Challenges In The Hotel Industry

Sojern Sit Down: Raj Patel, Founder & CEO of INNsight.com, Discusses Challenges in the Hotel Industry, Technology, and Direct Bookings

Marissa Rasmussen sits down with the Founder & CEO of INNsight.com to discuss challenges facing the hotel industry and how to tackle them head-on using the latest tech and some old-school service.

Sojern

Raj Patel is the Founder and CEO of INNsight.com. He grew up in the hotel industry selling rooms at his family’s hotels. Raj graduated from the Haas School of Business at the University of California at Berkeley with a Bachelor’s of Science in Business Administration.

In 2008, Raj started INNsight.com with his brother Roshan. Always knowing that he would one day have a career in the hospitality industry, Raj decided to leverage his High-Tech background to build a new and powerful e-commerce and online marketing platform for innkeepers.

I had the pleasure of speaking with Raj about the hotel industry for our latest Sojern Sit Down, including INNsight’s beginning, technology, and direct bookings.

How did you get into the hospitality industry?

For all intents and purposes, I was born and raised in the hospitality industry, as my family has owned and operated hotels my whole life. They started with small tourist properties and expanded. Being born into the business, I was very involved and privy to the challenges a mom-and-pop hotelier face.

I got exposed early on to all facets of operations such as general management, rate setting, and revenue management, selling rooms to walk-in guests, and ensuring that high levels of hospitality were in place on a day-to-day basis.

What do you enjoy most about the industry?

Having been brought up in the hotel industry, I’ve always been fascinated with the aspect of selling a hotel room, especially with setting rates, and property marketing, both online and offline. Hotel rooms are a perishable good. It’s here today and gone tomorrow. That room has to get sold. I was always thinking about how to make that process more efficient.

What would you say are the top three challenges the hotel industry is facing today?

I think there are multiple challenges that hoteliers are facing today. Oversupply is a huge challenge. Not only are there new hotels constantly going up, but there are also short-term rentals, vacations rentals, and the Airbnb concept to take into consideration. In addition, with economic headwinds, I foresee demand stalling in the future, and with slacking demand and oversupply, I think hoteliers are going to need to get inventive with their product and marketing.

The second challenge is distribution cost and management. You have to understand the landscape of distribution in order to determine where the inefficiencies are and how to fix them. Hoteliers are always wondering how to sell and distribute their rooms in the most cost effective way possible.

The third challenge I see is technology adoption, or perhaps the lack of technology in the independent hotel space, in order to enable smaller hotels to compete on a level playing field. Many mom-and-pop hoteliers don’t have the chops for technology and may not know how to effectively market a property online.

What was the driving inspiration behind INNsight, and what gaps in the lodging industry did you see that led you to found INNsight?

I was born and raised in San Francisco/Bay Area and saw how Silicon Valley blossomed. There were entrepreneurs trying to solve big problems or disrupt old ways of doing things. In fact, early in my career, I was heavily involved in building part of eBay’s fixed price business and tools to help sellers on the world’s first eCommerce marketplace sell their wares.

So, I wondered: if I can help a grandmother in Nebraska build an online storefront to sell her trinkets to the world, why can’t I do the same for hotel rooms? I saw an opportunity to disrupt the hotel industry, finding answers to questions of how to help mom-and-pop hoteliers sell their rooms online.

Your hotel is your supply. If you have rooms to sell, how are you going to display your inventory to the public, both online and offline? If my parents own a hotel, how are they able to sell their rooms more efficiently and what are the challenges they are facing?

After asking these questions, I saw the need to create a tool kit, set of processes, and software to help hoteliers sell their rooms on their own so they don’t have to be so reliant on third-parties to sell rooms for them. The ethos that drove building INNsight came from figuring out how to help hoteliers battle huge commissions, give them tools to operate more efficiently, and ultimately give them liberation to take control of their margins.

A lot of this came from my understanding of hotels, the industry, and the challenges that come with it through the lens of an innkeeper. Everything we’ve done has been built through the lens of the innkeeper. We try to remove the hurdles that an hotelier may face with selling their rooms online by providing the tools and technology to achieve more direct sales.

The hotel industry and technology are always evolving. Having a background in both, what changes and trends have you seen in the past 5 years?

Technology is improving to allow for new tools, functionality, and features to be available to hoteliers at economical prices so that they may do some of the hotel marketing work themselves. In the last five years, we’ve seen hotels take more and more control of their destiny online.

Even now, hoteliers have digital marketing tools at their disposal. More and more hotels will put their head up, look around, and see there are opportunities to do things on their own with software tools such as property management systems, digital marketing, and other marketing programs that they didn’t have access to before.

There’s been a huge push for direct bookings in the last couple of years. How do you see the relationship between OTAs and hotels transforming/evolving in the next couple years?

It’s really challenging to compete against the OTAs. They are on the television, using apps, and advertising the lowest rate, and, as a result, consumers are booking with them. It’s creating an inefficient marketplace for both travelers and hoteliers because hotels are inflating prices to make up for margin losses. And who does this hurt? The traveler because they end up paying higher prices for a room.

It is going to be more and more challenging to break away from the reliance on third parties, but I think it’s a matter of time before customers become savvier and understand that lower distribution costs mean lower hotel costs, and it’s always better to book direct. It’s a big education hurdle.

Can you speak a little more about the need to book direct?

When you have a customer who books direct, there is a relationship there. The hotel industry and hospitality, in general, is focused on relationships. It’s about the direct connection that the property and innkeeper make with the guest. Hospitality is the product here.

The non-direct online booking experience, in my opinion, is generic. It doesn’t lend itself to connect the guest to the innkeeper. Hotels benefit much more if there is a direct booking experience where the guest has the opportunity to ask questions, get their concerns met, and make any special requests. Those types of things are really the essence of hospitality.

As a hotel guest, what makes a memorable experience for you?

It all goes back to service. It’s not necessarily the facilities that are the most attractive to me. I don’t need a 4- or 5-star guest room, a fancy foyer, a big pool, or luxury facilities. For me, it’s enough if the hotel is clean and comfortable, there’s a pride of ownership, and the staff is hospitable. The staff is especially important, as it’s their job to provide a great guest experience. Were they hospitable, helpful, and did they guide me in the right direction with any questions or requests I may have had? I think if you can marry cleanliness, solid facilities, and excellent customer service together, those three things make the guest experience memorable for me.

What’s your favorite place to travel to?

I just got back from Italy and really enjoyed it. I took a lot of Latin classes in both high school and college, so I guess you could say I’ve always been a bit of a romantic at heart. I enjoyed reading mythology and understanding Greek and Roman history. One of the reasons I enjoyed Italy so much is because it’s so rich in history and art, especially from the Renaissance era. There is so much to see, and the food and people are great. However, I still have a lot more travel to do and a lot of places to scratch off my bucket list.

About Marissa Rasmussen

Marissa is Sojern's Content Marketing Associate. Indulging in her inner bookworm, watching HGTV, and playing with her puggle, Charlie, are among some of her favorite hobbies. Although she loves both, she prefers the beach over the mountains.



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