Hotel Brands’ Struggle to Understand Airbnb: The IHG Edition

When I’m on Twitter, I’m usually catching up on some of my favorite comedians (mostly comediennes) and posting my own material. But every now and then, some non-comedic items capture my attention. This live tweet caught my eye on September 30.

Sean McCracken* with Hotel News Now posted this update from IHG’s annual conference.

*(Let’s get our “release the kraken” jokes out of the way. I bet he hears them a lot.)

IHG CEO QUOTE

Wow. The “Solomons” referred to in the above tweet is not some mid-level manager at IHG trying to shake up the crowds. He is the Big Kahuna/CEO of Intercontinental Hotels Group! At first I could not believe that the CEO of one of the biggest hotel brands in the world would go on stage at their annual conference and say something this ridiculous and detached from reality. Then I realized that he was engaging in the long-standing tradition of hotel brands building up a boogeyman to rally against. I will elaborate on this later.

Solomons’ comment also sums up the very reason why hotel brands today are struggling with the reality of the rapidly changing travel landscape. If this is the belief held by those on top, there is very little hope that the brands will manage to stay relevant in the near future.

The Struggle Is Real

IHG CEO QuoteInterestingly, IHG is one of the brands I often refer to when speaking about Airbnb and its impact on travel. The ex-CMO of IHG shocked me at a conference three years ago when he did not know what Airbnb was. They now have a new team in place, but the struggle continues.

The fact that the CEO of a company listed on the New York Stock Exchange (aka, Wall Street; aka, the folks who brought us “Greed is Good” is calling Airbnb (unlisted) the product of “Silicon valley greed” is painfully ironic.

The real kicker here is that Richard Solomons’ bio comes straight out of the world of investment banking. To quote his Wikipedia page:

“Solomons worked in investment banking with Hill Samuel Bank for seven years, including two years in New York. He worked for seven years in investment banking, based in London and New York. Solomons qualified as a chartered accountant with KPMG in 1985.”

Meanwhile, according to Wikipedia, the CEO of Airbnb, Brian Chesky, has a BFA in industrial design from the Rhode Island School of Design. And he was broke when he started Airbnb to make ends meet.

This is usually my “drop the mike and walk away” moment. But since this is not a stage, I will keep writing.

Hey Guys… How’s Kimpton Doing?

Brands have been notorious for creating a boogeyman when facing change. The past few years have been all about Online Travel Agents stealing their share. Now they have a new entity to blame for their issues: Airbnb.

IHG’s recent acquisition of Kimpton, which I wrote about here, is playing very much in line with my prediction. The brand that took years to build is succumbing to the giant shadow its new owner is casting. Case in point, the loss of key landmark Kimpton assets in San Francisco:

[table id=6 /]

Kimpton’s single largest market was San Francisco, and they have now lost more than 75% of their presence. This is a much bigger threat to Kimpton than Airbnb and OTA’s put together.

So many of these iconic assets are getting renamed, losing the brand recognition that Kimpton employees built over so many years. I really hope Keane played “How to Save a Life Brand” at the IHG show.

Conclusion

Hotel brand annual shows are squarely focused on hyping the brand, and that is understandable. What is not acceptable is to misinform your franchisees and owners about where the business of hospitality is heading. They are hungry for education and knowledge, not just their Pancake Selfies at the “Stack Station.” Google it.

The End of Hotel Rate Parity: Much Ado About Nothing

Over the past few months, there has been a lot of talk about the imminent “end of hotel rate parity” and what it means for the hotel industry. Rulings in favor of ending rate parity clauses have been handed down by regulatory bodies in France, UK, Sweden and Italy. (Rate parity is the practice of maintaining consistent rates for the same product in all online distribution channels—Expedia, Priceline, etc.—regardless of what commission the OTA makes.)

The reactions to a scenario in which rate parity will not be required or enforced have ranged from “OMG! This is the greatest thing ever!” to “This will destroy the OTA’s!” to the proverbial “Meh.” Some industry veterans have declared it to be a “revolution” or – even worse – have employed one of my least favorite phrases in the English language – “game changer.”

I recommend putting jubilation on hold if you’re anticipating the quick death of OTA’s and the beginning of a new era of tremendous profitability for hotels. Some may believe that that the duopoly of Expedia Inc. and Priceline Inc. were built on the simple and magical hotel rate parity clause, and that they will perish without it. In response, I’d like to offer a gentle reminder:

The market cap of these companies as I wrote this article today:

  • Expedia Inc. – $15.87 billion
  • Priceline Inc. – $66.49 billion

(Source: Yahoo Finance)

The Myth of Hotel Rate Parity as an Obstacle to Profitability

Rate parity agreements put in place by OTA’s were never fully implemented by independent hotels. The complex distribution structure of an independent hotel operating in the real world made it impossible. Brand hotels have probably done a better job at implementing rate parity across their thousands of hotels. Even then, rate parity is just not that easy to implement and control.

Smart asset owners and managers devoted very little time to this clause in their OTA contract. Instead they focused on getting the most out of the OTA’s and building their direct revenue. On the opposite end of the spectrum were people who ran around in circles worrying about maintaining parity like it was life and death. Just recently I had to console a very concerned Director of Sales who would freak out every time he looked at the rate plan, yelling “What about rate parity?”

Rate parity is, and never will be, a “gun to the head” for hotel revenue managers or owners. Rate parity has not prevented independent assets from building direct revenue, nor does its demise automatically supercharge their revenue. I’ve worked on asset turnarounds totaling over $1.5 billion over the last decade; rate parity has never once been a factor that kept us from reaching our revenue goal.

It’s actually pretty simple. Hotel and lodging business managers who have not 100% outsourced their reading, learning and critical thinking are profitable today, and will stay profitable when the rate parity clauses go away. Rate parity, whether it’s in place or not, doesn’t override the many other important decisions that drive profit.

This Changes Everything… Not.

Some people are so excited about this development, they tout it like it’s the beginning of a phenomenal new age in travel and distribution. This is not the launch of the iPod, iPhone or i iPad, and we are not at the Apple developer conference.

Rate parity was not holding you back from taking control of your distribution and profitability. A new channel manager software is born every week. You always had the power to set your distribution priorities, and you will still have that power in the future.

The fact remains that if you still have not convinced your guests that your own website is the best place to book, it’s a failure of your online marketing and distribution strategy. Giving so much power to an OTA, and a clause in their contracts, is the very reason a lot of hotels are struggling today to build direct revenue. That, and the fact that their marketing department does not really do any work but totally excels at “vendor management.”

