Ally Northfiled: Staying commercially relevant in the age of unreliable signals

Speaker A: Welcome to the Turndown. We often talk about rate changes, dashboards and distribution strategy. But today we're cutting through the noise to talk about something more relevance. My guest is Ali Northfield, the powerhouse managing director of Revenue by Design and the visionary behind the Global Revenue Forum. Ali works with hundreds of properties to sharpen commercial strategy, but she's not here to talk about business as usual. We tackling the uncomfortable. How do you drive profitability when booking patterns are fractured and guests are more hesitant than ever as AI reshapes how the world searches for travel? Are we prepared? Ali argues that the next generation of revenue leadership requires a radical shift. We need to be more commercial, more communicative, and closer to the guests than ever before. We dive into the future of demand, the real cost of acquisition, and why the hospitality industry must rethink how it sells itself, not just to guests, but to the next generation of talent. This is a masterclass in modern commercial leadership. Let's get into it. Ali, it's a pleasure to have you on the Turndown. Welcome to the program.

Speaker B: Thank you. Thank you. I'm delighted to be here.

Speaker A: Uh, my opening question for anyone joining the program is typically, what keeps you up at night these days or right now, Ali? What comes to mind?

Speaker B: So I think the main thing is, uh, just staying relevant in the bigger picture. Um, in the shorter term, um, it would be remiss not to say that we are all dealing with a significant level of uncertainty. So I think those are the two things right now that are right top of my agenda for 3 o' clock

Speaker A: in the morning and uncertainty. Is this travel outlook. Is it the oil prices? Where is your head going at 3:00'? Clock?

Speaker B: Yeah, I think, you know, um, what's different about this level of uncertainty and the fact that it is geopolitically motivated is really trying to understand what consumers will do with travel. Do I advise my clients in the uk that's great. Everybody's going to stay at home. So it's going to be a fab summer. Or is everybody going to stop traveling anyway because nobody's got any money left? You know, these are the kind of things. There are certain things which feel like they're difficult to interpret right now.

Speaker A: Okay, so you're in this period of uncertainty because you don't know yet? Like. Yeah, uh, we are roughly, you know, spring of 2026.

Speaker B: Uh-huh.

Speaker A: This is peak booking season for the summer right now, or it's about to start.

Speaker B: Yeah, it is. I mean, depending on the type of asset that you're talking About. But typically yes, I mean people are starting to make holiday plans. Um, and if I was being fair, I'd say that we're looking at um, a level of kind of like uncertainty in booking patterns as well that people are slightly hesitant, perhaps sort of holding back a little bit just to try and make sure that they make the right decisions about what to do. So. Yeah. And I tell you though, there's another thing actually there's another thing that's interesting for the UK traveler because now um, Europe has introduced this new fingerprint system. Sorry, this is going to be really timely, isn't it? This is like really 26. So um, now people are really dreading kind of like the two hour waits in queues whilst they get their fingerprints taken and they go through this new way of regulating um, the fact that from the UK we can only spend 90 days in Europe at any one particular time. So. Yeah.

Speaker A: Interesting, interesting. I didn't think you were going to mention the 90 days. The, the, the, the fingerprint and etc. I, I witnessed this myself I think about a week ago when I was in Europe. Um, and it was okay granted. I connected via um, Munich, uh, on my way to uh, where did I go? Sophia Bulgari.

Speaker B: Okay.

Speaker A: And uh, it went extremely smooth. Um, there uh, there was no wait times. But yeah, um, for people who don't know. Allie, what do you do?

Speaker B: Ali? So I am the Managing Director of uh, Revenue By Design and Revenue By Design provides hotel clients with um, fully managed outsourced services as a, ah, primary function. So Revenue Management Outsourced. Um and we have two other revenue streams that we work on. One is um, we also provide online training in the form of a qualification for anybody who wants to be more um, relevant within this space and be more confident in communicating their skills in revenue management. And um, then finally we also run the London version of the Global Revenue Forum which is a big conference that's held from our side. It's held in January in London, Milan and Stockholm on the same, on the same day. And um, it. The aim of Global Revenue Forum is to bring together the revenue management community. So that's what Revenue By Design does.

Speaker A: That's amazing. You're wearing so many hats and I could go in so many places right now. Uh, describe your typical customer if you will. So you're providing revenue management services to hotels that don't have a revenue management team. Is that fair? Is that a decent description? What do the hotels look like or what sort of the typical hotel?

