This Argophilia post by Phillip Butler starts the conversation: Who is the big bad wolf of hotel marketing?  Simply put, there isn’t just one –  OTA’s, Franchise Fees, Internet Marketing Fees, Booking Engine Fees.  This is one leaky ship.

Here is my response, but I am more interested in what all of you have to say?
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Great read. Thank you much. =)

I always thought of the OTA’s as something that filled the gap during the off line to online distribution evolution. They were a stopgap solution. They are now becoming unnecessary, and getting in the way of commerce because they are becoming obsolete, where they used to promote some level of commerce for our industry. Distribution has changed… and their role will phase out. It won’t be in the next 5, maybe 10…. but this will all change. I adore how people revile when you suggest the guy on top won’t be there forever.  The fact is, nothing is forever, and new paradigms unfold.

Another big bad wolf, on top of franchise fees? Ridiculous internet consulting firm charges by hourly consulting model.  Buuteeq is doing some good with simple pricing plans… it makes a lot more sense, and you aren’t nickel and dimed for the internet marketing group’s mistakes or on the job training.

Lastly…. commissions to booking engines. Including the franchise fees, as well… Engines like Synexis get promoted by franchise and flag brands, which then take a cut. It’s incredible how much money is lost to an engine that simply helps facilitate online booking. Eventually, the hotels will realize the money lost can be recouped quickly by building and designing a proprietary engine of your own, off a template, for the hotel to own, outright. That can save 20K – 100K+ a year.  I imagine a management group could justify the development fees to an owner group, based solely off the last 3 years of annual or commissionable fees that the property made to the booking engine company.

Would anyone have any idea how much it would cost for development of a competent template, and simple engine with solid UI – that includes a mobile component? Is that $100k or more?  I know… you can always spend more. =)

This is something I have done in the past – talking about the history of hotel systems and amenities, and where we are today.  It’s likely horribly self indulgent, as well as terribly boring…. but coffe is such an afterthought, in so many situations, it deserves, at least, it’s own post.

We can start with my background in coffee:  I drink it. I drink quite a lot of it. I quite enjoy it.  I have a burr grinder. The burr grinder changed my coffee life.  As counter-intuitive as it is, I now understand why artisan roasters refuse to sell ground beans.  ”But the market is there for it”, my simplistic free market capitalist economy mindset cajoles my caffeine addled nerves… but self respecting roasters know their bean isn’t honored by letting it die a slow and lonely death as a tired ground in a depressing bag.

So… this is where we engage my hospitality mind, and wrestle with my pragmatic operations side, vs. my guest experience and brand equity side.

My last installment about the history of hotel minutia rambled on about hotel telephony: from PBX to modern software in place of hardware, and how it went from revenue stream to bungled system, all the way to how it exists today – a glorified in-house intercom (which marketers try to dress up with LCD screens, ad nauseum).  The story of coffee, however, might not be as interesting… especially to those tech & social fans who follow me (other than the giddy, amped ones who just placed another order for more caffeine related products from think geek).  To those fans – hopefully my rollicking, coffee fueled post will be the little bouncing ball over the karaoke lyrics.  Have fun.

I)  Thoughts from Paul Burditch, owner of an excellent Luxury Hospitality PR & Marketing company, Burditch Marketing Communications, in regards to hotels in San Francisco, and a decision *not* to allow dogs at a property:

Travelers who come from all over the world know San Francisco to be a dog paradise – it should be given certain treatment so that it is welcoming, & visibly warm & fuzzy feeling.  If dogs are not allowed, we will have a responsibility for a fair explanation of *why* we do not allow dogs, especially in light of the entire industry moving that direction.  Most San Francisco hotels allow dogs, and the national parks and Golden Gate National Recreation Area are one of the most popular places for dog walkers & dog fans in the city.  Dog owners who stay nearby will see many dogs on the trails, or at Crissy Field, and throughout the park system.  This might not only have negative PR implications, but it will be a negative impact on those that see dogs throughout the city, parks, and out our back door.  Almost all hotels in San Francisco allow dogs including the top boutique companies Joie de Vivre (ed note: kaput), Kimpton and luxury properties like Ritz Carlton, Four Seasons, St. Regis and others.  San Francisco is one of the most dog friendly cities in the country, with the parks being a perfect place for dogs and owners to enjoy. To not allow dogs is going against the bigger trend in dog policies here in San Francisco.  A no pet policy is antithetical to the prevailing opinion of most Americans and pet owners in the country today.  There are 78 million dogs in the U.S. and 39% of U.S. households own at least one dog. With the abundance of dogs throughout SF and the parks, a decision to disallow pets will have obvious negative PR implications.  At this point, it’s almost assumed that they are allowed, and “no” is never part of a good guest experience.

II)           FINANCIAL DATA:

At one unnamed property: “We’re at $24,475 in dog fees through October YTD.  It’s a one-time $75.00 fee (most fees are much less, but balanced against the full cost of dog sitter or kennel if guest were to leave them at home), regardless of length of stay.  The audit report only gives posting totals, so no way to track Room Night production.  I’d make an educated guess of 550 – 600 total Room Nights YTD.  The total doesn’t breakdown evenly when divided by $75 because we had a few in there we only charged $50 because their res was already OTB when we changed the fee and a few we charged $100 because they had more than 2 dogs. It is our opinion that these guests would have stayed elsewhere with their pets, and we would have lost the room nights.  This does not account for incremental revenues. [ed note: this is from a peer who doesn't know I am posting this. It's anonymous, but if ANYONE has ANY concern at all re: financial disclosure, I will take this down].

Incrememental revenues = selling branded or logo’d hotel merchandise to dog owners – whether homemade local treats or a rubber ball with your brand stamped on it.

III)          Articles, info, data:

a)    Tripadvisor Pet Travel report.

