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Tim Peter

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August 5, 2020

How To Run Your Business As If Google Didn’t Exist (Thinks Out Loud Episode 298)

August 5, 2020 | By | No Comments

Google didn't exist: Google logo

Google is dominant. Google is the beast your industry’s 800lb. gorillas have nightmares about. They’re incredibly strong. But Google’s strength is incredibly brittle. In theory, Google could fail tomorrow. They’re a one-product company. They the vast majority of their revenues from one product: Advertising. What if they went away tomorrow? How could you run your business if Google didn’t exist?

While that might sound far-fetched, it’s not crazy to think about how to end your dependency on Google. Or Amazon. Or Facebook, Expedia, OpenTable, or whomever else you depend on today. In fact, it’s critical for you to think about how you could run your business if these giants didn’t exist.

How can you do that? How can you run your business as if Google didn’t exist. The latest Thinks Out Loud takes a look for you. Want to learn more? Here are the show notes for you:

Relevant Links — How To Run Your Business As If Google Didn’t Exist (Thinks Out Loud Episode 298)

Thinks Out Loud is sponsored by SoloSegment: SoloSegment increases large-enterprise, B2B website conversion with easy-to-install software that automatically connects website visitors to the content they need to see to achieve their goals. SoloSegment does this using anonymous data and machine learning ensuring privacy compliance, addressing the many anonymous visitors, and improving the efficiency of marketing teams. Visit SoloSegment.com.

Subscribe to Thinks Out Loud

Contact information for the podcast: podcast@timpeter.com

Past Insights from Tim Peter Thinks

You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:

Technical Details for Thinks Out Loud

Recorded using a Heil PR-40 Dynamic Studio Recording Mic and a Focusrite Scarlett 4i4 (3rd Gen) USB Audio Interface into Logic Pro X for the Mac.

Running time: 19m 39s

You can subscribe to Thinks Out Loud in iTunes, the Google Play Store, via our dedicated podcast RSS feed (or sign up for our free newsletter). You can also download/listen to the podcast here on Thinks using the player at the top of this page.

Transcript: How To Run Your Business As If Google Didn’t Exist (Thinks Out Loud Episode 298)

Well, hello again, everyone. And welcome back to Thinks Out Loud your source for all the digital marketing expertise your business needs. My name is Tim Peter. This is episode 298 of the big show. And I think we’ve got a really cool episode for you today. I think there’s some amazing, amazing stuff to talk about that has enormous implications for your business.

And I want to start off by telling you some numbers. So the first number is $18.7 billion. The second number is $35 billion. The third number is $38.6 billion. The fourth number is $59.7 billion. And the fifth number is $88.9 billion. So 18.7 billion 35 billion, 38.6, 59.7 and $88.9 billion. Those are the earnings that were reported by, respectively, Facebook, Microsoft, Google, Apple, and Amazon Facebook’s at $18.7 billion. Microsoft at $35B. Google at $38.6B. Apple at $59.7B, and Amazon at $88.9 billion for the quarter, which holy crap, right?!? That’s a lot of money.

Alright, I have one last number for you. And that is minus 2%. Now that last number is Google’s earnings compared to last quarter, they fell by 2%.

Now that may not seem like a big deal, but 2% decline is about $780 million, a little over three quarters of a billion dollars. I don’t care who you are. I don’t care how big your company is. I don’t care how much money you make. Three quarters of a billion dollars is a lot of money. And this was the first quarter in Google’s 22 year history that their ad revenue has not increased. It actually fell a pretty fair amount. Their overall revenue was down about 2%. Now that’s crazy.

And there’s two things that I want to point out about this. And I want to talk a bit about why these numbers have relevance to your business. The first is that Google is a one product company. They make almost all of their revenue from search ads, from advertising specifically, but largely search ads.
Of the Frightful Five, with everything going on with digital transformation right now, they’re the only one who saw a decline in revenues in the quarter. Facebook, Microsoft, Apple, Amazon, all made more money. Google did not.

The second is their earnings were solidly in the middle of the pack. You know, I mean, they’re, you know, they’re a little bit better than Microsoft. They’re twice as large as Facebook. But they’re half the size of Amazon in terms of revenues. And you know, only about 60 percent the size of Apple.

We think of them as being so dominant. We think of them as being so strong and yet really that strength is incredibly brittle. It’s built entirely on one product, on advertising. They’re an easy company that they could easily break. I know this is bizarre to think about, but Google could vanish tomorrow. If we all woke up tomorrow and decided we were going to search on Bing, or we were going to search on DuckDuckGo. Or we were going to search on, oh, I don’t know, pick any other search engine you can think of, you know, we all want to start using, I don’t know, Baidu, Google would be screwed because their, their revenues would fall to the floor rapidly. And we just saw it. I mean, they didn’t go away completely, but they fell for the first time in the 22 year history of the company. Why? Because advertisers started advertising other places or stopped advertising altogether because of all of the challenges that are going around.

And one of the reasons that they’re so paranoid, one of the reasons that Google is so competitive is because other companies really are out to get them and really they could go away incredibly quickly.

Since I’ve started this show with numbers, do you know how much Google pays Apple to be the default search engine on iPhones and iPads every year? The numbers are a bit sketchy, but it’s certainly north of $7 billion. TechRadar had a story the other day because of a, the antitrust investigation that’s going on in Britain that Google pays Apple, at least 1.2 billion pounds, which is about a billion and a half dollars, to be the default search engine on iPhones and iPads, just in the UK. And I’ve seen numbers that say as high as 9 billion to $12 billion in the past.

Now, is that a sign of a company that’s confident in their ability to compete?

Or are they saying, no, we recognize if we lose that traffic, we’re in really, really deep trouble. And that’s why Google competes so ferociously because they have to. And they’re going to do a lot to be even more competitive, you know?
In their most recent earnings calls, Sundar Pichai was talking to financial analysts and he said, you know, "on shopping," this is a quote, "on shopping users come to Google to find a lot of the products they are looking for, but we see an opportunity to invest and make the experience it’s better." Google’s saying out loud, "Wow, we need to do more to get people to come to us when they shop."

Here’s what, here’s how we continued. "Sometimes the journeys may fail because they don’t find what they’re looking for. So we want to make sure it’s comprehensive when people find what they like, we want to make it simple for them to transact. And so working on that end to end experience has been a big focus."
Right? It’s not like they don’t know that Amazon is twice the size that they are. They get that that’s a problem. He continued by saying the early early indications are that "…users are responding positively, both in terms of user engagement and more importantly, giving value back to merchants for their investment there. In some ways it’s a return to our first principles. We want to ensure that Google is the best place for merchants to connect with users."

Again, they know that they’ve gotta be in the middle. They have to be there or else they’re in big, big, big trouble. Now contrast those comments with what Amazon’s CFO Brian Olsavsky said on their recent earnings call. He said demand is still super high. "Well, we’re seeing it’s driven by Prime members and Prime member engagement. They’re shopping more often. They have larger basket sizes. There’s still a heavy component of online grocery sales tripled year over year in the quarter, as we added capacity there." Which is crazy.

Olsavsky also said, and I am not kidding, this blew my mind, that they cut marketing spend in the most recent quarter two. And this is a quote, "to manage demand." In other words, the demand that they’re seeing has exceeded their capacity to meet it. So they cut marketing to slow down demand. That’s crazy.
Wouldn’t you love to have that problem right now that you can say, you know what? I really need to cut my marketing spend because too many people want to buy from me. That’s nuts. Anyway, Olsavsky also said "Prime membership and the acceleration we saw in the U S or worldwide, it’s just another encouraging sign. We think there’s still a lot more value we can add to that program."

So Amazon is saying we’re winning, we’re winning big time. And we’re going to still try to do better. Google is saying we’re losing and we need to do better. And that’s the reality. These are companies that are making billions of dollars per quarter, you know, billions and billions of dollars. And they’re still trying to improve.

So the question I would pose to you is imagine Google went away. What kind of business would you create? What kind of interaction would you create with your customers if you didn’t have Google? And if you prefer, you know, substitute Amazon for that, or substitute Facebook for that, or substitute Expedia or Booking.com or OpenTable, or, you know, whatever intermediary you deal with on a regular basis. What kind of relationship with your customers would you build if they didn’t exist?
Now you say, well, that’s crazy. It couldn’t be done.
Nonsense.

First of all, it was done before they ever came along. And secondly, the there’s a great article in a journal in a, in an online publication called The Information. It is a paid media channel, but you can view one article by giving them an email address. And I will encourage you to see the article that I will put in the show notes that talks about how Airbnb is trying to structure their company as one that lives without Google. What would their relationship to customers be without Google? Now again, Airbnb sure. Big company. But how did they get to be the size that they are? By going directly to consumers in the first place and saying, they’ve said it in the article that they got to dependent on Google and now they want to be less dependent on them.

What does all this mean for you? Well, first, none of this means that Google is going to lose. I mean, who would you rather bet on? The company that’s leading the race or a scrappy underdog, who’s willing to do whatever it takes to avoid losing. You know, I know Google might have only brought in $39 billion last quarter. I mean, gosh, that’s a terrible situation. Right. But do you really think that they want that number to get smaller? Yeah, me neither. Of course they want to grow that. So I don’t think by any stretch that they’re out of the race or they’re going to fail tomorrow.

I’m saying they could. And I’m also saying that you don’t have to contribute to their continued dominance any more than you need to. I realized that probably sounds a little contradictory. I’m not saying don’t use Google. There’s a lot of really good reasons to use Google. You know last week and the week before that, and the week before that, I talked about how you can use Google’s data to get a better understanding of your customers. And I think you should totally do that. I think you should continue to do that.

But what you also need to do is think about what Amazon is doing. Think about what Airbnb is doing. Think about what other successful businesses that you know are doing. And the first of those is they’re building direct relationships with customers. You need to build direct relationships with your customers. And I know that may seem hard given everything that’s going on right now, but there’s this old adage you’ve undoubtedly heard. I’ve probably said it on the show before that the best time to plant a tree is 10 years ago. The second best time is today.

So grow your email list. Start a loyalty program, right? You think of Amazon Prime as being this really big, huge thing. And Amazon is looking for ways to continue it because they see that people who participate in the loyalty program actually buy from them more often.

Now there are two ways to build a loyalty program. I don’t want to go down this rabbit hole too much on today’s episode. But you basically can think about loyalty programs working one of two ways. One is a rewards program, which is the way many work if you think about airlines and hotels and the like, you know, you stay with us, we give you points. You can later use those points as currency to buy more hotel stays or more airline tickets or other things, gifts and stuff like that.

