In The Big Chair - Dori Stein of Fornova

What weaknesses or needs has the pandemic exposed in hospitality? What still needs to be fixed?

The pandemic has decimated hospitality teams. Those who are left are having to do much more with significantly fewer resources. We are seeing revenue directors losing their entire teams and having sole responsibility for their property, or having to take on responsibility for multiple properties with little support - but that’s where automation and technology can really make a difference by freeing up their precious time. 

Not only have their teams been reduced, but many hotels have seen a shift in their source markets. At the moment, many hotels are practically only relying on guests from their local market; moving forward, feeder markets will be opening up one by one. As a result, hoteliers will need to work more closely with their online travel agency partners, to ensure they are targeting these markets effectively, and that they are visible to them.

Traditionally, the hospitality industry has been slow to change or respond to opportunities. But in today’s world, that’s not an option. Hotels need to be comfortable with a short-term marketing plan that is changeable based upon the evolving pandemic. This may be orientated towards domestic tourism initially but may also be constantly updated as the market shifts. For some hotels, this may not have been their core market, and competition will be tough - as more properties compete and focus on a smaller, less diverse cohort of travelers. 

New working patterns will also shift demand permanently. COVID-19 is providing the industry with a fresh impetus for digital transformation. A number of hotels have been deploying more contactless technology (digital check-in and digital room keys), as well as in-room voice devices and digital concierges. This allows fewer touch points with hotel staff, but also automates systems and frees up team members’ time to improve guest experiences. Hotels have often been lagging behind other industries, such as retail, when it comes to deploying technology, so it’s great to see them catching up.

Do you expect hotel distribution to change as we come out of the pandemic? Who will be the winners and losers? 

The winners will be the big chains; we’re seeing a growing new-build pipeline and long lists of brand conversions, because of their distribution and assistance with access to capital. Google and the largest OTAs will also come out on top - in an even stronger position than pre-COVID. 

We are also seeing a dramatic growth in the vacation rental sector. Airbnb and Vrbo have expanded to offer hotel rooms, while on the flip side we’re seeing major hotel brands offer vacation rentals - so there definitely is a blurring of the offerings. The losers will be the smaller chains and independents, who haven’t managed to save enough funds to weather the storm.

Elsewhere, my friends and colleagues working in corporate travel have had it really tough. The debate is what percentage will come back, as most people don’t believe it will return to pre pandemic levels.

What do you hear from hotels as far as what they would like to see change regarding distribution? Where are their pain points?

The landscape isn’t getting simpler - it’s instead becoming even more fragmented - and hotels need to monitor and respond to a rapidly changing environment, while having fewer staff. They would like to grow direct bookings, as they always did, but even though direct is on the rise, their big challenge is around budget and cashflow. Their other pain point is that the OTA tools, which help acquire additional guests, are mostly hard to implement and monitor in an effective way.  

What are your thoughts about the relationship between hotels and the big OTAs and how that may evolve in the coming years? 

When you look at the mix of distribution sources for hotels, taking into account that business travel, groups and events will take some time to return to pre-pandemic levels, hotels that don’t have substantial direct traffic will need to rely on OTAs now more than ever. We expect those hotels will need to use the tools provided by OTAs more and more, in order to capture targeted demand.

We anticipate there will be three changes:

• Hotel investment in direct channels, which hasn’t returned to pre-pandemic levels, will keep decreasing, for various reasons.
• The major OTAs’ influence will continue to grow and they will dominate the space, as I’ve said before.
• All of the issues with wholesalers and bedbanks, which hotels had been starting to get a grip on pre-pandemic, are returning with a vengeance. We’re seeing hotels returning to static rates, after having moved wholesalers to fluid pricing. 

What is your prediction for Google’s role in travel? And how do you advise clients regarding that?

It’s a “winner takes most” environment, but still not “all.” Google already takes the lion’s share of travel searches, and they will continue to do so. While the largest metasearch sites, such as Google, will continue to dominate, the smaller ones will continue to shrink.

