The 7 Ps marketing mix of home-sharing services: What did the 1 million Airbnb reviews inform us?

The 7 Ps marketing mix framework is a widely used managerial tool that helps businesses identify the principal components of a service product. The 7 P elements include Product, Promotion, Price, Place, Participant, Physical Evidence, and Process.

The 7 Ps framework can assist marketers in making decisions regarding segmentation, positioning, and differentiation. Even for the same type of products with different brands, marketers can still drive higher sales through the improvement of a product’s marketing mix.  

The empirical study about 7 Ps of home-sharing services

Building upon the 7 Ps marketing mix framework, I led a research team in a big-data, supervised machine learning analysis of over 1.14 million English reviews of 37,092 Airbnb listings in San Francisco (SFO) and New York City (NYC). We aimed to discover new meaningful business intelligence through the analysis of an immense quantity of online review information that is created by consumers in the cyber marketplace.

We published the research in the International Journal of Hospitality Management. The report can also be accessed in the Elsevier Public Health Emergency Collection.  

The three research questions of the study

1.    What does the marketing mix revealed from consumers’ online review data on Airbnb inform us about travelers’ experience of home-sharing products?

2.    Do travelers comment on the similar element(s) of the marketing mix for their home-sharing stays with multi-unit and single-unit hosts? In other words, do travelers share similar experiences for their home-sharing stays with multi-unit vs. single-unit hosts through a comparison of the two product types’ marketing mix?

3.    Do travelers comment on the similar element(s) of the marketing mix for their home-sharing stays with superhosts and ordinary hosts? In other words, do travelers share similar experiences for their home-sharing stays with superhosts vs. ordinary hosts through a comparison of the two product types’ marketing mix?

The data and the analysis

We downloaded the data from InsideAirbnb.com, an independent, non-profit website that provides publicly accessible data collected from Airbnb.com. We picked SFO, for its being a gateway city in the West Coast and Airbnb’s birthplace, as well as NYC, for its being a gateway city in the East Coast and a top tourist destination. We downloaded 233,070 reviews of 4,381 Airbnb listings in SFO and 1,047,337 reviews of 32,985 Airbnb listings in NYC in September/October 2018.

We then cleaned the dataset by removing all non-English reviews, retrieving 94.3% (219,833) and 88.6% (928,229) of the reviews that were written in English from the SFO and NYC markets, respectively. We used a sentence as a unit for data annotation under the assumption that people usually express one idea in one sentence.

Through a series of preliminary analyses, we concluded that most sentences expressed one of the elements in our coding schema, with about 3% of the sentences mentioned two or more of the elements. In the cases when a sentence can be labeled with more than one element, the most probable element was used in our analysis.  

7 Ps marketing mix as the coding schema

We trained the model to annotate the sentences using the following coding schema before we applied the validated algorithms to analyze the whole dataset.

·      Service Product (PT) – words that describe the overall impression of the intangible experiential product, e.g., “A great experience.”

·      Price (PR) – words that indicate the price or value of the experiential product, e.g., “Rather than renting two hotel rooms, we split this 2-bed Airbnb and probably saved $300 per night.”

·      Place (PL) – words referring to the location of a listing, e.g., “Short walk to the Bart station.”

·      Promotion (PO) – words comparing what the traveler(s) observed against a listing’s photos or descriptions on the website, e.g., “The place was exactly as advertised!”

·      Participant (PP) – words mentioning the host(s) or people/pets in the listing, e.g., “The hosts were also extremely friendly and accommodating.”

·      Physical Evidence (PE) – words that describe the tangible aspect of the experiential product, such as the physical attributes and the facility of a listing, e.g., “Details like flowers, wine openers, britta water pitcher, shampoo, added to our relaxation.”

·      Service Process (PS) – words that emphasize the process where the traveler(s) received a service, with or without the interactions with the host, e.g., “[host name] left detailed instructions for us upon our arrival.”

·      Traveler (TR) – words that are irrelevant to the experiential product (Airbnb) itself, e.g., “We had ice cream for dessert two night in a row (Bi-Rite! The Best!) and walked home with our cones feeling very happy indeed.”  