And then the other way is a recognition program, which is really the way Prime works more, which is you recognize your customers. And they gain benefits for being loyal customers, as opposed to gaining points that they later trade in for something.
I know a small farm stand that’s not far from where I live, that has a loyalty program. That is a recognition and rewards program. So you can do this as a small company. If you are a small business, you can do this as a mid sized business. You can do this in B2B. How do you recognize your best customers? How do you reward them for continuing to do business with you?

Next thing that you need to do is you need to build your brand. Now, this actually has more to do with Google than anybody else, but in a world of search, you really want people searching for your brand. Of course you want to gain top of funnel. Of course you want to gain people who may never have heard of you. But you want to be sure that when people are looking for a product or service that you offer, it’s much better if they’re actually looking for you by name than if they’re just looking for the category. Because if they’re looking for you by name, the odds are they’re going to come directly to you. If they’re looking for the category, the odds are that they might come to you, but they will also see all of your competitors. And again, you become more dependent on Google picking you to be the winner. If you want to run your business as though Google didn’t exist, don’t depend on them to determine that you’re the best answer. Be the best answer for your customers. Be the brand that they search for and that they seek out.

You also, to do that, you have to use data, use search data, use social listening data. As I’ve talked about the last few weeks to understand the questions your customers have. Then answer those questions, help your customers get the answers that they need, and succeed at their objectives.

You can compete. You can do this. I can point to case study after case study and real world examples, not just like academic case studies, but real world examples of companies who are succeeding with this every single day, including my own business, people come to us directly, right? Hotels that I work with, people come to them directly. Hotels that I don’t work with. Small businesses that I work with. Large businesses that I work with. People seek them out directly.

The point isn’t to beat Google. The point is simply to do what’s best for your customers and build your brand and build direct relationships with them so that it doesn’t matter whether or not Google exists at all.

And since I opened the show with numbers, I want to wrap up with one last number. And that is if you put your focus on your customers, if you run your business as if Google didn’t exist, then the only number that you’re going to have to worry about and the one that you’re going to be most happy with will be the one that’s in your bank account.

Now looking at the clock on the wall, we are out of time for this week. I want to remind you that you can find the show notes for today’s episode, as well as an archive of all past episodes by going to TimPeter.com/podcast. Again, that’s TimPeter.com/podcast. Just look for episode 298. While you’re there, you can click on the subscribe link in any of the episodes you find there to have Thinks Out Loud delivered to your favorite podcatcher every single week.

You can also find Thinks Out Loud on Apple Podcasts, Google Podcasts, Spotify, Stitcher Radio, Overcast, wherever fine podcasts are found. Just do a search for Tim Peter Thinks, Tim Peter Thinks Out Loud, or Thinks Out Loud. We should show up for any of those. I would also very much appreciate it while you’re there if you could provide us a positive rating and review. It helps new listeners find us. It helps us show up better on search on those various podcast hosting services. And it helps new listeners understand what the show is all about. It makes a huge difference to the podcast and I very, very much appreciate it if you do that.

You can also find Thinks Out Loud on Facebook by going to facebook.com/TimPeterAssociates. You can find me on Twitter using the Twitter handle @TCPeter. And of course you can email me by sending an email to podcast@timpeter.com. Again, that’s podcast@timpeter.com.

I’d like to thank our sponsor. Thinks Out Loud is brought to you by SoloSegment. SoloSegment works with large enterprise B2B companies to convert more customers. They use machine learning powered Software as a Service to automatically connect website visitors to the content they need to achieve their goals. They do this using anonymous data and machine learning to ensure privacy compliance, address the needs of visitors and improve the efficiency of marketing teams. You can learn more by going to solosegment.com.

With that, I want to thank you so much for listening for the last 297 episodes and this one specifically. It means so much to me. I hope you have a great rest of the week. I hope you have a wonderful weekend. And I’ll look forward to speaking with you here on Thinks Out Loud next time. Until then please be well, be safe and as ever take care, everybody.

Tim Peter

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April 28, 2020

Why You Should Be Optimistic About the Future Right Now (Thinks Out Loud Episode 285)

April 28, 2020 | By | No Comments

Why you should be optimistic right now: Woman joyfully embracing the futureLooking to drive results for your business? Click here to learn more.


Why You Should Be Optimistic About the Future Right Now (Thinks Out Loud Episode 285) — Headlines and Show Notes

Are you pessimistic right now, optimistic, or just plain realistic? Well, there's evidence that shows you need to be both realistic and optimistic during tough times. The problem is, too often, we focus on the realism (or, unfortunately, the pessimism) without balancing it with optimism. And that's a mistake. This week's episode of Thinks Out Loud aims to correct that, with some details on why you should be optimistic about the future right now.

Want to learn more? Here are the show notes for you:

Relevant Links — Why You Should Be Optimistic About the Future Right Now (Thinks Out Loud Episode 285)

Subscribe to Thinks Out Loud

Contact information for the podcast: podcast@timpeter.com

Past Insights from Tim Peter Thinks

You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:

Technical Details for Thinks Out Loud

Recorded using a Heil PR-40 Dynamic Studio Recording Mic and a Focusrite Scarlett 4i4 (3rd Gen) USB Audio Interface into Logic Pro X for the Mac.

Running time: 16m 04s

You can subscribe to Thinks Out Loud in iTunes, the Google Play Store, via our dedicated podcast RSS feed (or sign up for our free newsletter). You can also download/listen to the podcast here on Thinks using the player at the top of this page.

Tim Peter

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March 3, 2020

Coronavirus COVID-19 and the Travel Industry: How Hotel and Travel Companies Can Manage Business Disruption

March 3, 2020 | By | No Comments

Coronavirus COVID-19 and Hotels: Guests checking into hotel

[Latest update: 15 July 2020
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Table of Contents – Coronavirus COVID-19 and the Travel Industry: How Hotel and Travel Companies Can Manage Business Disruption

  1. Overview
  2. The Latest on COVID-19 and Its Effects on the Travel Industry
  3. Key Headlines [Updated 15 July 2020]
  4. What You Can Do To Help Your Hotel Manage Through Coronavirus

Coronavirus COVID-19 and the Travel Industry: Overview

Travel and tourism make up about 10% of global GDP according to the World Travel & Tourism Council (WTTC). And that number grew faster than the global economy in 2018. Again according to the WTTC, travel accounts for one job out of every ten around the world and an additional "one in five new jobs were created by the industry over the last five years." So, travel is a huge deal. And anything that disrupts travel, by definition, is also a huge deal. Which brings us to the outbreak of the novel coronavirus COVID-19. For instance, GBTA (The Global Business Travel Alliance) stated that the impacts from the virus to business travel alone could be as much as $47 billion. Again, that’s huge.

The Latest on COVID-19 and Its Effects on the Travel Industry

First, some background. To paraphrase Bones McCoy, here at Tim Peter & Associates we’re consultants, "not a doctor." Lots of our clients are in travel, tourism and hospitality. It's an industry we're deeply passionate about. And we're trying to do our part to help our clients – and the industry as a whole – weather any storm around COVID-19. We're not making any predictions around what will happen with COVID-19, when its impacts will fade, or other medical information. For that, we recommend you check with the World Health Organization (WHO), the U.S. Centers for Disease Control or your local health officials. The CDC in particular also has a great set of resources and FAQs for travelers that are worth reviewing.

Similarly, we're not economists. However, we do know some really good ones. The Conference Board has a list of possible ways that we might "reboot an economy in free fall" that is worth a look. None of the scenarios pictured are necessarily rosy. But they offer several outcomes you can expect for each of the likely ways that the economy will recover once the health crisis has passed. One thing that is certain is that it’s increasingly obvious that we’re in for a long road to recovery here. For instance, JPMorgan Chase said in their Q2 earnings call that "…we still face much uncertainty regarding the future path of the economy" and that they expected a sharp downturn and a fast recovery — the "V-shaped recovery." Now? They expect something "much more protracted."

We're also not looking to catalog all of the stories about COVID-19 and its impacts to the travel industry. The fine folks at Phocuswire have a great liveblog for all the latest stories and HospitalityNet is offering a fantastic round-up of news stories and advice that is well worth your time. The last thing we want to do is ratchet up fear about this situation. This situation is already disruptive enough; we don't want to make it any worse than it is.

Instead, our intent is to update this post regularly over the coming days, weeks and months with tips and insights to help you navigate the business impacts associated with the novel coronavirus COVID-19 so that you can:

  1. Understand the bigger picture around novel coronavirus COVID-19
  2. Properly assess the likely impacts to your business
  3. Mitigate the risks and manage your business appropriately through this (potential) crisis

Latest Key Headlines (Updated July 15, 2020)

Current Outlook

A lot has changed in the last few weeks. As recently as late June, the headlines were optimistic, noting,

"…we’re continuing to see data that suggests to indicate increasing demand among guests. But it’s a slow, somewhat steady increase… the decline in reservations volume has stopped in many markets and is showing signs of improvement. In some cases, we’re even seeing booking outpace 2019 numbers."

The update continued,

"Based on data from a variety of sources — including STR, The Conference Board, Cleveland Research, and others — we expect the recovery to make its way slowly with some markets doing very well…"

However, we also stated,

"We’re not ready to call this a full-blown recovery — far from it… that’s by no means the norm" and that "[other markets will] …struggle into 2021… We’re also watching the number of forecasts that about a "second wave" of coronavirus infections coming this fall, which may mean we need to go through this all again. The question is how much we can claw back over the summer without risking the health and safety of guests and staff."

Increasingly, it looks like every market is going to fall into that second camp at various points through the rest of summer and fall. There likely will be periods where the virus recedes — either because of better behaviors by individuals (such as regular mask wearing), clear guidance from health officials and civic leaders on staying safe/healthy, increased outdoor activity reducing the risk of transmission, or a combination of these.

What is absolutely clear though is that guests must feel comfortable traveling. Full stop. Almost no one is going to travel if they’re worried about getting sick. That’s critical, apparent, and necessary before we’ll reach true market recovery.

In all these cases, we stand by this point of view,

"However, regardless of where your market falls on the curve, we think it’s important to capture (at least) your share of market demand while it exists. Just because demand is soft overall shouldn’t stop you from marketing effectively and efficiently to attract guests to your property."

