Given their varying levels of loyalty, spending habits, and influence on future bookings, not every hotel guest is equally valuable.
While all hoteliers agree that it’s vital to segregate guests by potential value, each of the General Managers I have recently interviewed have a different way of defining a guest’s Lifetime Value (LTV).
Here are a few of those ways that our hotels are determining a guest’s LTV, along with a few of the challenges that come with it.
The simplest and easiest way to start segmenting guests is by how they booked. Was it through an OTA? Through the sales team? Directly through the website via a referral? Was it a corporate account? Knowing how a guest booked their room can paint a picture around how involved and loyal that guest will be.
Corporate booking potential
Specifically amongst larger hotels, many GMs define the value of a guest by the potential corporate business she can bring depending on how big her company is, how often she travels, and how much up-sell potential is there.
The most obvious way to determine a guest’s importance is by how much he or she spends. While simple in theory, many GMs find it a challenge to keep track of this data and “make the connection between the guests that are just staying for a room, and those that interface with F&B outlet, take advantage of our other services, and keep coming back.” It would appear that although all of the data is there, isolating the important metrics and linking the reservation to the spend is difficult.
Another common method of determining a guest’s LTV is repeat bookings. One General Managers says he tasks his front office team with “being responsible for recognizing repeat guests and making management aware of it.” And then, he says, “Once we’ve identified a VIP, we’re going to make sure they’re treated as well as possible. That could mean anything from VIP perks to comped dinners.” But as in the case of keeping track of a guest’s spend, GMs have expressed difficulty in keeping track of all of this information in one place. Specifically, they find it difficult to “figure who is coming back, and why they’re coming back here. I wish we had something like Salesforce to give us an idea of where the value lies,” one GM says.
Social media influence
Beyond TripAdvisor reviews, many GMs are looking to a guest’s social media imprint as a way to anticipate poor reviews before he checks out. One GM we talked with went so far as to consider a guest’s social media influence to be the most important factor in determining his or her value to the hotel. In an ideal world, this GM would have “a dashboard that would show all of [his guests’] social media influence to see what they’re posting and its impact so that I could assign some kind of value to them. For example, it would allow me to see that a major fashion influencer with 40,000 followers is going to be staying with us, and treat him accordingly.”
About the author
Alex Shashou is President & co-founder of ALICE. Alex received his Bachelors Degree from The University of Pennsylvania, Wharton Business School with a dual concentration in Finance and Operations and Information Management. After graduation, he took a position with Goldman Sachs in the Equity Sales division in New York, leaving in Sept 2013 to pursue ALICE full-time. Born in London, Alex grew up in the hospitality industry with his family operating 90 hotels in the UK across three hotel chains.
The above article is an excerpt from “The Data-Driven Hotelier” – a series of interviews conducted with New York City’s leading hotel General Managers. The report is available for download here.