Controlling and Contributing to the Travel Cycle

The OTA duopoly of Expedia and Priceline has been actively focusing on owning the travel cycle. From planting an idea (inception), to research (content), rate search (metasearch), transportation, things to do, and loyalty points and rewards.

To think of rate parity as the pillar on which the OTA’s have built their revenue and profitability is flawed. The key to their success is their unflagging commitment to investing online, which is where people are researching, dreaming and shopping travel. In complete contrast, a Hotel Brand’s # 1 prime objective is to build the “brand” to collect brand licensing fees. That’s the revenue that impacts their share price.

Controlling and contributing to the travel cycle has never been part of the brand hotel’s master plan. Hiring expensive ad agencies to stay current with the latest marketing fad seems to be the modus operandi for most of them. You see, perception rules everything around them. It’s never online revenue or their guests’ ever-expanding needs, you know, like fast and free WiFi.

Smart hospitality asset owners recognize that their guests’ needs are basic and evolving at the same time. They are creating their own brand loyalty by doing more for their guests and ensuring repeat business via engagement.

Looking Beyond Hotel Rate Parity Games

Instead of worrying about parity, extreme channel management tools, and data overload, how about you shift focus to the guest and their travel cycle? Just like the OTA’s. Here are some things that should be happening in your hospitality business right now:

Diversification

The guest and their travel cycle needs to be your focus. Diversify your efforts and instead of just thinking of them when they are ready to book a room, think of them in different stages of their travel from their home to your hotel. As the asset owner/manager even with all the online tools available to them – You can still can solve a lot of issues for your guests and build a relationship with them beyond “Book Now” button. This relationship ensures that they take your word for the Best Rate Guarantee and book direct with you irrespective of where they are researching airfare, activities and transportation.

Using a CRM (Customer Relationship Management) Tool

Every hotel today has some sort of a CRM system, but very few actually use it. Nameless, faceless throwing of room keys at your guests at the front desk has to stop. Reaching out to your guests (establishing a relationship) and then staying in touch (relationship management) has to start.

Robots will not build relationships (unless you are watching Terminator 2: Judgment Day). Not staying in touch and not keeping track of your guests drives them to channels that offer a better travel experience and better support. Hotels that truly connect with their guests, and provide what their guests crave (information, support, service, appreciation) are the ones who will continue to build profitability.

Conclusion

Hotel parity is another red herring preventing you from truly building your hotel’s long-term profitability. Even if hotel rate parity were to disappear overnight, thousands of hotel CRM tools would still be collecting dust. Sales Directors would still be outsourcing strategy and marketing to agencies who service hundreds of clients, including their own competitors. Hotel websites would still lack fresh content, and offer guests a substandard booking experience. Your front desk staff would still not recognize loyal guests, and would still fail to encourage them to spend more at your hotel via special dining or activity promotions. Need I go on?

If you are obsessed with rate, you are bound to neglect a lot of important work that needs to be done. You can quote me when I say, “ If you live by the rate, you die by the rate.”

Your Marketing Focus Must Shift To Hotel Value Over Price

It’s amazing how much time and energy gets poured into deciding the price of a hotel room. There are STR reports, RMS Reports, and booking engine reports to go along with the hundreds of tools that are solely focused on how much you are charging for your room. There are stacks of reports on top of other reports all showing pricing data – past, present and future. You want to know anything to do with pricing? There’s a report for that.

Now, where is the value report? You see, selecting your competition based on the size of your bed and the bathroom sink is an idea that has passed it’s prime.

Boutique hotels (a term that needs to be retired) took a lot of time defining their hotels and restaurants as being truly different and holding certain value that a braded cookie cutter hotel is never going to match up to.

Taking the time to educate your guests can make all the difference in value perception. Better perception = Better Price = Better Profits.

A lot of the traditional boutique hotels under pressure from stakeholders over the years have descended on the price level competition. When your biggest USP is your price, then it’s all that you will be judged on. A room rate becomes your only significant value.

Pricing is an extremely shortsighted play. Anyone looking for long term profitability needs to look at the value that they are providing to their guests.

Here is how you can start to turn your team’s focus on highlighting your value versus going into price wars that hurt long-term profitability:

Don’t Make Up Value- Be Who You Are

Just last week I saw an email from the “corporate” director of sales for a small no name hotel asset in the middle of nowhere wanting his website look like the Four Seasons and Jumeriah Hotels- both super high end luxury products. This happens often when clueless marketing “directors” start to consider the website as an extension of their ego’s. ( Note: It’s a guarantee that  their egos are much larger than their value as employees).  The value of your hotel is not a fantasy that you would like it to be. It’s who you really are. There are independent hotels and there are cookie cutter brand hotels. Every time each one tries to be something it’s not- It always ends badly. Lying about value is actually worse than not showing any value so please keep the marketing types and their ego’s in check. This is a clear reason why you should not call a Holiday Inn Express a “boutique hotel”. Hotel brands are already exhausting every day guests with mundane name/ brand variations of the same product.  Step up and embrace who you are. Value will be best competition differentiator you have that cannot be easily replicated.

Better Value Segmentation

Segment of go home. The key is in understanding that your hotel/lodging product is likely not a good fit for everyone and that’s OK. Before embarking on expensive capital expenditure or shelling marketing dollars on a “branding” agency as yourself if you clearly know who your target audience is?

I am not just talking about who is checking into your hotel today. What about guests checking into your hotel in the next 10-15 years? Who are you targeting? You can never relate to someone unless you narrow down your focus. Pretending to be all things to all the people is where things gets complicated and you start to use price as a flotation device.

Leverage Your Location & Story

Simple test. Get your friends to walk up to your hotel front desk and ask “ Why should I be staying at this hotel” . What you hear back might surprise you. Many times what you hear has never been mentioned on the website or on your value pitch.
What’s you frequency Kenneth? Do you have a story to tell? Does your hotel location ( city, area etc.) has a story? This is what you should be telling your guests online and in person.

What your guests tell Tripadvisor when they check out is a whole another story but in 90% of the cases a good story helps with value perception and reflects in your online reviews. Start training your guests to leave the reviews that you what them to. Do not wait after the fact; you have a first mover advantage that you need to hit. Own and leverage your location. Be the expert the your unfamiliar needs. I know everyone has a smartphone but most humans are still looking for a human touch, cue in Bruce Springsteen.You should also be telling your guests about the history of the company that helps build some confidence in your lodging product.  Why are you in the hospitality business is a good starting point.

Have Confidence In Your Product & Rate

If the only way you can highlight the value of your product is through wavering on price, then you will always be struggling to compete. Anytime a hotel resorts to selling rooms to someone that will advertise them for $7, the value lost is irreplaceable.