Forecasts for Hotels

As noted, the recent data about hotel demand and travel generally has gotten much worse in the last few weeks. That doesn’t mean you can’t find pockets of optimism. It simply means we’re in a new phase that requires listening to guest concerns and addressing those to get your fair share of the business. Here are a few recent data points that explain what’s going on:

  • After several weeks of demand growth, STR reports that hotel performance for the week ending July 4 fell from prior weeks. A small number of markets did see positive growth , but the overall trend was not great. We would expect to see that pattern — a small number of markets doing OK while the rest struggle — throughout the next couple of months at least
  • Data from Kalibri Labs tells a different story, with a strong uptick week ending July 3 across most rate categories.
  • Delta Airlines’ CEO says that airline recovery has come to a stall due to the increase in COVID-19 cases. In fact, they’re holding off on increasing flights in August,
  • USA Today columnist Christopher Elliott dropped a bomb last week, arguing that "This is not the summer for a spontaneous road trip" in his "…case for canceling your vacation." Um… thanks? He offers a number of key points you should know in support of his thesis:
    • "36% of Americans won’t take another international flight until there’s a vaccine"
    • 30% of domestic travelers say the same
    • "Roughly a quarter of respondents say they won’t stay in a hotel"
    • "And 25% of respondents say they’ll never cruise again."
      Those are troubling numbers and serve to underscore why the economy is shackled to the health situation. Only when the latter ceases to be a concern will the former start to rebound in a meaningful way.
  • Despite this, it’s not all grim news. Data from Duetto’s Pulse Report (week ending June 28) shows that "2021 hotel bookings are pacing ahead." We’ll be keeping an eye on this trend to see if this continues.
  • Some holdover research from McKinsey around COVID-19's effect on the hotel industry remains useful. Most interesting is that the consultancy has created a range of forecasts for how long you might be facing these challenges, including an amazing graph included here. McKinsey shows two scenarios -- one longer and one shorter, but still measured in months -- for hotel industry recovery As we’ve discussed, the most likely scenarios show recovery taking until 2021 at the earliest, with, as mentioned, pockets of optimism along the way.
  • McKinsey’s numbers are similar to research from Morning Consult that asks ”When Will Consumers Feel Safe Again?” Much like the McKinsey data, the news is mixed. Some customers feel safe right now (that’s where the recent demand surges come from), while others remain much more cautious (that’s why it’s going to take a while to fully recover). The net result is that you’re going to have to work hard to capture your fair share until demand returns to pre-Covid levels.
  • One bit of good news along those lines comes from recent TripAdvisor Covid 19 Research that shows about a third of all respondents have opted to reschedule travel instead of cancelling outright. They’re also seeing increased search activity, signaling that latent travel demand exists. That’s why it’s critical to ensure your marketing continues to run right now. You want to make sure that guests who are shopping see your hotel — and they won’t if you’ve gone dark. Guests will decide at their own pace when they’re ready to travel again. If you wait too long, you’re going to miss out on their interest.
  • And Laura Koss-Feder explained on Hotel News Now how a small number of hotels have found success by offering groups the ability to buy out 100% of a hotel’s inventory. While it’s not an option for most hotels, it’s certainly a strategy worth giving a look.

Interpreting Travel Economy News

What do these mean for your business? A few key trends for how to manage through COVID-19 have started to emerge. These include:

  1. The economic downturn will persist for a while. While some markets are seeing improvement and all markets might see short "bursts" of demand, it's very likely that we're looking at 2021 (in the best case) before we fully recover.
  2. Individual markets will recover at their own pace. Due to differing realities around infection/transmission rates — and, bluntly, varying political pressures in those regions — not every economic region will see growth at the same time. The so-called "V-shaped" recession isn’t going to happen. And effects of the downturn will probably linger through 2021. However, some demand exists, so it’s critical you focus on gaining your fair share.
  3. You can and should gain your share of the demand even in soft markets. Some people need to travel for family, work, or other reasons. Some guests are comfortable with the risks. And some just need a break. You can decide for yourself whether you should encourage travel. But as long as your property is open for business, you should be looking to gain your fair share of whatever demand exists in the marketplace.
  4. Local and drive market business will come back first. Recent data from Expedia shows that travelers are staying closer to home this year. Data from trivago also show that "in-state travel increased by approximately 13% over January." That shouldn’t surprise you. This behavior tends to be true in any recession, but appears even more true this time around. That’s where your biggest opportunities are going to come from. We refer to this strategy of focusing on economically challenged guests in your local and drive feeder markets as adopting a "Backyard and Bundle" approach.
  5. When air travel resumes, it will take time to ramp up. This is simply a restatement of the prior point, but underscores why it's critical to focus on building plans for local and drive market now.
  6. Digital plays a key role in helping guests choose your property. Hotel News Now shows that many companies were unprepared for digital impacts of COVID-19. You don’t want that to happen to you. Guests are using the web and social to dream, browse, and yes, book travel even in the midst of this mess. Our founder and president Tim Peter tackled why you need your digital presence to do the heavy lifting for your hotel and how you can use digital tools to answer guest questions right now. Don’t miss those.
  7. Travelers' confidence will matter most of all. Of course, nothing will happen until travelers feel safe and economically capable of traveling. Data from trivago (and, common sense, tbh) underscore that reality. Watching confidence in those areas makes the most sense.

How Hotel Marketers Can Apply This Data

Even though it's going to take at least a couple more months before travel restarts in a meaningful way, doesn't mean you should sit on the sidelines now. As we've talked about, hotels that continue to market appropriately during economic downturns far outperform those that wait for the recovery.

Our founder and president Tim Peter’s "Backyard and Bundle" post was recently updated to include some outstanding best practices from Fuel Travel on how to target drive markets directly that you’ll want to be sure to check out. And RevenueHub put together "A How-To Guide For Targeting the Drive Market" that's worth a look.

We'll continue to focus on how you can put yourself in a position to succeed as the travel economy restarts in the coming days. And plenty of other great advice is presented below.

What Hotels and other Travel Businesses Should Do About Coronavirus COVID-19

Finally, here are a series of tips, techniques, and links to case studies to help you manage through the coronvirus COVID-19 crisis and the eventual recovery. We have been updating this section regularly during the last few weeks as the impacts have become clearer and will continue to do so as better insights emerge into how long the crisis will last.

Before the recovery can occur, at least three things need to happen:

  1. Each market needs to address any underlying health situation.The situation will not get better until medical authorities can control the disease itself.A full vaccine isn't likely until somewhere in 2021 — if ever. But we're starting to see some areas have success in controlling the spread and effects of the illness. As national, state, and local leaders learn from these successes and implement appropriate next steps we may see reductions in the extreme "social distancing" that is causing so much pain to the travel industry. Some markets appear to be reaching peaks in the health demand, so hopefully that signals a positive development.
  2. Guests have to have the money to travel. The forced shutdown of many "non-essential" businesses has created unprecedented effects on the economy. The Washington Post noted that "a record 3.3 million Americans applied for unemployment benefits" in March and that "Many economists say this is the beginning of a massive spike in unemployment that could result in over 40 million Americans losing their jobs by April." For context, "During the Great Recession… the worst week for jobless claims was 665,000. Last week the nation saw five times that amount." Even worse, an additional 6.6 million workers filed for unemployment in early April. Those two weeks alone combined are greater than the total number of unemployed during the Great Recession. While unemployment numbers have improved marginally recently, they’re still very high in real terms. How long it takes for workers to get back to work as local communities rebound will play a big role in how long it takes for them to be able to travel again. Hopefully, government stimulus and other interventions limit the downside economic effects enough to ensure sufficient demand exists. Obviously, time will tell. And, even if they're able to travel, there may still be one lingering effect…
  3. Guests must not be afraid to travel. This represents the biggest wildcard at the moment. Even once the immediate health effects have been addressed and guests have the money to travel, travelers may still have lingering concerns about the risks. There's simply no way at this point to predict how it will take. In all likelihood, guests will split into one of a few sub-groups:
    1. More adventurous types who, tired of weeks or months of forced isolation, can’t wait to get back on the road.
    2. More cautious types for whom the current crisis will shape their longer term behaviors.
    3. A third set that falls somewhere between the first two.

There’s no predicting which one of these groups will be most dominant. Past experience suggests that we’ll see recovery in luxury travel first though, so it will be worth watching those travelers later in the year to see which group(s) take a leading position — or if some other as yet unknown set emerges. Watch your denials report and web traffic to see if there are any "green shoots" popping up out there. 

What Your Hotel Should Do During Coronavirus and to Prepare for Recovery

For now, here are some best practices you can follow to minimize the effects to your hotel or other travel business:

  • Don't cut your rates. Anytime business softens, an easy "fix" is to offer deeply discounted rates to your guests. The theory behind this action supposes that you can use lower rates to attract attention and steal market share from your competitors. Except that most of the time it doesn't work.

    While you may experience a short-term lift in occupancy, competitive hotels typically react swiftly and lower their rates to avoid any lost share – before you're able to gain any long-term benefit from additional occupancy. Instead, all you've succeeded in doing is driving down rates for the market as a whole. It leads customers to put less value in your product overall. And it reduces your ability to market or serve customers effectively. We call trying to capture share by lowering rates "the race you can't win." Our advice: Don't run that race.

    Underscoring this point, research from Cathy Enz, Linda Canina, and Mark Lamanno at Cornell and STR found "the best way to have higher revenue performance than your competitors is to have higher rates. A hotel should not drop its prices below those of its true competitors if it wishes to enjoy a RevPAR premium" [PDF link].

    Revinate also outlines some of the challenges that hotels face when aggressively cutting rates during a soft period. The bottom line is that you're not going to influence a non-economic decision with an economic solution. As noted above, two of the three big issues driving travel decisions are the current health crisis and, longer-term, any fears guests have as we begin to recover from that crisis. Wait on using rate as a lever until it's absolutely clear that only economics influences your guests' behaviors. Screen Pilot in particular offers some outstanding tips on how you can forecast RevPar and occupancy during this "era of uncertainty" that are well worth your time. One thing you can do, however, is…

  • Consider offering value-adds instead. Continue any promotions you have in the marketplace (unless of course, they reference "sick deals" or some other truly unfortunate turn of phrase). But also look at including value-adds in your offers to attract attention and interest from potential guests. They can help you differentiate your product from your competition, increase the perceived value your guests and travelers will receive, but also help you maintain rate in the marketplace. It's tougher for guests to place a direct value on a spa, dining, or event credit included in their stay – and tougher for them to compare your offering 1:1 with competitors.

    Value-adds allow you to drive interest in your property, but don't carry the same risks associated with cutting rates. They can make the difference for many guests while giving you more control over your price in the marketplace for the longer term.

