Kempinski Hotels isn't your typical 'chain' of hotels. Unlike some other brands that are focused on building out and owning their own hotel estate,Kempinski prefers to find a selection of independently owned hotels, spas and resorts that it then provides support services to under its luxury brand. The owners of the hotels basically pay Kempinski for its expertise in staffing, operations and for its access to online and offline travel distribution channels.
All of the 73 hotels operating under the Kempinski brand interface with Kempinksi's operations team in Geneva. Where in the past, data would have to be extracted locally via APIs from on-premise systems for the Geneva team to analyse and work with, Kempinski's VP of digital has been working on a strategy to get as many of the hotel systems as possible operating in the cloud so that consolidation of data at a corporate level is significantly easier.
In pursuit of getting Kempinski hotels operating fully in the cloud, Riko van Santen has just signed a deal with Infor to roll out its software-as-a-service revenue management application, EzRMS. So far four of the luxury hotels have implemented the new system, but more will be added over the coming months.
According to van Santen, revenue management is of crucial importance to the hotel industry and Kempinski was keen to automate the pricing and inventory management as much as possible with Infor's EzRMS. He said:
We like to review our products quite often and make sure that we have the cutting edge technology, because the marketplace is changing and becoming evermore complex with the internet, with pricing, with competitors. We want to make sure we have the best solutions in place for our hotels.
He added that the Infor product filled two particular requirements for the Kempinski group, one based around the level of data mining detail, the other based on the usability of the product. He said:
Kempinski Hotels has now made it a business objective to move everything it can to the cloud, if it is not already there. The IT department (which works alongside the more commercial, digital team to support integration and technical operations) has undertaken work to migrate email servers to Google and has also placed its networks in the cloud. Whilst at the same time van Santen and his team have been working on migrating the property management and revenue management systems. He said:
A revenue management system extracts data from our reservation systems to understand patterns of behaviour in the market and to understand the booking behaviours so we can set pricing accordingly. The way that Infor does that is slightly different, we found that with some of the competitors they take data on a transaction level, which means that sometimes you can set market trends and booking behaviours in certain buckets.
With Infor they are taking it at an even granular level, so even within a certain bucket they can dig in deeper to find out behaviours on a certain day of the week, for certain nationalities, different room types. Rather than looking at it a macro level, they look at it at a micro level.
The other functionality was the graphic interface. Although what's under the hood is important, what's also important for us as users is that the UI is very easy and intuitive. We found that Infor's dashboard is very user friendly and the learning curve is not as steep as other systems.
Traditionally management systems used to be installed at property level, they used to extract the data locally from the hotel. But with a cloud based solution there is minimum installation work to be done at the properties, which makes our life easier. And also for the consolidation of data, if it's up in the cloud, from a corporate perspective we can also pull the data from multiple properties.
Rather than having to interface or connect APIs into each location one by one and then to aggregate that in all of our corporate servers. Consolidation of data will be happening all in one place, so from our corporate dashboards we can access all the data from all the properties that are using the same system.
It takes time, we have to look at it system by system, you can't roll everything out in one big bang to the cloud. We need to make sure we find the right providers, but the one common denominator is being up in the cloud.
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Given that van Santen is in charge of all things digital for the Kempinski Hotels group, I took the opportunity to ask him where else he and his team are focusing their efforts. One of the main challenges van Santen is facing at the moment is getting customers to purchase off of the company's mobile site, despite having decent traffic.
He explained that he believes that this is likely because of customers wanting to dip into other channels to research before they purchase their 5* experience, whilst some may just not feel comfortable spending large amounts of money via mobile.
Obviously mobile is growing, one of the challenges we see is that the traffic audience is growing and outpacing the transaction volumes. This is particularly true for the 5* market. We see a lot of traffic, we see a lot of shopping being done on mobile, but the transactions are not always completed on mobile. People want to call the hotel and ask for details, people are reluctant to enter their credit card details on a mobilephone.
We have a lot of interest on the site, but the materialisation and the conversion rates are lower compared to other markets – there are higher conversion rates in the 1* and 2* market. That's a challenge.
In the future we are going to see more and more investment on how we can see conversion done on mobile, this seems to be a very attractive platform for commerce – about 15% of our traffic is coming from mobile. The more that's being booked on devices, the more we can measure behaviour, the more analysis we can do. At another point of sale it's often hard to pull those things together.
The other challenge facing van Santen is the growth in popularity of what he calls 'metasearch portals', which are essentially online comparison and rating sites, such as TripAdvisor, Kayak and Trivago. He believes that their evolution into actual booking sites could mean additional costs for Kempinski, and so the group needs to formulate a strategy for how it plans to deal with a growing network of distribution channels. He said:
Metasearch portals are evolving in their behaviour in terms of what role they play - TripAdvisor, Kayak, Trivago - these are sites that are getting a lot of eyeballs and a lot of traffic, but at the moment they are sending that traffic to other booking sites.
What we believe may happen is that they may look to play the role of a conversion, taking a booking. So we are looking at that space to see what partners and what strategic relationships can be built with these online aggregators.
The more distributors between us and the market means the higher the cost is for us as a supplier, so we want to consider how we can guide guests and web traffic to our own brand website, and if not, through certain aggregators that are closer to the marketplace.