“In a TripAdvisor survey of more than 1,100 pet owners in the United States, nearly half said they plan to travel with their animal within the next 12 months.”

b)   Pet Friendly Travel  – via Bella Dog magazine, also talks about airline fee frustrations, and more:

The majority of pet owners surveyed (61 percent) said they travel more than 50 mi. (80 km.) with their pets at least once a year, with 38 percent of those pet owners stating that they travel as often as once a month with their pets.  Pet friendly travel still is almost exclusively for dogs, with over half of the pet owners (61 percent) saying that they choose to travel with their dogs (33 percent of pet owners travel with their cats).  (Source:  Bella Dog magazine)

c)    According to the U.S. Travel Association:  “Pets make great travel companions. Over 49 percent of U.S. adult leisure travelers consider their pet to be part of the family and 18 percent of U.S. adult leisure travelers usually take their pets with them when they travel. (Source: travelhorizons^TM, July 2009”)

d)   Forbes: pet friendly hotels were due to market forces demanding it -

Why the change of heart? Travelers with pets are a huge market, and one that is untapped at the luxury level. According to the Washington, D.C.-based Travel Industry Association of America, there are 62 million dog owners in the U.S., and 29 million of those hit the road with their dogs in tow. The latest American Express Leisure Travel survey, released in October 2003, found that 13% of its respondents described an ideal vacation as one that is “pet-friendly.”

e)    Hotels Dogs Travel (via HotelMarketing.com) -

The nation’s pet boarding industry has figured out it doesn’t take much persuasion to get pet owners, often guilty about dropping their dog or cat off at a kennel while they head off on vacation, to pay extra for pampering: In the last five years, spending on pet services including boarding and grooming has more than doubled to $2.5 billion, according to the American Pet Products Manufacturers Association in Greenwich, Conn.

f)     Hotels renting pooches to guests without dogs via Time.com

These days, the coziest hotel trend has nothing to do with plush mattresses or comfy slippers. It’s about catering to guests who had to leave their furry, feathered or finned family members at home. This spring the Fairmont in Sonoma, Calif., added a dog to its staff, a chocolate Labrador named Zeus who is tasked with such things as welcoming guests in the lobby and going on hikes with them — or what is referred to, in corporate jargon, as “interactive guest appreciation.” (I have seen this in many JDV hotels as well. This trend started after studies showed that petting a dog or having a pet around reduces stress and increases health)

g)    Fairmont’s doggy ambassador delights guests (same as above, but more info)

h)   “Top Dog Hotels” via USA Today (same Tripadvisor rankings from above, but a little more about the hotels and amenities)

i)     Recent press release for Bernardus in Carmel Valley via SF Gate PRWire (the fact that someone does a press release is typically because the new amenity has relative strength or equity to the brand and bottom line)

j)      Kimpton’s Argonaut with their “Howl-O-Ween” dog costume contest (something that drives room nights and community around Kimpton property)

k) 15% of people are allergic to dogs (not including the 30% of asthma sufferers who are allergic), while 40% of people own dogs. With stringent cleaning methods (or just normal ones), i have yet to hear of an allergic person with a problem inside a room, let alone ever knowing whether they had been place in a room previously occupied by a dog.  For those truly allergic, they usually mention it, and it’s never an issue to accommodate all those concerned.  What’s more, hotels have been dealing with chemical sensitivity and allergies to things like down, etc, for years.  One more thing won’t be a major impact or operational issue.

l) Dogs that travel with people are typically incredibly well behaved, and often better and more quiet than children.  We also know weight limits are not necessary, because a) most large breed owners don’t travel with their pets, and b) a chihuaha can do as much, if not more, damage as a larger breed.  But if that rare bark is a concern to owners, remember  that acoustics won’t be an issue – a crying baby is louder than a dog in most acoustic tests: http://www.controlnoise.com/storage/dBSoundproofingChart.pdf

IV)         Conclusion

We have seen a lot more conversation on an internal industry level and an external marketing level because it has become so much more popular in recent years.   Opening without a pet-friendly policy, only to allow it later, would create PR issues because it is difficult to recapture initial interest after telling people that you are not dog friendly.

Observing and mulling all the above data and information, it seems pretty obvious what the right choice is for your guests, and your hotel.  Any complications, of which there are few and it’s very rare, is what needs to be discussed further.  I have a couple dog policies I can share, if you need them…. but overall, we feel strongly that a pet friendly policy should be approved for any hotel looking to drive revenues and capture new markets.

Hope this helps guide the decision making process.

Here’s an article on Room Key, the hotel brand search engine.

Upshot (summary via TNOOZ):

Choice Hotels International, Hilton Worldwide, Hyatt Hotels, InterContinental Hotels, Marriott International and Wyndham Hotel Group have combined to establish the joint venture under the leadership of CEO John Davis, founder of the Pegasus hotel distribution and technology service.”

And here is Barb Delollis from USA Today with a Facebook post that sparked some awesome conversation.

This is my commentary from that Facebook post (which, as it happens, is by far the most interesting post I have seen on Facebook in years, and no… not because of my response).

I am excited about Room Key for many reasons…. I hope the below is succinct but helpful in understanding why this is an exciting move forward…..

It’s not a better solution, but that’s okay. It’s a flawed solution that has monopolistic traction – and this entry from Room Key is simply the start of their traction. It’s like Google Plus vs Facebook….. just because Facebook has more traction doesn’t mean it’s a better option.

It’s all new tech, and layered diversification coupled with competition in the early decades of online travel distribution means that the booking process is exhausting and varied…. one site has not, and will not, *EVER* serve *every* single on of your needs.

If you can honestly say you book solely on one site, and one site alone… more power to you, and that’s a rare thing – a branded OTA travel consumer. Travelers that use OTA’s are deal shoppers, so the idea that they would use one site and stick with that due to loyalty is odd, when it’s myopic only to consider one site with the scores of other’s available. A real travel consumer isn’t going to stick to one OTA, and that process of shopping around has become somewhat of a liability…. and an exhausting one. In the last 5 years, the only thing that OTA’s have done is to train the smart revenue managers to yield such that the best available rate is *ALWAYS* directly on the brand website…. in this, you maintain as much rate integrity and control of inventory as possible. That being said, the gestapo like extortion and bullying from OTA’s like Expedia has backfired, and savvy travel consumers are starting to be trained that the best deal is ALWAYS on the hotel website. OTA’s know this, and they are losing consumers due to it.