The results

Travelers in both markets mentioned PT (about 26%) and PE (about 25%) most often, followed by PL (at about 19%) and PP (at about 15%). PS (less than 10%) was usually about the check-in process and how the hosts handled customer service issues. Travelers seldom talked about PO (about 2%) and PR (about 1%).

Research question two is to compare travelers’ experiences between multi-unit and single-unit hosts. We found almost no observable differences except that travelers would mention the hostnames more often for single-unit hosts. Such a finding suggests that multi-unit hosts are as competitive as single-unit hosts. Hoteliers should pay close attention to multi-unit hosts in the market because they are the micro-entrepreneurs and professional operators of home-sharing services.

Research question three is about the differences between superhosts and ordinary hosts. On average, listings managed by superhosts recorded more reviewers than the ones managed by ordinary hosts, a good indicator that travelers favor listings managed by superhosts. Travelers staying in the listings managed by superhosts commented more on their wonderful experience (PT) and the hosts (PP). In contrast those staying in the listings managed by ordinary hosts commented more on the physical evidence (PE) and the location (PL). Possibly, when travelers do not have as much to talk about PT and PP for ordinary hosts as they would for superhosts, they comment more on PE and PL instead.

COVID-19’s possible impacts on the research findings

COVID-19 is expected to change how people travel, and it will take a long time before we see a real recovery. Now more than ever, hygiene and cleanliness have become the top priority among consumers, hotels, and tourism companies. Travelers’ emphasis on the 7 P elements could have shifted in the post-COVID-19 era, such as about the upkeep and cleanliness of a place (PE) and avoiding direct human contacts (PP & PS).

The implications

Besides this study’s theoretical and methodological contributions, the results provide valuable insights for the hosts who want to compete with the superhosts. Meanwhile, hoteliers may refer to our findings as they seek improvement of their existing products or want to differentiate their products from home-sharing services. Lastly, we recommend the policymakers to consider restricting the professional operators or multi-unit hosts in the short-term residential rental market. 

What do you think about the research findings? To what extent does the 7 Ps marketing mix reflect travelers’ experiences of home-sharing services?

Note: This viewpoint article was also published on MultiBriefs.com; The first picture was downloaded from BibleMoneyMatters.com. 

CHRS 2017: Opportunities in the era of disruption

I was in Ithaca, New York, last week for the 2017 Cornell Hospitality Research Summit(#CHRS2017), where a good mix of industry professionals and academic researchers shared their viewpoints on the outlooks of the hospitality business and findings of relevant research.

This year, the conference's theme was "opportunities in the era of disruption."

So, what are the disruptions?

In fact, the hospitality industry is constantly facing challenges from disruptions. In today's economy, the following appears to be more salient:

• The advance of technologies, such as virtual reality, artificial intelligence (AI), facial recognition and data analytics, has transformed customer experience and is making innovative disruptions to operations.
• Airbnb brought new experiences to travelers, but also a tremendous supply of available rooms to the market almost overnight. Hotels are facing a big threat from room-sharing services and need to improve their practices in revenue management and asset management.
• Sustainability is going to become even more important in service operations even though not all consumers are willing to make extra effort for green products (yet).
• As hotels are responding to the changing needs of today's travelers, new brands/products are introduced to the market, with many still in construction. Newer properties also create threats to the older ones in the market.
• Managers should pay special attention to generation differences, such as the preferences of millennials.
• Online reviews and social media are still important, but not all generations pay attention to the same content or platform.
• Because OTAs (online travel agents) now have the business intelligence of both hotel sales and residential rentals, they should remain as an important strategic partner of hotels, even though hotels are pushing travelers to book-direct on their websites.
• There is a need for business to revamp their strategies in talent management as the industry is constantly being disrupted.

Remain positive when facing the disruptions

Shall we worry about the future because of these disruptions? We could, but feeling worrisome would not help business. Positive thinking is perhaps the only remedy to deal with challenges.

"Disruptions create opportunities," suggested Arthur Adler, the managing director and chairman of the Americas division of Jones Lang LaSalle's (JLL) Hotels and Hospitality Group, in the keynote opening session at #CHRS2017.

