How Amazon and Netflix are Inspiring a New Generation of E-Commerce in the Hotel Industry

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More than 20 years since opening their respective digital doors, Amazon and Netflix’s revenue gains have been relentless. Amazon posted $1.6 billion in profit for the first quarter of 2018 while Netflix simultaneously forecast $15 billion in revenue, up from $11.7 billion in 2017. What’s the secret sauce behind these tech giants’ success? Both harness the power of the “platform” business model.

What does this mean for hotels? While there’s a number of traits that define today’s platform businesses, better personalization and end-to-end customer experiences are the two most important platform-style strategies that those in the hotel industry are embracing. Those that implement this approach use what they know about customer behavior, compelling content, and inventory to master the art of a customized e-commerce experience, leading to a more seamless consumption process that intuitively responds to users’ needs and interests.

Today the hotel industry is increasingly latching on to the platform business model and its focus on a more frictionless and personalized purchase process. According to the Harvard Business Review article, How Marketers Can Personalize at Scale, better personalization can deliver five to eight times the return on investment (ROI) on marketing spend and can lift sales by 10 percent or more.

Hotels increasingly recognize that leveraging this platform-style approach to website personalization can better the bottom line. But how are today’s hotel brands integrating this approach into their own businesses? Below are some examples.

Building Revenue through Subscription

Standard Hotels is one example of a hotel group embracing the platform approach, by means of a new subscription-based consumption strategy to drive greater repeat business. The boutique brand has never offered its guests a traditional loyalty program, which Chief Revenue Officer Jimmy Suh describes as counterintuitive “because guests have to show their loyalty to the brand before any real rewards are delivered.” Instead, Suh is planning to launch an Amazon Prime-inspired hotel membership program later this year.

Although still in development, the subscription-based platform would provide members with immediate benefits such as members-only events at Standard Hotels that would compensate for their subscription fees. Additional perks will come by way of partnerships with retailers and other businesses that complement the type of lifestyle eschewed by the Standard Hotels brand, including music, wellness, and dining experiences that enhance the program’s value proposition both in the hotel and beyond.

When booking accommodations on the Standard Hotels website, members will also receive customized room rates for each of their preferred room categories, also presented in a personalized sort order. These elements are intended to underscore the lifetime value of the hotel’s loyal guests. “These two components can add great value as far as how we keep our guests and members more engaged, offering them a completely seamless experience whenever they stay at our hotels,” said Suh.

Creating Sweeping Content

Honolulu-based Aqua-Aston Hospitality also sought to offer a more holistic online experience that would bolster user engagement when it relaunched its website earlier this year. The new Aqua-Aston Hospitality platform www.aqua-aston.com, inclusive of personalized and customized experiences, serves as a destination for every stage of the booking cycle, from the inspiration phase through to planning, booking, experiencing, and sharing. The experience consolidates the brands’ 40-plus hotels and resort condos in Hawaii, the continental U.S., and Central America into one comprehensive booking destination.

“Our results, across the board, are positive. Not only are users spending more time on the site and engaging with its content, but conversion rates – particularly mobile conversion rates – have also significantly increased,” said James Karabelas, senior director, digital marketing and ecommerce for Aqua-Aston. “Additionally, we are seeing more repeat visits among online users… and we attribute this to the highly curated content from our team of destination experts, as well as the superior technology being employed by the site, that matched our customer with hotel options that fit the type of trip they’re planning.”

E-commerce sites such as Amazon, L.L.Bean, and Zappos, all of which offer the ability to cater to consumer behavior through experiential shopping, were key sources of influence for the new, mobile-responsive Aqua Aston site. User generated content (UGC) and local places of interest (POVs), as well as itineraries, were incorporated in order to enhance the planning and booking experiences, which are also based on preference rather than price. “Our customers are hungry for content that can explain and simplify the destination and all the experiences they can have on their vacation,” Karbelas added.

When users return to the site, the experience is personalized to their intent or on-site behavior, offering apropos activity and island suggestions as well as accommodation options. Travelers create wish lists and “digital vacation boards” that they can revisit and continuously build upon as they plan their trip. Still to come are fresh travel tip content, the ability to create a personal profile, curated custom trip itinerary and 24-hour web-chat access to a Hawaii travel expert center.

Karabelas is betting that as new content and features like travel planning tools and the option to like, share, and save content are rolled out on the site, “the personalization opportunities are unlimited.” Likely so are the prospects for growing revenue.

Power of the Platform

The extent to which these two hotel groups will increase ROI in the long term remains to be seen. But there’s no denying that both are looking to take the first steps to create greater levels of personalization by rethinking how they approach technology.

In fact, it’s largely thanks to the platform model, pioneered by companies like Amazon and Netflix that this approach is even possible. Both companies have access to a vast wealth of data about customers, created because they have centralized information from vendors, customers and partners all in one place. In a similar fashion, software-based digital environments with open infrastructures can help hotels stitch together their back-end software systems from various partners, allowing for more integrations and applications to be built on top.

“Property management, central reservation, channel management, revenue management, CRM to name only a few — hotels need a multitude of systems to run their business, and data is often replicated from one to the next,” said Marco Benvenuti, Chief Marketing and Strategy Officer for Duetto. “It’s one of several reasons the industry has struggled to keep pace with OTAs and other true technology companies. It’s exciting to see the industry begin to embrace true platforms that can bring all these technologies together and it opens the door for real innovation.”

In fact, if a hotel were able to unify the data from those systems, it could begin building a single view of the consumer, using that information to better serve hotel customers across the entire customer journey.

Individual hotels may never achieve the dominant market position of platform-focused companies like Amazon and Netflix. But that doesn’t mean they can’t steal a page from their playbook, using the insights of the platform approach to deliver more personalized, end-to-end customer experiences for potential guests.

This content was created collaboratively by Duetto and Skift’s branded content studio, SkiftX.