  • Control your costs. This one is obvious, but it's important to remember how important it is to control your costs at any time – bus especially during a crisis. A few ideas that may help:
    • Operate efficiently using checklists. It’s tough to control costs if you’re continually reinventing the wheel. Make sure you have well documented SOPs for the various activities at your property. If you haven’t already documented your procedures, now is a good time to commit those to "paper" (or better, an internal website). And, if you’re not sure how to get started, the folks at Alice have produced a massive series of 190 digital checklists for hotel standard operating procedures. [Free registration required]. And if you’re forced to close your doors, Stephanie Smith and the team at Cogwheel Marketing, along with Kylie Chen of Twenty Four Seven Hotels have put together a Temporary Closure Digital Checklist for Hotels that's very well done, especially for franchised properties.
    • Have a zero-tolerance policy against sick employees coming to work. Make your sick employees stay home. Seriously. We fully recognize the challenges that exist in a tight labor market. But sick employees run the risk of infecting guests and their fellow workers, each of which introduces a host of additional problems. If you can afford to pay workers for their lost time, we'd recommend it. You'll engender greater loyalty and increase retention overall. But, in any case, make sure that employees who aren't feeling well stay home.
    • Take rooms out of service. This one's tougher for some properties, but if you have rooms that need renovation or repair, slow periods are the perfect time to get those done. You can improve your property's overall service and experience without sacrificing additional revenues.
  • Review your insurance and other financial tips. Is coronavirus COVID-19 part of your coverages? Are you able to recoup any losses from business interruption insurance or similar? While insurance is unlikely to cover all your costs, they may help lessen any economic burden COVID-19 places on your business.
  • Market efficiently and effectively. One cost you absolutely don't want to cut is your marketing spend. Yes, you must monitor and control your expenses during any economic disruption. But evidence shows that travel companies that continue to invest in marketing during a downturn significantly outperform their competitors in both the short and longer-term. Research from Amrik Singh at the University of Denver and Chekitan S. Dev at the Cornell University School of Hotel Administration shows that "The results of this study show significant differences between winners and losers when measured by top-line indicators (Average Daily Rate [ADR], RevPAR, TRevPAR) and profitability (GOPPAR and NOIPAR). Winners were also found to spend significantly more on marketing than losers… total marketing expenditures are significantly and positively correlated with RevPAR, GOPPAR, and NOIPAR [during a downturn]. This finding implies that an increase in marketing expenditures has a positive effect on revenue and profit." [PDF link]
  • Tips for how you can market your hotel most effectively
    • Leverage your content marketing strategy to tell a great story about your destination and brand. In addition to the posts about why you need your digital presence to do the heavy lifting for your hotel and how you can use digital tools to answer guest questions right now, Screen Pilot has developed a tremendous set of resources for hotel marketers working their way through the current crisis. Their "Hotel Marketing COVID-19 Resource Center" is one of the best we’ve seen. In particular, they’ve got an amazing piece on how to use content marketing effectively during this period that's well worth your time. Fuel Travel also has a great Crisis Management for Hotels Resource List filled with excellent insights and ideas.
    • Don't disappear from social. Screen Pilot also put together an outstanding set of recommendation on how to effectively be "aware, available, and agile" on social. Many of these include items addressed above such as "encouraging consumer confidence" and using your FAQ pages to reassure guests. But the whole set is excellent and truly worth your time. You can check out their advice here.
    • Use email effectively. Email is always one of your best marketing and communication tools. But what's the right way to use email right now? Revinate offered 6 fantastic tips for writing a guest focused email during coronavirus that you should definitely bookmark and refer to often during this situation.
    • Think about adopting a "Fast Follower" approach to the recovery. This one is more of a suggestion than a recommendation. But it's likely someone in your market will be the first to try to commercialize and capitalize on the recovery… and will do that too soon. This remains a rapidly evolving and emotionally charged situation. Jumping the gun on selling risks a negative backlash from those still coping with the crisis or concerns around coronavirus. We'd strongly suggest you let someone else in your market be the first to take that step. As long as you put together the right plan and prepare to launch quickly when the recovery starts to take hold, there's little downside that anyone will beat you to capturing your fair share of the demand when it exists. Plan to be a "fast follower" and you should be fine.
    • Don't forget about past guests. Email, social, and targeted campaigns in search, display and YouTube all provide outstanding ways to reach guests who already love your property. Check out these outstanding tips from Screen Pilot for best practices on how to market to past guests during closure .
  • Cast a wider net. Yet another amazing post from Screen Pilot highlights 4 underrated channels to boost post COVID-19 brand awareness. Our two top favorites are leveraging Pinterest and thinking about digital radio/podcasts. That last item is particularly smart as part of a "Backyard and Bundle" approach to hotel marketing in the recovery.
  • Manage Google appropriately. It’s no secret that Google continues to play a huge role in the travel industry, especially during the Covid-19 situation. I’m sure that we’ll one day go back to talking about them as a bad guy, but for the moment they’ve put together a handful of excellent resources you should use to ensure you’re making the most of their tools during this highly disruptive period. These include:
    • Some handy guidance for updating info and temporary closures for businesses affected by COVID-19 on Google My Business. Along with your website, Google My Business is probably the best resource available right now for keeping guests and other customers up-to-date right now. Make sure you check out Google’s advice here.
    • This terrific article on navigating your paid search campaigns through COVID-19 from Google Ads Help. There’s an argument to be made — and I would make it in some cases — for keeping at least some paid search running right now. These Google Ads tips will help you manage most effectively regardless of what you do.
    • Google has also put together some examples of how brands are addressing the coronavirus. While it’s not specifically hospitality related, you can definitely learn some lessons that you can apply to your property’s connection with your community and customers right now.
    • Another very smart Thinks With Google piece uses search data to reveal how brands can help during the coronavirus pandemic. I love this. It’s a perfect example of how Google can use the extraordinary amount of data at its disposal to help businesses and consumers. For example, the data suggests that businesses can help customers adjust to the changes in their day-to-day lives. Do your F&B facilities offer takeout or delivery? Can you use your housekeeping or laundry capabilities to help those in need? As the article says, "Give people credible, detailed, and current information about your operations" to help reassure and assist them as needed.
    • Useful information from the Official Google Webmaster Central Blog on how to pause your business online in Google Search if that’s necessary. Think through how you’re managing your communication with guests around this situation and only pause what’s absolutely necessary. But follow Google’s advice in those cases to ensure you’re in the best position when you’re back in business.
  • Start planning ahead. It’s very early to start talking about recovery. At least forecasts suggest that we’ll be in lockdown mode until mid-June — or possibly later. However, even though we’re likely at least a couple months away from any recovery starting, it’s not too early to start planning for that recovery when it comes. To that end, HospitalityNet has put together a World Panel discussion around "Your Post-Crisis Top 3 Digital Marketing Action Plan." It contains great advice from industry heavyweights including Max Starkov, Loren Gray, Osvaldo Mauro, and our own Tim Peter (here’s a direct link to his point of view). There are a number of excellent ideas in there for you to explore when you’re ready. Our company founder Tim Peter also wrote about why digital must do the heavy lifting in difficult times that is worth your time. Given that you likely have the time right now, it’s a good time to start planning ahead for the eventual, inevitable recovery.
  • Keep learning. The current situation requires an adaptable approach to the rapidly shifting marketplace. Anything that helps you keep learning is a good move. This post attempts to help there. And my friends Loren Gray from Hospitality Digital Marketing and Robert Cole from RockCheetah put together a fantastic AAHOA Webinar addressed to hotel owners in the age of COVID-19, "Creative Marketing & Messaging Strategies," that you can — and should — review here. And Fuel Travel has put together several excellent podcast episodes on dealing with the difficulties caused by coronavirus, including one with Loren Gray on "Applying Lessons Learned from 9/11 To The COVID-19 Crisis" and an interview with our own Tim Peter reviewing "8 Things Hotels Should Be Doing About The Global Crisis." (We've also embedded that episode at the bottom of this post). All are well worth your time.

    Conclusion

Amazingly, we’ve been living with the novel coronavirus COVID-19 here in the Americas for fewer than 6 months. But some things are starting to become clear. It's increasingly less likely that this event will blow over with only short-term effects. And it remains possible that we will face a longer-term disruption or ongoing challenges every flu season from COVID-19.

What's more certain is that travel businesses and hoteliers who plan ahead, keep learning, control their costs, work to maintain rate, and continue marketing effectively will likely weather this storm – as well as any others that come along.

We'll continue to update this blog with additional techniques, tips, and strategies you can use to manage through this situation. And we'd love to hear from you. What's working for your business? Where have you found success in driving revenues and profitability? Drop us a line at revenuegrowth@timpeter.com. We'll be sure to share that here and keep the conversation going.

Past Coronavirus COVID-19 Coverage

We originally put together the following items to educate readers on the novel coronavirus COVID-19. There's now lots of coverage out there about what's going on with the illness and its economic effects. However, we're keeping these following sections available for your reference if you need them:

15 June 2020 Update

[Editor’s note: In mid-June, things were beginning to look decidedly more positive than they are when this update was moved to the archive (mid-July). In fact, as of this writing (15 July 2020), things look about as grim as they have at any other point during this pandemic. We remain optimistic that hotels who do the right things can manage through this crisis. The key is doing the right things to ensure you make it through.]

You may have noticed that we’re updating a little less frequently over the last few weeks. Why? As mentioned in our update from earlier in June, we’re continuing to see data that suggests to indicate increasing demand among guests. But it’s a slow, somewhat steady increase [EDITOR’S NOTE: As of mid-July, this is no longer true. Make your decisions based on your current data.]. We’re not ready to call this a full-blown recovery — far from it — but the decline in reservations volume has stopped in many markets and is showing signs of improvement. In some cases, we’re even seeing booking outpace 2019 numbers — though that’s by no means the norm. Still, there’s less to report on a day-by-day basis than there was a couple of months ago.

Based on data from a variety of sources — including STR, The Conference Board, Cleveland Research, and others — we expect the recovery to make its way slowly with some markets doing very well and others continuing to struggle into 2021. However, regardless of where your market falls on the curve, we think it’s important to capture (at least) your share of market demand while it exists. Just because demand is soft overall shouldn’t stop you from marketing effectively and efficiently to attract guests to your property.

We’re also watching the number of forecasts that about a "second wave" of coronavirus infections coming this fall, which may mean we need to go through this all again. The question is how much we can claw back over the summer without risking the health and safety of guests and staff.

All that said, here's what we're seeing.