When you get your guests to the booking stage and are about to get money in your account, do it with conviction. Matching your price to value is a cycle that needs to start at every page of your website and lead all the way into the booking engine.

Highlighting your property’s features and what you bring to the table. One golden rule here is not speak poorly about the competition. The minute you give any time discussing the competition, you have already lost the sale.

Emphasize Your Human Touch

When talking about the hotel assets it’s possible to show your product to be superior product by mentioning the high thread count sheets, fancy toiletries, fast WiFi and other bells and whistles.

Your competition is always providing some level of a basic product which might be a few levels above and below you. This is hard for your guests to understand and truly differentiate. The example I like to give is of two Starbucks on the opposite end of the street. Everyone has a favorite location and even though the product is same, it’s always the people that make the difference.

People will do business with someone who cares about them. This is where your human workforce comes into play. It’s your greatest differentiating factor and you should use it at every given opportunity.

Conclusion

Running any form of a lodging operation means that you are a) competing globally with people who can outspend and out market you. B ) you business is going to be seasonal. Your guests are willing to pay more for a product if they think it gives them a truly special or significant value—and if you present it to them in just the right way, the revenue if yours to take. Pricing is the short term and will let you win a few battles every now and then. Value on the other hand is always going to be the deciding factor in winning the war.

The Free Website Trap: Lessons From Priceline’s Rebranding of Buuteeq

The Free Website Trap: Lessons From Priceline’s Rebranding of Buuteeq

Last year, Priceline.com made a splash when it acquired Buuteeq, a digital marketing and website “cloud-based system” for independent hotels, for what looks like $98 million.

My detailed analysis of that purchase made a lot of headlines, and also missed a lot of headlines when some of the top hotel news websites did not carry my article. (Buuteeq was a big advertiser for them.)

Last week, Priceline announced that it would no longer let Buuteeq operate as an independent brand, and that they now offer free websites in exchange for a 10% commission on every dollar generated on those sites. Here is my analysis of what this means for the lodging industry.

Goodbye, Buuteeq.

The first thing I observed is how quickly Priceline moved away from letting Buuteeq “continue to operate as an independent business within The Priceline Group.” I was highly skeptical about them being allowed to operate independently when I first wrote about the acquisition in August 2014 (read my conclusion section here). Thousands of independent hotels and B&Bs using the Buuteeq platform were given a “nothing is going to change” story by the founders.

Here is an excerpt from an email that one of the founders of Buuteeq (Brian Saab) sent to a bed and breakfast client:

“We remain an independent brand (one of the prime reasons we considered the merger with Priceline Group) and we continue to run business as usual. That said, I am thrilled to be able to rub shoulders with other brands in the group; we’re already getting great advice on how to improve conversion for hoteliers (who wouldn’t want to get best practices from the likes of Priceline, Kayak, and Booking)!”

How cute! But we all know by now that nobody acquires a small company to make things better for their existing clients. They buy assets to benefit the larger group, which in this case is Priceline Inc. The interests of thousands of small and independent hotels is not the primary objective of Priceline. Their own revenue is their prime objective (as you should expect). Have you seen their amazing stock price lately? And yes, I still use Yahoo Finance.

The hotels who built their entire online presence on the Buuteeq platform – instead of owning their own digital assets – now have even less control over what happens to their own website and marketing. Priceline Inc. will tweak, update and change the new entity as they deem fit.

You must keep in mind that Buuteeq was acquired because it was working. It was built by smart people: former Microsoft executives Forest Key, Adam Brownstein and Brian Saab. They raised the capital, built the platform, and implemented aggresive sales teams that closed thousands of hotels and inns. They even convinced established hotel brands like Choice Hotels to join them. They flourished by playing on one of the lodging industry’s major deficiencies: the fact that people in hospitality do not want to spend time or money on direct marketing/ building a website/ getting a decent shopping cart.

This hands-off, price-shopping hotel culture was the key to their success, even when it’s common knowledge among lodging operators that their website is their single most profitable channel. The same key will unlock BookingSuite’s success. They’re just taking it to the next level. What can I say? It’s as surreal as a Salvador Dali painting.

Hello, BookingSuite.

For quite some time now, I have been seeing the BookingSuite link taking the place of “Hotel Marketing by Buuteeq” on independent websites. How did I know that the Buuteeq brand would be “sunsetted” by Priceline? Because there is so much more money to be made by taking a % of bookings versus peddling “digital marketing platforms” for a flat monthly fee. Where is the fun revenue in that?

You see, if a hotel on the Buuteeq platform decided to spend money directly on Google via PPC (which is their greatest marketing tool!), the hotel itself would profit from PPC success. This of course, is not what Buuteeq/Booking Suite would like to see. They would prefer to cash in on any marketing success you experience.

So, back in August 2014, less than 24 hours after the Priceline takeover, the old Buuteeq pricing chart disappeared. Since nothing can be truly deleted from the internet, here is a retro screenshot showing what Buuteeq was charging:

buuteeq pricing

 

Now let’s estimate what Priceline will make by charging 10% commission on every room booked on your BookingSuite–powered free website:

[table id=5 /]

The chart above clearly shows that even a small inn booking $10,000 in revenue is worth more than the flat-fee “Ultra” client, which only made them $1000 in monthly revenue, and out of which payroll, project management, etc. had to be paid. With the new pricing model, even a hotel booking as little as $5000/month is probably more profitable than offering monthly plans and pricing tiers. Remember, Priceline is not about giving choices to hotels and lodging providers. It’s about giving choices to your guests, and making a ton of cash doing it.

On the other hand, you could make yourself a comparable website that you own for around $1000, or one month’s commission. Even if you splurge on a custom site for 5-10K, you’ll be coming out ahead way before the year is up.

Now with BookingSuite, Priceline is going to do something they are exceptionally good at: make more money for themselves from selling your hotel/inn/bed and breakfast. Not only do they want to make money by selling your rooms on their Booking.com and partner websites for a 20% commission; they also want to make 10% on every room you sell from your own website. Cool trick, eh? They are about to make it rain revenue.

Free Websites? It’s a Trap!

Who can forget that moment in Star Wars: Return of the Jedi when Admiral Gial Ackbar realized what was going on.

“It’s a trap.”

Yes, free websites are a trap indeed. The old adage “there is no such thing as a free lunch” needs to be revisited by anyone in the hospitality business who is considering getting a “free” website. Yes, BookingSuite is a “free” website, but it comes with a very big price. The price is 10% of every single dollar you book on that website.

