By Larry and Adam Mogelonsky - 2.20.2024
When a hotel starts charging inordinate sums per night – with many properties around the world now above $1,000 per night year round – the luxury guests who are booking these lavish properties want to know what they are getting and they often have highly customized reservation requests. This not only speaks to a longstanding need for hotel brands in this category to maintain strong voice channel, but also to what technologies hotels can deploy to better service guests who are dialing in.
The Mille Club
While luxury or ultraluxury may not be for your company, its growth is one of the biggest trends in global hospitality right now. For reference, thing of brands like Aman, Armani, Belmond, Bulgari, Capella, Fairmont, Langham, Mandarin Oriental, Montage, One&Only, Peninsula, Raffles, Ritz-Carlton, Rosewood, Six Senses, Soneva, St. Regis, Waldorf Astoria and, perhaps this trend’s modern progenitor, Four Seasons. Then throw in the associations and collections like Auberge, Dorchester, Leading Hotels of the World, Oetker, Preferred Hotels & Resorts, Rocco Forte and Relais & Chateaux. Every property is droolworthy.
The growth of this category and the lessons for all hotels on how to achieve then sustain such lofty rates is something we document as part of other separate ‘The Mille Club’ column, with that middle word denoting the Italian for a thousand. What we emphasize throughout is that luxury guests are price inelastic but experience elastic.
These customers think in terms of time maximization and, even with high staff-to-guest coverage ratios, great technology is now paramount to make that happen. Despite the recent advances in attribute-based shopping (ABS) and genAI tools like chatbots, true customization (for now) can only be achieved by speaking to a live agent. Moreover, there’s something irreplaceably wholesome about a human-to-human conversation that’s emblematic of real hospitality service.
So, you want to increase rates and join the Mille Club? Maintaining an omnipresent, 24/7 voice channel in order to engage luxury guests during the reservation stage is critical, as is the ability to complete customizations and ancillary bookings while on the call. Yes, there’s lots of potential here to boost TRevPAR through upselling, but sustaining a well-honed res team still represents a high fixed cost.
And it’s not just new bookings that are coming through. Intake teams must also contend with:
- Meal reservations
- Front desk service calls
- Group calls
- OTA confirmation calls (where typically four out of five luxury OTA bookers will call ahead)
In order to not have these calls roll over to the front desk and potentially compromise onsite service, upscale and luxury hotels need a robust headcount. Yet during the low season, this cost can easily dip from revenue-producing to expense. We’ve been brought in by owners and executives in the near past to take a look at how to reduce the payroll, and the best solution involves converting the fixed expense to a variable one, necessitating a call center that can work on a per-minute fee while maintaining service standards and conversions.
To get some more specificity on the technology behind these scalable, cost-reducing outsourcing partners, we engaged John Smallwood, President of Travel Outlook, a call center company whose luxury hotel clients include KSL Resorts and Viceroy Hotel Group. As education on some of the specific terminology that voice operators use as KPIs, Smallwood added during our discussion, “We average closing more than 65% of the qualified reservations calls we receive, and we also average an 80/30 SLA, meaning that we answer 80% of the calls we receive within 30 seconds. Net abandoned calls are usually less than 5%.”
Part of the reason why Mille Club hotel members experience a much higher call volume is due to the convenience of having a human agent complete any manner of customization right on the spot. This has meant that any res team or call center partner has to have custom scripts in order to fulfill specific offerings such as spa rituals, beach rentals, skiing or excursions. Importantly, managers must also establish a seamless process for updating said scripts when there’s a special or new feature in order for any reservation agent, internal or external, to effectively sell.
Voice Channel Technologies
When done right, voice will always be a more convenient channel because it allows the customer to get exactly the answers they need and it’s hands-free. That said, automation and AI are inevitable, even for luxury, so here are three technologies that are proving to greatly enhance the voice channel while also driving down costs.
First is the CRM. With easy-to-implement APIs and AI-based connector tools like RPA (robotic processing automation) that solve the problem of double entry, it’s no longer the case that the PMS is always the singular cornerstone of the hotel tech stack. Instead, it’s all about knowing who your customer is across the entirety of their spending habits then being able to segment similar guests and find patterns for growing ancillaries, garnering return visits or targeting lookalike audiences.
With Travel Outlook having its own built-in CRM tools that connect through to hotel marketing databases, one protocol that Smallwood put in place for OTA confirmation calls is to have agents ask all callers for their real email address and phone numbers to see if they want to learn about the best rates and latest information in follow-up communications. From there, the guest profile gets automatically updated in the hotel’s CRM, so the property isn’t left with a bunch of useless OTA alias emails or duplicate profiles. This technique also works to capture leads for the hotel from callers who don’t end up booking at that moment.
Second is conversational AI; a voice bot that recognizes humans and can answer basic questions before passing the call off to a live agent. If a guest just wants to know what time the bar closes, they needn’t necessarily wait even 15 seconds in order to get the answer from a human reservationist. But if it’s a prospective booker with a complex reservation request, the AI can field some initial questions and fill out that information into the corresponding fields to save time for the res agent and for the guest.
Third and finally, hotel technologists should be aware of retrieval-augmented generation (RAG). Not quite available, it’s a near-future application of genAI where AI agents trained using deep learning can be commanded to execute multi-step functions from external sources. Such agents will likely be used in concert with a CRM, other systems, chatbots or voicebots to automate complex guest requests and personalize offers, further reducing labor demands in several key departments.
For all three technologies – CRM, conversational AI and RAG – the goal is convenience and reducing the total time spent on the phone by live agents. Soon, conversational AI will have the right data integrations – whether through APIs, a CDP, RPA or now RAG – to be able to complete basic bookings for the hotel, restaurant, spa or golf independent from any team intervention.
Implementing such a tool will be quite the debate for luxury hotels that pride themselves on curating human-to-human interactions as part of their service promise. Regardless, to be a Mille Club member the way to add value for luxury guests is to craft an excellent voice channel experience; convenience, responsiveness, customization and knowledge of the product will always be critical. And with every customization request that comes in, there are lessons for how to evolve your ecommerce channels, too.
Together, Adam and Larry Mogelonsky represent one of the world’s most published writing teams in hospitality, with over a decade’s worth of material online. As the partners of Hotel Mogel Consulting Limited, a Toronto-based consulting practice, Larry focuses on asset management, sales and operations while Adam specializes in hotel technology and marketing. Their experience encompasses properties around the world, both branded and independent, and ranging from luxury and boutique to select-service. Their work includes seven books: “In Vino Veritas: A Guide for Hoteliers and Restaurateurs to Sell More Wine” (2022), “More Hotel Mogel” (2020), “The Hotel Mogel” (2018), “The Llama is Inn” (2017), “Hotel Llama” (2015), “Llamas Rule” (2013) and “Are You an Ostrich or a Llama?” (2012). You can reach Larry at [email protected] or Adam at [email protected] to discuss hotel business challenges or to book speaking engagements.
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