Room Key is a brand new product that is put together by some of the biggest players in the hotel industry ( Hilton Hotels & Resorts, Wyndham Worldwide, Choice Hotels, Marriott Hotel, InterContinental, Hyatt Hotels as well as Pegasus), and it’s a new product that is *BRILLIANTLY* devised, the UI is quite easily the best online booking product that exists, currently (although KAYAK’s mobile app is stellar). It is filling a sorely needed gap in a crowded space – a simple, concise, uncluttered way to easily find hotel rates and book without the pain of being upsold on value ads and overwhelming options. The OTA’s like Expedia or Travelocity are dinosaurs, and this new option is filling the space that travelers are clamoring for.

I understand your comments about being a consumer, and wanting the simplest option – what you are forgetting is that OTA’s had a chance to offer the simplest options for booking, but have failed in an overarching attempt to increase revenues by destroying any functionality or user experience on their sites. This is all new technology, so the best travel experience hasn’t even been developed yet. Just because one of the OTA’s has a monopoly doesn’t mean it’s the best thing for the consumer. This is the first attempt at our hotel industry to create that experience.

Room Key is coming at the right time – it mimics Google in a light user interface that is concise, simple, and clean.

The other side of this is how Google will lay waste to the uneven and disjointed online travel world -

Google Search + Google Travel + Google Flight + Google Hotel + Google Plus (in searches) = dominance & sheer terror for the existing landscape of online distribution.

Facebook lost 5-6 Million members in the US in May 2011, mention of $100 Billion IPO comes same day.

Facebook Today

Facebook – what was a fun little site, the entire business world has turned into the Holy Grail. This is troubling, because it’s not the site that is amazing, but the new social comm technology that connects people.  I crunch some numbers here, and it’s obvious people aren’t interacting with brands on Facebook. Why are we losing sight of this? It’s just a platform, and membership does not attest to equity.  Equity is where the internet is happening, and the internet is not happening on Facebook.

Facebook might have a $100 Billion IPO, for Q1 2012.  Why would they let this ridiculous evaluation slip the same day it is announced that they also lost 6 Million people in May, via WebProNews.  Gizmodo says 5 Million. A Facebook insider says “nearly 6 million”.

It seems interesting, especially because one would hope that a whopping $100 billion would drown out the measly figure of 5-6 million members.  It’s notoriously difficult to cancel an account, so what’s going on?  Was the drop a culling of the notorious spam that poisons social media?  Is it businesses finally deleting their profile they built before the advent of pages? I know of a couple that have done so in the recent weeks. It’s a bigger, more frightening, trend than this.

The Social Media World watches as Groupon readies an insane IPO

I know LinkedIn. LinkedIn was a friend of mine. You are no LinkedIn.

I want to have a quick aside, and remind you that we all know Groupon is insolvent.  In fact, it’s safe to suggest that Facebook is aware that the social media darling is in crisis, having the market panic about feasibility as they approach an IPO.  An important IPO – one that tests the waters in a much deeper way than LinkedIn, a relatively conservative and successful no brainer in this 2.0 world.  It is also fair to acknowledge that whatever consumers do not know about Groupon, as Wall Street eyes Groupon’s likely failure as a business, other businesses are beginning to have a deep awareness of its flaws, which I documented here (with endless citation and evidence), but Techcrunch excellently explains it here.  Businesses wariness to sign up, coupled with Groupon’s balance sheet, makes that look like another disaster, and this is only valued at $20 Billion, one-fifth of the murmured Facebook IPO.  Do you think Facebook is watching Groupon’s “road-to-IPO” closely?

Facebook is failing, but it depends on how you want to define that.  At User Interface? At listening to consumers? At facilitating connection, communication, discussion? Helping create a consumer environment for our businesses?  This is something that is going to be defined by every individual angle – social media, individual people, business… but it’s safe to say they are failing everyone.

The Filter Bubble Problem

Mark's savvy with the Press knows no bounds.

Facebook has made made it so you can hide everything you dislike about the site.  You can hide people or pages, you can hide causes, games, specific api’s that post, specific phones, and more. These are the filters that Eli Pariser speaks about – the filter bubbles driving us apart, creating a homogenic environment, and limiting true connection and democratic discourse – and the resulting ethical issues involved.  These filters are meant to be a response to Facebook users’ dissatisfaction of the interface and lack of proper privacy controls. Users tire of mindless advertising and spam; being inundated with extraneous applications or attempts at monetizing the user base are finally wearing thin.  These filters are simply a way for you to shut down the site little by little, bit by bit. By developing these tools, Facebook has expressively admitted that the whole network is spam. I spoke about these hidden streams, overposting, and attention curation as equity, and you know that I do not consider Facebook a network in the traditional sense of the word.  If I don’t know who has hidden my business, then I don’t know who my network is, and therefore it is essentially defunct.

Could you imagine the statistics on overall users or pages hidden?  Have you ever hidden anything on Facebook?  I think it is completely unstable as a network, and assume Facebook will at some point have to unhide everything to fix some of the problems of “community”. I had hoped I wouldn’t have to post about Facebook again, but it isn’t just about narcissism and the challenge of pages.

Monetization

Facebook doesn't seem to work with dollar signs

Facebook is constantly altering their UI & architecture, so as to generate constant cash flow. These attempts at creation of revenue wholly disregard the individual users’ privacy & bungles the process constantly.  Beyond Zuckerberg’s slip ups, and horrid PR, Facebook adds confusing, unstable layers to a flawed structure/network that is based off of variably meaningful geo-connections. Social connections should *obviously* include *immediate* social circles, but the strongest online connections are based off interest, and do not necessarily involve family or educational institution, the latter which connects similar classmates across broad social, economic, and political backgrounds. Until Facebook figures this out, their dominance is tenuous. You cannot create a solid network based off of loose interests. Topics/Subject matter drive content creation, and content creation drives social networks.