I am not against paying an OTA (Online Travel Agent) a commission for revenue they deliver to my hotel, when they incurred the marketing cost of bringing that guest to me. I don’t even mind them converting a guest who is hooked on their brand. The thing to consider here is that, when using BookingSuite, you are going to share 10% of every dollar booked on the website, even the revenue that you made because of your own:

  • direct marketing
  • reputation & press
  • referrals
  • word of mouth

Here is a wonderful thought. Instead of paying a flat 10% commission to BookingSuite, spend it here instead:

  1. Spend directly with Google. Buy something as simple and effective as your brand name keyword searches.
  2. Pay a photographer. Photos make or break a website. Better photos = better revenue (update them on all your channels!).
  3. Put more/better content on your website. Convert visitors on your website by giving them better information about your location/destination.
  4. Do some testing. Try out social and meta advertising platforms with minimum budgets and see what works best for you.
  5. Get a print ad. LOL, j/k. Print is dead. Just added this here to make sure you are still reading.

The “We Do Not Have Website & Marketing Budget” Myth

Ok, this one is one of the most irrational arguments against building your own website and brand presence. Even in their Wall Street Journal announcement, Priceline highlighted that:

“BookingSuite is aimed at independent and boutique hotels without the deep pockets.”

This has to stop. Buying a website and investing in direct marketing is not like buying diamonds or an island or a luxury yacht. Not only are websites inexpensive, but as a lodging operator you simply cannot decide to skip direct marketing. As for booking engines, there has never been more choice than today. I think a new booking engine might even get launched by the time you finish reading this article.

Here is what a hotel website will cost you if you would like to get one today:

  1. Download WordPress: $0. Download is free, but you have to know a little tech. Don’t worry, you can do it with a very small amount of online research. (See…no free lunch!)
  2. Get hosting: $10–$15/month. Try: Bluehost, Host Gator.
  3. Pick a design theme: $0–$80. There are many pre-designed templates to choose from if you’re on a budget. Look at Elegant Themes, WooThemes.
  4. Stitch the site together: $600. Add logo, content, photos, etc. You’d be surprised at how much you can do yourself. But if you’d rather not, developers are available for $20–$60/hour. They can make your site in 8-10 hours, at a cost of approx $600.
  5. Start running ads on Google: $500/month. Open a Google Adwords account ($0). Get support to write an ad for your brand name searches, and set a budget that is right for your market ($200–$800/month).

So the question you have to ask yourself is: who is this hotel with deep pockets? In the age of WordPress, can you really not afford your own website? Can’t afford and being lazy are not the same thing.

The article in Wall Street Journal also mentioned that BookingSuite already has 2,800 lodging partners signed up and another 3,600 joining soon. Amazing, to read that so many people are willing to share revenue for the lifetime of their website rather than make a direct investment of their own time and a little bit of money.

Lodging operators who have no money to get a website should probably look for a new line of business. Only, no business today can really survive without the web. And no business can survive without direct revenue and innovation. Just ask music industry executives, or Blackberry (RIP).

Conclusion

Is there hope for hospitality? Yes! Actually it’s a simple 2-step program:

  1. Always own your digital assets.
  2. Be wary of free lunches. There is no free lunch in this life. You will pay for it one way or another.

If you’re ready to take the brave leap into being responsible for your own website and marketing, I’m right here for you. Email me. I’m always ready to talk with you or help you with a project. You just need to take the first step.

Google’s Mobile Update: Keep Calm and Get With the Program

google mobile update for hotels

Every time Google issues an update, hotel marketing agencies have a field day writing articles and trying to give you a reason to panic about your online presence. To provide you with a respite from the hyperbole, I would like to assure you that:

  1. Everything is going to be okay.
  2. This update is actually a great opportunity for you to take your online presence to the next level.

Here are my answers to some of your burning questions about the Google Mobile Update of 2015.

Why is Google doing this update?

Good question. The simple answer is: Google wants to make more money. (Just for reference, this is always the reason Google does anything.)

Google is at the forefront of mobile web. They have seen mobile search surge past desktop usage over the past several years. Their significant investment and success with the Android ecosystem further cements the fact that Google plays to win. In its continued dominance of global search traffic, Google has a clear agenda: to provide its users with the best possible search experience so that they stay loyal to Google. More Google searches means more chances for users to click on Google Ads, which means more AdWords revenue for Google.

With the majority of web traffic shifting to mobile over the past decade, Google needs to ensure that the websites providing the best mobile experience get top placement in their mobile searches. Think of it as Google’s Spring Cleaning for Mobile Search, where they want to “incentivize” you to have a better mobile presence. Instead of wringing your hands, consider that Google is doing you a favor by reminding you to bring your mobile presence up to par. Complying with Google’s guidelines is a win-win; it’s not only good for your business, but also great for their business. Google will not be relinquishing their mobile search dominance anytime soon, so…yes, it’s time to get with the program if you haven’t already.

What will happen during this update?

First things first. This is not an “apocalypse” or an “Armageddon” event, as many hotel and web marketing agencies might have you thinking. By using the word “significant” in their announcement of this update, Google made Christmas come early for hotel marketing agencies and their press release machines. But you don’t need to purchase any special marketing services to comply.

Here is what is happening:

On April 21, Google will be rolling out an update to its algorithm in which mobile-friendly websites will be given preference in rankings. This update is just a reflection of the fact that mobile web is a way of life for humans worldwide, and Google wants to show those humans better search results and more ads.

Likewise, if you have a website, and you want people to find it and use it, you should be providing them with a good mobile experience. Being mobile-friendly is a good common sense practice, like eating more vegetables. (Google is just like your mom, who still reminds you to do it every once in a while, for your own good.) Or, think of those ‘no shirt, no shoes, no service’ signs outside some beach restaurants. This update is Google’s indication that they have standards too, you know, just in case you have been living under a rock for the past decade.

Unlike previous updates that looked at your website/domain as a whole, the Google Mobile Update will look at your website on a page by page basis. A few pages that are not mobile-optimized will not “blacklist” your entire website. Of course, the pages that are mobile-optimized on your website will get preference in rankings.

Is your website mobile-friendly?

The good news is that you do not need a fortune teller, a “site audit,” any sort of advanced digital screening, nor any DNA splicing.

Just test your website here: https://www.google.com/webmasters/tools/mobile-friendly/ 

Think of this as Google’s very own Hogwarts style mobile-Sorting Hat. You will know where you stand in a few seconds. You’re welcome!

Disclaimer: Please know that this test is not perfect. There is no substitute for human testing, and I don’t mean your agency account manager. I mean you need to do it yourself. As I recommend in all my speaking gigs: go to a mobile phone store, and start pulling up your site on different phones and tablets. You might need some device-specific help from a developer for minor issues, but you’ll know if your site works on mobile or not. End disclaimer.

