Maximizing Direct Bookings and Guest Loyalty | LowKey Podcast (ft. Diego Fernández) #26

Speaker A: Hey there. You're tuning in to Loki by Oki,

Speaker B: our easygoing sessions for hotel professionals where we chat about industry trends, issues and solutions.

Speaker A: Hello everyone. Welcome to this interview with the Diego Ferrande Perdeponga. Diego, how are you?

Speaker B: Really fine. And you Paulo?

Speaker A: Good. Well, thank you. Thanks for your time and thank you, as I was saying to everyone for joining us on this conversation. We'll be touching the different hot topics at the moment as it is direct bookings, AI and C revenue, and also loyalty M for customers. First of all, I want to, well, introduce yourself probably. You can introduce yourself. I mean you have a very extensive career in the revenue management industry and now you uh, are CEO of a large hotel company. So tell us a bit about yourself.

Speaker B: So first of all Pablo, thank you very much for giving me the opportunity to be here with you and um, also Waki to host that uh, podcast. I'm Dio Fernandez, I'm um, the CEO of Pro Hotels. We are a Spanish hotel chains based on um, Costa Costa Blanca. We have 11 properties across all this area and um, almost 2,000 rooms in these 11 hotels. We have also on the peak season, almost 1,000 employees. I was also, one year ago I was the head of revenue at Palladium Group, which was also a Spanish company. And um, in my free time I'm lecturing in the universities and also I'm a writer. I have two book published and um, probably two new books coming during this year. So I try to be active and try to also teach things to others. So really happy to be here. And I speak about all these great

Speaker A: things, which is great. Giving back part of what you know, uh, and being a prolific author as you are. We'll touch that topic later. But first of all I want to start talking about the direct bookings, which I was saying is a hot topic, especially in resort destinations with usually uh, most of the percentage of arrivals coming from wholesalers or OTAs. So generating more direct bookings, it's a challenge globally. Uh, do you feel we're getting closer to unlocking the key to success in that sense?

Speaker B: I think that hoteliers uh, has made uh, a really significant effort and um, progress in that, ah, with no doubts. Ten years ago probably one hotel or one resort could have 3,5% of direct sales, percentage of their sales. And um, nowadays, ah, we have done um, an incredible performance in this node. Um, but I have the feeling that the direct bookings remain an ongoing challenge for all. I mean there is not uh, only a single key element to success. There are a Lot of things that you need to do and if you don't do that you will not perform well in the direct uh, sales strategies. First of all you need to have technology. You need to have a very good booking engine in your website. If not you are dead. There are a lot of hotels in the world that they don't have a proper technology or they don't have a booking engine in the website. So you don't have a booking engine you will not cast, you will not have great numbers in your direct bookings results with no doubt. Also you need to have a proper pricing strategy in place for your property also and I'm sure we will speak a lot of that during the session. But you need to invest in digital marketing. You need to bring your guest to your website and it's expensive so you need to spend money on that and um, spend strategy and resources in this digital marketing. And also you need to have uh, a really nice guest experience in your hotel. I think that the best that you can do in your data sales strategy is to have uh, 9.8 in the score of the OTAs and try to drive guests to your website. So try to focus on the guest experience, the guest experience in your hotel also our port hotels speaking specifically in us, we um, have uh, seen a great success by optimizing our website, try to have uh, better post better photos and better content, reinforce our loyalty program and also try to use and to give a CRM and personal offers for our guest. Um, last but not least we have improved a lot from the last five years uh our booking experience in our website. So with all these things in place you are able to have ah, a proper direct sales strategy.

Speaker A: Was that multi layer, as you were

Speaker B: saying, different actions you've been taking for

Speaker A: the last few years. There's not obviously not one single answer.

Speaker B: You know it's like a battle. You need to have a lot of things working at the same time and, and you know working as an engine, uh, you need to, to push every single aspect that I, I told you. If not, if you don't, if you don't do uh, a person strategy ah, or you don't do marketing, your data sales are not going to grow as uh, they can

Speaker A: and uh, that's the point of marketing. I want to ask you as well because traditionally many hotels ah, what they've done on a first approach to marketing will be going to Google Ads and use that kind of tool to advertise and sell to gain more traction on direct bookings. Now with, with the Appearance of AI, which everybody's talking about AI nowadays. You think that's going to help as well reshape the data landscape uh, when it comes to marketing.

