Hotel Online  Special Report

Is The Internet Delivering On Its Promise? 
Well, It Depends on How you Look at It

by Neil L. Salerno, CHME  June 2003

As the esteemed Mr. Covey might say, ‘what a great difference a paradigm shift makes’. Recently, I read an interesting, well-written article, comparing the value of hotel chain central reservations offices (CRO’s) and the opportunities present with the Internet. Well, it depends on how you look at it.

The article focused on the comparative closing ratio of CRO’s, a healthy 38 percent versus the Internet’s, rather anemic by comparison, 8 percent. I have no reason to challenge the numbers, especially since they come from TravelCLICK’s ChannelTRAK. The numbers make sense. But, is that a fair comparison?

It’s true that companies appear to be working hard to improve their CRO return-on-investment, but I doubt that any chains will soon be scrapping their CRO in favor of the Internet promise. The fact is that, ever since 9/11/01, our industry has effected many changes in the way we operate hotels. One of those changes is in the area of creating new payroll efficiency. Out of necessity, we moved from a comfortable budget-based payroll to a payroll based on our profit expectations instead. And most hoteliers believe that change is here to stay. 

Cutbacks have affected just about every area of the hotel operation, including chain CRO’s and property reservations offices. All cutbacks create a void, which must be filled by the people who remain, but this should focus us on the need to, learn from other industries, and place a stronger emphasis on training and development of our strongest resource, people. There are still many hotels and hotel companies that still do not budget adequately for training and strengthening the skills of their people. 

The emergence of the CRO model, thirty years ago, as a major contribution channel for hotels, is still a major factor for selecting a franchise, today. Years ago, Holiday Inns led the way with their revolutionary Holidex system. This is what made them a true industry leader in the 1970’s.  Since then, all CRO’s have made major leaps in technology and training techniques. True, CRO staffing is a greater challenge, today, but have faith; CRO gurus will soon catch-up with our new way of life since 9/11. Consolidation of staffing will be with us for a very long time. Our systems and training need to catch-up with our need to compact payrolls. 

Any comparison between CRO’s and the Internet needs to be tempered by the fact that the Internet is still fledgling as compared to CRO technology. First, the fact is that the vast majority of hotel Web Sites are still poorly designed and maintained. Some chains have been leading the way to reform and convert these sites to make them marketable and actually produce more reservations. But many hoteliers are not in total agreement in the reason for having a Web Site. Many sites provide for great entertainment, but do little for promoting the making of reservations. Others don’t even have the basic tools for driving visitors to their site or, even worse, lack the tools to make a reservation, once they get there. Many web masters, great at visual design and the technical aspects of creating a site, designed many sites to look nice but lack the understanding and hotel marketing techniques needed to make a site produce business. Internet technology has improved faster than our hotelier mentality to understand its application to our needs. 

Hotel room resellers explored the value and the power of the Internet long before we hoteliers realized it and took the marketing lead. We have been playing catch-up ever since. But, I can name many hotels, which were saved by the emergence of eWholesalers, even before 9/11. Let’s face it we need their business. Hoteliers need to learn how to work with eWholesalers and do less complaining about the financial quality of their business. 

Yes, the Internet is a department store as opposed to a CRO outlet store. So, what’s wrong with that? The outlet store didn’t become popular until the Marcus Corporation in Memphis created the first outlet mall, grouping stores together to create synergy. Yes, the Internet, like the outlet mall, created a new competitive environment. But, it presents a level playing field for hotels to compete electronically, if we treat it seriously. As a sales guy, I have always believed, and still do, that the advantage always goes to the face-to-face or the voice-to-voice seller. But these are not the only forms of selling. If you believe they are, tell Ebay. Ebay grew from a beanie-baby outlet online to a giant with literally no limit in sight. If you haven’t already, make a brief visit. Now that’s competition.

The notion of using the Internet to drive calls to a CRO or hotel reservations office is an exercise in futility and assumes that the majority of people even want that. If the experts are correct, the majority of people who use the Internet want to complete the sale on the net. The notion that anyone would be successful driving people to their call centers from the Internet simply ignores or doesn’t understand hotel economics. We just haven’t made it easy for people to make reservations on line. Where is PayPal for hotel reservations? Ebay recognized long ago that many people are reluctant to enter their credit card number into a computer, so they enlisted PayPal to collect funds. Is there a PayPal for hotel reservations? If not; why not? The rest of the world is viewing the Internet as a new market, not just a new marketing tool. We need to do the same. Closing ratios for electronic reservations on the Internet will improve, as we get smarter. 

As an hotelier who has been around for the last thirty years, I cannot leave this subject without echoing a concern for the de-personalization of selling today. I dislike many aspects of voice mail, automated phone systems with touch-tone menus, and even making reservations without having the ability to hear a human voice, but where would we be without them.  If everyone, our competition included, trashed their automated phone systems and went back to having people answering phones and refused to use the Internet, then we could all feel better as costs rose and profits declined for everyone equally. We could complain, together, as phones don’t get answered and any increase in call volume becomes our enemy instead of our ally, like it was in the “good ole days”. Ask any traveler if they prefer to hear a busy signal or don’t get an answer to their call at all. I suppose we could all trash our computerized front offices and return to the “bucket” and printing nightly “folios”, but I have never heard anyone propose that. Building business is still largely in the hands of property management and staff. Yes, there are many aspects to miss from the “good ole days” but new challenges will always be with us. A well-trained and friendly staff, clean rooms, an expert, well-coached sales team, and good food and service will always be the answer to building business.

Neil L. Salerno, CHME
Hotel & Internet Marketing Solutions
1369 South Wembley Circle
Port Orange, Florida 32128
Also See: Coaching and Mentoring, Sometimes A New Paradigm Can Go A Long Way / Neil L. Salerno / June 2003
Sales Training Works Well, But Sales Mentoring Makes It More Effective; Mentoring Lasts a Lifetime / Neil L. Salerno / May 2003
Is It Time For A Sales Tune-up? How Healthy Was Your Last Forecast? / Neil L. Salerno / May 2003
Hotel Web Sites; Want it Creative or Effective? / Neil L. Salerno / May 2003
If You Always Do What You Have Always Done.... You’ll Always Get What You Always Got! Hotelier’s Mantra... Thinking Outside The Box / Neil L. Salerno / April 2003
Good Sales Planning - The Basics Still Work / Neil L. Salerno / April 2003

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