Monthly Archives: October 2015

Management Update: “How to Future-Proof Your Hotel Company”

Smart hotel executives spend time dealing not only with the challenges of today but also the challenges of tomorrow. I don’t mean tomorrow as in the day after today. I mean tomorrow as in the future, six months from now, five years from now.

Our copycat industry is historically bad at this. We often take note of obstacles only after we’ve hit them head on. In a daze, we then rush to adopt the tactics of our nearest competitor.

Why? Maybe we’re not looking far enough ahead. Or maybe we’re not looking for the right signals ahead.

Across all industries, executives’ future-proofing exercises typically revolve around the proverbial Next Big Thing—what’s coming down the pike that’s going to change the world as we know it.

During a keynote at this week’s Marketing Outlook Forum, J. Walker Smith of the Futures Company suggested a different tact: The “Vanishing Point” approach.

It’s hard to spot the “Next Big Thing,” Smith said. When they first materialize, they’re often too small to notice. And they come on quickly, which makes it difficult to react when you finally do notice them.

Vanishing Points are the opposite, Smith said. They are the points at which big, established factors of influence wane out of relevance. That creates a vacuum that must be replaced by something new.

Spot them early, and you can begin to anticipate what will fill the void.

It’s like a big tree falling the in the forest, Smith said. That allows sunlight to penetrate the canopy and foster growth for something new.

An example: Screens are getting smaller. What once was a desktop became a smaller laptop which became a smaller tablet which became a smaller smartphone. Now wearables are on the rise, and screens are getting even smaller.

“This is the big vanishing point,” Smith said. “The active digital screen is going away. It is being replaced by sensors, or passive digital.”

Shoes will connect to Google Maps and buzz the right or left foot depending on which way you need to turn. Embedded technologies will track your health and fitness.

Instead of inputting data into a screen, sensors will track your behavior and send you information before you even know you needed it, Smith said.

He called it the “pivot to passive.” In the ecommerce space, Amazon is working to patent anticipatory shopping software that sends you products without you even putting them in your online shopping cart.

Think of that in travel context, Smith imagined. The agonizing booking funnel becomes an intuitive, anticipatory process that actively monitors your behavior and schedules a hotel stay accordingly.

Will it happen tomorrow? I hope not. (I’m not ready for buzzing shoes.) But it could happen one day. Maybe it will even be the Next Big Thing. Time to get out in front of it.

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Filed under Hotel Industry, Management And Ownership, Technology

Tech Update: “Hotel Apps – Nightmare or Blessing?”

Most hotel chains and many individual hotels have their own hotel apps – a small program for smart phones, which is supposed to facilitate the check-in process, provide additional information, replace the room key card, and eventually support and facilitate the next booking at the hotel.

But are apps really the ultimate solution? These small programs can easily turn into an expensive exercise and they have to be programmed for the various operating systems. Most importantly, an app should be embedded in a centralized guest-oriented IT structure.

The hotel business is often compared with the airlines business. This is, however, misleading, as frequent travelers – the target group hoteliers like to attract – mainly use the same airline. Surveys show, however, that this is not the case when it comes to choosing a hotel. On average, a frequent traveler has four loyalty cards from different hotel companies and eventually has to get used to several apps. Is this a client-oriented approach or just an IT trend, which managers cannot resist to follow?

At the beginning of the Internet age IBM’s slogan was “Jump in!”. But not the ones who just jumped in and followed the latest trends have become or are successful, but those who took some time to verify, analyze and then deliberately chose the right – client-focused – strategy.

On the one hand, an app has to suit the respective overall concept; on the other hand, it has to be accepted by the guests. This is the main difference between the OTAs that focus on the guest, and many hoteliers, who just love their product. The guest should always be in the focus. This rule is taught to every trainee or student in the first year of apprenticeship or studies.

The figures show that consumers increasingly consider apps as annoying. The result is that downloads are stagnating considering the increasing share of smart phones in the total market. Travel apps only come in seventh in the download ranking. There is not even a separate category for hotel apps.

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Filed under Hotel Industry, Management And Ownership, Technology

Hospitality Industry Legal Update: “Critical Control Points in Liquor Liability”

In this article, dram shop and liquor liability expert, Jeff Jannarone discusses critical control points in bar operations, including recourse options for handling intoxicated patrons.

Every bar or restaurant that serves alcoholic beverages is at risk of having intoxicated patrons. However, the mere presence of an intoxicated patron within an establishment does not necessarily indicate a breakdown in an establishment’s training or operations, nor does it necessarily indicate a violation of the standard of care within the industry.

The presence of intoxicated people in any environment increases the likelihood of crimes and/or injuries. While bars and restaurants are responsible for limiting alcohol consumption, it is challenging to prevent every patron from becoming intoxicated; consequently, the way that an establishment responds to the presence of an intoxicated person is often the crux of a liquor liability dispute.