Speaker B: A, ah, typical hotel for us would Be um, sort of 80 to 120 rooms, not necessarily super large. Um, um, that realizes that it's more efficient to outsource the revenue function because you get a fully qualified revenue manager. Ah, um, at an efficient pricing point. That said, we do actually operate hotels with more than a thousand rooms at times. It really depends on what the client needs at any one particular time. So we do scan right away across the board. But typically the sweet spot would be between 80 and 120 rooms.

Speaker A: That's amazing. Um, it hasn't always been like this, right? Like, revenue management is still a fairly new, I guess, practice in hotels.

Speaker B: Right?

Speaker A: Uh, you always used to have reservation managers or you used to have sales teams, et cetera. How did you get started in revenue management, Ali?

Speaker B: Um, I was working in distribution and E commerce before. So this is like a long time ago. I mean like last century.

Speaker A: Last century. Come on.

Speaker B: Yeah. Um, so, um, and so working in distribution and um, sort of like the emergence of um, the power of online travel agencies. It became quite clear that actually to be able to distribute effectively there needed to be some level of pricing strategy and some thought process behind that Distribution strategy and revenue management really was just emerging, um, in terms of it being mainstream hotel and also it was emerging in terms of the technology supporting that decision making as well. So that's kind of how I got into it, um, very early days and with Revenue by Design. I jumped in with a colleague and we, we just started saying that we did revenue management and then we got some clients. It was great fun. It was a lot of fun. Um, but that's, that's how the company really started.

Speaker A: For someone who's not familiar with revenue management, how would you describe revenue management? Like let's say somebody that is new to the industry or wants to get into the industry and was thinking, oh, this could be, you know, something. For me, how would you describe revenue management in hotels?

Speaker B: For me, it's a, it's a series of business processes that you put in place which are related to market segmentation, the ideal customer, um, demand management and pricing. So and, and beneath all of those elements, quite a few business processes that uh, when combined actually work together to optimize um, the demand, uh, for a particular property at a specific price point. So the challenge um, that I find in terms of people's interpretation of revenue management is that they think it's, oh, heaven forbid, uh, tweaking the pricing, which it's really not what revenue management is about at all. It is really about getting huge, um, um, being Extremely efficient about um, the relevant business process that need to be in place which when, which in turn when done really well, will provide the hotel with huge opportunity and to avoid them leaving money on the table.

Speaker A: So it's not only setting the prices, it's not going up and down the prices, it's business processes.

Speaker B: It is, yeah. Yes it is. So um, it's for example having a hugely efficient reservations department that um, makes sure that every single reservation is entered into us, into your property management system really cleanly. That customer is segmented. So you have um, an element of market segmentation. And when you have that you can then direct pricing, differential pricing towards different market segments. That then starts to um, segment your market which allows you to effectively. Differential pricing is providing uh, different price parameters for the same product, so selling a room at different prices to different segments at different times and then understanding the market demand, the booking windows of each of those segments and then fundamentally then uh, forecasting that demand and ideally then applying a price to that forecast. So the pricing really is almost like uh, the end game once all of the other elements are stacked up.

Speaker A: Interesting. So the pricing naturally happens from your perspective.

Speaker B: There's the economics of pricing which indicate that there's going to be a price point at which customers are willing to pay. Um, there's also going to be a requirement of the asset to drive a certain price because they need to make a certain amount of money. Um, and then there's also demand factors. So pricing isn't the last point, but I think it's probably a conclusion based on all of the other elements that you've put together in terms of the initial research in terms of that pricing strategy which of course is going to change. Um, um, the pricing is going to change. The strategy isn't necessarily need to change that much. Um, but certainly, yeah, ah, um, you've got to have that ability to understand so much about your market, the type of guest that's going to book, why, when and at what point and in which which mode that guest is. You know, I can be a different type of guest depending on what my needs are at any one particular time, whether it's for a business trip, a leisure trip, just going out for a party, you know, those kind of things.

Speaker A: So um, yeah, a lot of revenue, uh, management systems out there exist. Right? I mean there's probably hundreds of revenue management systems that claim that they can potentially replace the revenue manager on property. What do you say to that claim? Possible, not possible.

Speaker B: Um, I think that we are moving in a direction where Revenue management systems can create significant efficiencies in terms of the data analysis that's required. Um, you're seeing now a lot of um, revenue management systems proposing that um, agentic AI can produce scenarios whereby you have um, specific solutions that you can follow based on the data that they have. And I'm seeing as well demands from owners asset, then the asset management community to drive those efficiencies through technology and automation. Um, so for example a lot of at that community level you'll have people asking questions like how many hotels can a revenue manager run at any one time? And that has changed like a significant amount in the last five years. So previously it would, I don't know, if you first looked at some of the brands managing revenue management then it might be like three hotels and then it was five, then it was seven. Now it's not unusual for a revenue manager to be managing like 10 hotels, 15 hotels. Again, whether or not that level of detail that you might want is going to be there, if you're managing 15 hotels, it would mean that the technology has to be super efficient to basically help on that level. So I think the efficiencies in data management, but I think also that at the end of the day you still need a human at the end of that line to effectively analyze what makes sense, um, redirect that technology. If you know something that technology doesn't, then clearly you still need that human in the loop.

