As consultants, our niche is, per the title, upscale, premium, luxury and ultraluxury hotels and resorts, helping owners solve ‘strategic’ issues. We put this word in quotations because it means connecting the dots whichever way that is and taking an outsider’s perspective on how all operations or distinct data sets integrate for the greater whole, most often anchored around the goal of maximizing profitability.
One counterintuitive observation of recent is that, even in a world of flashy websites and intelligent booking engines, the voice channel is still a very important part of the prebooking and prearrival stages of the journey for luxury guests. While we would never imply that ecommerce isn’t critical for hotels or besmirch the scalability that cloud-based tech can provide, preferences change once you start charging a ton of money for a room.
In basic terms, luxury guests want to know what they are getting, and frequently the only way they can gain confidence in the product is through a phone call. For a typical luxury hotel, voice channel revenue can be as much as 20% of total room revenue, and it is the second-most profitable revenue channel, even including the labor costs associated with answering the call.
Joining the Mille Club
For context, one of the biggest trends right now in global hospitality is the proliferation of brands that have no problem sustaining year-round rates above $500, $750, $1,000, $2,000 or even $4,000 per night for a standard king room. Some brands in this category that make hotel nerds like us drool include Aman, Armani, Belmond, Bulgari, Capella, Fairmont, Mandarin Oriental, One&Only, Peninsula, Raffles, Rocco Forte, Rosewood, Six Senses and, perhaps this trend’s progenitor, Four Seasons.
Documenting the explosion of hotels appealing to wealthy and high-net-worth individuals (as well as us plebs who opt to splurge on fancy accommodations for a special occasion) is something we do in our regular column called ‘The Mille Club’ with that middle word denoting the Italian for a thousand. While there are many economic and geopolitical factors contributing to this phenomenon, the focus is on what you can do to become a Mille Club member, wherein sharpening how your voice channel operates is one such task.
What we emphasize throughout this column is that there are certain psychological thresholds, expressed in the form of ever-lofty guest expectations, that exist once your ADR ticks above four digits, although others exist at the half-mille and three-quarters-mille marks. Namely, luxury guests may be price inelastic but they are entirely experience elastic.
These individuals want to maximize their time, no matter the cost, and this means gathering the exact information they need to make a purchasing decision as well as customizing their hotel stays and planning a bespoke itinerary. Despite the recent advances in attribute-based shopping and AI-enhanced 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.
Rethinking the Call Center
So, you want to increase rates and join the Mille Club? As previously noted, this means building an omnipresent, 24/7 voice channel in order to engage luxury guests during the reservation stage as well as 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. That means recruiting a call center on a per-minute fee – an option that wasn’t available many moons ago because these external providers had inferior service and poor conversions relative to the in-house team.
To get some more specificity on this decades-long transition whereby cost-reducing outsourcing partners are now readily available for independents, small groups and other luxury brands that are still scaling up, 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 about his company, “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.
The Future of the Voice Channel
You would think that if convenience is the most important factor then online would rule the day due to the ability for customers to window shop at all hours of the day or night. For most hotels with a limited range of services, this is true.
But when done right, voice will always be more convenient because it allows the customer to get exactly the answers they need to whichever question they have in their mind at that moment rather than scrolling around. Ever on the forefront of how technology can help, Smallwood offered up two advances to consider how to imbue tech into the voice channel for maximal efficiency, ever-better service and further boosts to TRevPAR.
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 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.
That’s what a well-interfaced CRM can do for you, wherein leading providers like Travel Outlook have their own built-in CRM tools that connect through to hotel marketing databases. To give a sense of what’s possible, one protocol that Smallwood has 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.
The second piece of technology that Smallwood mentioned was 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. 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.
For both cases, convenience is enhanced as is total time spent answering the phone. Soon, conversational AI will have the right data integrations 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.
To trace back to Travel Outlook’s KPIs, if a hotel is able to answer most calls within 30 seconds, then deploying a voice bot might not be necessary. 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 e-commerce channels, too.