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David Collins

Know Your Unknown Unknowns

By David Collins

A phrase used by former United States Secretary of Defence Donald Rumsfeld back in 2002 came to mind recently in a chat with an industry colleague.

I’m paraphrasing here but Rumsfeld’s quote went something like this: 
“There are things we know we know. There are things we know we don’t know. And there are things we don’t know we don’t know.”

It’s a bit of a stretch I know linking a quote from the second Gulf War with a convivial chat over coffee but with a bit of context, in my view at least, the phrase is no less relevant to business. In summary, we were talking about distribution and specifically that hoary old chestnut OTAs vs. Direct.

So the ‘Known-Known’ was that we live in an ‘OTA-first’ world where consumers will at its simplest check Booking.com first for prices and availability before checking a hotel’s site.

Straight-forward enough. No surprises here.

The ‘Known-Unknown’ in this instance was how many of these consumers were previous guests of the hotel who still checked with Booking.com first rather than the hotel’s own site. The point being that despite great strides in visibility, tracking, etc. due to tech advances, we still have limited visibility over buyer behaviour.

Again straight-forward enough. Still no surprises.

As regards the ‘Unknown-Unknown’, the point I made here was that my colleague didn’t know that decisions he was taking – or more accurately, not taking – were in fact exacerbating this drift away from direct to indirect. In other words he was unaware that even as a sole operator in a busy, noise-y, competitive market, that he could influence, impact and in fact invigorate client behaviour.

As to how he arrived at this point, it was a combination of things.

Firstly, he’s a busy guy, running a 75-bedroom hotel which presents plenty of day to day challenges so raising his head above the proverbial parapet and keeping it there was a bit of an ‘ask’. Personally I get this. Hotels are busy, busy places and even if you do surround yourself with a solid team, at best your outlook for the business will be short- to medium-term.

Secondly, and it’s a trap we’re all prone to falling into, and that is to think that what’s happening in the market is well beyond our control. That the command the OTAs and Google et al. have over businesses is simply over-whelming and therefore an individual hotel is powerless other than to comply with the rules of the game or risk having revenue streams cut off.

The problem I have with the second point is that this ‘white flag waving’ is now happening on an industry-wide scale: there is almost a collective lemmings-like view that ‘oh, well, what’s the point, we might as well just get on with it and accept our lot.’

This mindset, I would argue – without aligning myself too much to a certain self-opinionated Free World leader with bad hair and even worse make-up – is in my own personal view being driven to a certain extent by fake news ..

Think about it. How many articles have you read or webinars have you attended where this myth is being perpetuated. That you are no longer in control of your business and that as the old poem by John O’Brien went:

“There’ll be bush-fires for sure, me man.
There will, without a doubt;
We’ll all be rooned,” said Hanrahan,
Before the year is out.”

(‘Said Hanrahan’, John O’Brien 1878 – 1952)

Again the point here is that an individual hotelier can impact the market, and can both command and retain a dominant position by adopting a granular approach to revenue management, yield, digital marketing and channel management.

Yes, Google is important and yes, OTAs are critical but by shining a big white light on key business drivers such as for example turn away rates, demand pacing and opportunity costs, this can have a transformative impact on any business, its sustainability and its independence.

The secret is to know this in the first instance.

At the end of our chat I am pleased to say that my colleague saw his world in an entirely different way and was left empowered and optimistic.

I however was left with the bill. Ho-Hum.

Now, where’s my wig?

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