By reviewing the history of how the hotel business has evolved over time, Adler concluded that disruptions brought innovations to the industry (e.g., making reservations on the phone vs. on the internet). Rather than feeling worried about the future, we should all react to the new opportunities identified in the era of disruption.

New opportunities in the era of disruption

All attendees in the conference seemed to hold positive attitudes toward the disruptions. Particularly, the industry is highly encouraged to look at the following areas:

• Rethink guest experience and be innovative in product offerings.
• Utilize space more efficiently. For example, can a hotel's lobby or meeting space be "shared" as what is in the room-sharing and ride-sharing business?
• How can technology be used in providing customized service? For example, use AI and machine learning to predict guest preference.
• How can technology be better utilized in daily operations (e.g., making improvements in revenue management and productivity among staff members)?
• What can we learn from the room-sharing business?
• How can blockchain technology be used in the hospitality industry?
• What proactive approaches can be taken in sustainability? A good example in case is that the Romantik Hotel Muottas Muragl is running a lodging business in a "plus energy building," meaning a building is so energy-efficient that it generates more energy than it consumes.

Do you agree that opportunities are often associated with risks, or disruptions in this case? What opportunities do you see in the era of disruption?

Note: This post is also available on MultiBrief.com; The picture was downloaded from the Twitter account of The Hotel School at Cornell University. 

Consumers' path of purchasing a travel product

Hotels have been working hard to win more travelers to "book direct" on their companies' websites, but are consumers listening?

In fact, hotels are not alone. All service providers in the hospitality and tourism industry want their customers to make purchases directly on their websites, but consumers want to search and compare various options before making a decision.

So, to convince customers to purchase directly on the service providers' websites, companies must understand where their customers "hang out" in the cyber marketplace before they make the purchasing decision, as well as where they end up buying their services.

The white paper "Understanding the Travel Consumer's Path to Purchase" by Eye for Travel provides some business intelligence in that regard. The report combined a large panel consumer data of online transactions and surveys into the analysis, revealing the following results:

The places where customers purchase a travel product

With an analysis of about 200,000 bookings in the U.K. and the U.S., online travel agents (OTAs) such as Expedia and Priceline are winning big in the competition.

In the U.S. market, 42 percent of purchases came from OTAs, leaving 39 percent for airline brands and 19 percent for hotel brands. In the U.K. market, 73 percent of purchases came from OTAs, 23 percent from airline brands and only 4 percent from hotel brands.

The devices used for buying the travel product

Devices being used for hotel reservations:

• Desktop or laptop (49.9 percent from the U.K. sample / 62.1 percent from the German sample)
• Face-to-face (6.1 percent / 11 percent)
• Tablet browser (17.3 percent / 5.5 percent)

Devices being used for flight bookings:

• Desktop or laptop (51 percent from the U.K. sample / 56.1 percent from the German sample)
• Face-to-face (9.3 percent / 20.1 percent)
• Tablet browser (15.2 percent / 4.4 percent)

Desktops or laptops remain the most-used devices for making a purchase, and desktops have higher conversion rates for all OTAs, all airline brands and all hotel brands than mobile devices. But before consumers make a purchase, let's also check out ...

The devices used for browsing before making a purchase

• 80.7 percent of those who used desktops or laptops to search also used the same device to book.
• 63.8 percent of those who used tablets to search also used tablets to book; 21.3 percent of those who used tablets to search ended up using desktops or laptops to book.
• 36.2 percent of those who used smartphones to search would use desktops or laptops to book; about the same percentage, 35.1 percent, of those who used smartphones to search also used smartphones to book.

The websites visited before making a purchase

For a purchase on OTAs, about 90 percent used search engines, about 75 percent visited the OTA site prior to conversion, and about 25 percent visited the competitor OTA sites prior to conversion.

For a purchase on an airline website: about 90 percent visited search engines, between 69 and 84 percent visited the airline website prior to conversion (across three samples of the U.S., the U.K., and Germany). Depending on the regions of where the customers came from, over 20 percent also visited a social media site such as Facebook or Twitter (U.S.), a meta-search site such as Kayak or Trivago (U.K.), or an OTA site (U.K. and Germany).

