Hilton takes steps to level OTA playing field

Cairo "Almasalla News "- Hilton Worldwide will take calculated steps and provide amplified resources in 2012 to assure its product is represented and sold appropriately across all channels, said Paul Brown, president of global brands and commercial services for Hilton, during the PhoCusWright Conference this week.

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I’d like to have a very frank, honest dialogue around what suppliers are thinking about what most of you in this room are doing and how that fits in with our overall agenda as a supplier,” Brown said. “A lot of this buckets into two major agenda items: We are very focused on delivering great customer experiences and ensuring those great experiences are ideally represented and merchandised across all relevant channels and touch points.”

Customer service on the Web
Brown addressed social media and its affect on service at the hotel level. He said social media and review sites are not the death of brands, as some have suggested, but that “social media might be death of bad brands.”

“Gone are the days when you can hide behind millions of dollars of marketing spend and push a message to the world and customers will take you at your word,” he said. “Customers are now pulling the story to themselves and ultimately the truth will be discovered.”

He said Hilton will take a multi-channel approach to customer feedback but has instilled a company policy not to reward passive-aggressive behavior by offering more incentive for guests who complain publicly as opposed to privately.

“We have to be careful not to create a very public and unattended backdoor to the customer service process,” he said. “We have a policy that regardless of how a customer is giving us feedback, whether it be a public or private channel, that we will not change the response to that individual.”

To ensure the guest is able to openly provide constructive feedback, Brown suggested Hilton’s partners remember that customer service is a people industry and that new channels of feedback must remain connected to old channels, such as quality assurance.

“The technology part is really not that difficult; it’s the operationalization of that technology,” Brown said. “We are training hundreds of thousands of employees around the world on how to react on that information, and it’s critically important to keep this hurdle in mind.”

Distribution
Brown said Hilton is changing its philosophy to understand that guests today are booking hotel rooms across more touch points. He said Hilton’s question is shifting from ‘Where do guests book?’ to ‘Where are they making their decision?’ and that third parties are an important part of that decision process.

“It is naïve and dangerous for us as a supplier to assume that we can force customers to use direct channels against their will,” he said. “However, it is equally naïve and dangerous to assume that as a supplier we can take a passive approach to how our product is represented and merchandised through any channel.”

Therefore, Brown said Hilton has formulated a four-pronged approach to distribution:
1) Direct channels must be ultimate truth and offer the best rates;
2) the entire portfolio of hotels must operate as a single system, otherwise the brand will appear schizophrenic;
3) suppliers can’t be “pennywise and pound foolish” about channel economics; and
4) third parties will be given inventory “once the hotel has its own house in order.”

To accomplish this distribution strategy successfully, Hilton will embark on a handful of new initiatives in 2012. The company will increase spend on direct channels by more than US$100 million and remove the revenue management responsibilities from the individual hotelier by rolling out a brand-wide revenue management service.

“Hotel suppliers have been behind but that is changing rapidly,” Brown said. “The pace of innovation from suppliers will only accelerate.”

To this point, Brown directly addressed companies who he suggested have built a successful model by taking advantage of supplier shortcomings.

“There will always be a critically important role for third parties in travel marketing, sales and distribution,” he said. “However, my challenge to third parties would be: If the success of your business model is dependent on arbitraging historic inefficiencies and sleepiness of hotel chains, then you may want to step up your own pace of innovation to remain relevant over time.”

Revenue management rollout
Brown said his experience gained at Expedia (he was president of the North American division from January 2005 to December 2008) helped him persuade others within Hilton, particularly hotel owners, to invest in tools that will help level the pricing and distribution playing field.

Hilton is in the process of rolling out a corporately funded field-based revenue management team of about 250 employees to assist individual properties with revenue management. The goal, Brown said, is to take the onus off operators to navigate a complex set of distribution channels and instead let them focus on providing great hospitality. Admittedly, Brown said the program will closely resemble the internal market management group he helped build at Expedia.

The initiative will not come without cost, and Brown said some owners have pushed back.

“Most owners are just thankful,” he said. “All but about 200 of the owners feel this is something they can’t manage and they’re thankful to have us take it over. A few others feel this was a competitive advantage to them. And then there’s the economics of it.”

Bringing third-party functionality in house
Brown addressed Hilton’s objectives regarding functionality that third-party intermediaries currently provide, such as mobile check-in, sale through opaque channels and same-day discounting.

He said Hilton works very closely with its revenue managers to monitor what percent of business they’re doing with opaque channels. The revenue managers are incentivized to underutilize opaque channels, he said.

“We are able to measure that and put it into their incentives,” he said. “There’s a reason to use it, we just want hotel managers to use it appropriately.”

Hilton hasn’t made as much progress as Brown had hoped regarding the ability to check in to a room via a mobile device, he said.

On same-day discounting, Brown said he wants managers to avoid the “holy crap” factor, where managers didn’t price and distribute rooms correctly throughout the process and then have to dump them at the last minute. He said there is a time and place for last-minute discounting, but said under Hilton’s current policy the practice “does need to respect rate integrity.”

As far as making customer reviews public, Brown said there is a challenge surrounding the way customers communicate with Hilton directly as opposed to third-party sites. Specifically, guests will reference individual team members more often when leaving feedback with Hilton, and the company is wrestling with whether it’s appropriate to publish employee names.
 

Source : hotelnewsnow