Speaker A: Yeah. And then there are events like Covid where suddenly 50 or 60 or 70% of your on the books reservations are canceled and you don't really have a scenario or you don't have a historic component to that. Um, mhm. You almost need the human person.

Speaker B: You almost do. I think, I think one of the things that, which is quite interesting that has come out of um, things like Covid and there's a rapidly changing marketplaces over quite a sustained period of time. If it's quite difficult to remember now, but certainly in the UK we had scenarios where different geographies were able to travel and other ones weren't. So you'd be in one region and you had to stay at home and you could be 10 miles down the road and you could travel. Um, so revenue management systems had to, had to, had to learn to respond to that. And I have to say that there have been some success stories out of that. Uh, relying significantly on past history is not necessarily the holy grail of a revenue management system anymore, whereas it was previously. There was a lot of business rules and small algorithms Built into revenue management systems which very much relied on kind of like how did last Tuesday behave in comparison to a Tuesday of last year which had similar demand characteristics. So there's significantly less reliance on that kind of data now because in reality we live in a world that is changing significantly more quickly irrespective of pandemics. There are other things that happen which mean that we have to pivot quite frequently, um, on um, the strategies and the expectations and forecasts that we had.

Speaker A: M. So less reliance on historic data, more reliance on what, like what is replacing the historic data, if you will.

Speaker B: But the ability to evaluate what's actually happening right now. Sort of the pace of um, demand changes, reservations, pick up, that type of thing. So really looking at exactly what's happening within a window and then creating um, scenarios that um, make sense based on the demand patterns that are coming in. So pretty much sort of working at the front of the curve rather than the back end of the curve. So the curve is still there in terms of the reservations, pace of arrival, demand patterns, um, maybe looking for similarities in demand patterns that perhaps we couldn't see previously. So just the way customers are behaving, um, the fact that lead times are changing quite significantly, um, irrespective of the segment you're talking to. So this type of thing I think, um, systems are better able to manage because they're more powerful, they can chunk a lot and a lot more data more quickly than they could before.

Speaker A: You mentioned lead times. Right. So lead time is the time between booking and arrival, uh, if you will. You seen significant changes in lead time in all directions or what do you see happening most of the time? Is it a shortening of lead time? Is it uh, what's happening?

Speaker B: Typically we are seeing a shortening of lead times definitely. Um, although you'll always find somebody that can come and give you some data that shows, wow, lead times are getting longer and longer and so there's loads more time to prepare. Um, but in reality, I think consumers in general are understanding that perhaps the old rules of um, deeper discounting um, towards the day of arrival are not quite so drastic. And so therefore, um, they don't necessarily have to manage when they make a booking, but they can actually manage when they make a booking based on their, on their own, their own requirements, rather than being driven by the industry to book early and save or um, the typical tour operator model which was very much sort of dumping inventory, um, just as the day of arrival approached. Uh, so it was quite confusing for guests at any one particular Time so you kind of like couldn't win whichever way you went. I think those kind of like scenarios are changing. Um, but certainly, and also I think that people are more impulsive than they used to be and um, making decisions to last minute decisions to take their travel.

Speaker A: Time travel is such an interesting industry because we're all travelers ourselves right In a way. So we all have an opinion that is both supplier oriented or the hotelier oriented but also the traveler oriented. Um, one scenario that I struggle with myself as a traveler is I would book far in advance, meaning I would be happy to pay to book now for my next trip in June, in July and September, but oftentimes I'm not doing it because I'm not confident whether I'm actually traveling for those specific days. And cancel policies have become extremely unflexible from a consumer perspective.

Speaker B: Right.

Speaker A: There's a lot of non refundable products out there. There's a lot of um, you know, cancel policies that are at least in some you know, destinations not very consumer friendly. And you know we all have limited travel budgets as well. So I often end up booking two weeks before I, I, I travel to avoid change fees, cancel fees, et cetera because they can, they can, they can happen quite often. What do you say to that? Like have we, have we lost a little bit the uh, I guess the ability to be consumer centric or do you consult your properties and always having flexibility as well alongside deeper discounted non refundable rates. Like what, what's the best practice here?

