Elizabeth Taylor: a lesson for the hotel industry?

Peter Waters

Director of Hotels, Mobility and Insurance, Amadeus

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This year we started the Amadeus Hotels Exchange with a little story, inspired by the event’s welcome dinner at a famous hotel in Cannes. This particular hotel likes to boast of its star appeal by listing famous guests. So, we tested a room full of our hotel industry customers – from hoteliers to TMCs and web intermediaries – on whether they could identify the following: Mrs. Hilton, Mrs. Fisher, Mrs. Todd, and Mrs. Burton. A film buff in the audience immediately shouted out “Elizabeth Taylor!” They were indeed all just Liz, using four of her married surnames.

hotels sketch

While Liz Taylor in person would be hard to miss, the serious point I’d like to make is that the hotel industry often struggles to recognize different variations of the same person. One person could also have multiple travel personas: alone, with family, on business or for leisure. Added to this is the fact that we now have more distribution channels, and distribution players, than ever before, so guests are coming to hotels from channels that barely existed five years ago.

It’s issues like this that we seek to unravel at the Amadeus Hotels Exchange, which we view not just as a platform where we can talk with our customers, but a forum where they can talk to each other, too.

One area of immediate concern that emerged was how to reduce the increasing complexity of the hotel landscape. Over time, the hospitality sector has struggled to keep pace with technological and social developments. Looking at some of the visual notes from our recorder Fernando, the picture that emerges is that of a maze-like tangle. And as our guest speaker Cindy Estis Green pointed out, whenever you have an overly-complex system, there will always be someone there to take advantage of it – or, as Amadeus’ head of innovation and ventures Katherine Grass put it, to disrupt it.

Taking Cindy’s point first, let’s refer back to a phrase she used in her presentation. “There are a lot of toll booths on the road to customer acquisition.” Because hotels have historically worked on a commission-based model in exchange for customers, the intermediaries that supply customers are – naturally – willing to exploit this. Commissions are now rising at twice the rate of revenue growth, which is obviously unsustainable in the long term. Cindy’s argument is that every hotel needs to use multiple channels, but rather than use a scattergun approach, it needs to be far more strategic – working out the optimum blend of channels that deliver the best profit margins.

And this means that mature systems and business models are ripe for disruption. Disruption that introduces new players into the space can be good for the sector – for example, the anticipated grip of metasearch megaliths could be significantly slackened if fresh competition emerges. There are concepts within the start-up industry that should be applied to mature businesses to keep them relevant; and also of course, to make our industry more efficient, while eliminating the waste that detracts from profit margins. It’s this approach we’re taking at Amadeus through our extended B2B hotel marketplace, which weaves buyers and sellers together in a one-stop shop, eradicating the duplicated effort that usually goes into finding the right hotel content.

There’s no doubt in anyone’s mind that the hospitality sector has been thrust into a time of rapid and unprecedented change. From the rise of millennial guests to the proliferation of start-ups; it’s a time where innovation counts for everything. The race will be won by those who put forth the effort to shape the outcome of the new hospitality landscape. What’s so encouraging for us is the number of people at the event who are not only ready for the challenge, but willing to collaborate with other industry players to make the whole ecosystem a better place.