Questions that are commonly at issue in liquor liability disputes include:

  • How effective was staff at identifying the intoxicated patron?
  • Was the intoxicated patron continued to be served alcohol?
  • What measures did the establishment take in safeguarding their customers and the public?

These issues represent critical control points that test how effectively staff was prepared to handle potentially dangerous situations.

Many states have a requirement that businesses that are permitted to serve alcohol not serve anyone who is visibly intoxicated; permittees also are responsible for providing proper measures to ensure the safety of any intoxicated person on their licensed premises (or when they leave?). These requirements are reflected in the standards of care for the industry and reinforced by the various professional training programs that promote the responsible service of alcohol (e.g., TIPS, TAM, RAMP, etc.). The modern standard of care goes well beyond simply removing drunken people from an establishment or passively posting the phone number for a taxi service. A well prepared bar or restaurant has a variety of best practice recourse options when they identify an intoxicated person.

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Filed under Guest Issues, Hotel Bar, Hotel Industry, Management And Ownership, Risk Management

Hospitality Industry Risk Update: “7 Workers’ Comp Issues To Watch”

Today’s Workers’ Comp market is generally favorable, but several emerging medical and demographic challenges have the potential to upset the current balance. By better understanding the possible impact of these new variables on the market, buyers and brokers will be able to continue to protect employees—and their bottom lines.


1. The Affordable Care Act may well increase Workers’ Comp costs by increasing demand for medical services from a fixed number of providers. If more Americans can buy medical services, the cost of those services will rise. Beyond higher prices, greater demand will also lead to longer treatment and recovery times as claimants wait to get appointments, potentially impacting indemnity costs.

2. The growing use of—and cost for—physical therapy causes challenges. Fee schedules for physical therapy have increased over the past two years in nine states that have the greatest use of PT in Workers’ Comp claims. California increased its fee schedule for all physical therapy billing codes by 5% to 6% in March, while New Jersey upped its schedule by 3.6% last fall. Managing the utilization and cost of physical therapy is becoming a key issue, so much so that clients, prospects and brokers are asking TPAs more questions about their strategies in this area.

3. The variability of WC costs and treatments among states threatens the  market. There is no reason why the cost for treating the same type of work-related injury should differ significantly from state to state—but it does. The median medical benefit per Workers’ Comp claim by state is $26,124, according to NCCI data. California and Delaware have medical benefits per claim over 50% greater than the median, while Massachusetts and Rhode Island are well below half the median.

There is good news, however. Medical treatment guidelines and drug formularies continue to be developed in states across the country. As experts with a shared interest in cost-effectively delivering quality medical outcomes for injured workers, all of us must understand this issue, and translate that understanding into action by becoming involved in efforts to improve workers’ compensation systems and develop treatment guidelines and formularies.

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Filed under Claims, Hotel Employees, Hotel Industry, Management And Ownership, Risk Management

Hospitality Industry Management Update: “Investors Bet on Boutique and Lifestyle Hotels”


The numbers paint a rosy picture for developers and owners who want to dip their toes in the boutique, lifestyle, and soft brand segments. Collectively, these arenas are an $11.5 billion industry and growing, according to a report by The Highland Group.

Demand has increased for boutique, lifestyle, and soft brand hotels over the past six years, clearly since the recession, says Kim Bardoul, a consultant with the Atlanta-based hotel consultancy group and co-author of the 2015 report. For example, with lifestyle properties 300 rooms and under, demand grew at an annual average pace of nearly 20 percent from 2009 through 2014—far above the rate of overall U.S. hotel demand growth of 4.2 percent, the report shows.

“The independent boutique has remained steady in growth, but the soft brand and lifestyle segments have clearly grown stronger in the past two years,” Bardoul says. “I really expect that to grow, because of the awareness the brands have brought to the industry.”

During the same six-year period, supply for lifestyle hotels and soft brands, which are newer products to the market compared to the more established boutique segment, grew at a compound annual average rate of 11.5 and 17.8 percent, respectively. Meanwhile, compound boutique hotel supply grew 3.1 percent—over three times the rate for the U.S. hotel industry overall. Compound demand change for the boutique segment was 6.7 percent, compared to a 4.2 percent increase for all U.S. hotels.

To compile the report, The Highland Group pored through STR hotel census data and qualified hotels into these three segments (see chart). Bardoul says they classified boutique hotels as unique in style, small, and either independent or affiliated with small systems (think Delano by Morgans Hotel Group or Thompson by Commune Hotels & Resorts). Of those boutique properties, 21 percent have less than 60 rooms and 17 percent have 160 to 300, and they range in design and building type. Boutiques have a strong representation in California, New York, and Miami, but appear in at least 46 states, she adds.

