As the Founder and CEO of the Stocki Exchange, a five year old hospitality consulting firm, John Stocki has found a passion in working with clients who are never willing to settle for “good enough” and constantly strive to be the best.
Before founding his own firm, John received a Bachelor’s degree in Hospitality and Tourism Management in 2007, and found his passion for hospitality with Kempinski Hotels with a position as the Marketing and Public Relations Executive for a luxury 5-star property in the United Arab Emirates. Three years and several promotions later, he transferred to another Kempinski Hotel in Dalian, China where he managed their Marketing and eCommerce department. Upon his return to the United States in 2012, John began consulting with Choice Hotels International to develop e-learning content and online training materials for over 6,400 hotels worldwide.
Today, John works with a range of different clients, assisting them in delivering on their brand promises and responding to the challenges of today’s ever-changing industry and consumer demands. He is also the Host and Travel Expert for a new luxury hotel TV show called Great Escapes that will launch worldwide to an estimated 2 million viewers in the fall of 2017.
We sat down with John to find out more about his experience and what he sees for the future of hospitality.
Tell us about the Stocki Exchange. What is it and what do you aim to accomplish for your hotel clients?
The Stocki Exchange is a hospitality consulting firm I founded in 2012 after my return from living and working in hotels throughout Australia, United Arab Emirates, and China for over five years. My global experience allows me to provide a unique perspective on the industry for my clients. I constantly encourage them to ask “why,” allowing them to adopt and adapt to change quickly.
What big changes have you observed in the hospitality industry in recent years?
One of the biggest trends I have seen in the US is the reversal of the cookie cutter hotel model that has reigned for the last three decades. Gone are the days of every hotel brand having the same color bed spread, check in counter, amenities, etc. A shift in consumer behavior, often times attributed to the Millennial generation, sees guests actively seeking out unique, one-of-a-kind experiences. That is the new norm, and brands are responding. Many companies are diversifying their brand portfolios to target emerging demographics such as the business traveler Millennial. For example, Marriott has recently launched many new brands including Aloft, Element, Moxy, and Protea, which are all boutique-style properties with a very specific target demographic. Hilton has done the same with its Canopy, Curio, and Tru brands.
What are the biggest challenges hotels are facing today?
While maybe not the newest challenge, but certainly a large one, is a hotel’s ability to drive as many direct bookings through its branded website as possible. In my experience, this started for two specific reasons. First, the rising commissions paid to Online Travel Agents (OTA) for bookings cut too far into hotel margins and affect profitability. With the tremendous growth and consolidation of many OTAs, the online marketplace for hotel bookings is now largely controlled by Priceline, Expedia, TripAdvisor, and their subsidiaries. With their low overhead, extensive online marketing budgets and vast consumer reach, these new OTA behemoths can now command search engine rankings, outbid many hotel brands for Google Ad placements, and demand higher commissions.
Bigger brands like Marriott, which manages over 30 brands that have over one million rooms worldwide, will likely have the best shot at competing in these battles. The smaller brands who have significantly fewer marketing resources will continue to face many challenges in driving direct bookings. It’s a continuous battle for smaller groups and independent hotels to keep up with constantly changing consumer behaviors and the growing digital distribution landscape. Smaller hotels brands have to decide whether it’s worth the money, time, and patience involved in running your own consumer marketing campaigns, or whether they should just pay the commissions to OTAs who have an ever-growing consumer reach.
Accor Hotels has taken a new approach to their relationship with OTAs by saying, if you can’t beat em’, join em’. Visit AccorHotels.com and you’ll see that a search for hotels in San Francisco not only shows Accor Hotels, but also other competitor hotels as well. By doing this, they’re thinking that they offer more options, and therefore a better solution for their consumers, similar to the ways the OTAs build brand trust with consumers. The risk here is that consumers using the Accor site will make a booking at a competitor hotel instead of their own. Yes, Accor may not have received a booking for one of their hotels this time, but by offering an OTA-like service, it did make a commission from the hotel that was booked from the brand site. It will be interesting to see whether this gamble of mimicking the OTAs by offering more options to the consumer through the brand website will pay off. Will Accor gain enough strong, long-term guest loyalty that it eventually receives a sustainable levels of commission revenue and bookings to their own hotels? Only time will tell.
The second reason to focus on direct bookings is the continual struggle to build and maintain brand loyalty. In today’s digital world, where access to information about hotel rates from thousands of different websites is available in seconds, this is certainly a herculean task. Additionally, a recent article explains that today’s most sought-after consumer, Millennials, are more brand loyal than you think. Historically, capturing attention and brand loyalty was primarily done through advertising, but research shows Millennials choose the brands they are loyal to through a brand’s experience, its mission, engagement, and level of personalization.
We live in the era of “moments” and it is affecting brand loyalty. Do you think this trend is already affecting hotels in the US?
Without a doubt we live in a world of micro-moments experienced both online and offline. I call this the digital blur. Whereas the Internet used to be a place where people go when they had to wait for the dial-up connection and had so many hours per month, today’s consumer is connected 24/7 which demands brands have a dynamic omni-channel brand presence. Brands that deliver a seamless personal experience from digital channels through on-property execution and post-stay communication will find the success they’re looking for. For today’s consumer, it has to be more than personalizing an email blast with “Dear John” as the heading and more of really learning what I appreciate and shaping my expectations to match. Those who solely focus on one aspect to capture market share, such as price, will continuously be in a race to the bottom and have some of the lowest levels of customer loyalty.
Perception is reality and brands that can most accurately manage the expectations of their consumers and overdeliver will consistently win.
In a recent article on your blog, you talk about the three ways hotels can compete with the OTAs. Why is this so important?