For a purchase on a hotel website: about 90 percent used search engines, about 70 percent visited the hotel website prior to conversion, and about 20 percent visited an OTA site.

Where do smartphones fit in?

It seems smartphones played a more significant role in both the researching and purchasing processes for consumers in less developed countries than those in developed countries. For example, 66 percent of Indians accessed travel websites with mobile devices, but only 34 percent of them used desktops. In the U.S., such percentages changed to 54 percent for using mobile devices and 46 percent for using desktops.

Not surprisingly, a large percentage of consumers aged between 18 and 34 owned at least one smartphone. For example, 85 percent of Chinese aged between 18 and 34 owned at least one smartphone, but only 43 percent of Chinese aged 35 or above used smartphones.

Another good example came from the U.K. consumers aged between 18 and 35. When asked if they researched and/or booked air travel on a smartphone in the past, over 90 percent of participants said so. Specifically,

• 23.4 percent always booked flights on a smartphone.
• 22.9 percent regularly booked flights on a smartphone.
• 21.8 percent occasionally booked flights on a smartphone.
• 22.1 percent researched flight information using a smartphone even though they did not book with a smartphone.

What are the next big things?

The top two "game-changing" factors in the industry were mentioned:

• Data-driven personalization (78 percent of participants being surveyed)
• API-led (application programming interface) distribution partnership (14 percent)

The top three areas for future opportunities include:

• Mobile (79 percent from European respondents / 74.7 percent from North American respondents)
• Content and digital marketing (58.8 percent / 65.3 percent)
• Social media (35.3 percent / 50 percent)

Other possibilities or opportunities may include:

• Will search engines become the next big player in selling travel products? Many consumers have already been using search engines to research products, so why can't Google Travel or Bing Travel become the next big thing?
• Can Facebook get into the game, too? Facebook has tried to let its users make purchases on a business's page, rate a business or service and make recommendations of purchases for their friends. Most of all, the hospitality and tourism industry is too big to be ignored.
• Will Apple try Apple Travel, too? At least, Apple can easily reach all the Apple users.
• Will WeChat dominate the Chinese marketing in selling travel products? I tried to make hotel reservations on WeChat because I could not find good internet connections when I was traveling in mainland China, and WeChat became very handy.

Now, do you have a better idea of where travel or hospitality companies can reach their target customers in the cyber marketplace? Tell us what else you want to know. Your voice could inspire the next big research project.

This post was also published on MultiBriefs Exclusive, the leading source for targeted, industry-specific news briefs.  

Can hotels stop the growth of Airbnb?

As a substitute for the traditional lodging facilities, including hotels, hostels and short-term rentals, the increasing supply of Airbnb properties is no doubt making an impact on hotels' bottom lines. So, can hotels stop the growth of Airbnb? 

Hotels' strategies for fighting against Airbnb

#Airbnb #Hotels #Competition - http://bit.ly/kwok051117 

Hotels are working hard to fight against the competition from Airbnb, other room-sharing websites and online travel agents (OTAs). For example:

• Hotels are encouraging travelers to search and make reservations directly on the hotels' websites by offering special discounts if they book directly, even though this strategy might possibly push Airbnb and OTAs to work closely together against hotels.
• Hotels are reinventing loyalty programs to win more new travelers and, at the same time, keep their repeat customers.
• More hotels are adding local flavors to lure travelers. If travelers choose Airbnb over hotels because they want to gain some unique experience as a local resident, this strategy may work particularly well.
• Hotels are responding to the shifting needs of customers by introducing new brands and through acquisitions. The merger of Marriott and Starwood is a good example.
• Most recently, hotels are planning for a lobbying push over the Priceline-Expedia "monopoly," in addition to the legislation push toward Airbnb. Hotels want to play a "fair" game in the competition with Airbnb and OTAs. So far, hotels have successfully convinced legislators to impose stricter regulations on room-sharing operators in several locations, including San Francisco, Vancouver, Amsterdam, and London.