What’s the worst case scenario?

With every Google update, nobody but Google engineers knows exactly what is going to happen. But what’s the worst-case scenario if your website is not mobile-optimized? Google might remove the non-mobile-optimized pages from their mobile search results, or at least push them down a few notches.

If this happens, you will notice a change in your organic traffic. Then you’ll know that it’s time to update your mobile experience. Do that, resubmit it to Google Webmaster Tools, and you will be back in the index next time Google robots crawl your website. Easy like Sunday mornings.

A lot of you have read and reviewed and commented on my article on the SEO Bubble, and how it has already burst. I recommend re-reading that article and focusing on the big picture that lies ahead.

Nobody will be annihilated or lose any limbs/appendages because of a Google algorithmic update. And while you are reading this guess what will happen to your pay per click ads? Nothing! You see, when you pay Google, they are your best friend. Like I ahve said before- Pay Per Click is still a hotels best marketing tool. 

How do you become mobile-compliant?

  1. Do not panic.
  2. Get off your marketing agency’s proprietary CMS system and move your website to WordPress ASAP. (Need more information on that? Read this and this. If you ever needed an incentive to properly own your digital assets, this is it.
  3. Once you get yourself onto a nice responsive WordPress theme, go into Google Webmaster Tools, resubmit your website, and check for any other errors.
  4. Check your analytics data after resubmission observe your website performance changes. The web is always evolving: test, observe, repeat.

Conclusion

I feel really old when I think of the “Mobile Web Marketing” speeches I used to give circa 2006 at hotel marketing events all over the world. All web is mobile web today. Google is just trying to make some stubborn folks join 2015. For those folks, it’s a perfect time to catch up on some long-needed updates. For the rest of us, it’s business as usual.

Keep calm and stay mobile.

 

Let’s Keep It Real: The Truth About Hotel Meta Search

Hotel marketing types love trends. Every day there is the same old story about a new thing that changes everything. It’s always a thing that, if the hotels would only start doing it, or hire an agency to do it, or subscribe to a tool that would do it… the heavens would open and it would rain revenue.

I’m sure everyone remembers (if they are not still living in) the Social Media Monetization Era. Now, the new craze is Hotel Meta Search. Unfortunately, over the past few years, its virtues have been overstated, to say the least. Yes, it’s a channel worth trying. But no, it’s not a magical weapon that will transform your online revenue and put the OTAs out of business. (Magical weapons do exist, but only in online role pay games or Peter Jackson trilogies.)

If you want to get in on hotel meta search, first you need to understand it. Don’t get your information from the vendor who’s trying to sell it to you. Here’s the truth about hotel meta search, and how you should use it. I’ll start by debunking some sales-fueled propaganda.

It’s Not Ground-Breaking Hotel Technology

Connecting your booking engine to Google Hotel Finder or TripAdvisor is not, in any way, shape or form, “ground-breaking technology.” OTAs have been doing this for years, and making plenty of money. The new development is this: Some hotel marketing agencies have developed an interface between advertising platforms (Google Hotel Finder, TripAdvisor, etc.) and a hotel’s IBE/CRS (Internet Booking Engine/Central Reservation System); and now they want a nice return on their investment. By making meta search sound like an interstellar technological breakthrough, they hope to get hotels to sign up en masse and pay them a monthly fee.

Remember, Google’s cost per click (CPC) based advertising − AdWords − has been around since the year 2000! Hotel meta search is just another way for providers to collect advertising revenue. Simple.

It Will Not Destroy Online Travel Agents (OTAs)

The agencies who are trying to sell you on hotel meta search generally focus on one of these three themes, each of which is backed by lengthy articles:

  1. Meta search is “shifting share from OTAs.”
  2. Meta search is “leveling the playing field for hotels.”
  3. Meta search is “going to destroy OTAs.”

Reality Check: My long-time friend, partner, and online travel marketing superstar said it best:

“The only thing that will ever destroy an OTA is another OTA.” − Ronnie Soud

Take a minute and let it set in. There you go…easy now. Let’s move on to some facts about hotel meta search and OTAs:

  1. Some of the biggest hotel meta search engines are currently or previously owned by an OTA. TripAdvisor used to be owned by Expedia; Trivago is now owned by Expedia; Kayak is now owned by Priceline. The CPC or CPA revenue odds are ever in their favor.
  2. Hotel meta search is targeting a specific stage of the travel funnel; it does not control the entire travel purchase cycle. OTAs are doing much more than meta search. They are doing a brilliant job of targeting every phase of the cycle. From destination research to final purchase, they cover all the bases.
  3. At the end of the day, it’s still battle of the clicks. When you are running a Google Hotel Price Ad, so are the OTAs. And as always, they are packing some serious firepower (ie, money). Hotel search engine marketing history (circa 2000-2010) clearly shows us how well OTAs can work those click-based advertising platforms.

I’m not saying that hotels have no chance, and should just give up. It’s ok to get in the game. This is a new channel in which to buy advertising, and you should try it. But keep it real: No hotel marketing agency is going to be “defeating” the OTA’s with their magical MetaSearch Gateway… ever.

It’s Not a Return-on-Investment Slot Machine

I have previously written about the disasters of ROI-based marketing. Hotel meta search marks the return of hyper-inflated (and to a real marketing professional, sickening) 800% to 2,500% ROI promises. All you have to do is get a monthly “middleware” connection, allocate a small budget, and then revenue will be pouring in. Yes, hotels marketing agencies are now marketing meta search the same way they did search engine marketing. This kind of hype gives rise to things like the Hotel SEO Bubble.

It’s really dangerous to fall for dazzlingly high ROI gimmicks. Meta search is not a loose slot machine. Exaggerated ROI numbers should always be a red flag and not an enticement. In fact, for every new marketing buzz, I have four words: law of diminishing returns.

As for the Encyclopedia Britannica link above, yes I am that old.

It Should Be Part of Your Bigger Revenue Picture

Make it a point to advertise directly with the hotel meta search engines whenever possible. Avoid retainer-style agency services. And, as a general principle, avoid automated bid management software, just as smart advertisers do with good old search engine marketing.

You need to focus on the bigger revenue picture and make sure your hotel meta search investment is supported by the following essential activities:

  1. Create Content: Update and experiment with your website and booking engine content.
  2. Take New Photos: When was the last time you did a property photo shoot?
  3. Revisit Pay Per Click: Tighten up your pay per click strategy. Are you optimized/spending enough?
  4. Do a Bubble Check: Check to ensure that you are not caught up in the frenzy. Assess how meta search is performing, and put your money where it really matters.
  5. Fix Your Booking Engine: Focus on sharpening your booking engine conversions. All your hotel meta click traffic will go there to convert. If visitors cannot book a room efficiently, at the right rate, then what is the point of all this?