Facebook’s slapdash and immature attempts at monetizing a site with enormous architectural flaws have made it a broken network, and now they are bleeding users…. there are so many meaningful, topical driven sites, that people simply don’t need it anymore. With the rise of topical boards, Facebook is moot.  You can still check in on your grandkids, or your college ex-boyfriend’s family on Facebook, but most people seem to feel more comfortable generating content in like minded communities, which also includes Tumblr and Twitter.  Tumblr has stolen an entire generation of younger kids, Twitter has mid 30′s parents and professionals who don’t have the time for the vacuousness of Facebook, or the time to figure it out.  This is where Facebook’s content is being generated – elsewhere.  Everyone still has a Facebook account, but you may be interested to know where the internet is really happening.

Where The Internet Happens

No, not those kind of boards.

The internet happens in the open.  It happens in an unregulated environment that business has little interaction with.  Foodies have Chowhound or Eater to talk recipes, cuisine, and what’s hot.  Sports fans have their dream team forums or ESPN boards & an entire industry of social sites.  Movie fans engage in sites like IMDB, Netflix, and Rotten Tomatoes, all rabid posters writing shining reviews or debating camera angles.  Entertainment blogs have members on sites like TMZ or Gawker, where posters gab ad naseuom about the plastic world of their interest.  These people *might* share on Facebook, but often the people that you know in the real world aren’t interested in the same hobbies or activities.  Techies on Techcrunch or Engadget have devoted commenters espousing their applicable fanboydom.  Relevant social sites like Mashable or open forums like Yelp Talk cover a bevvy of topics and retain interest from users.  Traditional national and local newspapers cover the entire gamut of local events and allow a wide spectrum of commentators with insane devotion (sometimes literally).  This doesn’t cover the existence of any millions of hobby or enthusiast boards for everything from offroading (based off the specific make and model of your truck) to knitting clubs or book clubs on small blogs or local sites to large sites like Amazon or Ebay.  Even boards like 4chan create content and relevance that makes other sites pale in comparison.  All this is an indication that social media has blossomed in a way that makes Facebook completely irrelevant.  The walled garden, with too many privacy holes in the fence, leaves a lot to be desired, and users are finally leaving Facebook for greener, rolling pastures.  It’s an apt analogy.

For example, my business is travel and hospitality. My entire industry is suffering devastating groupthink – and every conference or social media mention is about Facebook, driving revenue, ROI. I wanted to mention them, but don’t want to damage the conference economy built around Facebook.  I will just say that I know there are those of you out there nodding your head (ed note: thank you for the emails).  Do you want to know how I can be so brazen about this, and why your company’s efforts on Facebook are misguided?  It’s painful to admit, but the real internet and real consumer isn’t on Facebook, and never planned to be.  As soon as they are on Facebook, they are a sister or a grandmother or a college chum.  But when those same people leave the site – they are consumers on flyertalk, tripadvisor, yelp, and any other consumer site referencing the interest they have at that moment.  Someone can be on Facebook loading vacation pics one moment, and that can have zero relevance to the fact they are a consumer searching reviews for a hotel on Tripadvisor, a moment later.  The two are not related.  ”Consumers” do not exist on Facebook, because when people are on Facebook, they shed the role of consumer (or at least they think they do, which is all it takes).  A friend told me to be patient, but he was speaking to me about being patient in the business realm, that the facebook user will eventually be “born” a consumer.  Well, I am not so sure the users have that sort of patience, and looking at their fickle migration patterns of the past, coupled with their distrust of Facebook management, I don’t think my patience will have anything to do with it.

Our Groupthink and What Your Business Needs to Ask

It's not pretty when it happens, and sometimes we can't see it.

The groupthink throughout industry is to talk about how to leverage Facebook, and not whether it’s truly worth the effort or has intrinsic value. Everyone is so self interested that they won’t admit that it’s not the wonder it appears to be. The general rule is that you have to be where people commune, but it doesn’t mean it has to be anything more than a landing page.  I went so far as to ask fans of some of our hotels what they thought of brands on Facebook. Informal test of 4 hotels was unanimous – everyone overposts, and it is tantamount to spam. The more you post, the more people hide you. Great… you got 5 comments!!! Then it’s likely, as 90% of people are lurkers, that even more hid you. You are losing attention every day with your Facebook pages.

Outside the US, along with Twitter, Facebook has been the only available tool with the reach to successfully organize people, and the result has been powerful and moving and undeniable.

But, inside the US, it has been co-opted by brands and marketing agents who attempt to exploit it and utilize it for business. This is all at the behest of Facebook, who is trying to monetize the hell out of the user base and define and reinforce the concept of “user equity”.  Of course, businesses haven’t taken the time to realize there is almost no ROI, and when there is – it’s rare and far between. Why did they lose 6 million people in May? Is that real people, or is Facebook flushing out the coffers of spammers that are littering every corner of that network? Outside of this loss of users, how many existing accounts of the 700 Million members are spammers or multiple accounts? Dead accounts? How do they measure usage?