Speaker B: Reminded of a situation that we have at the moment in terms of current ah, sort of client base. One client is servicing what we would call the Uber high net worth individual um, so very, very very high end uh, product and on that basis, and it's also quite a unique experience and on that basis people are prepared to pay up front. Um and also it protects from the client perspective it does protect the revenue that there's certainly a significant percentage of that stay is paid for upfront for other hotels and other clients of ours that participate in a more competitive environment then it is more competitive to offer more flexibility to the guest and um, to follow certainly from an OTA perspective to follow their directives which is typically um, if you have flexible cancellation policies then algorithms are more positively orientated towards those particular properties. So, so it's it, it's very much horses for courses I think um, at the moment and, and the strategy has to reflect that. We have one client that sits in the middle at the moment and they have a Fully prepaid strategy. And it's very challenging. It acts as a restriction. That is a restriction we use in revenue management. If you really want to, if you want to calm down a booking curve like the rate of reservations arrival because it's going too hot, then you put in a restriction which is like okay, prepaid bookings only or length of stay restrictions, you know, and that would, that'll, that'll shut it down for you, you know, that will put the water on the fire. So um, it's um. And it becomes very complex when, if you get those wires crossed and don't understand exactly what you're doing and what that pricing strategy is doing in terms of how it's impacting customer behavior and customer decision making is. It's also you have to think about the customer. You know, um, they, if they're putting that money down up front, they have to find that money before they travel. And often in our head psychologically we're going to get the money when we travel, not before. So. Yeah, you know, unless, unless you're really good at budgeting, which I'm not. So you know, I never have the money. Yeah. So. Yeah, yeah, yeah, yeah.

Speaker A: Interesting, interesting. Um, what's the biggest, I mean you talk to hoteliers all day long. Uh, what's the biggest pressure hitting hotel margins right now?

Speaker B: I think the one that is pretty common across the entire industry is cost of employment, um, the cost of people. And um, certainly uh, I'm talking to the UK market which is where I'm at mainly. Um, we have cost of employment as an issue. Um, and um, we have um. So then that's reflected in increased taxes and an increase in the lowest wage, uh, or the lower wage brackets. So it is very challenging. And also we have cost of um, energy and cost of food. So actually everywhere it's just hitting the middle of the P and L. So that it's not just people, it's very much just the uh, operating environment as well, which is quite challenging. I'm seeing for example the first time, rather than revenue directors and commercial directors being charged with KPI driven targets. So monetary or numerically driven targets like Revpar or average daily rate, they're now being driven by targets such as how do I, um, well not how do I But you must keep down the cost of recruitment or you must keep down uh, you must keep your team stable. These are some of the KPIs that they've now got, which is stability of teams growing from within, um, reducing the cost of employment. So those are huge Changes. See changes in, um, the targets for the commercial, um, entities within hospitality.

Speaker A: At the moment you mentioned commercial roles, which I find fascinating because I do see that popping up much more frequently. I mean, we started the conversation talking about revenue management, but what we are also seeing in hospitality is the sort of onset of, you know, I'm a commercial leader, I'm a chief commercial officer, or, um, of sorts, encompassing the disciplines of revenue management, sales and marketing in a reservation management, distribution into a single, I guess, discipline, if you will. Is that the future of revenue management, that it's becoming a commercial role that encompasses more than just revenue management?

Speaker B: I think so, yeah. I, um, think certainly for hotels to benefit from the level of understanding that the revenue function has, um, then driving, driving that role into a commercial direction makes sense. Um, I think also you need to. We need to consider the efficiencies that an asset can bring when removing the silos of marketing and sales and distribution and the commercial function. And a commercial leader will bring that all together. And I see that happening more and more, and certainly from. I see it practically with Global Revenue Forum, where we had people that were speaking as revenue managers like four years ago, and they're now commercial directors. It's a very common route for them to go, which is great. I'm very pleased and proud of all of them that have gone that far, which is great.

Speaker A: So what competences do they need? If you're a revenue manager today and you want to become a commercial director or commercial leader of sorts, what. What's the area that they lack most? Sorry, that sounds terrible. Uh, you know what? Where is the opportunity?

Speaker B: I'm loving the answer to that one.

Speaker A: Where is the opportunity for growth?

Speaker B: Right.

Speaker A: Much nicer.

