In 2011, venture capitalist Marc Andreesson argued that we were in the middle of a dramatic technological and economic shift in which software companies were poised to take over large swathes of the economy. At the time, his claim that “software was eating the world” seemed hyperbolic. Just nine years later, it’s apparent he was dead on. Over the past decade, we saw Amazon establish world domination, Facebook influence geopolitical events, and Netflix change the way we produce and consume entertainment.
The hospitality industry has been far from immune, witnessing the rise of Airbnb and myriad alternative accommodations providers that leveraged a tech-first approach to quickly attract a massive customer base. Meeting brokerage platforms such as Cvent changed hospitality sales drastically. And finally, Google launched Hotel Search, changing the distribution landscape seemingly overnight.
With the companies above experiencing a meteoric rise in a span measured by years rather than decades, it would be wise for us to consider how we can leverage a software development mindset to enhance our approach to hospitality.
As a former hospitality strategist turned technology provider, I’ve had the opportunity to witness both worlds firsthand. Here are a few principles I would recommend hoteliers apply based on my learnings.
10x thinking. If you want to capture attention as an upstart technology provider, you can’t deliver a product that’s incrementally better than the competition. True breakthroughs come when you focus on delivering something that’s 10x better than the currently available options.
As an industry, we often focus on capturing our slice of the incremental market growth forecasted by STR and CBRE. What if instead of asking ourselves how to improve revenue by 3-6%, we asked ourselves what it would take to decuple our revenues? Perhaps we might not quite get there, but when you shoot for the moon and miss, you’ll still land among the stars.
Leverage existing tools and frameworks. One of the reasons that technology evolves so quickly is that developers harness the work of those that have come before them. Open source or third-party technologies provide a strong foundation for the applications you use daily and help increase inter-app connectivity. Additionally, these technologies allow development teams to deliver added value by focusing only on their core objective – for example, building an app that can pair drivers and riders quickly, rather than having to develop a proprietary database, user-authorization framework, and payment system before they can get started.
There are a variety of hospitality technologies available that can help you focus on your core objective rather than continuously recreating the wheel. As hoteliers, our job is to attract customers and make them happy. Building software internally, manually compiling reports, and conducting meetings solely to review pricing and reports are a distraction from this effort.
And yet, we need access to the insights that these processes provide.
Why not partner with organizations that exist solely to help you tap into the insights you need to achieve your core mission?
Specialize and collaborate. It’s impossible to be an expert at everything. The best programmers develop a broad understanding of the tech ecosystem, then pick just one or two coding languages to master while forming tight bonds with peers that possess a complementary specialty.
As hoteliers, we often talk about empowerment. Paradoxically, however, we often go to great lengths to empower our line-level associates to satisfy our customers while questioning every $10 increase or decrease in our Best Available Rate.
The most successful hotel management teams realize they are more effective when they clarify their business objectives, align stakeholders, and allow their discipline heads to execute.
Speed vs. Quality. It’s widely known that, in the early days, Zuck’s motto for Facebook was “Move Fast and Break Things.” However, in 2014, this was changed to “Move Fast with Stable Infrastructure” as he realized that bugs were causing their development team to move too slowly.
Achieving the right balance of development speed vs. quality is extremely important for any organization. Move too fast and you may create headwinds. Move too slowly and you’ll be obsolete.
The savviest hoteliers realize it’s important that we understand when to put our heads down and when to pace ourselves so that we can become more strategic.
During the early stages of the crisis, it was important to move quickly with imperfect results. Now that we’ve had more than six months to gather our bearings, we should focus on taking some time to implement the processes and tools that will help us emerge from the crisis.
There are many ways to achieve a desired outcome. Software developers realize that there are many ways to solve for the same problem. Their job, then, is to find the most efficient solution.
As hoteliers we often limit ourselves to two strategies for raising revenues – increasing rates over high-demand dates in order to maximize RevPAR through ADR, and decreasing rates over low demand dates in an attempt to maximize RevPAR by capturing a greater percentage of demand.
Yet we often stand to gain more by leveraging new techniques to outperform the competition. By considering factors that have little to do with pricing — improving our sales effort, optimizing conversion through electronic and voice channels, marketing to a higher-propensity audience – we can create exponential growth rather than incremental improvement.
By adopting these software development paradigms and combining them with our existing hospitality expertise, we can improve our commercial strategy efforts and position our hotels for success in the years to come.
About the Author
Mike is the President and Co-Founder of Focal Revenue Solutions, which provides hospitality business intelligence systems and strategy for hotels, resorts and hospitality management organizations. Prior to founding Focal, Mike served as Director of Revenue Systems Architecture for Two Roads Hospitality.