The first and most important reason is basic economics. With tremendous competition for traditional hotels in many already over-saturated US markets, uber-educated consumers, and the dramatic growth and popularity of home sharing services like AirBnB and HomeAway, many aging and outdated hotels cannot afford to lose any more market share or pay increasing commissions to OTAs without going under. Today’s consumers are more informed and have access to information at unprecedented levels. They demand transparency and don’t like the feeling of getting ripped off. Of course, no one likes the feeling of getting ripped off, regardless of the generation, but in today’s digital world where people have access to this online information spreading like wildfire, controlling rate parity through online channels has never been more important to maintaining brand loyalty.
When it comes to technology, do you believe hoteliers are adapting themselves quickly enough to the tech revolution?
It’s a mixed bag. The inherent risk of being an early-adopter to technology is that the market of consumers who care at first is relatively small compared to the overall population. Then, once a new technology becomes too mainstream, consumers move on to the next new thing. We see this pattern happening at breakneck speeds as everyone is trying to become the next Mark Zuckerberg and venture capitalists are trying to profit by becoming early investors in whatever tech revolution happens next. For hotels in particular, technology adoption at scale can be very costly, and it can be very difficult to calculate the ROI of adding new tech like hotel room door locks that can be controlled by mobile phones. The attention span of today’s consumer is similar to that of a puppy chasing a butterfly and changes to consumer technology are happening at lightning speed. As such, it’s hard to determine whether this investment in technology advancements really drive enough bookings to show an ROI.
Image Source: Wikipedia
At heart, I’m a true romantic when it comes to hospitality, which is one of the oldest industries on our planet. No matter how much technology automates the hotel experience, removing the points at which guests are required to engage with a human, I believe that human interaction will never totally disappear. This is essential to the guest experience – the ability to speak with a real person who can show empathy and passion, someone who truly cares that guests have memorable experiences, is irreplaceable.
As with any industry, by choosing the the role of early adopter, the potential rewards are directly correlated to the risks. For hotels, those with a higher tolerance for risk will likely win consumer attention and the resulting profits before the majority catches up on a new technology. However, they’ll likely also lose some of those bets and suffer the consequences. Other, more risk-averse hotels, will learn and marginally benefit from with little ill effect, but they won’t have the same ability to profit big by being the first to market with the next shiny new thing. Technology adoption is a double-edged sword. It’s powerful and dangerous at the same time, but its efficacy really depends on who is holding the sword.
Are hotels today fulfilling the expectations of the modern traveler?
Many are on a good path, but there is always room for improvement and innovation. Many smaller hotel brands and operators are still hesitant to adopt the digital revolution, specifically, the mobile-focused technology that today’s traveler is using to research to make an informed and educated decision on where to spend their hard-earned money. Customer engagement and authentic personalization are areas where many hotel brands have a lot of opportunity to grow.
As previously mentioned, large hotel brands such as Marriott and Hilton have diversified their offerings, selecting locations that match well with Millennial consumers’ travel habits and demands. Independent hotels may have a slight advantage in certain leisure travel markets as they could offer a more unique and authentic experience. The challenge they face will be having the marketing ability and budgets to drive consumer awareness of their brand/hotel.
What do you think are the biggest opportunities for hotels regarding the guest experience?
Guest experience innovation is a topic I discuss in depth with many of my clients and with other industry professionals. The way I approach the guest experience is the concept of managing expectations and over delivering.
This is categorically different than the underpromise and overdeliver approach, as I don’t believe under promising to begin with is a smart move from a brand perspective. Transparency and authenticity are the keys here. By properly managing each guest’s expectations you have a better idea of how to personalize each guest’s experience and knock their socks off with something that shows you understand them.
Thankfully, people love to talk about themselves and with the advent of social media, finding information about a person’s likes or dislikes isn’t too hard to do. Using that information to personalize a guest experience can surprise a guest is a positive way and is a great way to build a relationship that shows you truly care about them as a person and not just as a booking.
Do you consider the Sharing Economy, or short-stay rentals, a direct competitor for hotels in the USA?
Yes, 100%, and not only for the USA. Recent research has shown that sites like AirBnb are being used heavily by people and property management companies as a real, revenue-generating business model (as opposed to someone just looking to make a few bucks from their spare room). With fewer restrictions, licenses, safety requirements, and permits, these services are being used by persons or companies with commercial intentions. Many in the hospitality industry believe it creates an unfair advantage and potential dangers to guests. In simple terms, hotels really don’t like it.
At the same time, the market will decide who wins and with the recent estimates placing AirBnb to be worth $30 billion with a looming IPO, they must be doing something right. Hotel lobbying organizations are already fighting for equal requirements for operating a property through a home sharing site versus a traditional hotel, but only the future well tell whether or not those requirements will become a reality.
How is the relationship between hotels and these new players developing?
Based on the thousands of hotel, resort, and bed & breakfast (B&B) owners I’ve spoken to, I can count on both hands the number of them who were pleased with the latest home sharing trend. Almost every single one of them has the same complaint. People who operate properties through home sharing sites have almost none of the legal requirements that hotels or B&Bs have to comply with. From health and fire safety to Americans with Disability Act (ADA) compliance, hotels are required to maintain a strict set of standards to ensure guest safety, security, and accessibility. Those utilizing home sharing sites are not held to the same standards, and that really doesn’t sit well with hoteliers or B&B operators.
I believe that the relationship between these two entities will be very similar to the fight that ridesharing services like Uber or Lyft are currently waging with traditional taxi companies. At some point, regulatory authorities such as the Federal Trade Commission (FTC) may become involved but it’s unlikely. Meaning, it will be up to each State or local government to adopt their own restrictions and regulations for home sharing services to operate in their jurisdiction.