The concept of hotel companies ‘borrowing’ from the repertoire of successful airline practices is nothing new. Over the last three decades, airlines have pioneered many products and strategies that have eventually made their way into the hotel industry. Historically, several pivotal practices that were perfected by airlines have been adopted by hotel companies and have since become commonplace in our industry. These include the ubiquitous customer loyalty program, and more recently, the concept of yield management. For one reason or another, the hotel industry at large has lagged in introducing these strategies and as a result seems to be forever following in the ‘jetstream’ of the airline companies. However, one may easily argue that this is not such a negative thing, and that in doing so the hotel industry has managed to avoid full-scale commoditization (despite some of the segments having fallen victim to this). Regardless, this tendency of borrowing from the [most successful] airline tactics continues today.
Airline Practices Adopted by Hotels Historically
Rewind back to the early ‘80s when American Airlines grasped the concept of repeat customers and brand loyalty. The idea was simple: encourage repeat business by rewarding customers for their loyalty. Thus, AAdvantage was born. While no one will argue the effectiveness of well-structured loyalty programs, it was another two years before the sluggish hotel companies extended and adapted this concept to its hotel operations.
Yield Management is another commonplace practice that has its roots in the air, so to speak. A practice that was established in the early 80’s by airlines was eventually implemented in hotels following its undeniable success as a tactical tool in maximizing revenues.
Emerging Trends Being Extended to the Hotel Industry
There are, and will continue to be, new products, strategies, and trends that flow from airlines to hotels. Many of the latest emerging trends are technology based. Recently, hotels have started to introduce Common Use Self Service (CUSS) portals to its operations. Hotel lobbies across North America have been installing kiosks for self check-in and check-out. Marriott, Sheraton, Starwood, Hyatt, and Hilton have all be experimenting with this and gauging their guests’ reactions. A web-based example of this is online check-in. While airlines have been offering this for some time, it is only just in its infancy with hotels. Omni hotels is one hotel company that has recently introduced this service for all of its properties.
Online product personalization is another emerging trend in hotels. Online seat selection has been prevalent in airline travel for a couple of years, whereas the hotel equivalent, room selection, is only just getting its legs. This concept presents obvious operational challenges, however several companies have begun testing this service, Homewood Suites being one of the most prominent. Other hotel companies are also experimenting with online personalization, such as bed and pillow selection, dynamic packaging, and even in-room F&B offering selection. As we have witnessed in recent years with the airlines, hotels are attempting to harness the web capabilities of personalizing experiences and differentiating its product.
“No Frills – Chic” is another buzz phrase that is a blanket term for a number of exciting concepts emerging in hotel developments. The term describes the concept of merging design with budget. In short, affordable luxury. This includes new hotel concepts that cater to the budget conscious traveler, i.e. Micro Boutique hotels, where consumers are unwilling to compromise style and design for price. This concept has garnered tremendous popularity in Europe in the airline industry, where ultra low cost airlines have been able to seduce customers with trendy marketing and slick operations at a curiously low price point. Porter Airlines is a prominent example of this emerging concept on this side of the pond. The airline promotes quality and service with distinction, coupled with a luxurious, sleek, and trendy image, all at a reasonably low price point. JetBlue Airways is a similar product operating south of the border.
Can this concept be extended to hotels? Absolutely. And, in fact, it is already happening. Companies like Yotel, QT, and NiteNite are opening properties across Europe as well as using New York City as a gateway to North America. The concept? Chic for Cheap. Similar to the airlines, it is opening up what is traditionally a luxury experience to the masses. ALT Hotels is a prime example of this movement in Canada. As defined by ALT, the concept ‘redefines luxury, adding a dash of personality, a dose of great design and one-of-a-kind service to the standard economy hotel experience, without charging top-tier rates’.
This latest trend is surely not the last airline practice to be adopted by the hotel industry. However, having witnessed the airline industry propel itself into full-scale commoditization, perhaps hoteliers are wise to let such practices be first ‘piloted’ by our neighbours in the air.
Tyler MacDonald, Consultant
PKF Consulting Toronto