[Editor’s note: These haven’t changed much. However, in the interest of transparency, we’ve kept the original trend analysis available for your review and our learning.]
  1. The shutdown appears likely to persist for a while yet. While some markets, as noted, are seeing improvement, it's very likely that we're looking at 2021 (in the best case) before we fully recover.
  2. Individual markets will emerge from shutdown at their own pace. Due to differing realities around infection/transmission rates and political pressures, it doesn't appear that every economic region will restart at the same time. That seems to reduce the likelihood of a "V-shaped" recession, with effects lingering through 2021. However, demand is already starting to return, so it’s critical you focus on gaining your fair share.
  3. In hospitality, local and drive market business will come back first. This tends to be true in any recession, but seems even more reasonable to assume this time around. We're referring to this strategy of focusing on economically challenged guests in your local market as adopting a "Backyard and Bundle" approach.
  4. When air travel resumes, it will take time to ramp up. This is simply a restatement of the prior point, but underscores why it's critical to focus on building plans for local and drive market now.
  5. Travelers' confidence will matter most of all. Of course, nothing will happen until travelers feel safe and economically capable of traveling. Watching confidence in those areas makes the most sense.
  • For starters, the latest US hotel results from STR for week the ending 6 June show that occupancy is now up to 39.3% from its low point of 22% for the week ending April 11. That’s a 78% increase during that period and a 3point-lift from just last week. That’s progress. The numbers are particularly strong in beach, park markets, which likely reflects guest preferences for open outdoor spaces. If that holds, city centers may continue to struggle in some markets for a while.
  • Speaking of guest preferences, McKinsey has put together some outstanding research around COVID-19's effect on the hotel industry. Most interesting is that the consultancy has created a range of forecasts for how long you might be facing these challenges, including an amazing graph included here. McKinsey shows two scenarios -- one longer and one shorter, but still measured in months -- for hotel industry recovery Clearly, the most likely scenarios show recovery taking until 2021 at the earliest, with some pockets of optimism along the way.
  • McKinsey’s numbers are similar to research from Morning Consult that asks ”When Will Consumers Feel Safe Again?” Much like the McKinsey data, the news is mixed. Some customers feel safe right now (that’s where the recent demand surges come from), while others remain much more cautious (that’s why it’s going to take a while to fully recover). The net result is that you’re going to have to work hard to capture your fair share until demand returns to pre-Covid levels.
  • One bit of good news along those lines comes from recent TripAdvisor Covid 19 Research that shows about a third of all respondents have opted to reschedule travel instead of cancelling outright. They’re also seeing increased search activity, signaling that latent travel demand exists. That’s why it’s critical to ensure your marketing continues to run right now. You want to make sure that guests who are shopping see your hotel — and they won’t if you’ve gone dark. Guests will decide at their own pace when they’re ready to travel again. If you wait too long, you’re going to miss out on their interest.
  • Kalibri Lab’s latest Industry Health report highlights this reality, with demand growing in many rate categories across multiple markets. Group/corporate business remains very soft, but most every other rate category has seen solid if not spectacular growth.
  • In Kalibri Lab's data, by the way, OTA rates continue to climb, even though occupancy on that rate plan have declined. This is something that's a mixed bag on its own. As we have said throughout for years, OTA's aren't evil; you absolutely should take any revenue you can get right now. But, also, consider whether it's time to invest in your own content and marketing to ensure you're getting the most profitable revenue you can. If you can drive demand through direct channels at a cost per reservation of less than 14% – and our experience shows you can – you're better off than getting that from an OTA. Again, we can't emphasize enough that it may seem silly to debate where revenue comes from at a time when, clearly, anyrevenue is a good thing. But we don't want to see hotels put themselves in a worse competitive position with the OTAs if demand suddenly jumps. It's not "either OTA or direct" here. It's "OTA and direct" that you should be shooting for.

1 June 2020 Update

  • The news right now, at best, is mixed. The forecasts that up until now have been positive, including Jan Freitag's update a couple weeks ago have started getting less encouraging (you can read all past updates below or via this link). Here's just a small sample of the headlines:
    • Hotel News Now says that analysts agree US hotels will take years to bounce back. Those analyses suggest we're looking at weak growth through 2021 and recovery not beginning in real terms until 2022. CBRE even has a "downside scenario" that "pushes back the jobs recovery to five years, which would significantly delay the overall recovery for the hotel industry." Um… yikes.
    • PwC's "Hospitality Directions US" lodging outlook [PDF link] "…currently expect[s] annual occupancy for US hotels this year to drop below 40 percent and average daily room rates to drop almost 20 percent, with resultant RevPAR declining over 50 percent from last year. RevPAR in 2020 could fall to a level not seen since 1994. [Emphasis added]" Again, not good.
    • Kalibri Lab's most recent Industry Health tracker (as of 1 June 2020) also shows either flat trends or declines in ADR and occupancy across the six rate categories they track.
    • Adding to the bad news, Sabre says its gross bookings are still down 90%. In this case, Sabre is mostly talking about air reservations. But, it goes without saying that significantly reduced air bookings will affect many markets that depend on air lift for its hotel reservations.
  • Now, despite these terrible headlines, there are some rays of hope here including SiteMinder's World Hotel Index (data as of 27 May 2020), which shows that global bookings are double where they were in April. That's a positive trend; let's hope that continues.
  • In less positive news, CBRE Hotels Research doesn't forecast full demand recovery until late 2022. This seems weird to us. The Hotel Business article we're referencing here makes that data seem like a positive; we're not so sure. What the data seems to show is that 2020, at best, will be a year of muddling though and that many hotels won't see real growth until 2021 – or even later in 2022. While that seems like the most likely outcome, that's hardly great news. None of this is to say you can't find successes along the way. But CBRE seems to be forecasting a longer, tougher slog than others.
  • This is more of a mixed bag than a true positive, but data from Deloitte's "Global State of the Consumer Tracker" survey has some kernels of hope. The good news, according to Lodging Magazine, is that "35 percent of people are still planning to fly domestically or internationally over the next three months, and that nearly a third (29 percent) of 18 to 34-year-olds are 'actively looking for travel deals.'" Additionally, the study found that "When you look at the cost of the travel products that we asked about-hotels, domestic and international flights, rental cars, renting private accommodations, taking a cruise, etc.-it looks like things will rebound the quickest domestically. " The bad news? That "…only a quarter of them [consumers in the survey] told us that they were feeling safe going to a hotel."
  • Whether this next item is good news or bad depends entirely on perspective, I suppose, but Skift reports that "Spirit Airlines finds even cheap fares can't help fill airplanes." This, when coupled with the data from the Deloitte study mentioned previously that shows, " the consumer is weighing health and safety concerns more than they are weighing their financial well-being concerns" strongly suggests that you can succeed holding firm on rate – as we advise later in this post – as demand returns. Discounted rates aren't going to drive demand; confidence about health outcomes will. The fact remains that guests aren't traveling right now because they're worried about their health, not because they're worried about their wallets.
  • Jamie Lane of CBRE released the company's latest (as of April 29) US Hotel Outlook Report [PDF download] and the data is more good than bad. For one thing, on page 8, the report notes that US occupancy levels have risen for the second straight week. Obviously, those levels remain historically low; however, it's good to see them trending in a positive direction. Lane also projects markets "re-opening to travel 8-12 weeks after peak" of new COVID-19 cases and shows that cases in many markets are peaking or peaked between 8 and 21 days ago (2-4 weeks as of this writing). So we're looking at the potential for some rebound in travel as we get into mid-June or perhaps early July. The rest of the report is worth reading, and to be fair, isn't all good news. But it's nice to finally see some positive trends on the horizon for travel.
  • The New York Times put together a well-researched article that outlines The Future of Travel that is worth your time. Among other things, they forecast increased drive market demand (much as we're predicting in our "Backyard and Bundle" recommendations) and increased focus on transient leisure, with corporate and group business taking longer to recover.
  • The Duetto Pulse Report for April 30, 2020 shows new bookings continuing to lag, but also says that "new bookings for 2021 are exceeding pace far more than expected." The revenue management company interprets this as "…largely due to groups rescheduling their events, and pushing them out a year." While the Duetto data and the CBRE data don't exactly line up, the variance likely reflects differences in the markets they're using for their data. In other good news from Duetto, they note that in, "…North America it would seem that cancellations have largely plateaued" which is a welcome sign. One other welcome sign in Duetto's data is that "…there was a slight week over week uptick in searches during the week commencing April 13. For North America this increase was for stay dates beginning as early as May 2020 through the end of the year." This is consistent with data we're seeing for our clients and represents, if not "green shoots," then at least a seed we can nurture.
  • In slightly older data, PhocusWire says that as business travel bottoms out, near-term optimism remains high
  • The Los Angeles Times also reports that coronavirus aside, cruise fans book trips for next year
  • Guests may have more reason to book direct both now and as travel recovers. In a somewhat positive development for hoteliers, The Points Guy lays out 6 reasons guests should book directly with an airline or hotel – and lays in to OTAs in the process. While we need to see more demand among travelers before this becomes a meaningful trend, it's far from inevitable that OTAs and intermediaries will return to their dominant position following the crisis. OTAs have cut marketing spend dramatically and – along with Google – are facing the same challenges as hotels. While I doubt Barry Diller is going to change his hard-driven ways, Expedia, Booking.com and the rest of the intermediaries may need to adopt a more conciliatory approach with guests and hotels alike when demand starts to return.
  • And our friends at Screen Pilot break down 4 airline industry trends and what they mean for your hotel. The big takeaways, which we've discussed below and in our "Backyard and Bundle" post, is that 2020 may turn out to be "the year of the car." But you can learn a number of other lessons from airlines around giving guests flexibility with their travel options and how to engage guests who are interested in traveling. The full article is definitely worth a read.
  • Other data from STR shows that U.S. hotel construction pipeline hit an all-time high in March. Room supply is always a trailing indicator, so don't expect that number to hold up for long. Not all of the pipeline will come to market (and it's possible that some existing hotels may fold due to coronavirus). The article itself supports that idea noting,

    "It's worth remembering – in 2008, the projects that were in the ground continued to get built, while the projects that were in the planning or final planning stages were most likely shelved. We expect the current pipeline to follow a similar pattern and will continue the monitor the number of projects that are halted in the coming months."

  • Bloomberg offered a solid Coronavirus travel video where Skyscanner's CEO sees an uptick in interest for late 2020 flight bookings. This is from a few weeks back and we're looking to update soon.

Plenty of Less Positive Hotel Data Also Exists

  • James Risoleo, Host Hotels and Resort's CEO, said on their latest earnings call that, along with the cancellation of $630 million in group bookings in Q1 alone, "We feel group travel is not likely to start meaningfully coming back to hotels until mid-2021. At this point, with the need for cleanliness and confidence in consumer safety, I would say until we have a vaccine, it's not likely you'll see group come back in any meaningful way." Full story available at Skift.
  • Expedia chairman Barry Diller echoed a similar sentiment, telling CBS News that there is "no chance" of economic rebound by summer.
  • Those brutal assessments aside, you must not get discouraged. Freitag rightly cited a version of "The Stockdale Paradox," which states,

    The Stockdale Paradox really defines the optimism that is most important in becoming a resilient person and that is, when you're faced with a challenge or a trauma, you look at that challenge objectively. You might make the assessment, 'I'm in really big trouble.' You have a realistic assessment of what you're facing. On the other hand, you have the attitude and the confidence to say, 'But I will prevail. I'm in a tough spot, but I will prevail.' That is the optimism that relates to resilience.

    Times are tough. That's true. We need an honest view of that fact. We also have to know that we'll get through these tough times.