Speaker B: I think, um, I think. I think, um, the opportunity to grow for revenue managers is really moving beyond understanding the numbers, which, you know, a revenue manager typically is really familiar with the numbers. It's then repurposing those numbers in a way that services the language that's used by an asset manager or the language that's used by, um, a marketing director or the language that's used by a reservations manager. And I think it's having that confidence in the numbers means, um, that a revenue manager specifically can grow their, what you call it, emotional intelligence. I don't know, their ability to reinterpret those numbers in a way that satisfies these different target audiences. Um, and that's a real skill to be able to communicate something meaningful at those different levels. So working up and down, if you want to put it that way, um, or across the organization. And I think, um, that's an area where a revenue manager can really focus on their skills. Some revenue managers, they're just happy where they are. You know, it's not. You don't have, you don't have to go in that direction. And there's some people that absolutely love just being with the numbers and, um, and, and understanding how an asset performs and just really getting out the best, the best out of it. Um, if you want. But if you want to grow, then I think that having those skills, uh, is super helpful. Strategic skills as well. Um, that kind of like goes hand in hand.

Speaker A: Interesting, interesting. So be the analyst, but be an extremely good communicator because you have to convince a lot more teams about your strategy, about what's happening and where you're going with it. Is that, is that a fair.

Speaker B: Yeah, I think that's a fair assumption. Yeah, absolutely. Yeah.

Speaker A: I want to talk some more about sort of the future of travel search. You're organizing the Global Revenue Forum. I'm sure you talk a lot of agentic AI, but before we go there, um, quick, rapid, quick fire questions, right? So say anything that comes to mind and then we talk about agentic AI. Um, what's one metric you think is being overvalued right now?

Speaker B: Uh, I would say revpar. It just makes me uncomfortable. I feel like I'm 80. I feel really old when I even say it.

Speaker A: Gut instinct or AI recommendation? Who gets the final say in pricing

Speaker B: right now with the quality of AI? Um, analysis, I'd say gut instinct.

Speaker A: Okay.

Speaker B: But ask me again in a year's time.

Speaker A: A modern revenue manager is more a strategist or analyst. Which matters more right now?

Speaker B: Strategist.

Speaker A: Perfect distribution mix or maximum direct bookings? What's the real goal?

Speaker B: Perfect distribution mix.

Speaker A: Okay. And I have to go back to revpar. What's the most important metric?

Speaker B: Uh, I would say understanding cost of acquisition.

Speaker A: Okay. Okay. For every reservation, I assume sort of the cost of acquisition of a guest.

Speaker B: Yes, yeah, yeah. For every segment. Um, certainly. Yeah.

Speaker A: At your recent Global Revenue forum, you had a significant discussion about AI search tool and how they're shifting consumer habits away from, you know, the typical transactional queries. Um, with this shift in mind, how crucial is it for hotels to develop context, relevant content? I guess because now you're answering a bot, a large language model, right? Like, yeah, what, what do you recommend your hotels or your customers to. To do right now?

Speaker B: I reckon hotels really need to have an understanding of why a customer might Book and under what circumstances and create content that's likely to effectively create the largest FAQ that um, you've ever seen. Because it's kind of like what would I do under these circumstances? And the answers have to be somewhere in your content. Um, so if it's somebody asking about um, um, how long they can stay, can they bring the dog, do they have high, you know, do you have a high chair for my two year old, all of that data needs to be, then an AI bot needs to be able to simulate that data and from, from a specific property and feed it back to you. And it's a very, that's a very simple example. But um, typically these, the extremely long search terms are being used by guests nowadays and, and put into AI, um, large language models and expecting a result. And it does offer hotels an opportunity to really sell themselves based on the level of service and experience that a guest is looking for. And I think the concept of experiences now is huge and delivering on guest experiences is something that um, you can only really do if you have the right level of content there. So, so um, hugely important.

Speaker A: So concretely you're asking hoteliers to publish a thousand FAQs on their website. Right? Like come up with any possible questions your guests may have because they will ask the AI agent, the large language model whether they can have a soft boiled egg inside their hotel room.

Speaker B: Yes, obviously it doesn't have to be an faq.

Speaker A: Okay. But that's the question that needs answering, I guess.

Speaker B: Yeah, no, I mean, so it's also um, providing information on experiences that you can have locally. Um, it's having really nice um, blogs or use cases of kind of like what customers have experienced, experienced at your property. Um, so it's really repackaging content in different ways as well. Although actually a straightforward Can I do this at your property? Is, is and answering that question is also going to solve a lot of the problems. Um, but I've seen, I mean there are lots of different ways that hotels can answer those, can, can solve those, those things. Um, the content challenge in nice ways, you know, really nice designer LED ways which is, which helps solve the AI bot question.