Speaker B: Wow, this is, this is a great question because in my case, and I'm speaking in my personal case, I do half of my searches right now in ChatGPT, half of the searches and the other half on Google. So I think that we need to change a lot of strategy right now in terms of getting our clients to our site. I think that we need to do more metasearch strategies, Trivago, Kayak, tripadvisor and so on. Um, trying to capture direct demand directly to our website. Also we need to bring back the social media and influence marketing to do the same trying to bring client to our website. Third you need to put a CRM, an email marketing strategy. You need to touch your clients directly. And last but not least if you want to gauge if you want, if you want to go against that same between uh, Google and ChatGPT, you need to have uh, or you need to, to do a build more effect. I mean you need to be in the, in other channels you are not able to survive only it yourself through your website. It's impossible to survive in these markets. You need to be present in the ecosystem, in the online ecosystem. You need to be present in the OTAs. I think that you need to have always a balance Distribution strategy is not a war, is not you against the ODAS or the wholesaler. It's not a war, it's a partnership. I think that um, it's very important to have another partners ah because your website, your direct sales strategy is limited and you need to try to take advantage of that. So don't hesitate to use this billboard and try to be on other channels. It will help you to reach the clients that nowadays are coming from Google to ChatGPT. And also don't forget try to position your hotel now in ChatGPT and not maybe spending so much money in SEM or something like that. Try to explore to be positive on ChatGPT.

Speaker A: And one of the points uh you mentioned now it's uh seeing sometimes the distributors OTAs for example as uh someone to challenge you instead of being a partners which should be the right approach uh, focusing on that on maybe the mistakes hoteliers make when it comes to their relation uh with vendors. Um, what would you think are those main mistakes uh when it comes to trying to increase their bookings.

Speaker B: I think that there are three, three, three main mistakes that ah hoteliers does or Hoteliers do. Sorry, first one, a poor web experience, website experience. I mean I think that hoteliers don't spend money on time trying to improve the website experience. Sometimes you have a slow or uh, outdated or complicate booking experience in your website. If you do that, uh, you are, that you are completely dead. Because once your, your website spend more than three, four seconds. Three, yes, three seconds on charge, the clients is, it's is out of your, of your, of your, of your web. I mean they want to have a quick process in all this website experience. So you need to have that in place. Second, and this is very important not having a dedicated revenue manager. There are a lot of hotels in the world that they don't have a uh, dedicated or at least a revenue manager. I mean um, you need to spend money on your expiration strategy. You need to spend money on your disparities strategies. So if you don't have uh, the professional in charge of that, you will lose direct bookings performance for sure. So try to have track or at least try to hire a revenue manager to help to grow on that. And the third one, M. And um, I said previously not invest money. M In digital marketing. Hoteliers believe that clients will go to your website. At least you have a really important brand. Your clients are not going to go to your website if you don't bring them to it. So you need to spend a lot of money, bring a uh, client into your website. It's really expensive and you need to take into account that you need to have a proper digital marketing expensive budget in your hotel. Please have it. If you don't have it, you are uh, not reaching your top level strategies in terms of direct bookings. You will not be performing well if you don't spend money in digital marketing. If you don't know how to use that, try to hire external company to do the marketing for you. But it's like the revenue management. If you are not able to do that internally, go to external company, try to give uh, to the company the resources necessary to do revenue management and to do digital market. Because if you do that you will increase your numbers in terms of profits and in terms of direct sales strategies with no doubt. So try to avoid these three important mistakes at least from my perspective.

Speaker A: Um, that's why we're asking you because you have a great knowledge in the industry. Absolutely right. I agree with you understanding that marketing is an investment and not spending in that sense. So cover the topic on direct bookings. I wanted to touch base with you also about loyalty So I know you just uh, relaunched your internal loyalty program and I want to check, to double check with you, you know, what it has meant for hotels in this sense and what is your view on the importance of loyalty program for.

Speaker B: Yeah, um, Push port Shapers. It's our new rebrand loyalty program and it's uh, like you know designed to reward our frequent guests, frequent travelers and try to boost our direct sales. Uh, it's simple as that. We feature three levels uh for friend, for influencer and um the third tier ambassador which increase benefits as guest progress. Uh one of the most important programs key advantage is how easy is to level up because with 8 accumulated nights um gets reached the second tier. So with 8 nights you will become influencer which can be achieved more or less in one, two or at least three bookends. So we try to create the sense of immediate progress with our uh, loyal guest. Because in my opinion one problem that all the loyalty program has is that you want to retire. 3. You need to spend so much money and to make so much bookings that is almost impossible to get there. So it's like I want to be there but I know that it's impossible to get. So we try to do uh, um uh a really fast growing. Ah or a really fast and easy to level up is probably the key element of our loyalty program. Like other programs we offer exclusive member benefits uh like special discounts which is one of the most important benefit that we can offer. We start with at least in the tier one, at least 10% and we have some hotel with 15% of discount. 15% of discount in tire in tier one in tier one and um, we go up to up to 20 in tier three. So let me. Sorry. Sorry.

