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HB ON THE SCENE: RSS Identifies Important Tech and Strategies for the Future

NEW YORK—The second annual Revenue Strategy Summit (RSS), hosted by Duetto, Kalibri Labs and Silver Hospitality Group, took place here at the Affinia Manhattan, where representatives from brands, ownership groups, management companies, asset managers and technology providers came together to discuss the evolution of revenue strategy and challenges and opportunities for the future.

“Revenue strategy is taking an integrated approach of combining together all of the functional areas of a hotel—revenue management, distribution, online marketing, loyalty, and so forth,” said Patrick Bosworth, CEO and co-founder, Duetto. “I’m excited to learn and discuss issues that are at the forefront of what we can do to remain competitive as an industry. I think we’re at a turning point where we could go the way of a lot of other industries that have been disrupted and had their profitability undermined, through new intermediaries in the market, through new pressures that didn’t exist before, and I think we have a real opportunity to maintain the profitability of our industry for the coming decades.”

Educational sessions throughout the day focused on the shifting landscape, market insights and business intelligence, as well as discussions from companies that have made significant changes to their structure to adapt to new innovations.

The day concluded with a keynote from Jeffrey Katz, managing partner, KA Holdings, as well as the founding chairman and CEO at Orbitz. Touching on a lot of issues and themes discussed throughout the day, Katz focused on the rise of the new gatekeepers, companies that get in the way of what you want to do.

“There are landscape changes that are happening now, and it’s really important that you not see them in the context of a month or a year, or even three years. They’re going to take 10 or 20 years to get this right,” he said.

“Are we ready for the future?” asked Katz, who then compared the industry’s readiness for the future to The Matrix, in which the protagonist had the choice to take a blue pill and live in blissful ignorance, or take a red pill and see the truth.

He noted that those who take the red pill would recognize that the inflexibility of legacy systems is a growing constraint. “The industry players are going to have to tackle systems that got built in the ‘60s, ‘70s and ‘80s,” he said. “Nobody wants to deal with it.”

In addition, distribution costs will grow substantially. “If you’re worried about the cost of OTAs or TMCs, wait until Google is the world’s biggest OTA,” he said. “Does anybody think it’s going to be cheaper? It’s not. It might be better from a technical point of view, but it’s going to cost more. It’ll be an astoundingly important gatekeeper.” Katz also noted that iTunes has 800 million credit card accounts. “As app revenues grow, distribution costs through these marketplaces will grow,” he said.

However, Katz added that the industry isn’t powerless, pointing to how Orbitz disrupted Expedia and Travelocity in the late ‘90s by creating competition. He noted it did that by fielding a strong industry/non-industry team; being capitalized for success; having a defining and differentiating idea; and leveraging technology for the next decade, not the prior decade.

According to the exec, the hotel industry should have a real stratrgy for the future; field the best talent; make sure their own house is in order; and fix the resources vs. importance chart at their companies.

“Who’s really important today? Today, who’s really important, because it’s going to dictate our future, is Facebook, iOS and Android,” he said. “Today, they don’t have the economic might and impact on travel as they will in the future, but… eventually, resources will have to be remapped because entities like GDS and OTAs in the next five years will be benign resources in the marketplace. Resources will ultimately shift.”

 

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