Challenges that Airbnb faces

Despite Airbnb's phenomenal growth since its inception in August 2008, the company is facing more challenges lately.

On one hand, hotels are gaining more success in combating Airbnb. For example, New York City just passed a new regulation, charging steep fines to those Airbnb hosts who break local housing rules, resulting in fewer qualified listings in the market. Airbnb is also more willing to work with local governments to collect taxes on room-sharing rentals, now at the same rate as the one for hotels. On the other hand, Airbnb is facing allegations for the hosts' racial discrimination against renters.

The question is: Will those challenges slow down Airbnb's growth?

Airbnb's strategies for growth

Airbnb wants to become more than just a leading room-sharing platform in the market, as suggested in the following moves taken by Airbnb recently:

• Airbnb acquired a couple of travel service companies, including Luxury Retreats and Tilt, as the company is getting ready to become a full-service travel company.
• Airbnb wants business travelers, too. Not only has the company launched a website that tailors to business travelers, but they also work closely with the hosts to ensure the listings meet business travelers' needs. The most recent move Airbnb took was to introduce new booking tools that were specifically designed for business travelers.
• Airbnb is working on a gadget that will provide travelers with reliable internet connections during their trip. For business travelers as well as those young leisure travelers, stable WiFi connections have become a must-have amenity for their stays.

Competition between Airbnb and hotels

It is unlikely that anyone can stop the growth of Airbnb. The competition between Airbnb and hotels is only going to get tougher.

Can you predict what the next moves for hotels or Airbnb might be? What suggestions would you make to hotels or Airbnb to win the battle?

* This discussion was first published at Multibriefs.com.

Machines are now replacing humans in service jobs

I am not joking. Machine serving people has now become the new reality, as I suggested in my recent discussion on Multibriefs.com .

Here are just some examples:

• A restaurant with no hosts, no waiters, and no tables
• Burger-flipping robots
• Robot baristas 
• Robot that makes salads
• Self-ordering service - Domino's Pizza, McDonald's, Starbucks, and Wendy's. 
• Food delivery robots
• The robotic butler service in hotels
• The automatic drink dispenser
• Personal assistants
• Self-driving cars

Does it become obvious that the new era of machines serving people has already arrived? I think it is now the time for those who are feeling the panic of being replaced by machines or robots at work to reconsider their career paths. Manual labor will certainly be replaced, and the only way for us to survive in this competition is to become the leaders in the field.

Managerial responses to online reviews: Strategies should vary across different hotels

Last month, I published two journal articles about online reviews. The first one was about how managers of different hotels should use different strategies to respond to online reviews and published in The Cornell Hospitality Quarterly (with Karen Xie and Wei Wang). The second one was a review of current literature about online reviews and published in International Journal of Contemporary Hospitality Management (with Karen Xie and Tori Richards). 

I highlighted the important implications of these two journal articles on Multibriefs.com. For example, I recommend that responses to online reviews should vary based on hotel class. In particularly: 

• Budget traveler hotels — provide more but also more concise (shorter) responses by the executives.

• Mid-market economy hotels — provide more responses by the executives.

• Full-service hotels — provide more responses by the executives in a timely manner.

• Above-average hotels — provide more and longer responses by the functional managers (e.g., front desk manager, sales manager, etc.) and reply in a timely manner.

• Luxury hotels — provide more and longer responses by the functional managers.

In the literature review paper, we pointed out what we know and what we don't know about online reviews. Particularly, I would like to see what you want to know about online reviews. Maybe your comments will inspire more research studies in the future to help us further advance our knowledge about online reviews. 

Advertising Methods Done Right (by Enmy Zheng Feng)

Hotels have a difficulty in building relationships with their customers through advertisements. Nowadays, it is not an easy task to inform a customer about one’s property, especially to the millennials. Some customers do not find ads credible or accurate, and new software such as AdBlock provides customers the options to remove advertisements from their computer. Today, people rely on social media to acquire and follow the latest trends. A new method of advertisement has taken over due to this concept. Many hotels are changing their marketing plan and trying to improve their social media presence to gain more sales. Moreover, Google has come up with a plan to help hotels acquire more businesses. 

