How Can Hotels Gone Adrift Navigate the Success of the Cruise Industry to Enhance Guest Experience?

Hotels are looking to their colleagues in the cruise industry for ideas to engender greater loyalty and higher revenues

It's been building for the last couple of years, but as stated by Costar's Stephanie Ricca in her recent publication, we've officially entered the "era of experiential travel."

At last month's American Lodging Investment Summit (ALIS), hospitality leaders gathered for a panel on a "State of the Travel Industry," and the consensus is the recent shift from spending on products to services is here to stay. For hotel owners and operators, this means that a clean, well-maintained room is no longer sufficient to stay relevant, and they must pivot to a provide differentiated ancillary services and experiential enhancements.

One particularly noteworthy panelist was Christine Duffy, President of Carnival Cruise Lines, who shared that the company comes into 2024 "with two thirds of all business for the year booked, leading [Carnival] to push out the booking curve and open up more inventory earlier." Hotel owners and revenue managers would give just about anything to enter the year with that level of pre-booked business, and while hotel booking curves are starting to level-out and extend post COVID, they're nowhere near that long. So what's the secret sauce to Carnival's success? Personalization: "[guests] want it and are willing to pay for it" stated Duffy.

The usually significant period of time between booking and embarking on a cruise allows Carnival, and other cruise liners, to focus on building excitement, generating information about each guest, and driving pre-stay revenue. According to Duffy, Carnvial is generating pre-stay onboard revenue from an eye-popping 50% of guests! Can you imagine the impact that kind of engagement could have to a hotel's bottom-line? And yet, the hotel industry has been historically bad at generating much excitement of any kind before, during, or after a guest's stay. By-and-large, most hotel guests view a hotel stay as transactional: a place to lay their head close to where they actually want to be. But what if hoteliers could shift the paradigm and make their hotel a destination unto itself? And how would they do that?

The first step would take a page out of the cruise industry's playbook and actually make a concerted effort to engage with their guests once they've booked...and an automated "pre-arrival" email doesn't cut it. How many of us actually read the templatized booking confirmation we receive before filing it away in a folder never to be seen again? Carnival has created a dedicated, pre-arrival portal that allows guests to make on-ship reservations for restaurants, spas, and excursions, building anticipation for a trip and remaining top of mind for its upcoming guests. Once on-board, a mobile app can be used to order food and drinks to wherever a guest may be on the ship which "eliminates friction...and [gives] a better overall experience" says Duffy.

While booking portals and interactive apps may be out of reach for many hotels, especially those without franchise brand support, hotels simply must get better at engaging with guests and "reducing friction", as fewer of them ever speak to a human before arriving. According to a recent Siteminder analysis, an increasing number of hotel room reservations are made online, close to 60% as of 2023, which means hotels have to fight even harder to build engagement as fewer live humans are involved in the process. This is where repurposing existing staff can be extremely lucrative. There is inevitably downtime in a given hotel shift, but often that time isn't spend productively. Why not train and incentivize front desk agents to be brand ambassadors, extolling the benefits of a given property? I guarantee a personalized email sent from someone onsite will garner a higher open-rate than an auto-generated reminder. That email should be offering to make reservations at the hotel restaurant or spa, pitching a room upgrade, or selling a post-arrival amenity. Even if a guest doesn't respond, they know that someone at the hotel cares enough to reach out. That in and of itself goes a long way to engendering loyalty, which becomes increasingly valuable in the fight for market share, especially amongst independent properties that don't have a traditional rewards program in place.

And what about all that data that hotels collect? It can be a fine line to walk between being personal and being creepy, but hotels can infer what guests what or need without much effort, either through their booking details or because they've explicitly told the hotel. The challenge comes in actioning upon that data, from something as simple as actually following a guest's profile requests for a high floor or extra pillows, or acknowledging their birthday. Some properties take it to another level by compiling a dossier-like amount of information about a guest, down to their preferred vintner of Cabernet. While that level of detail requires time and resources that most properties don't have, in today's hyper-connected world, it doesn't take all that much effort to find out an actionable piece of information about a guest that can be the difference between an "ehh" stay and an exemplary one. Cruise lines have learned to do this consistently and successfully, and now the hotel industry needs to follow suit.

As hotel occupancy levels are returning to (or in many places exceeding) pre-pandemic levels, the next battle for guests will be won or lost in how hotels create meaningful experiences and drive engagement with their brand. Finding new ways to engender loyalty and drive ancillary revenue will be the deciding factor of who reigns supreme in the competitive set.