Define a successful campaign on Facebook? Define a successful business situation in regards to Facebook? Is it about money? brand building? interactivity? I have heard minor successes on Facebook, but no consistent, overwhelming victories as you may have heard from sites like Twitter.  You know what would happen if any single hotel took their page off Facebook? Absolutely nothing.  Facebook is a pass through. They interact with your brand on other sites like user generated review and rating sites, or topical boards where they can get advice from like minded people with expertise enough to answer tough questions.  Uncle Harry or your high school prom date isn’t likely to be able to do that for you.  People “like” and move on in Facebook, it’s a throwaway, passive activity; otherwise people don’t “like” anything because they don’t see the point, or don’t trust the process, even if they actually like something.  It’s obvious there’s a flaw in this system as a trustworthy & equitable model for making business decisions.  Facebook’s compulsion to legitimize the ad model structure of their social business has marginalized the ability for people to meaningfully connect. This erodes trust, and now people are finding other places to commune meaningfully online.  People are still using Facebook in a personal manner, so they wear brands like fashion, for status. They aren’t interacting with the brand so much as showing it off as they might Gucci sunglasses or a Prada purse.  There isn’t the compulsion or awareness by normal Facebook users to create commerce, or interact with businesses as they would on a review site, or topical network.  The closed network based off random, extinct, geographical connections (school, etc) stifles ability to congregate and commune around brands or specific concepts. The groups and pages don’t work properly, because they were an afterthought to the original intent of Facebook.

Is what your organization puts into Facebook worth what is coming out of it?

The End of Facebook

Heaven's to Murgatroyd, Facebook may exit stage left, even.

So far it’s been difficult to cultivate a social network into a successful long term business.  You can’t build a social network, just ask Google. A small network goes viral, then that network spends years garnering users and destroying the site in the race to monetize it, until users move somewhere else. Facebook went viral overnight, but this doesn’t mean it’s a successful platform for business.  Until they can offer a meaningful way to show real return or effeciveness, we are wasting labor and marketing dollars on a black hole.  The reason they aren’t sharing any of their data regarding site usage is because they know it would hobble their $100 Billion IPO.  The data and trends obvious in their private data, coupled with the social world’s IPO craze, it’s seems obvious they know the time is now, while they are jumping the shark.  Their talk of IPO is nothing more than a cynical money grab.  As Groupon will start the beginning of the 2.0 bubble, Facebook is desperate to cash in before it’s too late.

The sad part is that all these social media conferences and advertising or PR firms, coupled with the rest of big business, have so mindlessly invested endless money and time into developing their presence, they won’t be able to see the forest for the trees….. there is an entire economy that exists around Facebook, and people will have too much self interest to admit it’s time is passing.  They will hold on dearly, for fear of having to make new presentation slides, or build yet another business profile on yet another network.  Consultants will be frightened of being exposed for how much money they charge for administering Facebook.  Operators won’t want to change a thing because they finally got the facebook action committee meeting in place, or the hierarchy of responsibility for posting and replies.

Many people are vested very deeply in Facebook’s success, and I fear that our inherent self interest will allow this IPO to happen without a hitch…. a massively inflated and dangerous number representing an inflated faux economy that could collapse harder than a previous bubble we all should know and remember.  In fact, it’s going to happen.  Groupon is the start of it.  All that conversation about Groupon’s insolvancy and filed IPO papers – Facebook knows this.  The collapse will bring greater scrutiny, deeper questions, and demand for much more reporting and numbers in regards to the site.  As for now, Facebook stats are piece-meal, unsubstantiated guesswork, and Facebook is very secretive with all their usage stats.  Once real data gets out, do you suppose that it will bolster the evaluation, or bring it back down to earth?

I think the answer is all too obvious.  So Facebook is getting ready to cash in because they know they have peaked, and the other side of the mountain is a long way down.  It’s a precarious time for our economy as well as my personal hospitality and travel world.  Will we keep our heads down and keep espousing the genius of Facebook with empty stats and minor successes, or will we be big enough to move on, and realize that another time is passing?  I doubt we will be big enough.  But I hope this helps to create more of a dialogue that gets us there… ultimately one that protects the future of our economy.

Edit 16th June 2011:

A friend sent this article, “Older users likely to connect with businesses“. It is unfortunate that we are defining “connection” or interaction as something as passive as pressing a button. Users are tired of privacy issues, sure… but they are also tired of 90% of businesses doing Facebook wrong – not allowing user comments to appear on the wall, nor interacting and commenting on their posts.  It’s an RSS feed, and that’s spam, and it’s being hidden, and you have lost their attention.  When businesses realize the problems with Facebook, the lack of results, and the fact we burned most of bridges in trying to connect with users, ad sales will plummet, and the bottom will fall out.  We are still in front of the Groupon IPO, and lessons can be learnt from the Pandora debacle from today. Show’s over, says VentureBeat, as Pandora skids hard.  Stay vigil and stay aware, fight against groupthink, and engage your company with open-minded discussion regarding your next move.

UPDATE 30 Sept 2011:

Ed Note:  Google Plus’ Open social graph will quickly make Facebook’s walled garden irrelevent.  I quote  Terrence Lui:

“Those of you reading this right now should realize something. You have a fantastic lead. Everybody who depends on Google to run their business, and there are a lot of them, and is ignoring Google+ right now is a fool. You are in on the ground floor of something that will fundamentally change what is now the foundation of the internet.

So take advantage of it while you can. Stake out your place on the high ground. At some point very soon, the crowd will wake up to the fact that Google is serious about all of this and the flood will come.”

But I think the most compelling and damning evidence is this:  Twitter has seen more growth in the last 9 months than the past 5 years. It is vital to be aware of this fact.  Since May, Facebook user base growth in the U.S. has completely stalled, while these other networks are growing faster than ever.  I am basically done protecting my industry from the mindless groupthink.  Let’s let those who are listening gain the high ground.  Let’s let the vacuous & self interested, fall by the wayside.  Good luck out there guys.

First Step: Shout Out About It (even if others don't care)

People keep pontificating on the “check-in”, and what it means for most people, whether it will be relevent enough to stick around, or if it will fall into shadow like so many past “darlings of the moment”.  Well… I commented first *HERE*, and saw that consumers might think they are *not* a winning proposition here, and even Read Write Web claimed the death of the Check-In in 2011, and it was supposed to be a simple sentence.  In fact, I started by saying, “Here, I will make this simple…”, which is not only a bit grandiose, but sort of pompous as well.  I will try to relate my opinion with logic, instead of emotion… but it is still just an opinion.  I am just sharing a few thoughts on LBS (Location Based Services).  I would love to know what you think?

