Hraba Hospitality Consulting

Another Class Action Lawsuit for Yelp!

Enjoy the TechCrunch article… and always, always, always enjoy the commentary.  I find it interesting if not hilarious.  If it isn’t hilarious enough for you, check out the comment section of this blog post, where it basically proves Facebook users are clueless (or 4chan had a blast acting like a mischievous army, once again).

Yelp seems to be taking this situation seriously though; umm….enough to post a Craigslist ad for legal counsel.  I would imagine there are better ways to hire lawyers than CL, but hey, just says a lot about the management that got them into this mess.

But these cries of extortion… once again… are more about bad management than out and out unethical behaviour.  There is no way these suits will be able to prove the “WE WILL DELETE A REVIEW FOR YOU” concept, because I don’t think it has ever happened; if it has, I doubt anyone has gotten a record of it as fact.  Someone would have proof by now… a recorded call, etc.  Admittedly, these guys at Yelp are from Paypal, and they know not to be sending privy or damaging info across email, etc…. but I still doubt something like that is going on.  It’s more likely confusion on the level of businesses not getting what is happening with the algorithm, as well as the dubious (but not out and out unethical) “move the best review to the top” program, that seems to confuse a lot of people.  This is more about business owner’s lack of understanding about social media, and Yelp’s apparent incapacity to clarify just how their algorithm works.

Using the algorithm as an excuse is not a wise move – blaming the foundation of their business opens them up to scrutiny.  By blaming the process of your sorting model, there will be more curiosity as to how it works.  Until people can trust that algorithm without question, their entire model will be extremely unstable.  Regardless of proprietary, privileged information, it jeopardizes their ability to be viable and dealt with as ethical business people.  Of course, the bungled Google deal and whatever really happened there (it’s all speculation) might offer a small window into their world.  Theories abound that Yelp was lying to Google, leaking information, and fabricating higher offers from unnamed suitors.  Yelp walking on this deal doesn’t make as much sense as Google calling their bluff, but logic doesn’t always figure into business dealings.  All in all… Google knows how to negotiate, and they were “rattled” by Yelp’s lack of transparency…. seemingly a theme for Yelp.

All they need to do is be open about their algorithm, and it will bolster and gel their business model.  I am sure there would be growing pains with being that open, but it would pave the way to have a stronger, vetted business that actually has trust from other people.  Until then, their algorithm nonsense will be the blood in the water that keeps the sharks (lawyers & lawsuits) coming back…

As the solution to their issues seem obvious, it starts to beg the question whether Yelp really has something to hide.  Without being conspiratorial, it isn’t that much of a logical leap that they are concerned about *something* – whether there are significant flaws in the algorithm, or they have work arounds that allow you to disregard specific aspects of it.  Frankly I don’t like conspiracy theories; people are typically not intelligent enough to orchestrate massive lies involving endless people that agree to keep secrets without being morally challenged.  Our government can’t, big businesses can’t…. why should a web 2.0 startup be able to get this far?  If moralistic heart strings being tugged isn’t enough, money talks… and one of the employees would have blown the whistle for their future book deal and fame, at this point.

However, if they ever get caught jockeying reviews under the guise of their algorithmic mistakes, Yelp will be *decimated*…. but I can’t imagine that ever happening.  What might happen is that serious flaws in the algorithm get noted, and short term it will seriously hurt them.  Depending on how they handle this fictional problem, it won’t likely be a Yelp killer.  However, watching Toyota deal with public fallout, it never ceases to amaze me how business’ often choose to ignore history and good sense.  What’s more, Yelp is a leader in flipping the marketing model and giving consumers a voice, taking a business’ ability to control damage with PR and spin.  Yelp is acting exactly like the companies that they are helping expose… you can’t be secretive, you can’t market your mistakes away…. if any business should understand this, it’s Yelp.  If you aren’t ethical, or don’t operate with the best of intentions… the public has ways of exposing that.  It’s humorous, and possibly ironic, that Yelp is caught in a trap of their own making.

I love seeing unethical people getting brought down, but I just don’t see this as mitigated behavior so much as foolish bungling, something I touched on before in this article.