Conclusion

The hotel meta search engines are doing what they do best: helping guests with price shopping and selling click-based ads. They will not make the full value proposition to your guests. You have do that for yourself . So, what are you doing to provide real value to the travel shopper, and ultimately to your guest?

Hotel marketing tools are useful, but they are never going to replace innovation at your hotel. The creation of value should rule everything you do − not only in your marketing efforts, but in your hiring decisions, pricing strategies, front desk policies, etc, etc. Embrace hotel meta search as one more tool you can use to reach potential guests. But then, make sure you are giving them something truly valuable: not just a good price, but the best experience they can get for that price.

 

Expedia Acquisitions Signal Tougher Times Ahead for Hotels

Expedia, Travelocity and Orbitz walk into a bar. 

“We do not serve second and third rate Online Travel Agents here,” says the bartender.

“Well, they are now with me,” answers Expedia, “and the drinks are on me!”

The room erupts with joy. Drinks are flowing.

When Expedia bought out Orbitz within a few weeks of gobbling up Travelocity, it was great news for a lot of stakeholders. But it’s probably not so great for the hotel industry, which relies heavily on online travel agents (OTA’s) for their revenue and profits. Read on before you raise your glass.

First, A Trip Down Memory Lane

One of Expedia’s greatest assets was its first batch of market managers and directors. While Travelocity, Priceline (before booking.com) and Orbitz fumbled, Expedia built strong relationships with hotels and hotel personnel. Aggressive but likable market managers went out in person and made one exclusive deal at a time, pushing its competitors onto the sidelines.

Fast forward to 2015: Expedia acquires the remaining (and still flailing) OTA’s. Meanwhile, Priceline acquires Booking.com, a miracle move that puts Priceline in its own league of awesomeness. It’s shaping up to be a showdown of epic proportions.

Why This Is Bad News for Hotels and Travelers

Travelers, hotel brands and hotel operators all have good reason to fear this sort of consolidation in the OTA market. Let me explain why.

Higher Costs for Hotels

Orbitz and Travelocity lost out to leaders Expedia and Priceline a while back. Still, they had their market share and their contracts in place with hotel suppliers. With this latest consolidation, the option of selling your rooms on a different channel is gone. Your new “Expe-Orbit-Ocity” contract now will contain much higher margins for hotels because there’s nowhere else for hotels to go.

Now, why do hotel brands and operators need Expedia? I’ll say it one more time. Because they do not dominate the search engines, nor do they have a particularly good grasp on their own marketing, direct revenue and ecommerce. Just remember… if you don’t like Expedia, now you can also forget about Travelocity, Orbitz, Wotif and Trivago (all now owned by Expedia).

Airlines, on the other hand, do not have much to fear; they just walk out on the OTA’s like clockwork every year and then get back on board when the margins are corrected.

Industrial Style Customer Service

Supersizing things is generally not a healthy choice. This is especially true when it comes to larger enterprises and customer support. Try calling the ultra-consolidated United Airlines, American Airlines, Comcast, Vonage, UPS, or Network Solutions when you need assistance (as I’m sure you all have). All of these companies have grown through acquisitions, and every step has been a nightmare for their customers. This is yet another reason why Expedia’s shopping spree does not translate into anything good for the hotels that will now have to deal with a behemoth team.

Higher Prices for Travelers

Let’s not forget about the travelers. We all learned in Econ 101 that less competition breeds higher prices. Anyone checking the airfares since the Continental-United and American–US Airways mergers knows what I am talking about.

So what happens the next time you need a hotel room? Sure, go to Booking.com ( rooms only) or Priceline ( Room + Air) and check the rates or  go to Expe-Orbit-Ocity that’s the choice. Even with the astronomical growth of Airbnb, you still might require an airplane to get to your destination. You see? Owning the travel cycle is the name of the game.

Of course, several industry experts are not convinced about price increases for the end customer because travel is such a big market. It may take a longer time for these acquisitions to impact hotels than airlines, but the rise is coming.

“Coke vs Pepsi” for the Hotel Industry

First things first: Priceline’s acquisition of Booking.com under the leadership of Jeffrey Boyd still stands as the greatest acquisition of all time. It should be required reading for all business and hotel schools worldwide. Taking Priceline from a loss of $19 million in 2002 to a profit of $1.1 billion in 2011 is legendary.

Expedia’s acquisition strategy clearly reflects its need to stake out a strong market position in relation to a formidable adversary that started in Europe and is now giving them a run for their money in the US and Asia. It’s disappointing to see Expedia mismanaging its Air Asia partnership in the Asia Pacific market. Having people in the US and Europe manage Asia Pacific is a pitfall that a lot of US-based companies fall into. (APac expansion by a non-Asian company or hotel group is something that deserves its own article.)

A common theme for the two remaining OTA’s is their astronomical spending on online marketing. All this while, hotels (independent and brands) continue to bring a knife to an thermonuclear war. Even if you don’t want to admit it, you know that signing up for a $99- $599/month agency solution is not going to help you reach your full online revenue potential. Neither is hiring an agency with hundreds or thousands of clients.

According to CNBC, Expedia’s marketing costs (direct selling, Google Adwords, display, etc)  jumped 32% in 2014 to $2.26 billion. Priceline hasn’t filed its 2014 annual report yet, but in 2013 the company spent $1.8 billion on Internet marketing. This was a 41% increase from the prior year! Mark Mahaney, an analyst at RBC Capital Markets, estimates 90% of that went to Google. (To put that in perspective, I have worked with major hotel portfolios who balk at a yearly increase of $250/month in AdWords budget.)

For now, Expedia is like the Pepsi to Priceline’s Coke. It’s putting all its US-based failed adversaries out of their misery and playing desperate catch-up to mighty Priceline. As these giants fight it out, brand and independent hotels are just waiting to see what happens. They never took charge of building their own direct revenue and distribution, so they are at the mercy of whoever wins. Their marketing departments have fiddled with buzzwords like “millennial traveler,” shared “social media success” articles circulated by the hotel news media, and cycled through one internet agency after another in a race to pay less and less. As those activities have not done much to build their market share or revenue, hotels now have very limited choices.

So, would you like Coke or Pepsi to be your distributor? And, as in restaurants across the US, the answer is going to be “NO, we don’t serve both.”