Check-ins aren’t going away, for the time being, because they are part of vanity and branded narcissism. People brag, everyone else ignores accept for supplicants and giddy fanboys. Check Ins are part of the “ME” culture… the issue is whether or not they will ever be really important. Aggregate check-in data for business *IS* interesting, but carving the path to relevance may include suffering the thorns of droll personal information that acts as spam, or the hot air of arrogance that chokes our lungs. I see the network, overall, quieting down on Facebook because the content generators form powerful cliques who don’t notice everyone else hiding them or just not paying attention because looking at their wall is a rollcall of constant chattering. To most people *I* know on Facebook, Check-In’s are spam. So are events. So are causes. So are messages. It’s all spam, and people are really getting tired of it, so they’re checking their pages less, posting pics less.  In fact, Facebook has made so many personalization features to combat the fact that Facebook, in itself, is spam, that these features are beginning to erode the entire concept of community (as you know from my post about Eli’s Ted Talk here, and this PDF 2010 talk)  As to the FB Check-IN:

We all come with baggage, so do the young Geo Location Based Apps

Facebook people didn’t opt in to the “check in” feature so much as have it forced on them, while giddy users of foursquare opt-in, and are voracious users of the real world board game… because they chose to be part of it. For Facebook users, it’s just more of the painful grind of the “me”.  Another thing to deal with – ignore, respond to, or hide. Is it possible that people are tired of the “me me me” stage of 2.0, and a more social semantic web will wipe out the relevance of the combined GPS individual user info that we are talking about? When people get over the individual importance of their check-ins, the real importance of the process will be noted: it’s not about the people checking in, it’s the brands that have been checked in to. The marketing opportunity isn’t with the individuals themselves, and soon we will move past trying to find influencers vs simple nodes.  I like weak ties, personally.

Where people are isn’t as important as why they are there. The next stage is communing around the places, and understanding that the individual person is simply a node in a much vaster network (Know Your Role, Know Your Place). The individual check-ins are irrelevent. It’s the thing they’re checking into, or around, is what’s relevant, and that means the real world is marketing your business by default. It’s viral, and it’s not something you pro-actively manage other than to run a ethical, fantastic business.  You don’t market to these people checking in to your hotel or business…. they are already branded in some loose sense as they are there. If you are doing your job, they will love it…. and it’s the simple fact that aggregate social user info like reviews, coupled with aggregate (I love the word aggregate) location info – nothing to do with the individual – will simply build your brand.  Fire your marketing department.  I am joking.  Calm down. I saw the ops guys in the back clapping.

The Swarm is what matters to marketers, while individual users matter to operations.

In fact, unless someone is famous or popular in some sense, the individual will have zero relevance, at least on a social network that isn’t a location based augmented reality app.  Famous people will give more credibility to places, events, etc… but for most of us little people, the future of our phones is that they just start clicking away when we are moving around (the issue is whether you will be able to opt-in to that, or opt-out of that?), and that aggregate data will be anonymously extrapolated to tell a story.  I know the privacy nonsense comes up again… I am all for individual privacy.  I just think it’s a red herring.  Kids these days… have traded privacy for notoriety.  We have traded privacy for apps that make us superhuman, in some senses. Read all about my privacy thoughts here.  Is the idea of volunteering endorsement of a brand that far fetched?  We do it every time we check in on Facebook or Foursquare, Gowalla, or any of the others endless check-in options.

Make sure to tag your friend with you, while you check-in, and ignore them.

I just can’t imagine individual user activity to be that important, where most of the time people see it as spam on Facebook.  I will post an informal test soon.  So I could see where it lapses. But the technology of recording or registering with locations will amplify, and that location data will aggregate to create a narrative about real world businesses, online.

I think they aren’t going away, but it’s certainly going to evolve and become something totally different. Active single user activity will alter and it will be more passive and automated.

But I am rambling.

Once we stop being so full of ourselves, the check in will take on a new role. Until then, we wear them as literal badges, as bragging rights. I am *HERE*. Look at me.  Like an expensive pair of jeans or some silly handbag.  I love trying to be mayor of my favorite hiking trails, so there I am, in nature, searching for a signal so I can let people know, “Wish you were here”.

It’s gonna be around for quite a bit, methinks.  Maybe we’ll be lucky enough (dry sarcasm) to simply have our credit cards automatically check us in when we are at the airport, or out to dinner.  Maybe currency will be your star rating, or an onsite review is added value to your bill for the restaurant, so you can have a real dialog with management about your experience and help the brand improve, and help manage it.  It’s going to evolve… it’s just how much it will scare us, and how we will want to respond to that, and control it.

This is the most important thing regarding Facebook & other online communities that very few people are talking about.  I note here (June 2010) that hidden streams destroy any legitimacy to this network, & eventually Facebook will have to change their practices.

Now, Move On’s Eli Pariser has written a book called “The Filter Bubble: What the Internet is Hiding from You” -

“The Internet software that we use is getting smarter, and more tailored to our needs, all the time. The risk, Eli Pariser reveals, is that we increasingly won’t see other perspectives. In The Filter Bubble, he shows us how the trend could reinforce partisan and narrow mindsets, and points the way to a greater online diversity of perspective.”

We need to reinforce the wobbly foundation before it comes crashing down.

Here is his TED TALK.

Here is his talk from PDF 2010, as well – “Eli Pariser, the president of MoveOn.org, answered the PdF 2010 question “Can the Internet Fix Politics” with a warning about how the hidden personalization features of search and newsfeeds were subtly destroying the notion of a common public space.”

Smart people are actually writing about what I wrote about.  Dangit, I *knew* it was important.