“Boutique is a popular but loosely used term, and most people associate it with small,” she says. “Most definitions you pull up use the word ‘small,’ but they also use the words ‘unique,’ ‘highly specialized,’ ‘niche,’ and ‘elite.’ We used that criteria similarly to distinguish between your typical independent hotel, which is very limited in service or amenities without a specific design, from all the others.”

In response to changing traveler tastes and adapting interests of their development communities, the chains have responded by introducing lifestyle and soft brands. The report describes lifestyle brands as prescribed franchise products that are adapted to current trends (e.g., AC and Moxy by Marriott, Canopy by Hilton, Hyatt Centric). Soft brands like Ascend by Choice, Autograph by Marriott, Curio by Hilton, and Tribute by Starwood give hotel owners and operators the opportunity to affiliate with a major chain distribution system while retaining the unique name and properties of an otherwise independent hotel.

“Developers and owners are seeing increased interest in what I’m calling the ‘now’ traveler, and there’s an opportunity to capitalize on that with little risk, especially if you go through a brand,” Bardoul says.

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Filed under Hotel Industry, Management And Ownership, Risk Management

Hospitality Industry Security Update: “Developing a Cyberbreach Strategy”


Throughout the business world, breaches have become a constant reminder of the critical need to assess and take action on cyberrisk. But they can also make addressing the issue seem like an ever more daunting task, leading many to either put off substantive measures or blindly buy the latest insurance or software to “take care” of the problem and move on.

“The biggest mistake companies make in the breach recovery process is just not being aware of the risk in the first place,” said John Mullen, managing partner at Lewis Brisbois Bisgaard & Smith LLP and chair of the firm’s data privacy and network security practice. “You would be amazed—I do up to 100 presentations a year, and at 80% of them, people still look at me like it’s the first time they have heard about it, and I have been doing this for over a decade. The people in the know are in the know, but there is an amazing amount of people who have no clue.”

There are countless ways a cyberbreach can unfold, and countless ways response can go wrong, but laying the strongest possible foundation ahead of time ultimately makes the difference between successful response and absolute disaster for a company that gets hacked or otherwise compromised. According to Mullen, a breach coach who reports that his firm sees a new breach case every business day of the year, “If you don’t do all of the prep stuff, you’ll never get response right.”

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Filed under Crime, Hotel Industry, Management And Ownership, Risk Management, Technology

Hospitality Industry Tech Update: “Two Digital Disruptors Hurting Hotels”

Airbnb’s price positioning play—accommodations often are less expensive than similar hotel rooms—is not sustainable, he said.20150730_distributioin_RSSDisrupter Once the platform is forced onto a level playing field and starts collecting taxes, it will costs hosts more to do business.

In an industry with so many variables, one thing is certain: Hoteliers are woefully inadequate when it comes to technological innovation. And that makes the impact felt by the so-called disruptors all the more disruptive.

Thus concluded a panel of owners and operators titled “Disruption 2020: The digital marketplace” at the Revenue Strategy Summit.

“We’re still stuck in the Stone Age,” said Shai Zelering, managing director of operations and asset management for Thayer Lodging, Brookfield Hotel Properties. Instead of investing in new technologies, hoteliers are more obsessed with new guestrooms amenities that ultimately don’t matter, he said.

“It’s about priorities,” he added.

To that end, panelists identified the two major disruptors that require the industry’s immediate attention.

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Filed under Hotel Industry, Management And Ownership, Technology

Hospitality Industry Management Update: “How to Combat Last-Minute Cancellations”

“If it’s one call from a regular guest who has to cancel at the last minute because of extenuating circumstances, that’s not a problem,” Rauch said. “Our goal is to protect and grow our revenue.Cancellations-feature But at the same time, we have no desire to have guests hate us. The last thing we want is for someone to badmouth us on social media because of how we handled their cancellation.”

With last-minute cancellations having the potential to wreak havoc in the revenue management arena, hoteliers from Los Angeles to London are opting for a range of solutions that include tightening the rules on refundable bookings and turning to more sophisticated algorithms to forecast.

Last-minute cancellations have been on the rise in recent years amid an emergence of online tools and platforms that make it easier for consumers to shop and compare hotels, explained Bjorn Hanson, a hospital industry expert and professor with the New York University Preston Robert Tisch Center for Hospitality and Tourism.

“It’s an increasing problem that needs to be addressed,” he said.

“People are always looking for a better deal, and most cancellations happen when they see another hotel lowering their rate,” said Jamie Pena, VP of global distribution and revenue strategy for Omni Hotels & Resorts.

She and many of her fellow industry colleagues are taking action.

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Filed under Guest Issues, Hotel Industry, Management And Ownership, Technology