Conclusion

In December of 2003, I visited the Dallas HQ of Hotels.com. The market management team had a funny cartoon pinned on their desks of a menacing looking Hotels.com valet using the Expedia.com suitcase to whack the Travelocity Gnome (which was lying sideways on the floor). I look back and realize I was getting a glimpse into the future.

I’ve been saying this for a while, but here I go one more time. It’s going to keep getting harder for hotels to make a profit unless they take control of their online distribution and dive into some real innovation. Instead of trend spotting, agency hiring and firing, and other hi-jinx the focus needs to be on owning and building your own digital assets and direct revenue.

 

 

Marriott’s War on Wi-Fi: Hotels Need to Stop Fighting the Future

Marriott's War on Wi-Fi

Big hotel brands have seen unprecedented growth over the past decade. Even when the global financial engines slowed down, they grew exponentially in global markets (ie, Asia, Middle East, Latin America). But unfortunately, they have forgotten what every Stan Lee fan already knows: with great power comes great responsibility. One of the leaders of the pack – Marriott – has decided to appropriate one of the most important aspects of modern human existence: Wi-Fi.

Let’s start with why Wi-Fi is such an integral part of guest experience in a hotel.

Now, here are your Captain Obvious facts for the day:

  1. Wi-Fi’s impact on hotel bookings: 73% (Yes, it’s beating your location.)
  2. Guests will not come back if they’ve have a bad Wi-Fi experience.
  3. Guests don’t only want Wi-Fi, but they also want it fast. Yes, they, like Tom Cruise in Top Gun, have a need for speed.
  4. Your positive reviews, which have a massive impact on your direct revenue, are directly proportional to the speed of your hotel’s Wi-Fi network.

So that’s why you have to make sure your Wi-Fi is up to your guests’ standards. But what if it’s not, or they just want to use their own? Well, Marriott has a big problem with that.

What Marriott Did

Marriott wants its conference guests to use only their proprietary Wi-Fi network when they are on property. Sounds pretty ridiculous, right? It gets better. At the end of 2014, Marriott Hotels was fined $600,000 dollars by the Federal Communications Commission (FCC) for blocking Wi-Fi signals at one of its hotels. Basically they were preventing guests from using their own Wi-Fi enabled devices, instead forcing them to use the expensive and unreliable “official” Wi-Fi network installed at their convention center.

Anyone who has ever attended a conference knows how annoying and unreliable open hotel convention center Wi-Fi networks are. That’s why anyone in the Internet trade (myself included) carries a broadband Wi-Fi device for two very specific reasons:

  1. Speed and reliability
  2. Security

Can you imagine giving a product demo or presentation on a hotel’s network? *Shudder* So, how much negative press did this get them? Plenty! The story was covered by the Economist. And CNN. Even Huffington Post took time off from covering celebrity wardrobe malfunctions to write about it. Here is the FCC’s official take on the investigation.

How They Did It

One word: jammers. Not to be confused with the little known band from Sioux City, “The Jammers.” Wi-Fi jammers are illegal devices that can be bought cheaply online and then used to block Wi-Fi signal. Here is the full definition of what the FCC considers a jammer. And here’s a quote from FCC’s head of enforcement, Travis LeBlanc: “It is unacceptable for any hotel to intentionally disable personal hotspots while also charging customers and small businesses high fees to use the hotel’s own Wi-Fi network. This practice puts customers in the untenable position of either paying twice for the same service or forgoing Internet access altogether.”

Sore Loser?

So, you’d think Marriott would take this as a (big, flashing) sign of the times; maybe they could work on improving their Wi-Fi policies, and maybe their Wi-Fi service too? No, that would be too easy, and also the right thing to do (two things which rarely go hand in hand). Instead they recruited the American Hotel & Lodging Association (AH&LA) and have petitioned the FCC asking for a declaratory ruling making Wi-Fi jamming legal. Is this real? Yes! You better believe it. Actually, don’t take my word for it…you can just read the official FCC filing.

Their official reason for doing this is even more ridiculous. Marriott argues that its hotels should be able to block guest Wi-Fi devices in the meeting spaces because their network provides:

  1. Increased reliability (LOL*)
  2. Better “cybersecurity” (LOL x2**)

*Personal Mi-Fi device can kick any convention center Wi-Fi’s behind.

**Cybersecuity is an illusion. If someone really wants something you have stored online, they can get to it no matter how hard you try to prevent it. The world is full of teenagers who hack the Department of Defense because they are bored.

Here is a quote from Marriott: “The question at hand is what measures a network operator can take to detect and contain rogue and imposter Wi-Fi hotspots used in our meeting and conference spaces that pose a security threat.” They are basically planning to use “legalized jammers” only in their meeting spaces…but for our own protection, of course. How thoughtful.

Conclusion

There is no way this is going to end well for Marriott, or any other big hotel brands that want to jump on the “security and reliability” bandwagon. Marriott, here’s the way out:

Step 1. Drop it like it’s hot.
Withdraw your FCC filing, issue a simple apology, and then issue guidelines on securing Wi-Fi connections in your meeting spaces.

Step 2. Give your guests free Wi-Fi.
Think bigger than “ancillary revenue.” Offer free and fast Wi-Fi to everyone, and win hearts and minds.

It’s possible that Marriott will ignore my advice and continue on their current path. But this time they are not going up against small individual owners or investment funds they can crush with their legal teams. This time they’re battling Google and Microsoft, who have deeper pockets, more lawyers, and stronger lobbyists than Marriott.

What other massive obstacle are they up against? Sheer public will. You can quote me here: “Charging for Wi-Fi in any form will soon lead to the quick and decisive decline of any hotel in the court of public opinion.” Think of it like indoor plumbing…hotels need to roll it into the cost of the room. Nobody is going to pay extra for “security and reliability” while using your toilet inside the room they paid for; what makes you think they’ll want pay extra for W-Fi inside the meeting space they paid for?

Marriott: Please get real. Wake up and smell your bulk-purchased, medium-quality coffee. Spending money to petition the US government to change its laws in order to make a few extra nickels is wasteful. Why don’t you spend your money on a worthy cause instead, like marriage equality, medical research, or world hunger? Even if you miraculously win the legal battle against FCC +Google + Microsoft, you have already lost in the court of public opinion. It’s a #FAIL no matter how you look at it.

If you’re a hospitality business who’s still charging for Wi-Fi:  Stop fighting the future. Internet is almost as essential as plumbing to today’s guest. Don’t hold them hostage and expect them to like you, or to ever return. Be gracious. Meet the future with a smile and some good, blazing fast, free Wi-Fi. It will do wonders for your revenue in the long term.