People who don’t understand what Yelp is offering endlessly cry about the review site’s shifty ways… but Yelp’s program for advertising isn’t that nebulous.  The $300, $500, $1000 plans get you “impressions”…. those lightly highlighted/colored ads at the top of searches on yelp.  You also get a “slideshow” style picture gallery which is pretty meaningless, and you get to pick your favorite review to automatically appear at the top.  It says, “this is the company’s favorite review” and it’s fairly obvious when people are sponsors.  Most of the worthwhile aspects of managing the business owners accounts on yelp have nothing to do with their advertising options, by the way.  It is a valuable tool and can help you listen, learn and grow…. but you don’t need to pay yelp for any real reason.  For most businesses I doubt it makes sense at all; I don’t get it for a flower shop or bakery, etc…. there is no return on investment, so those constant calls they must be getting are annoying, to be sure.  But I still don’t think there is some devious plot going on…. I have spoken to at least 5 different account managers in different markets who try to get me to advertise, and none have pulled any unethical behavior beyond being ENDLESSLY annoying.

I still prefer google adwords, but if you are already doing those it might not be a bad idea, depending on your business.  Think about it from a hotel’s perspective – If I choose to pay $1000 a month from our marketing budget (which has moved online from print media), that means I get something like 4800 impressions (aka a banner ad that a consumer may or may not see due to “banner blindness”… I mean, I don’t see those ads at all, frankly).  If our average daily rate is $500, that means I literally have to pluck one person for two nights out of the 4800 impressions to cover the cost of advertising with yelp.  It actually is sort of a slam dunk, in that sense.

I just can’t convince old school marketers who are scared of losing the message, and not controlling the brand, due to sites like this.  What’s more, Yelp is only successful in SF Bay and a couple other markets.. barely.  Boston, LA, Chicago, NY seem to be okay… but even social media savvy Portland and Seattle aren’t that strong a market at all.

Look at open table reviews vs. yelp reviews in other markets…. opentable reviews which are verified and confirmed from a reservation are much more common than yelp reviews outside of the SF market.  One of our fine dining restaurants in the Portland area has 2 reviews on yelp, and over 200 on open table.  That speaks volumes.

But in the end…. it’s all bad press, and it douses their equity every time this happens.  I can’t help but wonder why they allow this to continue unabated?

Social media is supposed to be about transparency and Yelp is failing at that…. massively.  Everyone thinks Yelp is some immutable, immovable behemoth, but people moved from Myspace to Facebook in less than a couple months.  Youtube is less than 5 years old, and Facebook is less than 3 1/2 years old..  Yelp needs to recognize that their high horse isn’t that high.  The basic upshot is that this is all very young.  I think it’s interesting tho… all of it… which is why I am rambling here to all of you.  This will all be sorted out within a couple years, I am sure.

Do you guys think this is more about confusion from the companies themselves, or do you really think yelp is committing some expertly maintained conspiracy?  What are your thoughts on the future of online reviewing?

An impressive LEED Platinum for a hotel, Napa’s Bardessono.  I would like to take the time to point out that the incredibly complex reuse project from the NPS and ECB/Fort Baker Retreat Group, Cavallo Point, was just awarded LEED Gold.  Being NPS land, historic buildings, and completely “green” presented an  interesting array of problems (aka opportunities), and I am happy to say 2 years after opening it’s doors, it has finally received it’s status.  It is a shining light for the Bay Area, a stunning addition to the National Parks and GGNRA, and a model for future development being ethical and about sustainability.  I applaud both these properties, especially knowing how complex the LEED process can be!

Sign of the times – Ritz Lake Las Vegas to close 2nd May.  The economy may be leveling off it’s slide, but foreclosures lurk everywhere.

Gulliver points out a fairly brilliant honors scheme hatched by Intercontinental Hotel Group over Hilton’s disastrous alteration of honor awards points.

This is sort of scary, but nothing new to our industry:  Hotel industry needs flexible graduates.  “Skeleton staffs don’t bode well for hospitality students preparing to enter the market today. As if the long hours and weekends shifts in the hospitality industry weren’t unattractive enough, students entering the job world in today’s economy are forced to be more flexible than ever, often taking jobs outside of their geographical preference and much lower on the corporate ladder than they had hoped.”  Honestly – if I had known the hours I was going to work prior to starting my career in hospitality, I don’t know if I could have done it.  Of all the things I have dealt with in my life, the hours as manager at every property were dehumanizing and exacerbating.  Looking back, I don’t know how I did it for over a decade.  But that is what our industry is… high pressure, fast paced, grueling grinds, and the self delusion that it is as important as saving lives and that it will all be better tomorrow – oh, and that “lateral promotion” you took to get out of the department you are currently pigeonholed in… was totally worth it. (a little cynical humor, of course – not at all from my career.  Riiiiiiiiiiight).