Speaker A: But the risk is as a hotelier is that if I don't have the answer prepared, I won't show up to the guest. I just will disappear from their perspective of you. And while previously I may have gotten a phone call from a guest saying hey, do you accept dogs? That phone call no longer happens. Right, that's, that's, you're not getting that interaction with that Prospect guest M. What happens is that Prospect guest uses ChatGPT or you know, replace it by any large language model. Ask the question and if the property hasn't provided to your point, that content in their website somewhere, the hotel won't show up in this in the search result. Is that fair?

Speaker B: Um, yes and no. I mean certainly it's not as black and white as that. So certainly if you had, if you had 80% of what, what a customer is looking for, you would still show, but it would be, they would be, there would be a rider on, on that result saying I've managed to find you this but you can't get that, you know, you can't get the last two items on your shopping list. So. But they wouldn't be a straight. Never to be shown. Um, yeah.

Speaker A: Um. Are pictures becoming less important in this context?

Speaker B: Perhaps in the short term but not in the long term? No, I think it'll be um, multimedia searches uh, will become the norm. Uh, but right now perhaps not so much. Um, a lot of it's sort of like text led but still in future, definitely.

Speaker A: In your quickfire answer we talked about direct uh, bookings versus perfect distribution. Max. Um, we have to talk about OTAs a little bit. Right. What's your fundamental approach to using OTAs for distribution? Friend or foe?

Speaker B: Both.

Speaker A: Okay.

Speaker B: Yeah, let's go. Yeah, you can I think. Okay. So if you, if you, if you were to look at your property and you always had a percentage of occupancy that consistently year round was not being used, so you had like a gap between 100% and 80 let's say. And if you weren't using OTAs then you should because they will fill that gap. Um, if you are a property that you and, and not very well known then I think you should look at OTAs for just general breadth of distribution and promotion. Um, they, they um said because they do reach like customers that you just won't. So it says it's a really solid marketing tool to use. However, if you then get very lazy and um, you, you basically only use online, um, online travel agents then, then I think um, then, then you will become trapped in that OTA environment and you will be susceptible to the algorithms, um, that are being used to um, to present your property and sometimes they don't work for you and that becomes, then all of your eggs are in one basket and that becomes a very dangerous place to be in. Um, so it is really like using, going. It isn't necessarily walking the middle road because that sounds Like a bit of a, sort of, like a bit of a kind of situation. But, um, and nobody wants me to, um, so. But I think definitely you still want to have that direct connection with the, with the customer. So there is a direct strategy that should be taken, definitely. Um, but I think we need to be realistic in terms of, um, the breadth of awareness that online travel agents can generate and in that case supply you with bookings ideally that you would not have otherwise got.

Speaker A: Yeah, you said something very interesting that made me pause and I was like, okay, I need to double click on that. When you start being lazy as a hotelier, is what you said, right? And being lazy typically means you stop doing something, right? Like, what do you stop doing in order to really that leads to that reliance on OTAs. What is that? What do hoteliers stop doing when they rely too much on, um, you know, the ots?

Speaker B: I can, I can only give examples of when I've seen that. And it's where. It's where hotels have decided that it's too difficult, too uncomfortable and perhaps too expensive to try and work the direct channel harder. And typically that's when they are not very confident about what they're doing or then, or they're not doing things particularly well or perhaps the underlying pricing strategy doesn't serve, that they're using for the direct channel, doesn't serve the customer very well. So often it's when there's a lot of things that are wrong, um, but typically it then leads the hotel to rely on the marketing and the distribution capabilities of online travel agents, primarily because they do it really well. Um, and so that's why I sort of mentioned the word lazy, because it's effectively, it's a bit harsh to be fair, but it is effectively. It's selling out and giving over the entire inventory to a channel that is the owner of the guest at the end of the day.

Speaker A: I often have sort of very heated debates with hoteliers around marketing spend versus OTA commissions, right? And, um, especially with hoteliers that may spend five times more on OTA commissions than what they have as a marketing budget. And the argument that they make is like, where there's uncertainty with the marketing budget, right? It's just, I don't know necessarily whether it is going to convert into, you know, um, accommodations or, you know, bookings or which, you know, you could argue that's wrong and here's the proof, etc. What do you say to, to a hotelier that, that you know your challenge and say, hey, you should spend more on marketing. But there is a reluctance or there is, you know what's, help me, you know, in my next conversation with hotelier,