Social media have become a great mean to advertise a product. However, advertising on social media is different than on television. It is not as simple as opening a Facebook fan page or creating an Instagram account. It requires hours of preparation and a good understanding of what customers are looking for. For instance, on Instagram, I follow a very well-known fashion stylist who is always traveling. Through her posts, I have noticed that she mentions the places that she has visited. The pictures that she posts show the beauty of those places and can inspire people to visit. The places she has visited, the hotels she has stayed, and the food she has eaten are all advertised in the forms of social media posts.

On the other hand, Four Seasons Hotels and Resorts have utilized social media in a different manner. They decided to create a campaign featuring a plush toy named Maxine. This plush toy was featured in all the most well-known social media such as Facebook, Twitter, Instagram, and etcetera. Maxine traveled everywhere in the Big Apple, and people were excited to see where Maxine was going to travel next. This was a genius idea since it was meant to target family travelers to their hotels. Kids loved the plush toy and they wanted to visit the same destinations that Maxine had visited. They were also able to interact with Maxine in their facilities. The campaign not only brought profits to the hotel, but also to nearby businesses featured in Maxine’s travels.

Google has been experimenting with a new way of advertising, according to Nicholas Ward (2016), CEO of a digital marketing agency. Every time a person searches for information about a hotel, or when they want to book a room through Google search engine, nearby deals will be shown at the top of the list. People will be able to click on them and more information about the hotel will be shown. Also, when changing the check-in and check-out dates, the deal will also change just like any other booking websites. Moreover, Google is trying to make the search engine better to their users by offering not only the best deal but also hotels that are similar in rating for people to compare. Users will be more well informed, and this will make their booking experience more satisfying. 

These new ways of advertisement will influence the sales of many hotels in the long run. On the other hand, it is important for hotels to understand this processes and to know how to employ each mean of advertising. For instance, for the hotel to thrive, it would be beneficial for the hotel to be seen in the nearby deals under Google’s search engine. This is because many millennials seek inexpensive hotels with a good location. Social media advertising can also be difficult but not impossible if they have a good sales marketing plan. I believe if done well, a hotel could increase its sales due to these new ways of advertising. What would the advancement in technology affect sales in the future? Would televised advertisement cease to exist? If so, why or why not?

About the Author

Enmy is a Chinese who was born in Venezuela. She loves to travel, discover new places, and plan events. These are the reasons why she chose hospitality management as a career. Enmy is fluent in Spanish, English, and Cantonese, and she is also in the process of learning Mandarin. Enmy is now a senior at California State Polytechnic University, Pomona, and she is expected to graduate in Spring 2017. She is very interested in event planning and wants to own her own event planning company in the future. She is diligent and cooperative, and she currently works at Wokcano, Pasadena as a host.

Reference

Ward, N. (2016, October 24). Google tests single hotel deal placements in search - Tnooz.            Retrieved November 02, 2016, from https://www.tnooz.com/article/google-tests-single-hotel-deal-search/ 

Olenski, S. (2014, February 7). The Impact Of Social Media In The Travel Marketing Industry.   Retrieved November 2, 2016, from                http://www.forbes.com/sites/steveolenski/2014/02/07/the-impact-of-social-media-in-the-travel-marketing-industry/#2f794f725c37  

What Is the Core Principle of Social Media Marketing?

I attended the Social Media Marketing World Conference 2014 in San Diego (#SMMW14).  I heard many case studies and real success on social media marketing, which were drawn from different industrial sectors and represented a variety of social media platforms.  In the end, I made one conclusion: Listening and responding to customers is the core principle of social media marketing.  Companies now can answer the following questions by analyzing the consumer data on the Internet:

• For what purpose or on what occasion do customers use a product/service?
• What do they like or dislike about a product/service? And for what reasons?
• Who is actually buying and using a particular product/service?
• When is the best time to communicate with the target customers on social media?
• Where is the best "place" to reach the target customers?

Is it that simple?  Just "listen" to what customers said online, and then "respond" to what they need?  Check out my reflections on #SMMW14.