It’s never about *me* per se, but it certainly is my hope that my ideas and the exchange of information gets out into the public domain and is found, in some way, relevant and meaningful.  If it sparks discussion, that’s all I want.  In this case, Eli is way ahead of everyone else… and it’s just nice to know I am on the right path about these complex issues.  Or maybe it means I have way too much time to be esoteric and ponder.  Whatever the case, consider this my endorsement of his book.

If you would like to read more about Facebook and it’s growing pains, attention as equity, overposting (an obvious experiment I have been running on my accounts so as to not destroy the biz pages I admin. *hopefully that explains a *LOT* of how I use and interact on Facebook*), follow the next link. There is another article, among many more, on my professional blog (so lame to say that) regarding Narcissism and the challenge of Facebook.  In case you missed it above, here is the link regarding Hidden Streams, and how they completely erode the functionality & impact of Facebook’s network.

(Thanks to Kristine Johnson for sending me the PDF 2010 YT that introduced me to him)

WHAAAAAAaaaaaaaaaaaaT did you say???

The power of Groupon’s success has surely been due to the happy consumers rambling on about the score they just made.  You can’t go anywhere and not see it.  The crisis of perception is that everyone is beside themselves with how “cool” coupon sites are, but only regard them from the perspective of being a consumer. Stop being selfish, and think about these poor businesses. Everyone seems to be in a mindless consumer mindset when they consider them, and especially when they sign on to participate in them; all the proselytizers are consumer advocates or discounters. I don’t know one thoughtful business person that finds them to be anything but frightening, even if deemed necessary (and in hospitality, they never are necessary). They can surely bring business into an operation with low to no overhead, huge margins, or zero variable operational costs…. but to businesses like hotels, it’s a losing proposition.  Please, check your giddiness at the door – and hope these coupon publishers are a fad, because if they are not we are in big trouble. Whether you scored a good deal on Living Social is moot, so put on your business acumen hat… and let’s explore!  This post is meant to be a simple, accessible cautionary tale to Hoteliers and the like.  I am not covering entirely new ground.  But, I rather have something for us to refer to than having to explain my dour skepticism to each person incredulous as to how I am “missing the biggest thing ever”.

In fact, I wouldn’t mind being known as that one guy that stopped the entire hospitality industry from participating in any form of online coupon site.  At least, realize the impacts.

Search “Is Groupon Killing” in Google, or simply click this link.

Do you here a ticking sound? Is that for us or for Groupon?

[Leafing through pages of Google results] Leeeet’s seeeeeee….

They are killing brands, retailing, local food, restaurants, photography, and more. Whether this is hyperbolic is beside the point… the issue is that you can see significant duress about the long term efficacy of these coupon sites.  People are talking about the drawbacks of coupon sites much more often, and deeply considering the short term gain versus long term costs.  In fact, I don’t have to wax endlessly, for once, because a gentleman and scholar from DAVIDID Blog…. nailed it succinctly.

“But if marketing is defined as increasing perceived consumer value in service of increasing sales at a profit, we need to look beyond Groupon’s short-term sales impact, and ask how it might be influencing perceived brand value.

On this matter, we have serious concerns.  Groupon, and its ilk, unfortunately is training people to expect a coupon on most anything.  And that means that unless people find a deal, they’re less likely to buy at full price, preferring to wait until the next coupon cycle.  This applies to current customers who are used to paying full price, and new customers who would now never dream of paying full price.  The result:  More and more people will be trained to only buy on deal, which, of course, diminishes the perceived value of a brand both short and long-term.”

In fact, it can be even simpler when you consider this article about Groupon becoming the online Walmart that kills small business.  ”The ratio of consumer savings vs business profit can kill small business“.  Math, of course, is known to be frustratingly honest.  This has been quite apparent with Groupon’s expansion into Europe, damaging small brands.  The New York times also comments on Groupon altering and destroying proper retailing, while other people muse about the crush of business that they can’t manage (more Groupon vs restaurants commentary here and here) - but I don’t want to stray too far from my original point:

A discount seeking non-branded consumer is not your guest.

If you ask me, it's not that uncertain, but it is surely a dead end.

If you are considering doing an online coupon, please do some research and find out if any of your competitors or professional peers have information regarding how their coupon went. In fact, the buzz and excitement is leaving us blind, so that a “successful” groupon customer might not realize all the associated costs. A restaurateur breaks down the costs in this article, “5,772 new customers — how can I not love Groupon?”, and the results are unnerving.  I do not understand how we were able to become this intoxicated with the shiny new toy, but the long term costs are even more problematic than the short term costs, which are, funny enough, also problematic.

The one thing for sure is this: someone looking for a deal will not become branded as they are already branded for the deal. Post stay, they won’t come back to the hotel, because they will be disgusted with normal rates. Groupon, Living Social, and other coupon advocates will claim that standard rates are a barrier to entry, and the coupon will allow for someone to experiment prior to committing to a brand or standard rates.  If this demographic exists, the onus is on the coupon sites to demonstrate newfound brand loyalty due to original Groupon-style sales.  That is a very meaningful measurement that equals equity for coupon sites, and would, in all likelihood, sell a hotel on a deal like these coupons. But it’s simply not likely, and I haven’t heard of these scenarios. I think it’s more selling and wishful thinking than careful logic on the part of Groupon and their clones.  But these Coupon Sites were never about the business side of things.

A consumer using any of these coupons will simply go back to the branded coupon site and buy the *next* hotel deal. Brand doesn’t matter to them, which is why they are shopping via a coupon site.  The deal is the brand. They won’t be your guests.

