Valamar breaks up with direct sales: They reduced OTA channels to only 10%. Impressive

Of Valamar's one million guests, a quarter of them used online check-in

Author:  Goran Rihelj

1. December 2023.

As part of this year's edition Rentlio Rediscover 2023. a panel discussion was held The Future of Smart Hospitality - AI Leading the Way, where one of the panelists was Roberto Gobo, director of the digitization department in Valamar, who presented some very interesting examples of digitalization in the hotel industry and how Valamar is already using artificial intelligence to improve its business. 

The whole panel gave an excellent overview of the topic artificial intelligence in tourism, and Roberto Gobo explained through practical examples how hoteliers can and should use artificial intelligence in their business.

As an introduction to the topic, we must first be aware of some basic assumptions before introducing artificial intelligence in tourism and hospitality.

We have to have databases, and for that we need the digitalization of the entire business. Bases that are interconnected and networked so that they can communicate with each other, which is a huge problem today due to old and different types of programs for each department and special operation, because the sector has not followed technological progress fast enough.

We are not talking about excel tables, which are still most often used today, and even still in many hotels the guest check-in/check-out process is still done manually. Today, it is a huge challenge to connect all these programs and arrange a digital structure that is efficient and that can take advantage of the benefits of artificial intelligence. 

When we have all the programs (from reception, sales, crm...) networked, only then can artificial intelligence have an application, and a big one at that. All with the aim of speeding up and improving the efficiency and digitized business, especially in the processing of large amounts of databases.

"We have been dealing with artificial intelligence and machine learning in Valamar for the last four years," Gobo pointed out and presented some of the excellent indicators of the digitization process, mostly returning to the strengthening of direct sales in the hotel industry, which in the last decade has been absolutely taken over by various OTAs, especially Booking com.

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They dominate bookings so much that they have taken over the entire traffic of the tourism sector. Of course with the "high" price of their services. Just imagine, on the example of large hoteliers who have hundreds of thousands or over a million overnight stays per year, how much is the commission of 15-20% on booking portals. These are large sums, which were sticking out in excel tables. The amount they could not influence, we were powerless and too dependent on OTA platforms, because we practically completely gave up or simply removed direct sales, which had become a "cost". 

A mistake that we are now paying dearly for. 

But five or more years ago, large hoteliers (Marriott was the first to start) began to return to the old settings of direct sales, empowered by modern times and digitization. Departments for direct sales began to open, develop and strengthen again, hotelier websites became the main sales tools, data on guests from various sources began to be collected, both through our website and through promotion, we brought back call centers, strengthened programs loyalties associated with the application. Everything revolves around data, in order to achieve direct sales and reduce commission costs.

Valamar also went through all that, but with a big exception. They realized that they had to turn the story in their favor. And very successfully. Proof of this is the data presented by Gobo, which from today's perspective sounds more than impressive, even unreal for many hoteliers. 

"We have a sales call center and invest heavily in our direct channel. Our direct booking is about 62% of the total traffic, while approximately 10% of reservations come to us via OTA. To be more specific, 55% of direct income comes through our websites, and 45% comes to us through our call center. This means that our call center is sales and generates a lot of income. The largest amount of income comes through calls and emails. Gobo stated. 

We do not yet know the real potential of artificial intelligence, we are learning and watching how it develops, testing how we can use it and how it can speed up and improve all business processes. One thing is for sure, artificial intelligence is developing very quickly and we will all have to embrace it in one form or another. Otherwise, we will be overtaken by time, which today runs faster than ever. And that is a social and business problem. Change is too fast. 

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On the other hand, as we can see in the example of Valamar, in large companies digitization, and now Ai, has been present for years and will surely speed up and improve the efficiency and optimization of business, especially in the processing of large amounts of databases. Does this mean that a part of people will lose their jobs? It does not mean that a priori he will lose his job, he will just have to adapt, educate and transfer to some other departments. Of course, some will unfortunately lose their jobs, because Ai simply has the ability to process a large amount of tasks in a very short time. In some cases, work that would take x employees weeks or months of work, Ai's help is all done in an instant or a couple of days. 

A concrete example was also given by Gobo, pointing out that in Valamar last year in May after covid, when everyone rushed to make reservations, they had over 100.00 emails, which were sitting somewhere waiting for someone to process them. 

"In order for someone to process 10.000 e-mails, we need a huge amount of agents who must first read each e-mail, process it and decide which one to answer first according to some priorities. In order not to wait two weeks for someone to read the email for the first time and respond back, we started training our artificial intelligence model to be capable enough to read the email, recognize the language, understand the intention and narrative of the email... based on several default attributes in addition to the artificial intelligence, we determined our priority model, so that our agents can work on emails that have the highest business priority.” stated Gobo, and he also gave an example of how they made models for guest reviews as well. 

One of the most valuable skills will soon be knowing how to ask good questions (prompt) to artificial intelligence and get the answer we want or the solution to the problem we are looking for. A skill we must learn, test and develop. This will be the most important skill, and one that we must be aware of. 

Also, some will say, it is easy for Valamar, who has the human and financial resources, to go that way. And that is true, but there will certainly be smaller companies (there already are) that will offer various AI tools and accessories specifically for our industry, which will enable us as entrepreneurs to be part of the AI ​​evolution. 

Of Valamar's one million guests, a quarter of them used online check-in

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Gobo also pointed out the issue of guest registration, which is currently very slow and manual for hoteliers who are not digitized, but is fast when using digitization. Marko Mišulić, the founder of Rentlio, in his presentation showed a video from a hotel that uses Rentlio, the application process lasted only 30 seconds, and that without any excel sheet or paper. Yes seconds. 

Gobo pointed out that guest registration should take place before the guest arrives at the hotel, and the previous time for registration will be used for communication with guests in the real domain of hospitality, recommendations and additional sales. 

"We started with online registration in 2019, and last year we had over 250.000 online registrations out of one million guests, where guests scanned their documents themselves. This means that 250.000 times our receptionists did not have to scan the documents themselves, or simply 250.000 times there was no need for the check-in process at the reception. And that is a real advantage that digitization brings. It is interesting how now guests themselves stop at the reception and ask about the hotel, recommendations for what to see in the destination or about what really interests them. So real hospitality happens at the "guest check-in". What used to be a process is now a conversation. Where to refer the guest, what to recommend to him and what to possibly sell him additionally. Gobo concluded.

In conclusion, based on the example of Valamar, who realized the need in time and promptly started transforming their business through digitization (in the end they also have a digitization department), today thanks to that move they are far ahead of everyone in tourism (regardless of the resources they have). have digitized and harmonized all business processes and are ready to embrace all the benefits that artificial intelligence brings us. 

Below, take a look at the more than interesting panel on the application of artificial intelligence in tourism. 

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Author:  Goran Rihelj

1. December 2023.