Speaker A: Sorry.

Speaker B: We go up to 20% in tier three. So we try to easily level up and um give a strong special discount for our guests with no labels. Also we offer special access to private sales. You will have access to to special offers also upgrades, early check ins, early checkouts and late checkouts which are really important benefits for our guests. Also we personalize promotion and welcome gifts. Um we do special room and amenities and a welcome gift for every single member of uh our loyalty program. So we try to, to build a uh really easy, easy to understand program. There are no point. It's only night based on nights that you spend on. On our hotels. And uh, you know the, the key, the key element is the easy daisy way daisy way to to level up in these three tires.

Speaker A: I know the approach you have with when it comes to Names, you know, instead of going for a boring silver, gold, platinum, like calling it influencer for example. Ambassador is really cool, you know, to be m named an ambassador of the company.

Speaker B: I think it's a nice approach and also you know it's um, an uh, employee benefit. So all our employees are uh, influencers are ambassadors. Sorry. All our employees are TR3 from the minute one that they are part of the company. So we also try to, to build the program close to our employees or close our colleagues here in corporate.

Speaker A: Yeah. So let's move now into ancillary. Something is very close to okish hard of course. So growing importance of upselling, uh, cross selling and any other revenue stream that can help optimize the revenue. So how do you see uh, the ancillary revenue growing importance in the hotel industry?

Speaker B: I think that this is becoming a critical part of hotel profitability. I think it is as simple as that. And nowadays successful hotels do uh, ancillary revenue and they have uh, a uh, team of persons focused on a cylinder. Okay. Because you, you can improve your incomes so easily implementing the cellular revenue from the day one. Okay. Ancillary revenue is one of the most profitable incomes that uh, you could bring to hotels. They are not uh, uh, almost insane on them. They are not, they don't have cost involved. I mean if you are selling a CPU in your hotel, there is not a single cost on that. So if you are charging €20 for your CPU in your hotel in front of the sea, in front of the beach, I mean it's 100% profitability for your hotel. So you need to understand being a hotelier that ancillary ah, revenue is one of the most profitable incomes in your hotel. Okay. Because there are not distribution costs on that. For example. So sanctuary strategies and single one is try to upsell your rooms categories. Okay. Try to offer personalized in room esque. Try to promote food and beverage experience and also to try to sell local tours, local transportation activities and um, something that it works or also really good is try to extend their space. Try to sell one night more for your clients. Also the parking, I think that the parking is one of the most profitable series in the hotel industry. You know, there is not cars involved with that. You are selling space, free space in your hotel. So try to, to be very dynamic. Try to do revenue management on your ancillary revenue which is also very important. Try to dynamize the pricing strategies of your service. But uh, you know, trying to summarize ancillary revenue for my side. There are uh, three important levers of that which is incentives. You need to incentivize your staff in the hotel. You need to marketing. You do marketing your hotel in terms of a ciliate of revenue. And also last but not least, training, training and training your staff. You need to train your stuff. And if you do these three things you will be better selling and selling revenues with no doubt. This is mathematics. It's like revenue management. Once you do that you get results with no doubt. So try to invest money, invest time, try to have a specific person in your hotel focusing on ancillary revenue because it's so profitable. That will help you to get better numbers in your hotel knowledge, appreciate you

Speaker A: the support we align, you know in terms of how important it is for the, for hotels. One more question I want to ask you before I let you go. It's about the future of hotel revenue management. So you've been in the industry for, for a large number of years. You publish a lot of uh, very, very impactful and interesting uh information and content on revenue management. How do you see the revenue manager's role evolving now, moving into the future?