In fact, this article suggests a few ways that Groupon is going to kill your business, and one aspect is that you will become branded as a discounter.  Is that healthy for your year end?  How about 5 years from now as the economy strengthens? Will you get the rate back you gave up during the 2008 recession by discounting to no end?  So you don’t have to continually jump off to new links, I will repost the 4 concerns from the prior linked article:

1. You may always be fishing for customers.

2. You may be branded as a discounter.

3. You will get finicky and demanding customers who suck.

4. It conditions people that price is the only benefit.

The fourth comment is also vital.  It alters your pricing model, and suggests that your brand experience has no equity. Coupons destroy perceived value in your rooms. It immediately destroys the original value of the room to the Groupon user (would you pay 2x the rate you paid for your last stay?  No. No one will.), and it will confuse a branded guest, as well.  If a guest is branded and paying rack rate, then a coupon either means i) they are angry that their brand would distill their hotel stay by allowing a specific demographic water down the experience (in a way, it’s subsidizing rates so that rack rate guests pay more for a lesser experience… please explain how that might be fair?), or, possibly worse – ii) the branded guest who would have booked at full rate is, literally, given free money by the hotel.  I have friends who were planning a reunion at a specific property who found a coupon for the hotel they planned to book.  That’s 2 for 1 that was going to pay rack rate.  Smart business?

In summation – Coupon Sites like Groupon, Living Social, and the others impact your business by:

a) attracting non branded deal seekers who don’t know you, that won’t be back at full rate, which then may re-establish your brand as a budget, discount brand.

and / or

b) handing out your profits to branded people that would have paid rack rate who stumbled upon the deal.

On the right path.

Pro coupon site people ruffle at these comments, but I haven’t seen any meaningful metric from Groupon or clone sites that suggest a decent percentage of guests become branded, loyal fans. In fact, what I *have* seen are relaxing, healing spas with cooler toting cheapskates, or deal seekers causing endless headaches and complexity for well positioned, established brands. Your rack rate paying guests don’t take half the energy than these critical, troublesome deal seekers. A generalization perhaps, but often seen in practice.  Just ask the desk or prop level ops people how they feel about it.

Yes there are plenty of wonderful coupon site users – I can be one of them at times.  In fact, the only way I use these sites now is to wait for a deal of a brand I already patronize.  I am simply waiting for a business to give me free money.  That’s nothing but damaging to a brand.

I leave you with these cautionary words:

It’s not a good investment. For some businesses, it may work short term, but it can also hurt long term.  For hotels, it simply doesn’t make any sense.  I hope it’s a fad, but stay far away – because if the coupon craze is here to stay, it’s going to redefine the economy of your business.

Lot of sleepless nights ahead for Groupon

Thanks for reading, now go tell your GM or DOSM.  Do it now!  If you still don’t get it… good luck out there.

A ghostly voice:

Consumer privacy issues are a “red herring.” — “‘You have zero privacy anyway,’ Scott McNealy told a group of reporters and analysts Monday night at an event to launch his company’s new Jini technology. Get over it.’”

That was in 1999.

Subsquently…. resultingly….. These privacy conversations kill me. If one wishes for privacy, one shouldn’t leave the house, nor ever go online.

It is completely within the best interests of a hotel to protect a guest’s privacy… we go to significant lengths to do so. To suggest otherwise is misinformed and ignorant.  It is the hallmark of our success, among other things.

This issue isn’t about a hotel’s sensitivity to privacy. The issue is our current preoccupation with the concept of privacy. No one has any idea what “privacy” means. We have relative freedom, and our lives are relatively unobstructed and we are able to do as we please. But leaving the house – you are subjected to the largest shift in communication history, coupled with modern technological achievements that have, together, completely negated the concept of privacy. It doesn’t exist anymore. In fact… younger generations shed it as a by-product of the lifestyle they seek… a reminder that, shortly, it simply isn’t going to be an issue for people that will be controlling the world soon. How can we really expect any privacy, anyway?

It’s a fun conversation about a word few people really understand…. but whether or not we need to be sensitive (hotels, in fact, are sensitive) is moot. The point is that privacy is ending, and to some extent we are willfully giving it up as a biproduct of being able to access these amazing tools of the internet age.

Think about apps…. how much did you think about all the permissions you granted those people to access your app for free? Sorry to say, that app isn’t free:  you are releasing your privacy as payment. It’s happening at an increasing rate, and it’s soon going to be an arcane conversation for future pondering. It really makes me laugh that these people are on Facebook, posting constant information, and worried about privacy. They worry some professional acquaintance will see something off color, when they have completely given their entire lives worth of information to facebook…. talk about a crisis of perception.

Hello Nero, your fiddle is lovely. I think it’s a lyre, but history is vague. Also, Rome is burning.

Facebook isn’t free. Privacy doesn’t exist there… there’s equity in your information. Why else would it be valued at 50B? So we give up privacy constantly. In exchange for ESP like connection to friends and supercomputer like access to facts and answers…. I give up much, happily.

When the concept of privacy was far more quaint.

But if I can go to a website and spend $30 and know someone’s address, info, etc… I just can’t imagine anyone really taking privacy seriously. Mcnealy was right in 1999. It’s the nature of our culture cannibalizing itself. It’s not a hotel that people have to worry about.

It’s not big brother. It’s us. We are what we fear. Big Brother is every single one of us with a camera and being in the right place at the right time. What reasonable expectation of privacy would one have when everyone is connected to a camera that immediately uploads online? Our police cameras can’t compete with the aggregate real world social net that is taking down people, and corporations, and governments and nations.

Hotels, arguably, are among the most sensitive organizations in the world when it comes to respecting all levels of it’s guest’s / patron’s privacy. It’s not our responsibility, however, to be blamed for the growing pains involved with the greatest shift in human communication’s history.  Unfortunately, until we resolve these issues…. everyone will grimly fantasize about being important enough to be stalked. It’s not that I am that cynical, it’s just that I know we may not be *that* interesting.

It's not big brother, it's us - the sea of anonymous watchers.

Until we realize this, we impede the advancement of a more ethical, and humane, human population.  I am sorry your petty, arrogant privacies feel threatened.  I already mentioned, unfortunately, that in the grand scheme of things… none of us really matter. In light of that, let’s celebrate our connections and stop babbling about meaningless issues of ego.  Let’s advance….  see you there.  Until then, you are stuck arguing about lost concepts from vestiges past.  Evolve.