend to like people.  My wife is a people.  My kids are people (in varying degrees).  I’m mostly people myself.

But, I’ll tell you, there are some instances when I’m happier with my self-service experience than others.  The library is fantastic.  Easy.  Quick.  Scan a barcode on the outer cover of the book and be off.  The grocery store, Wal-Mart and Home Depot are not my favorite.  The self-checkout process is complex.  Lots of payment options.  “Unexpected Objects in Bagging Area?”  ARGH!

Last week, I was speaking with Ram Thakur, PhD who is on top of self-service.  He said that simplicity is the key.  The more complex the process, the higher level of dissatisfaction.  Makes sense to me. 

But, self-service isn’t going away.  It is getting smarter and will pop up in almost every area of our life.  They don’t make mistakes.  They are easy to use.  They are less expensive and more consistent than humans and they don’t mind working at all hours without a break.

(Note: GuestSpan is very concerned with this topic as we intend to put self-service into every hotel room in the world.  Hotel guests will get everything they want (food, product, information, service) more quickly than they have every experienced.  Watch for us in your next hotel stay.)

According to an article in Hotel Business Magazine, Kimpton Hotels is making a big bet in what many would consider a bad market. Kimpton has raised $800 Million in funding for new projects to be invested in the next three years. The article states:

While much of the hotel investment community awaits further clarity on where true asset values currently are before making another move, Kimpton…has made a bold statement of faith in the market, the boutique sector, and more significantly, its own brand.

Indeed Kimpton’s strategy is bold. I think it also speaks to the real state of the market. Companies that are nimble such as Kimpton can benefit from the lowered asset values and expand their hotel portfolios. Kimpton CEO Michael Depatie is quoted in the article as saying,

“while there isn’t a lot of current activity, we expect that will change in the coming months. We’re very bullish.”

He continues,

“So in 2009 and 2010 there will be a moderation of new supply and if the economy comes back at that same3 time, that will bode well for asset values.”

It is as simple as buy low sell high. Kimpton is poised to take advantage of a lagging market and, what’s more important, they have the confidence in the resurgence of the market to do so. Further elaborating on how the company is approaching this, Joseph Long, Executive VP of Acquisition said,

“No one knows where the market is on the downward scale and whether it’s down 20%, 30% or 50%. And there is a dearth of deals getting done because the values are not being validated due to the lack of financing. But at some point that will change and it may be in about six months.”

I like Kimpton’s confidence in both their brand and the status of the market. In an era of negative media about the economic outlook it is good to see a company with a lot at stake taking risks to further their brand and their market position.