Why do hotels have so much trouble answering emails? This is an epic, well timed, post.  It’s a HUGE problem, and not enough companies have corporate policies.  It becomes a disaster for communication if people think they can reach you, but have zero real access to you.  It makes our industry look bad, and it has to stop.  On the up side…. if you make it a priority to reply to emails, and it becomes everyone’s priority, maybe they will slow down with better communication.  More phone calls, less emails (including those horrible passive ones hiding the real question of “why haven’t you answered my emails?) – but that might just be wishful thinking.

Interesting and thoughtful piece on being a cautious, calculating restaurateur & entrepreneur in these times.  Fact is, it pays off big in a lot of situations.

Hotels converting F&B space into meeting space. A lot of hotels are looking for revenue, and this was an actual conversation we had with a client in the last couple weeks…. nice to see the article agreeing with us.  Lounges and comfy spots don’t generate revenue – but meeting space does.

Here are some interesting thoughts on Luxury Lifestyle and Travel Trends for 2010

Is Social Media the next Search Engine?  Some people think it is, just as we find out Facebook directs more online users than Google.

Augmented Reality is buzzed about for a reason… and not just because it is PHENOMENALLY AWESOME.  But it may actually create business, even for small businesses.

Is geolocating the future of hotel marketing?  I love that hyperbole, I really do… but let’s just leave it at “a really important, impacting development” before waving the white flag at all other types of marketing.  I actually think it is… for one, there’s FourSquare.  But I don’t like getting *too* carried away. =)

Foursquare does have some strategic growth;  First Zagat, then Chicago.  Some pretty big stuff happening, and it makes me excited that with all this activity, and other industry people cloning their format in multiple ways, Foursquare seems aware and fluid enough with a solid enough business acumen, to withstand the turbulence in this crowded arena.  They seem smart, and I think you need to keep an eye on them.  If you haven’t gotten a google alert from them about someone “checking in” to your hotel or business, trust me… you will.

The future of marketing in hotels? This is a tech guy with idealistic notions of what hospitality *COULD* do – with money, foresight, more labor, and planning.  It’s a good idea, some luxury brands might try to get there with this as a gimmick, to start….. but interesting and enthusiastic read nonetheless.  Beyond that, I liked the idea… and don’t mind plugging him.  He has got to be one of the only people out there that I know building Iphone (and I assume Android as well) apps that has even the most rudimentary understanding of the hotel business.  A lot of people are yapping about apps in our industry…. we might not be able to afford one, but for those that moved enough of your 2009 marketing budget online, and have a bit to spare…. check him out.

An interesting blog about the development of social media in the Kenyan hotel industry, and can possibly be extrapolated to other small inns and boutique properties that don’t have the monster marketing budget, but know there is an audience to reach.

The UK heats up about online hotel reviews, looking for some sort of validation process for Tripadvisor.  Is this another aspect of GPS & Geolocation that could help curtail fraud and shill reviewing?  Whatever the case, I think the industry can handle itself…. it’s in their best interests.  Getting the government involved to regulate seems a bit much.  The only winner when you start legal proceedings are the lawyers.  Very few other people actually win besides them.

Speaking of Tripadvisor… here are a couple best practices for a top ranking.

Social media as customer service for hotels.  Thank you for not saying social media as a way “to sell” or “drive revenue”.  Social Media may have a valid ROI, but this is more about being a cost of operations than a revenue stream.  We can all drive revenue with it…. but it is simply more important to *ENGAGE*.  Because in the end, ignoring it will cost you.

Here’s an odd piece – great thoughts… horrible grammar.  I didn’t understand this, so I include it to see if you have any thoughts?

That’s it!  Just thoughts and links and interesting stuff!  A real post is coming soon, I promise!

So it seems that I have enough work that I can’t write a proper blog post…. which is good.  I do enjoy putting them together because it’s like a coffee break for my noggin’, and I can take a second to observe and learn rather than keep my head down in the hurried pace of being a modern hotelier.  But operations and actual business take a front seat to my intellectual (or charlatan) musings…. and frankly I think this forum for soundbytes fits our world a bit more efficiently.  I will get back to a couple thoughtful posts (of which I have about 8 or 9 hanging, waiting to be finished) soon…. until then, here are the links that stayed open in my tabs for far too long not to share.  More to come, but enjoy these because you never know when I will have time to put this together again. =)

1) You might just want to go out and buy this one:

A lovely special report from the Economist on Social Networking, and modern communication.  All the buzzwords are here.. and *EGADS* they actually hold this wonderful new tech masquerading as cult to task for being important without an economic feasible business model…. what will support this wonderful new thing!  It covers Facebook, Twitter, small biz using SN to be big biz, how to profit from friends, whether social networks at the workplace are problem, distraction, or potential benefit.. and more.  My favorite two pieces are about Privacy and endless communication socializing the state.  So to speak.  Whatever the case… some big thoughts in there, and likely… another post.

