PHOENIX—A new white paper is expected to reveal opportunities CROs are missing, in an attempt to help hotel operators drive market share and increase revenue. Scheduled to release next week, Hotel Business has the preview.
“Managing operations by the cost line at the detriment of the bottom line is just bad business,” Bob Post, CEO of Cloud5, a Chicago-based provider of hospitality communications, told Hotel Business. “With the preoccupation of online bookings and threats from alternative channels, the voice channel has taken a back seat and become a cost-driven channel. What’s needed is simply a change of attitude.”
Cloud5 commissioned Scottsdale, AZ-based consulting firm HTC to conduct a survey of North American hotel companies to determine the hotel reservation call performance metrics, including conversion rates, achieved at both self-operated and third-party operated contact centers. The data compiled represents all lodging tiers. HTC grouped participating hotel companies according to their STR Global lodging tier assignment. The firm added another “multi-tier respondents” category to accommodate hotel companies whose contact centers serve brands in multiple lodging tiers across a shared service. HTC focused its analysis solely on CROs in the North American market.
The data, which incorporates 24 major brands/chains representing more than 8,300 hotels, revealed the average gross conversion rate for all lodging tiers is 27.1%; and the average net conversion rate is 35.85%. In nearly 100% of the cases, surveyed respondents only tracked one of the requested conversion metrics, either gross or net conversion. Brands or third parties have developed their own key indicators of what they exclude from total incoming calls.
“The industry needs to start measuring and publishing this data so operators can see how they stack up and just how much money they are leaving on the table,” Post said.
There are ways operators can change this. “First of all—operators have to ask the hard questions of whomever manages their voice reservations. Know your metrics,” he said. “Next, benchmark against yourself to see how conversion rates are trending. Are net conversion rates increasing? Are booking values on the rise? How about your ‘refer to a friend’ metric? Finally, you need to see how you stand against the competition.” Cloud5 has plans to collect this data twice a year to help operators begin to benchmark themselves using a conversion rate index that compares them to like brands and competitors in their region.
HTC also compared the difference in conversion rate for self-operated call centers versus third-party call centers. The firm found there was no significant difference in gross conversion rate; however, it did find about a 10-point advantage in net conversion between third-party contact centers compared to self-operated contact centers, 45.85% and 35.75%, respectively.
As with many aspects of the hospitality industry, CROs are having a difficult time with securing and retaining personnel. Nearly 63% of respondents did not know their average agent tenure, and of call centers that reported on tenure, the average was just shy of six years.
“Traditional call centers across all industries are known for high turnover due to the accepted practice of ‘answering calls’ with the lowest cost resource,” Post said. “When that is the environment and the management attitude, the positions aren’t filled with the most-qualified or motivated candidates. This can be prevented by looking at the contact center as a revenue center, not a cost center.”
Profitability pressures from OTAs and Airbnb have forced operators to focus more on lowest cost per minute instead of incremental revenue. This shift in priorities can result in increasing customer dissatisfaction. When this occurs, guests may more often than not look elsewhere.
“If callers have a poor experience when they call in—maybe they are put on hold for too long or feel they are not getting the info they need—they have options: hang up and call your competitor, or go online to shop more and likely book through an OTA or alternative,” Post said.
Today’s guest is determined to overcome roadblocks. “Whatever channel provides the answers and service that potential guests needs is where they will book,” he said.