Forecasts Still Show That Air Travel Will Suffer For Years

One group of analysts suggest that air travel will be negatively impacted for as many as five years:

Data Providers Offering Real-Time Updates

The best data are those that simply show in real-time how travelers are behaving. There are a number of these and we'll update as more become available:

  • Lodging Magazine highlighted some great news from Duetto Pulse Reportthat give some insights into when travel might resume at scale:

    The first report, highlighting data for March 2-April 5, 2020, showed clear indications that travelers intend to resume travel as soon as possible. In the United States and Europe, cancellations flatten by August 2020 and bookings for October 2020 are already trending ahead of 2019.

  • Google has released a series of COVID-19 Community Mobility Reports that give a sense of when and where people are out and about. As these numbers grow, it should give a sense of renewed interest in travel.
  • There's a new Daily Travel Index from Arrivalist that's particularly cool because it focuses on the drive market (more on this in a minute).
  • Adara has included a Travel Trends Tracker in its ADARA COVID-19 Resource Center that may provide some guidance as well.
  • Our new friends over at HotelRecovery2020.com have an outstanding Data Dive that aggregates the latest stats about coronavirus around the globe, plus rounds up much of the data from STR, Kalibri, CBRE, and others that we've previously recommended. Very helpful to have it all in one place.
  • And Boston Consulting Group continues to produce a series of COVID-19 Consumer Sentiment Snapshot #3that focus more on how people are feeling rather than their behaviors. We tend to prefer behavioral data (it's more predictive and shows what's actually happening vs. what mighthappen). But understanding consumer sentiment will also help indicate when guests start to feel safe to travel.
  • 21 May 2020 Update
    • STR's Jan Freitag, has an update on COVID19 and the U.S. hotel industry: Five things we learned and five things we are still wondering on his LinkedIn blog. The whole thing is worth reading, but here are some key points worth considering:
      • The hotel revenue data from China provides some hope.China offers a decent proxy for what we'll see elsewhere in the world and, generally, that data strongly suggests this is still a temporary – if significant – problem. Travel demand is returning and will continue to grow. We recommend you focus on gaining share from that demand while also keeping some powder dry in case the virus surges in the fall.
      • The "end" of the pandemic is still next to impossible to predict. Part of this is due to the rapid growth of the pandemic, with data changing day by day. And part of this is due to the mixed response from state and federal governments. Though part of that is due to the rapid growth… you get the idea. (We're not saying that government did a bad job here. We're just not notsaying that either).
    • The STR data for US hotels week ending May 16 continue the trends seen in the week ending 9 May data. There's more good news than bad in relative terms, though absolute numbers remain extremely soft. Occupancy is now at 32.4%, up from 30% a week ago. For many hotels, though, that's a breakeven point, so hopefully you're on the north side of that line… and that you stay there. As Freitag notes, "The trend of 'less bad' data continued with occupancy and ADR on a slow climb driven by a fifth consecutive week-to-week increase in demand… Last week's data showed demand of more than 10 million room nights sold for the first time since the end of March, and this past week, the industry inched close to 11 million." Fingers crossed that momentum continues.
    • Even better, Freitag goes on to say "…slow weekly demand growth should continue with more leisure activity around the country. Weekend occupancies continue to increase at a healthy clip, especially in drive-to destinations with beach access like Florida, or national park access, such as Gatlinburg, Tennessee. The industry will remain largely dependent on the leisure segment as uncertainty remains over when hotels will be ready to accommodate large events and group business." We've been touting our "Backyard and Bundle approach" for some time now. It looks like the data further validates that approach.
    • The latest Kalibri Labs data (as of May 19, 2020) shows a couple of worrying trends when compared with their May 11 data. While YOY occupancy in the RACK/BAR and Promotion + Loyalty Member Rates categories have climbed for four straight weeks, "guest paid ADR" is either flat or down in both. Worse, OTA occupancy (and, to be fair, guest paid ADR) have climbed during that same period. We gave that a "Boo!" last week and continue to stand by that message. Why? Well, as we said last week, OTA's aren't evil; you absolutely should take any revenue you can get right now. But, also, consider whether it's time to invest in your own content and marketing to ensure you're getting the most profitable revenue you can. If you can drive demand through direct channels at a cost per reservation of less than 14% – and our experience shows you can – you're better off than getting that from an OTA. It may seem silly to debate where revenue comes from at a time when, clearly, anyrevenue is a good thing. But we don't want to see hotels put themselves in a worse competitive position with the OTAs if demand suddenly jumps. It's not "either OTA or direct" here. It's "OTA and direct" that you should be shooting for.
    • In less positive news, CBRE Hotels Research doesn't forecast full demand recovery until late 2022. This seems weird to us. The Hotel Business article we're referencing here makes that data seem like a positive; we're not so sure. What the data seems to show is that 2020, at best, will be a year of muddling though and that many hotels won't see real growth until 2021 – or even later in 2022. While that seems like the most likely outcome, that's hardly great news. None of this is to say you can't find successes along the way. But CBRE seems to be forecasting a longer, tougher slog than others.
    • Kalibri Labs Industry Health Report also shows a mixed bag, with overall occupancy trends still declining, but growth in transient leisure business. Additionally, the decline in major markets continues to shrink each week. Demand for Atlanta is still down 66% YOY; however, that’s significantly better than its bottom level of negative 140% YOY from mid-March. Other major markets show similar “lift.” Miami, for instance is still down 100% year-on-year. That too though is a huge improvement from its greatest decline (192%) reached late in March. I know it may sound idiotic to claim that year-on-year declines in demand of 60%-100% are a good thing. That only illustrates precisely how steep the drop-off has been — and how much room we have to make up before we see a true recovery.
    • Jan Freitag, STR's senior vice president of Lodging Insights, in his April 27 data recap for Hotel News Now said that there's no sugarcoating US hotels' record drops in March. Key quote: "If you could just insert in your head this half-sentence: 'which is the worst drop ever recorded' after every single percent change number in this document, that will save me some work. Demand declined 41.2%, which is blah blah blah you get the idea." While that may seem flip, it is, unfortunately, an accurate assessment of the current state of the industry. Worse, additional data from STR says that the US hotel industry still long way from recovery. In fact, Hotel News Now's writeup of the data quotes as saying, "The U.S. hotel industry likely hasn't reached the bottom of performance declines, and it will still be some time before it begins to climb out of this pit. [Emphasis added]"

    The Bad News About Coronavirus Covid-19

    Let's start with the bad news. And, I'm sorry to say that there's a fair bit of it. The disease originated in Asia and, as you might imagine, that's where the greatest impacts have been felt so far. But, health officials are tracking rising numbers of cases in Europe, the Middle East, and the Americas, with, for example, California monitoring at least 8,400 people for the coronavirus. This sudden spike – which is expected to get worse – is leading many businesses to restrict or cancel conferences and business travel. Some of these include:

    Again, Phocuswire's liveblog can help keep you up to date on additional cancellations that might matter to your business.

    Impacts to Travel Businesses from Coronavirus COVID-19

    A number of news outlets are also rounding up stories around the impacts from COVID-19 that may be worth checking out. We'll update these as needed over the next few days/weeks, but mostly these are to give a sense of the overall travel industry effects of the virus:

    The Good News about Coronavirus Covid-19

    Thankfully, it's not all "doom and gloom." Here are a handful of positive – or at least neutral – stories that show how some events and travel businesses are managing through the crisis. We'll highlight specific case studies where relevant:

Tim Peter

By

February 11, 2020

We Live in the Future (Thinks Out Loud Episode 274)

February 11, 2020 | By | No Comments

We live in the future: Team collaborating over augmented reality screensLooking to drive results for your business? Click here to learn more.


We Live in the Future (Thinks Out Loud Episode 274) – Headlines and Show Notes

When you look around, do you feel like you’re living in a futuristic utopia? Or does it feel more like a dystopian future to you? In either case, it’s clear that we already live in the future. Whether you see a world filled with global access to instantaneous information, improved medical treatments, and declining poverty, or one filled with information overload, disparate access to healthcare, and growing income/wealth inequality, the fact remains that the future is here, now.

This week's Thinks Out Loud looks at the “state of the future” that we’re living in, positive and negative, and offers some thoughts on how you can make it more positive for you — and for the world around you.

Want to learn more? Here are the show notes for you:

Relevant Links – We Live in the Future (Thinks Out Loud Episode 274)

Subscribe to Thinks Out Loud

Contact information for the podcast: podcast@timpeter.com

Past Insights from Tim Peter Thinks

You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:

Technical Details for Thinks Out Loud

Recorded using a Heil PR-40 Dynamic Studio Recording Mic and a Focusrite Scarlett 4i4 (3rd Gen) USB Audio Interface into Logic Pro X for the Mac.

Running time: 20m 20s (I didn’t plan this one. But, c’mon. The episode “We Live in the Future,” released in 2020, is 20:20. That’s awesome!)

You can subscribe to Thinks Out Loud in iTunes, the Google Play Store, via our dedicated podcast RSS feed (or sign up for our free newsletter). You can also download/listen to the podcast here on Thinks using the player at the top of this page.

Transcript – We Live in the Future (Thinks Out Loud Episode 274)

Well, hello again everyone, and welcome back to Thinks Out Loud, your source for all the digital marketing expertise your business needs. My name is Tim Peter, this is episode 274 of the big show, and thank you so much for tuning in. I really think we've got a cool show for you today. This is something that I'm passionate about, just unbelievably passionate about, and that is this idea, you know, anyone who follows me on Twitter has probably seen me say recently that we live in the future. We are in a remarkable time.

The Good News: We Live in the Future (Thinks Out Loud Episode 274)

You know, obviously I talk a lot about mobile and how it shapes the future. Believe me, I'm going to go way wider than mobile here. But just to point out a couple of recent statistics, you know, there's new data from Pew Research that shows that mobile phone ownership has reached 94% in advanced economies and 83% in emerging economies. Smartphone ownership is 76% and 45% among advanced and emerging economies respectively. So almost half the world has a smartphone. And internet use among people in advanced and emerging economies has reached 90% and 60% respectively.

Now, as you might imagine, those numbers are even more dramatic among millennials, or as I like to call them, adults under 40. So that's amazing, right?

Well, there's even more amazing stuff, none of which has anything to do with business in the just spot-on view. But if you broaden your lens a little bit, you're going to say, Oh, that's got some amazing implications.

You know, for one thing, we have a longer life expectancy according to the World Health Organization. This is a quote, "global average life expectancy increased five and a half years between 2000 and 2016, the fastest increased since the 1960s. Those gains reverse declines during the 1990s when life expectancy fell in Africa because of the AIDS epidemic and in Eastern Europe following the collapse of the Soviet Union."

