Kyle Riordan | Research Analyst
February 11, 2014

Meeting Hotel Industry Challenges: APIs Check-in

 

As part of Mashery’s Travel Industry Spotlight, our Strategy Services team has authored a series of four blogs that describe how the adoption of APIs and API Management will transform virtually every corner of this important industry. The central theme argues that improved data flow via APIs will allow each player to better control their own destiny while at the same time dramatically improving customer satisfaction.

The way people travel is changing.  Sure the conveyance vehicles largely remain the same: traveling predominately by plane, train, or automobile (still no Star Trek teleportation beams), but the methods with which travelers book their transport and accommodations have seen dramatic changes.  These new booking methods have presented new challenges for the hotel industry, such as increased commoditization, maintaining brand loyalty, and ensuring customer satisfaction.

Increased commoditization (viewing a hotel stay as a prepackaged otherwise undifferentiated good) really found its genesis with the emergence of OTAs (online travel agencies, such as Expedia, Orbitz, etc.).  They provided travelers with direct access to a variety of hotel stay options.  In a market that has seen essentially stagnate growth over the past 2 decades, this can pose a real challenge for the market as a whole.

Building off commoditization is the primary challenge to maintaining brand loyalty. A 2012 Cornell panel discussion comprised of some of the industry’s top CEOs noted that as consumers increasingly base their booking decision on price it becomes more and more difficult for brands to ensure return customers, posing a threat to sustainable revenue (Withiam, 2013).

Finally, there is the age-old question of how to ensure customer satisfaction.  This challenge is as old as the travel industry itself, but new technologies can help companies to make big improvements. It all starts with booking and giving consumers the right data.  A 2013 report by J.D. Power and Associates found that guests that thoroughly researched their hotel and location prior to their stay reported an 11.4% increased satisfaction level over the industry average (J.D. Power and Associates, 2013).

To combat these challenges hotel brands must be able to effectively share their data with all forms of consumers; intermediaries (like OTAs),  “last minute” booking applications (like Hotel Tonight), metasearches (like KAYAK), or even social couponers (like Livingsocial Escapes), internal teams, and development partners.   For hotels, this is best accomplished by leveraging APIs. 

APIs ensure that these parties have the most up to date information regarding things like property location, room availability, rates, as well as enabling direct booking through the hotel’s system.  These data and services are essential to enabling these parties to provide a better customer experience.

But just handing over relevant data isn’t enough, especially when trying to tackle issues like brand loyalty and customer satisfaction.    If a hotel brand wants to drive more direct bookings, it needs to build rich and intuitive web and mobile booking experiences.  Often this means handing development over to development shops which are experts in creating engaging user experiences.  The quality of the brand specific booking must be as good, if not better, than that which can be found through intermediaries.  Beyond that, the hotel should also give the user some sort of incentive to book through their web interface or app; this could mean a richer experience with expanded access to images relevant to their hotel, integrated independent customer reviews, or even (and perhaps most effectively) the ability to book using rewards points.  This is where a well-managed API comes into play.

Just like with intermediaries, development partners need access to a hotel’s data.  But if these developers are to build richer experiences they need to have more tools at their disposal. API management tools allow hotels to assign expanded permission levels or provision specific packages for these high value partners.

Beyond their own data, an API program that easily enables partnering and mashups can make it easier for hotel brands to build booking experiences that make their prospective customer more knowledgeable about his or her stay.  This could mean partnering with independent review companies such as TripAdvisor to prominently feature reviews in the booking experience; this, as noted by J.D. Power, should help to increase their guests’ overall satisfaction.

So APIs and the requisite management layer can be effective means of meeting the challenges both new and old facing hotel brands.  Well-managed APIs enable brands to connect with all of the appropriate players in the ecosystem, thereby reaching as many customers as possible. APIs also differentiate a hotel brand’s interaction, making it possible for them to entice consumers towards their brand specific while improving their satisfaction with their stay.