 

My Top 6 Articles of 2014

It’s time to say goodbye to 2014. It was an epic year for me, and I especially loved sharing my thoughts about the industry with a wonderful group of loyal readers.

This year my articles were read by visitors from 126 countries! I was most excited to see Bhutan on the list, also known as the happiest country in the world; they actually measure happiness and not GDP as their metric for being a successful country. Let’s try and get some inspiration from Bhutan and do things that make us happy. Producing meaningful content, and having you enjoy and share it, has been a great source of happiness for me.

As always, I had a very international year:

  • I famously said this year at a family party: “I’d rather fly than drive.” I completed 1 million miles in the air with American Airlines in 2014! Nine million more and, according to Clooney’s movie, they will have to name a plane after me.
  • I spent the summer working in Singapore, adding some heavy hitters to our revenue management and asset takeover team. These guys are not only the smartest, but some of the nicest guys in the industry. Also, I love Singapore!
  • I got to work in the Middle East on an amazing project, developing tourism potential for the hotel brand and the country. It’s very exciting, and a wonderful place to work.

In 2015, I plan to continue offering content that you can use to grow professionally without getting bored to death.

As for 2014, the tribe as spoken. Here are the top posts based on traffic, engagement and social sharing:

  1. Priceline’s Acquisition of Buuteeq: Why Hotels Must Own Their Digital Assets  
  2. How Airbnb Is Crushing Traditional Hotel Brands
  3. Reality Check: 7 Questions for Your Hotel Marketing Agency 
  4. It’s Time to Burst the Hotel SEO Bubble: What Hotels Really Need to Know
  5. Hotel Pay Per Click: Your Single Most Powerful Marketing Tool 
  6.  Why You Shouldn’t Sell Rooms for $7 on Hotel Tonight 

Happy New Year, everyone!

 

The End of an Era: IHG Acquires Kimpton

How much is that boutique hotel in the window? Well, it’s around $430 million.

Yes, that’s the price InterContinental Hotels Group (one of the biggest hotel companies in the world) paid to acquire Kimpton Hotels, the original boutique hotel group, which includes 62 hotels and 71 hotel-based restaurants and bars. The number might sound big, but in reality it’s a drop in the IHG ocean of hotel brands and assets.

Having lived in San Francisco, I saw the best and most vibrant years for the local Kimpton hotels. Now it’s come to this: the latest and, I think, fatal blow to Kimpton as a boutique brand, and the Boutique Era itself.

Kimpton, Schrager and Conley walk into the hotel business.

The 80’s were a wild time. It was also the time when the concept of a “boutique hotel” was born. The three people who took this movement mainstream (in chronological order) were:

1. Bill Kimpton, 1981 – Clarion Bedford Hotel, San Francisco
2. Ian Schrager, 1984 – Morgans Hotel, Madison Ave NYC
3. Chip Conley, 1987 – Phoenix Hotel, San Francisco

These three men had one thing in common: they wanted to do something different than what the established brands were doing. Free thinking is something that does not fit the traditional style of a hotel brand (not in the 80’s, and not today). These guys transformed one boring hotel/building at a time into a hotel that had a soul and something unique about it.

Where are they now?

1. Kimpton just sold to IHG (a brand that owns Holiday Inn Express).
2. Ian Schrager is now designing hotels for Marriott.
3. Chip Conley has quit hotels and is now working with the fastest growing lodging distribution company, Airbnb. (Still crushing hotel brands.)

If the three original innovators are abandoning the boutique concept, I’d venture to say that the concept needs to change. This leaves us with only two kinds of hotels: those that are owned by a big brand (Brand Hotels) and those that are not (Independent Hotels). Soulfulness is no longer part of the equation. You just can’t be boutique and big brand at the same time.

Your call is important to us. Please stay on hold.

KimptonTweetsHow quickly things change! Check out the two standard tweet replies now going out from the @kimpton hotels Twitter account. These are used to reply to all tweets, no matter how positive or negative.

Moving forward, everything goes through IHG legal, no matter how “quirky” you say you are. Want quirky? Go to your local independent coffee house. With big brand comes bigger legal teams. No matter how you hard try and spin it, things are going to be different.

The fact is that IHG already owns two “boutique” brands: Hotel Indigo and Even Hotels. Don’t feel too bad if you haven’t heard of them. They are way under the radar, and IHG casts a pretty big radar shadow, making it hard for an independent concept to take off.

Culture Club

I love the typical response that a lot of big brands give when acquiring “boutique” hotels: “It’s the fastest growing segment in the industry.” The fact is that the best kind of independent hotel grows organically. Once under a big brand umbrella, it’s almost impossible to maintain its original culture. Reports of a big hotel company “nurturing” an independent brand are highly exaggerated. Keep it real: nobody spends $450 million and then doesn’t change a thing.

Keeping the culture of an acquisition alive is especially hard for brands because it almost never makes much business sense (at least on paper). Not that big companies are evil. It’s just that everything is based on maximizing efficiency. Culture is never given priority over shareholder value. Remember (and you can quote me): Big companies measure success in dollars and not smiles.

This trend can be seen everywhere. The technology world is riddled with small, amazing product companies that were slaughtered or ingested by larger corporations. Sure, selling to bigger brands makes the founders a lot of money. But in the long term it kills their product, which is what it was really about. I still remember when Google killed Sparrow, and when Yahoo killed Flickr. There are so many small fish (really cool ones) that will never be the same inside the belly of the big fish. Free market capitalism giveth, and free market capitalism taketh away.

What happens next?

IHG, with the limited success of its Indigo/Even brands, capitalizes on the established Kimpton brand. The focus will be on reproducing more hotels under the Kimpton banner, including sub-brands under Kimpton (Monaco and Palomar). There are already 16 Kimpton hotels in the pipeline that are going to experience the full force of IHG’s development team. Next, IHG’s owner connections, and their massive-scale distribution and procurement teams, are going to hit Kimpton, taking it beyond the US market to Europe and Asia. File it under the “big brand buys an independent brand and takes it global” storyline.

Conclusion

Independent hotels will always thrive with outside the box thinking, service and products, and a strong focus on guest experience. By contrast, a hotel brand’s focus is to have McDonald’s style efficiency and economies of scale. This approach is just not compatible with independent thinking. Sure, you can try and buy innovation, but maintaining it with your industrial-strength departments and strategies in place will be really hard, if not impossible.

The hotel industry today is ripe for innovation. As I have said many times, innovation will not come from brands, but from independent hotels and independent thinkers. We are ready for the next generation of hotel people like Kimpton, Schrager and Conley. We’re ready for the next concept. Who is stepping up to the plate to bat for innovation vs mass production? Maybe you?