Think about it. It's not that people don't die of AIDS any longer. It's not that people don't die because of economically depressed conditions, and I'll speak a little bit more on that in a moment. But overall, people are living longer. They're healthier. Cancer rates are down. The American Cancer Society said "the death rate from cancer in the U S has declined steadily over the past 25 years. As of 2016 with a cancer death rate for men and women combined had fallen 27% from its peak in 1991. This decline translates to about one and a half percent per year, and more than 2.6 million deaths avoided between 1991 and 2016." Again, that's amazing. So people are, you know, living longer. People are healthier, they're more connected.

And that all leads to the fact that we have a growing middle class according to the Brookings Institution. "As of [September, 2018] just over 50% of the world's population or some 3.8 billion people live in households with enough discretionary expenditure to be considered middle-class or rich." That's amazing. And it's a reality that would have been tough to predict not that long ago. But that's the world we live in.

You know, it's, think about Star Trek and the fact that they talk about, you know, "Star Trek: The Next Generation." Yes, I'm a nerd. I've been watching "Star Trek: Picard." I love it. It's amazing. You should check it out.

But this idea that, you know, in the future we will have fewer concerns because some of our more basic needs — you know, if we think Maslow's hierarchy — are being taken care of. We no longer worry as much about lodging and food and shelter and basic health. And I want to be really clear, obviously, there's a lot more than can be done.

I promise you I'm going to come to that, but we live in amazing times. You know, just as a, for instance, think about the things that exist now that would have sounded like science fiction even 10 to 15 years ago, but no longer do. We have space tourism launching this year. Virgin Galactic and Jeff Bezos's Blue Origin will begin flights this year. According to the BBC, "Swiss bank UBS released a report," this was in 2019, "that estimated space tourism could become a $3 billion industry in the next 10 years." There was an interesting article in late December on Politico that published an article about concerns about the lack of regulation in space tourism. And this isn't a science fiction piece. This is like a legitimate serious conversation they're having. You know?

Also not science fiction, quantum computing made huge breakthroughs in 2019, with Google claiming they had achieved quantum superiority. Now, there's probably a little bit of PR in that. But that's extraordinary. We have things like quantum teleportation. We have things like gene editing with CRISPR. We have telepresence and augmented reality, and oh, I don't know, podcasts and all kinds of crazy stuff that people take for granted day in and day out.

If we don't live in the future — I don't know when we will — right now. To be fair, I want to point out two things here. One, I'm sure if you're an adult under 40 right now, and especially if you're an adult under 30 right now, you're probably saying, well, c'mon, this is just normal, and that's kind of the point. If you're older than 40, if you're older than 35 a lot of this stuff was the future, not that long ago. And today it's normal. It's reality. And that's something we need to just, accept, we just need to take in and, you know, own, right? We need to embrace it.

The Bad News: We Live in the Future (Thinks Out Loud Episode 274)

Now the other side of this is, of course, the future isn't all good news. We've seen a rise of hate groups and criminal activity on the internet. That's terrible, right? I'm, I'm paraphrasing Benedict Evans, who's a partner in the venture capital firm a16z, who recently gave a talk and said, you know, when everyone is connected to the internet, everyone includes the bad people.

So you absolutely get bad actors and you know, whether they're doing it for fun, whether they're doing it for profit, or whether they're doing it for fun, like trolls and things like that. In his fantastic book "LikeWar," which is stylized as #likewar, the writer Peter W. Singer quoted Robert Bateman who said, "Once every village had an idiot. It took the internet to bring them all together." Which is not, I mean, it's a funny line, but it's also tragic.

I have mentioned many times before that "digital is like gravity" and quoting Paul DeLillo, the a French philosopher, you know, "when you build the ship, you also build the shipwreck. When you invent the ship, you also invent the shipwreck." And digital is like gravity. It's got these problems.

I had a podcast episode not too long ago where I asked did we break the internet or did the internet break us? And I think those are questions we have to pay a lot of attention to. You know, I'm going to give you my point of view on this in just a moment.

But I want to take a step back to this great book from, Oh gosh, 10 years ago or more, a guy by the name of Joel Garreau, who wrote a book called "Radical Evolution." And he talked about the fact that there are multiple scenarios for the future. He called them the Heaven scenario, the Hell scenario, and the Prevail scenario. Right? I've also heard them referred to as "the Pollyanna scenario," right, where everything's going to be amazing. The "Gray Goo scenario" where everything's going to go to crap, and "the Muddle Through scenario," you know, where we just kind of take one step forward and 1.99 steps back.

And I'm going to be honest, I think that's the scenario that's most likely, the muddle through. You know, the future is not utopia, though there are elements of utopia in it. You know, when we talk about things like cancer rates going down and longer life expectancy and more people being middle class and having access to a modern economy, that's phenomenal, right? And that's before you get to the science fiction stuff, like space tourism and access to information and all that kind of stuff, right? That's utopian. That's heaven. That's Pollyanna, right? It's also not all dystopia.

You know that we don't live in a utopia. We don't live in a dystopia. We just kind of live in a "Topia" where things kind of muddle through and we have muddled the through for millennia, and I expect we're likely to continue to do so.

There's going to be amazing breakthroughs that make the world a better place. And we're going to have bad actors and criminals and all those other kinds of things of people who want to exploit the system to their own advantage. You know, when we look at people, when we look at some of the divisive rhetoric on the internet, some of the people who are, you know, saying terrible things or doing terrible things, you know, ask yourself who benefits from this. Are they are these legitimately good actors? Are these people who are trying to thrive on the chaos? So I think we have to recognize that, you know, it's not utopia. It's not dystopia, it's just a "Topia." And we will muddle through.

What You Can Do About It: We Live in the Future (Thinks Out Loud Episode 274)

Now, if you think about it, I think there's a few things you can do to, to, you know, do well at because we live in the future.

And the first is kind of embrace the chaos. And I don't mean, you know, I don't mean necessarily create more chaos or add to the chaos. I mean, it's likely we're gonna muddle through. It's not all going to be wonderful, but it's probably not all going to be crap. You know, take it for granted that this is the world in which we live and try to make changes for the better in the areas that you can for the people around you.

Another thing you can do is learn to live in the future. Keep learning, keep reading. I'm going to paraphrase yet another quote, and I would attribute this if I could find the source, but there was a politician who said, once upon a time, you may as well embrace the future. You're going to live in it anyway.

That's the reality. That's the world in which we live, and so you're better off saying, okay, if that's true, if we live in the future, how do I live in it successfully?

Another thing you can do is plan. You know, I realized that dropping quotes all over the place here, but one of my favorite comes from a Yiddish expression that says, "Man plans, God laughs," by which it means that the circumstances that happen every day will likely force you to change whatever plans you make, sometimes dramatically. You know, Mike Tyson probably had the best version of this when he said, "everyone has a plan until they get punched in the mouth." But that doesn't mean you shouldn't plan. It means that you should have a plan that's adaptable as circumstances change.

If you know change is going to occur, why not plan for that change and say, okay, what do I do if this occurs? What will I do if this occurs, what will I do if that occurs? What do I do? You know, what do I do to achieve the outcomes that I'm looking for? How do I make sure I put myself in a position to be successful as circumstances change and for lots of different definitions of success, not just in business, but in your personal life, in your interpersonal relationships, in your you know, health and wellness.

And that leads to my last point that I want to talk about, which is, let's be fair, the future hasn't always been bright for everybody. So look for opportunities to bring along those who are currently left behind. You know, I think it's really clear that the technologists and tech evangelists often only look at the bright side. They don't always look at the impacts — whether they're environmental or financial or cultural or just basic human — of those who don't get to participate as early adopters. And the reasons that they don't pay attention to this aren't evil. They're just blinded by the bright side. And let's be fair, they have some reason to be.

Think about all the news about longer life expectancies, more people in the middle class, greater access to information, et cetera. Full disclosure, this may be my blind spot. But just because it will probably get better for everyone eventually doesn't mean it's all good for everyone now. In fact, quite the opposite. And you don't have to look to the far side of the world to find examples of that.

Think about people in your local communities who struggle with access to education or information or you know, things like water that isn't mostly made of lead, right? I mean, you don't have to go that far to find places where people are being left behind. And the thing you can do is ask, okay, what can I do about that? How can I help?

I once met a hotel operator in Mexico who had built a series of schools for local kids to improve their access to education, to improve their education and their economic prospects. And yes, one of the reasons he did it was because he wanted to improve the quality of the workforce in his area. And yes, one of the reasons he wanted to do it was to give himself access to a local market. But he was educating far more kids than he could ever hope to employ and far more kids than he could ever hope would stay in his hotel. And he knew that, and in his view, that was a good thing.

I think it's amazing that you have the ability to use these tools to do well for people. And even if you don't believe that helping others matters altruistically — and I do by the way — but just like this hotel operator, think about how you can benefit if you have richer customers, more educated employees, and all the other benefits that come with that.

We Live in the Future (Thinks Out Loud Episode 274) Conclusion

So we live in amazing times. We live in an era of unbridled opportunity. We have people who are living longer. They're making more money. They have access to more information that should bring the world closer together, that should bring you closer to your customers, but also just closer to people generally. And if that isn't a bright vision of the future, I don't know what is.

So don't just wait for the future to happen to you. Embrace it. Recognize that you live in the future and that because of that, you can do some truly extraordinary things. Personally, I can't wait to see what you do with it.

Show Closing — We Live in the Future (Thinks Out Loud Episode 274)

Now, looking at the clock on the wall, we are at a time for this week, but I want to remind you that you can find the show notes for today's episode, as well as an archive of all our past episodes by going to TimPeter.com/podcast again, that's TimPeter.com/podcast. Just look for episode 274.

While you're there, you can click on the subscribe link in any of the episodes you find there to have Thinks Out Loud delivered to you every single week. You can subscribe to Thinks Out Loud on Apple Podcasts, Google Podcasts, Stitcher Radio, Overcast, whatever your favorite podcatcher happens to be. Just search for Tim Peter Thinks, Tim Peter Thinks Out Loud, or Thinks Out Loud, we should show up for any of those. While you're there. I'd also appreciate it if you could provide us a positive rating or review. It helps listeners find us and it helps them understand what the show is all about. It makes a big difference for the podcast overall.

You can also find Thinks Out Loud on Facebook by going to facebook.com/TimPeterAssociates. And you can find me on Twitter using the Twitter handle @tcpeter. And of course you can email me by sending an email to podcast@timpeter.com again, that's podcast@timpeter.com.

As ever, I'd like to thank our sponsor. Thinks Out Loud is brought to you by SoloSegment. SoloSegment focuses on AI-driven content discovery and site search analytics to unlock revenue for your business. You can learn more about how to improve your content, increase your customer satisfaction, and make your search smarter by going to solosegment.com.