Speaker B: Yeah, this is a, a great question Pablo, because and I'm trying to be always really, really transparent on that. If you are this kind of revenue manager that we only change prices or you do only uh, one thing or one tactic thing, you will be replaced by uh, AI algorithm with no doubt. The RMS industry has uh, changed a lot in the last three years but is going to grow us faster than we think in terms of artificial uh, intelligence, uh, in terms of automate your pricing strategy. There are a lot of hotels right now in the complete world that they work alone in terms of pricing strategies. So your main role right now being a revenue manager is changing prices. You will be replaced. Okay, but there is an opportunity there for, for revenue managers. I think that we need to change from revenue to profits. You need to start thinking about ah profits in your hotel, not only revenues. Your main task being a revenue manager is try to bring better incomes and um, flows that income into a profit. This will be the future tax of a revenue manager. You need to improve your skills in financial control and cost management. You need to, you need to understand better your cost structure in your hotel. Second, you need to improve the commercial strategies and sales alignment. Okay? Revenue managers must play a relevant role in commercial your hotel. Okay. And last but not least and I know ah, we are running late. You need to understand virtually m the marketing. I think that revenue managers are focused on um, reacting to demand and they are not well trained uh, to influence the demand. There is a huge difference between react and influence. So we need to or they need because now I no longer a rowing manager. But they need to shift the role. They need to think in another way. Try to think in profits. How this revenue flows to the profits in your hotel. So once you do that now body could replace you.

Speaker A: Okay, well noted. Hopefully the audience also take note of that. Anyway, I'm just taking notes so I'm gonna wrap it up in a couple of minutes. But now I think it's time for the shameless plug. And in your case I guess has to be your book either or and soon the ones you're writing and soon publishing but the ad or revenue A complete guide about revenue management which is a kilo of revenue management that you published over a year ago. So tell us more about this book and how's it going.

Speaker B: You know, uh, I started my career in revenue management 15 years ago. Ah, almost 16 years ago. And it was pretty, pretty complicated because at that time I couldn't read anything in Spanish. At least at that time, um, uh, I didn't speak well as English. So I do my first steps in Spanish. But at that time I couldn't find proper books in the market. So when I started to write the book which is called the Art of Revenue is available on Amazon, I wanted to write the book that I wanted to have at the beginning of my m career. So it's like uh, a bubble of revenue. So I start from the beginning, I start from the scratch. And once you read the book, you will increase the level of your revenue management strategies. So I try to teach revenue in a simple way. Ah, one great advantage that I was able to do in my career is that uh, I try to speak always about revenue management in a simple way. I try to do revenue easy because I think that one mistake that revenue managers does is they complicate the way that we explain revenue management. So the book is based on that try to explain in a simple way all the revenue management cycle. And um, I, you know I was, I was writing the book for myself but it has worked really fine and it's helped a lot of people to understand better in a better way the act of revenue. It's also available in English. The second one, which is the 10 commitments of revenue Management is not for the moment available in English. But the first one, yes, and as you said is one kilo of knowledge of revenue management. And also it's almost 500 pages. So you will, you Will you? Will you will. I think that you will get uh, a great, a great level of revenue management after reading that book.

Speaker A: It is, it's become a reference on the industry. No doubt of that. Okay, so I was taking notes also mentioned earlier. So let me wrap up uh, the conversation we've had and the um, notes I've taken. So we've touched base on the importance of direct bookings and how important it is to work with the digital marketing. Understand from the hotel point of view that it's an investment and not spending money. Working with a proper and a positive CRM, taking advantage of metasearch and having a split between direct bookings, OTAs and, and understanding the relationship with OTAs as partners. There we uh, talk about uh, the importance of the loyalty programs. Understanding as that you have to have a better website, your own website. Again investing in marketing. It's come up again that topic in there, um, easy way to. I mean the easiness of your loyalty program in that sense. So how you've created um direct bonuses for clients, direct ah discounts if they sign up and they have perks so they don't have to wait for next year to enjoy them but they enjoy straight away with the book and see that revenue, profitability, super profitable. And importance on uh, incentivizing the team using uh marketing strategies and also training, trading training. These were your words. And then finally on the uh the importance of the changes on the revenue managers role that if they only. The only thing to do is change rates, they'll be uh, um removed by AI and what they have to do is increase the level of knowledge moving into uh, finance and profitability. Is that right?

Speaker B: Yeah, it's like that the best wrap possible. Pablo, like always this has been uh, enormous uh moment for me and being with you um, and also Aki. So thank you very much for, for having me here and a pleasure, great

Speaker A: pleasure again thank you very much SEO. Thanks for your time. Hopefully it was insightful for the audience and uh, we'll be speaking again soon.

Speaker B: Thank you very much.

Speaker A: Thank you.

Speaker B: Bye bye.