CEO and Chairmen’s Views on the OTA Challenge

A recently published white paper on the state of the hospitality industry by Egon Zehnder’s executive search and leadership consulting team brings into focus the need for senior managers in the hotel industry to holistically re-examine how they approach their business, and ultimately their hiring practices, to meet their future needs.

I had an opportunity to carry on a three-way conversation with the authors, Hicham Sharaa from the Dubai office and Paul Liu in Shanghai.

The paper is based upon interviews with CEOs and Chairmen of two dozen major hospitality companies around the world. Their research in the sector highlights three major trends.

First, digital engagement with customers is the game-changer for the hospitality industry, even though the interviewees admit to falling short in this area. Elaborating further, it was stated that CEOs must now have both the curiosity and insights to drive functionality digital strategies for revenue management, financial controls and the customer experience.

If senior management simply knows numbers and traditional hospitality without a fluency in technology, the organization is doomed. Consumer behavior no longer tolerates subpar web or mobile experiences, while print and broadcast are dying as influential marketing channels. Top executives must not only acknowledge this trend, but understand that more tech-savvy companies such as the OTAs are already miles ahead. It is not a matter of simply catching up to the OTAs, but striving to surpass them by giving customers a simple value proposition with catchy marketing in channels that are relevant, good loyalty perks, interesting onsite features and a seamless digital user experience.

Second, hospitality corporations will need to put an increasing focus on the Chinese, Indian and Southeast Asian markets. Three-quarters of respondents stated that China’s growth will redefine the industry. They identify that there are leadership gaps and the sector will need to look to balance centralized management with rapidly evolving market requirements.

Again, the battle with the OTAs abounds in this arena. Top executives must become familiar with the unique characteristics of each region with regard to distribution channels, social media, mobile usage and customer behavior if they are to succeed. Each country is different, and a North American or European approach often won’t work.

Third, diversity in leadership teams will bring fresh perspectives, creative stimulation, more agile management and breakthrough insights on how to engage customers. In essence, the interviewees are stating that the future leaders of our industry will not come from the hotel school of thought. As chilling as this may sound, you can arm yourself for a future overslaugh by immersing yourself in technology and how each digital channel works.

Hospitality and technology will only become more intertwined as time goes on, so a thorough understanding of the latter will serve you regardless of your career trajectory. This might require innovation at the board level, where disruption might be necessary to support change.

Overall, it would seem as though hoteliers are being thrust into a world dominated by technological innovation. The OTAs and Airbnb, for example, thrive in a world where they can focus their efforts on digital and mobile platforms with zero investment in physical elements. In doing so, they have created exceptionally guest-oriented programs which help keep them top of mind for travel research and bookings.

Hotel chains, as well as independents, need to respond with innovations of their own. This might be the greatest challenge facing our industry since its creation, and it is one that we all will have to confront.

You can download the white paper in PDF here.

(Article by Larry Mogelonsky, published by eHotelier on July 7, 2016).

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