2)  Cornell does it again with a couple reports available… the INCREDIBLY interesting one about price differentials for consumers, and how it effects them, your brand, and their likelihood of staying.  If you don’t want to download it, the long and short of it: People want information about differential pricing – including transparency and accessible to information about how prices are regulated.  The OTA’s have created a conundrum in controlling our own rate at the property level… and in doing so have confused regularly savvy travelers.

3)  OTA’s begin their own bargain basement for branded OTA users.  To have the distressed rates of distressed rates makes me sick to my stomach, but hey… there are a lot of those types of rates out there, aren’t there?  Anyone have an opinion about this sort of stuff?  Like Jetsetter getting packages that marginalize luxury positioning?

Maybe it’s luxury doing it themselves… they’re even dropping “resort” from their marketing.

and yes I adore the line : “To attract business conferences in these tough times, some luxury resort hotels have resorted to a sort of strategy of last resort: They’re dropping the very word “resort” from their names.”

4)  I hate to think that hospitality is entering a realm where it’s as difficult to manage normal business as it is for F&B.  That’s why we choose to be in hotels… because someone needs to help us if we enter F&B.  Hell you can open a teensy little outlet and it will completely alter you ability to “do” hospitality – and what’s more, your bottom line.  I was in front of a well respected head of PKF (who will remain nameless) that said, “Buckle up… RevPar and the entire industry won’t return until 2014.”  And I heard that in 2009.  It’s sounds scary, but seeing as we are already a couple months into 2010, I might believe it for one reason alone:  Our industry is so completely tied to the unemployment rate.  Until employment stabilizes, we can’t come back.  It’s too important a part of our industry.  Period.

5) Facebook conversion tool is offered… attempt to track Facebook consumer’s tendencies.

But is Facebook really the place to go for travel, lodging, and commerce? You know what I think from about a year ago:

But so much changes in social media so fast.  People saw Facebook as a HUGE marketing experiment which is more about amalgamating data than it is caring about the interests of the consumer/user.  Oh wait… it’s still like that.  Well – has any more commerce started happening beyond the jaw dropping revenues from Zynga’s social, yet annoying, games?

Well here is some data and metrics from Facebook…. and if they aren’t interesting, maybe pay attention to the conversation.  Some very interesting data and insights here… as well as the comment section (a part of blogs and papers that continues to amaze me with relevant, if not hilarious, conversation).

6)  Daniel Craig has a lot of good stuff to say, even if he does seem wholly unaware of my existence.  Tis fine tis fine Mr Craig…. we are all in this to help others.  My ego is transcended by knowing I help establish the pulse and tide of our industry.  That’s more than enough for me (tongue firmly jabbing cheek).  If you want to make sense of social media, and are just entering the world… well you *ARE* in the right place.  You are here reading me…. but if you want a little more, check out his latest post.

He’s right… know who you are reading, target that exhaustively…. or you won’t ever get anything done.  I am at the point where I barely have time to read myself. =)  He is always on point, and usually helps add a dose of levity.  Speaking of precisely that, I offer you Gulliver’s frazzled end of newsday ramblings…  A fun discourse into how to make airline food better.  I love that he actually, somehow, engaged me on a conversation about hot sauces.

7)  Photo Fakeouts caught by Oysters blog… great stuff! A piece on what they are doing with it *HERE* , and Oyster’s Blog here.

As for the gent in that rantrave.com comments section which talks of Oyster’s photo blog, I don’t mind leading those creeps on…. not one bit.  If I have the time, I will ruin their day with bizarre non sequitrs and baffling logical progression.  If you somehow found out how to get a hold of me for marketing reasons, you better realize who you are messing with.

8)  A fantastic and interesting interview with Hilton CEO Nassetta.  Amazing… with the allegations flying around about his involvement in the Denizen disaster, this is a very interesting interview (that doesn’t for one second come close to touching on anything at all in regards to Starwood’s newer claims.)

9)  SOME HELPFUL NEW YEAR TREATS! These are something I mull over, look at, think about throughout the year.  It might not be patently obvious why these are important, or how to leverage them…. but the more you read and learn, the more you will get why these are vital!

The top 15 web 2.0 websites as of January 2010

The 20 most popular social bookmarking sites on the web, as of January 2010

There you go!  I am sure I missed some stuff, but I will add more next week in what promises to be a constant addition too my blog.  Cheers!