Speaker B: selfishly there's, there's the mathematics of it now if you look at the level of investment that, that hoteliers put into commission payments and if you then took a percentage of that and put that into direct, um, the direct channel, um, and, and grew that direct channel then that would be a self serving continuity uh, in investment. The mass of that is relatively straightforward. It's not a difficult sell. But I think what is happening now is that there are, there are better technologies in terms of tracking guest behavior. There's, there's better opportunities in terms of digital marketing to really understand exactly what guests are likely to do. And therefore I think you can get some more efficient results from, from the digital marketing space than you were able to before. So it's also having the right tech and um, I won't be able to kind of like offer you any examples of this because I'm really not in that space. But I do know that working with some of the digital marketing agencies that we work alongside from a client, with a client, from m. A client perspective, there's some extremely good technology nowadays that, that's able to create lookalike type clients and go after where those sorry, guests. So lookalike guests and go after those guests that behave similarly and therefore can, can actually, you can actually then start to farm or nurture you know, a new guest segment. So all of these things nowadays are um, areas in which hoteliers can explore to really leverage that digital marketing budget and not cap it. It doesn't make sense. If a digital marketing budget is working and you are getting more direct guests, then why cap that budget? It doesn't make sense. And I think that's, it's one of those, it's where the structure of budgeting and the P and L don't stand up and it don't work in the favor of the digital marketing, um, side of the business. Because if you've got a budget and it says that this is what you spend in digital marketing, then irrespective of how popular that or how successful that budget is, it's challenging to then get more because budgets are typically set in stone. And I've never had a conversation with a financial controller that says if this is really successful, can I have some more? There's the uh, Oliver Twist element to this, isn't there? What do you mean more?

Speaker A: Ali, are you making the revolutionary demand that we change how hotels manage their P and L. In a way.

Speaker B: Yeah, in a way. I, yeah, I am. No, I think, I think there, I think that we need to get to a point where we can be, where we can pivot if we need to. And I, and, and I think markets demand that, you know, if we're being successful, then why wouldn't you? Um, um, and that's, and that's not to say that given a solid commercial reasoning a financial entity would not change their mind. Of course they would. I'm sure. But, but I, I do think that budget structures and some of the rules around that are really prohibitive in terms of changing, changing strategy. Um, the clients that are open to change are the ones that the most, are the most exciting and the ones that are, they're able to accept failure as well as success. Um, test and learn being like a real maxim. And those are the ones that typically in the long run are more successful as well.

Speaker A: Interesting. What's one channel that uh, everyone should be participating in but is currently not on everyone's radar?

Speaker B: If I was looking at distribution overall, I think distribution is becoming significantly more important again and certainly from the direct channel. If you just combine some of the things we've spoken about like the improved um, capabilities of digital marketing, AI search channels, um, changing guests behavior patterns, it's all of this will serve you really well in terms of still remaining able to capture the guest uh, at the point of sale.

Speaker A: You're making a case for being in every channel is I guess what you're saying, right? Like if there is a channel you're not currently present in, get on it. Is that fair?

Speaker B: I would say so. And I can only say from my own experience but in my experience the only hotel companies I've worked with who are able to remain consistently out of online travel agencies are those that spend an inordinate amount of money and time and specialist capabilities on the direct channel like uh, significant amounts of time and energy and expertise or they have such a unique product that, that people want to stay with them and therefore they don't need to be um, on online travel agents and in fact if anything will then also claim that it's not necessarily aligned with the brand. So if you look at some of the um, ultra high net worth individual brands, which is something I've mentioned before, not necessarily actually ultra high net worth, but just unique um, and, and experience that I like that in now because I think experience that opportunities and hotel um, offerings are really something that people are looking for right now.

Speaker A: Interesting. Before we wrap up, I'm curious if there is something in a hotel room today that you think will disappear in the future.

Speaker B: Oh, crikey. I was going to say telephones, but m. Mostly they have. Although they are coming, they are reappearing. Would you believe it?

Speaker A: So they're reappearing. You've seen them reappear?

Speaker B: Yeah, yeah, I was in one and it had, um, the other day and it had one of those old Baker Light telephones, you know, the really old ones.

Speaker A: Okay.

Speaker B: That's fun with the RAM thing, you know that people don't know what you do with them with the round dial. So.

Speaker A: Yeah.

Speaker B: Ah, that was interesting. That was um, that was a, uh, blast from the past. I'm not sure anything about anything else. And dustbins are just so horrible, aren't they? But that's all I can think of. What's wrong with me?

Speaker A: Yeah, a good one. I, I recently came across a hotelier who said the key will not disappear. You know, like the physical key.

Speaker B: Oh yeah, yeah.

Speaker A: For, for, um, you know, for all the sort of hype around mobile phones and having a digital wall up on your phone is like, the key is critical and I hope they, you know, I will always be key being the key card, right? Not the physical necessarily key, the lock key, but the key card is something that I think most hoteliers will probably stick with for some time.