With that, I want to say thanks so much to you for tuning in. I really appreciate you listening. I know I say this week after week after week, but I really would not do the show without you. It means so much to me to have you listen every single week. I hope you have a great rest of your week, wherever you may be. I hope you have a fantastic weekend ahead and I look forward to speaking with you again on Thinks Out Loud next time. Until then, please be safe, be well, and as ever take care everybody.

Tim Peter

By

December 11, 2019

The Lessons You Should Learn from Expedia’s Recent Troubles (Thinks Out Loud Episode 268)

December 11, 2019 | By | No Comments

What do Expedia's recent troubles mean for your business? Screenshot of Expedia.com home pageLooking to drive results for your business? Click here to learn more.


The Lessons You Should Learn from Expedia’s Recent Troubles (Thinks Out Loud Episode 268) — Headlines and Show Notes

Literally days after our episode calling out the dangers of Google forcing your company to become a "hidden intermediary" — and using Expedia’s recent troubles as one example of where things are going terribly wrong — Expedia fired CEO Mark Okerstrom and CFO Alan Pickerell. The reason? Well, apart from a "disagreement over strategy," the real issue is that the company simply doesn't have a plan for dealing with Google's rising dominance. And, as stated, that's something you want to keep from happening to your brand.

How can you do that? How can you avoid Google taking over your share of the market? How can you compete with the search giant to win customers and profits? Tim Peter & Associates' president Tim Peter has a few ideas for you on the latest episode of Thinks Out Loud.

Want to learn more? Here are the show notes for you:

Relevant Links — The Lessons You Should Learn from Expedia's Recent Troubles (Thinks Out Loud Episode 268)

Subscribe to Thinks Out Loud

Contact information for the podcast: podcast@timpeter.com

Past Insights from Tim Peter Thinks

You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:

Technical Details for Thinks Out Loud

Recorded using a Heil PR-40 Dynamic Studio Recording Mic and a Focusrite Scarlett 4i4 (3rd Gen) USB Audio Interface into Logic Pro X for the Mac.

Running time: 15m 52s

You can subscribe to Thinks Out Loud in iTunes, the Google Play Store, via our dedicated podcast RSS feed (or sign up for our free newsletter). You can also download/listen to the podcast here on Thinks using the player at the top of this page.

Transcript — The Lessons You Should Learn from Expedia's Recent Troubles (Thinks Out Loud Episode 268)

Well, hello again, everyone. Welcome back to Thinks Out Loud, your source for all the digital marketing expertise your business needs. My name is Tim Peter. This is episode 268 of the big show, and thank you so much for tuning in. I really appreciate it. We have a crazy show today. I did an episode last week that talked about the biggest risk to your business is becoming a hidden intermediary, and I really used what's going on with Expedia lately to illustrate the problem of becoming hidden intermediary — how Google, how Amazon, how Facebook, how Apple, you know how the big tech giants are really threatening companies that don't provide a direct value-add to their customers. And you know, one of the things that drove this was that Expedia reported really, really crappy earnings in Q3.

And I talked a little about the fact that, you know, they needed to sort this out and they probably would, well, no sooner did I publish the episode. Then the very next day Expedia fired Mark Okerstrom, the CEO, and Alan Pickerell, who was the CFO. Like out. Gone. Hit the bricks.

Phocuswire who covered the story brilliantly. I'm going to link to a lot of focus wire stuff here because they're really great at this. They do a wonderful job, but I will say, I thought the framing of their headline was kind of funny because it's “Expedia group CEO Mark Okerstrom out amid board disagreement over strategy.” I think the biggest disagreement that the board had was that, you know, Okerstrom and Pickerell thought they were the right people to lead that strategy. And the board, you know, disagreed.

So I'm, not that I was in the room, but I'm pretty sure the biggest disagreement was, you know, "are these, in fact, the people who can fix this?" Now I want to point out, I tweeted on December 3rd, another story about this that was also from Phocuswire because at the Phocuswright Conference, Mark Okerstrom talked about the challenges that we're having with search, and I tweeted — and this is important to those of you who are listening, who are not in the travel industry — I said, “don't let Expedia fool you. This isn't just about travel. Google is coming for a lot of folks.”

I also tweeted on December 3rd, you know, a link to an article from the Motley Fool that said, “why Expedia blamed Google for its earnings debacle.” And I said, because "Google is a huge problem for Expedia. That's why, and they may be coming for your business next."

This is a thing I've talked about a ton when it comes to travel. Google is the dominant player in organic paid search, organic search, paid search, and a thing called metasearch, which if you're outside of travel, don't worry about it. Well actually, let me rephrase that. If you're outside of travel, you don't need to know precisely what metasearch is, but you should worry about it because it is a canary in a coal mine. And I'm going to come back to that canary in a coal mine in just a second. This is a thing that I've been talking about since at least 2014 when I referred to the big myth about hotel metasearch. Which you know, the nice thing about predicting things years in advance is you only need to be right once. 😉

But there was another Phocuswire article from November 14th where they talked about Skyscanner becoming a search company, pivoting from their original model of being a metasearch engine and instead becoming a marketplace with bookings. Functionally, they're getting out of the business of aggregating search results, right? They're no longer going to be a search engine primarily, and instead they're going to sell travel directly, which by the way, is exactly the problem that, you know, Expedia and Booking.com and the like and TripAdvisor, who I all talked about last week, seemed to be having.

Now remember the canary in the coal mine that I talked about a moment ago? Well, Social Capital CEO Chamath Palihapitiya was speaking at the Phocuswright Conference a couple of weeks ago, by the way, that is run by the same people who run Phocuswire, and I'm going to quote pretty extensively here from a a CNBC review of this. So I'm quoting from the CNBC article. It says, quote

Speaking at The Phocuswright Conference this week, Palihapitiya said that while he “loves” Google and its stock as an investor, he warned that time is running out for companies who have become reliant on it. “The longer it takes for Google to find a second act, the more you’re f—-d,” he said about those companies, adding that investor patience will wane. “If you are in the business of being a parasite on top of Google, your medium-term and long-term prospects are terrible; you’re an impaired company, you don’t know it,” he added. The only way to win, he argued, is to offer unique value; many companies have done the opposite, becoming more like their competitors and relying on Google to drive volume. That’s a recipe for disaster. “This is accurate,” tweeted fellow venture capitalist Bill Gurley, of Benchmark, Thursday evening.

Palihapitiya pointed to the travel industry, calling Google’s travel efforts a “canary in a coal mine” and citing both Expedia and TripAdvisor. “At the core of it is the decision that they will capture the overwhelming majority of profit in the travel sector,” he said about Google.

He's not the only one saying it either. Ben Thompson on Stratechery a couple of weeks back now, on November 12th, actually right after Expedia's earnings call, referred to "the Google Squeeze" and the challenges that Expedia and people like TripAdvisor and Booking.com will have in competing as you go forward.

This is a huge deal, and it's not about travel. This is what Google's doing in a number of markets. Look at what's happening with online retail. Look at what's happening with Google Shopping. Look at what's happening with Google News. They aggregate demand to use Ben Thompson's phrase, and because they have the demand, they control the marketplace for whatever that product or service is.

And this is a huge issue for all kinds of companies. Mark Oak Ostrom got fired because of this, by the way, to point out how rare this is. He was named CEO of the company two years ago. Less than two years ago. Find me another example of a CEO of a public company that by the way, is doing basically okay, right there.

Their revenues were up 9% year on year. Their costs were up dramatically more, but find me a CEO who gets booted after two years. And the reason he got booted was because the board didn't believe that he had a good plan for dealing with the fact that Google's going to come along and you know, eat their lunch or drink their milkshake, or you was whatever your favorite, you know, analogy is basically the board said, mr , mr Pickerell, we understand what you say you're going to do and we think it's not going to work.

Now. Last week on the show, I laid out a three point framework for how you can succeed and make sure what just happened to Okerstrom and Pickerell doesn't happen to you. I said, you must differentiate. You must become a destination and you must diversify. You must get your traffic and your revenue from more than just one source.

A lot. Don't get all your business from Google. In fact, I had a podcast, a podcast a weeks ago where I said, stop outsourcing your sales and marketing to gatekeepers like Google at a minimum. Don't outsource a hundred percent of it to those folks, but there's one more point that I want to add to that framework, and I hinted at it last week, but I want to get a little more in detail about it this week, which is, I said, you have to differentiate, you have to become a destination.

You have to diversify. And you have to deliver. There was a fascinating article that on marketing charts that said, uh, uh, here's what B2B content marketers are prioritizing in 2020 and near the very top, they had increased conversions and near the very bottom they had no the customer better, and I thought that was insanity.

Because I think the first of those follows from the last of those. You don't increase your conversion without knowing your customer better. One leads to the other, and we see this all the time when I've talked about customer experiences queen, this is what I'm talking about. Steffan Berelowitz had another great example, a guy from a company called Travel Tripper that said, consumers want Amazon to be a travel booking site.

Why?

Because they really like the experience that they have on Amazon. I talked about this actually two weeks ago with Amazon Go, instant gratification, and the boring future of business customers expect. That the experience will become invisible. It will become so seamless that they don't even notice it.

And that's kind of what Amazon has done with Amazon. Go and now travel. Customers say, why can't they do that for my travel too? That's a huge threat to an Expedia or booking.com and frankly to a Google. And the reason it works is because they're using data to understand the customer and using that understanding to create a deeper, deeper, richer experience.

Uh, there was another fantastic article that was out, uh, Oh, about a week ago from CMS wire about how brands still haven't tapped AI's full promise. Why do I talk about AI? I'm going to talk about customer experience. Because that's how you know your customer better. That's how you use the data to inform your decisions.

It's not that AI is going to tell you, here's exactly how you make the customer experience better. It's going to tell you, here are the pain points and here's what we understand about sentiment analysis. When people talk about our brand and our business, and here's where we see patterns emerge.

That co that you know. Uh, reflect challenges people have when they interact with a product or a service. And so you need to do that to understand what's going on and understand your customer better so that you can deliver a greater customer experience. And so that you can differentiate your product or service from those of your competition, especially the competitors who are the big guys like Google and Amazon and Facebook.

And that's how you can become a destination. And it's how you can diversify the marketing and sales channels from which you get your business. Because at a minimum, your destination, your own web presence becomes one of the places people want to go.

So you must differentiate. You must become a destination. You must diversify. And you must deliver. Because if you don't — like Mark Okerstrom and Allen Pickerell — your board or your company CEO or your customers are going to show you a fifth "D" — and that is the door.

Now looking at the clock on the wall, we are out of time for this week, but I want to remind you that you can find the show notes for today's episode as well as an archive of all our past episodes by going to TimPeter.com/Podcast again, that's TimPeter.com/Podcast just look for episode 268.

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