Speaker B: I think so too. I think, I mean I, I, when I, when I'm working and have, and in a hotel with a mobile, um, lock, the level of anxiety that I get, it's just mad just walking up the door, is it going to work? I mean, this is ridiculous and I could do without that.

Speaker A: So the anxiety I have that my phone runs out of battery is ridiculous.

Speaker B: Yeah, yeah. Uh, yeah, yeah.

Speaker A: Look, the future looking question that I have for you is when you think of agents making reservations, how soon until an agent will actually replace an OTA in your point of view? Because it's not yet there, right? I mean there is some.

Speaker B: No, it's not. No. Um, and, and some, some, some agent responses are just, they're comical, aren't they? They're just like, no, I mean, so that's not going to work. But I think probably sooner than later. And, and I think there' as with anything, it's going to be the, it's going to be the first, the first to market type consumers that will drive that, um, and be willing to accommodate the downsides of the novelty and the innovation that they, that they, that they actually contribute to. So I think it's one of those tech questions, isn't it? Sort of like longer than you think but sooner than you thought kind of thing. So.

Speaker A: And who will win the race from your perspective? An OTA or

Speaker B: you know, travel booking is so complicated that at the moment, at the moment I think even a lot of AIs have kind of given up on the actual transactional side of um, it. So I think that in the midterm the OTAs will win. You know, they'll, because they, they do it really efficiently. Uh, so unfortunately not. I don't mean that obviously. Sorry, should I say that?

Speaker A: That's okay. That's okay. You can say fortunately, unfortunately, this is a safe space. Ali.

Speaker B: Uh, yeah, no, you and me, of course.

Speaker A: Exactly, exactly. No, but in all seriousness, I think you have a, a really valid point which is travel is not straightforward. It's, it's sometimes uh, complicated. Especially cross border, um, you know, payment facilitation is difficult at times. Right?

Speaker B: Yes.

Speaker A: Validating that the right customer is actually the person paying, you know, there's an identity validation. So it's, it's not straightforward. It's not. You're not ordering a pizza, you, you're doing a bit more than that.

Speaker B: Yeah, yeah.

Speaker A: So you cautious on who is winning that agentic race at this point? Is that fair?

Speaker B: I, I am. I think there's probably going to be other players that come in. I think like, I think the fintech sector has got, has got a lot of, of um, positive plays in the, in this whole environment, um, and they may well kind of make things much easier and therefore destabilize the race at the moment.

Speaker A: There is a question on m my list here that I haven't asked you yet, which I really like and I want to love to close with that, which is, you know, about the younger generation and especially making hospitality attractive again for the next generation of. So from your perspective, what needs to change for hospitality? Do we feel relevant again for a younger, I guess, generation and a younger talent?

Speaker B: I think we need to really revisit the brand identity of hospitality. Um, if you look at any of the advertisements for hospitality, um, the likelihood is that you'll see a chef or a housekeeper. And that is not what hospitality is all about. It is a fundamental part of it, obviously. But you don't see a revenue manager. There's probably a good reason for that, but you don't. So I think, um, you know, and you don't, you don't get to understand the level of excitement that hospitality industry brings and the opportunities to grow which you can grow faster in hospitality than you can in any other industry. I think one of the challenges is also um, certainly for Gen Z is that the hours are pretty unsociable if you're actually operational and it's just not in their nature to do things that are over difficult. Um, not my words but certainly one of the characteristics and I think you also need to remember that Gen Z's grown up in a lot of uncertainty and um, is anxious as a generation and sometimes the hospitality environment, it's a 24 hour show and that is quite, you know it can be quite an anxious environment to work in. So there's probably just a sub, um, a sub message of psychological message regarding hospitality that is new that what they see is people kind of like working very hard, high energy, very uh, a uh complete, often shifting environment within which you work. Which maybe well for me was one of the reasons why I loved getting into hospitality. But for some people it's just not what they want. They want stability, they want something that they know is going to be the same the next day. So there's a, there's a lot of, a lot of things that we could do to change the uh, what what people think of us. But I think the brand of hospitality is something we need to look at quite carefully and how we, how we position all of the different roles.

Speaker A: Ali, thank you for joining today, uh, this program and sharing your insights, your expertise and your experience. Experience in this matter. This is awesome. Thank you so much for coming today.

Speaker B: Thank you for having me. It's wonderful. Thank you.

Speaker A: Absolutely. Thank you for listening. If you like what you're hearing, make sure you subscribe to avoid missing the next episode. It helps us produce better shows and get the most interesting guests. Thank you for your support.