Fornova has its foundations in retail and we still work with brands such as Gucci, Walmart and Samsung. In that sector, we experienced how all of the price comparison engines were decimated by Google Shopping, and we can see the same thing happening in travel.

That said, we are a Google Connectivity partner and work closely with them to help hotels optimize their visibility. Our advice to hotels is: Take Google up on their offer of free traffic!

Last year, Google launched the most financially beneficial and risk-free bidding strategy model for hotel campaigns with Commissions (per stay), also known as Pay Per Stay, which allows hotels to pay only when the guest stay has actually happened. Hotels should trial this, at least at some of their properties. 

Price is the most important parameter in the current environment - hotels need to do all they can to protect their rate integrity, while ensuring they are always offering the best price.

As we hear about the need for more supply of alternative accommodations, how would you advise traditional hotels to capture some of that demand? 

Some of our clients already offer alternative accommodation. Marriott, for example, provide villas. Likewise, we work with the largest vacation rental brands, and they also provide hotel rooms.

Hotels must be aware of the breadth of their comp set these days. They can’t only monitor other nearby hotels. In addition, they need to remember that their feeder markets may also have changed and they need to be on their toes when monitoring where guests are coming from. This is particularly true if traditionally, the hotel was a corporate traveler-focused hotel, which is now pivoting to attract leisure guests. 

Also they need to consider their guest experience in light of the “new normal.” Some people who are moving to vacation rentals are doing it because of the check-in process, which they don’t want to go through. So one option is contactless check-in, which many of our clients are adopting. 

On the plus side, hotels are able to offer extremely high hygiene standards, which vacation rentals can struggle to meet. In addition, the use of technology is making it easier for guests to order food to their rooms not only from the hotel’s restaurant, but also from local food outlets.

Has the "work from anywhere" concept impacted your company?

If you would have told me in 2019 that sales and training on a solution could be successfully delivered online, I would have told you that you didn’t know what you were talking about! But, we’ve managed to sell, train and provide services to new clients who have joined us in the last year, and the simple fact of the matter is that it’s working. 

We have sales and training people who have moved continents, and I didn’t even know until I asked one why it was dark outside - it’s been seamless. We’ve had an employee who moved from Amsterdam to Mexico, another who moved from Israel to Argentina and I, myself, moved from London to Israel to be closer to family and the R&D team. But, as far as clients and team members are concerned globally, I doubt they see a difference.

Fornova’s last funding round came in September 2019 - $7 million extension of your Series B – but then a few months later the COVID crisis began. What have been some of the key developments for the company in the last 18 months?

Probably the most significant development has been the launch of FornovaCI (Fornova Competitive Intelligence) - a solution that allows hotel chains and independent properties to track the rates of their comp set, from individual to chain level.

FornovaCI, along with our other products such as FornovaDI (Fornova DIstribution Intelligence), have all been wrapped around our Hotels BI suite - and this  laid the groundwork for us to introduce new insights each quarter. 

We also branched out into the car rental industry - delivering very similar services as we do to the hospitality industry to some of the largest players in the car rental market with FornovaMI (Fornova Mobility Intelligence).

Looking ahead, a substantial proportion of the company’s R&D team is working on developing a new category-defining product. We’re excited about it because there aren’t any other companies that I’m aware of developing anything like it. Can’t wait for 2022 to launch it on PhocusWire.

Looking back, is there anything you wish you had done differently as the pandemic began as it relates to your business?

A better question maybe would be, what would I have done differently if I knew the pandemic was going to happen?!

As a company, we decided to fight together - in order to not lose any member of staff and to not furlough anyone. We took a salary cut company-wide, to ensure that the company survived, while at the same time many of our competitors let go over 50% of their staff. Looking back, I would have made those sorts of decisions sooner, but in any case I’m proud that we did what we did.

Fornova has now been around for more than a decade. How do you continue to drive innovation?

It’s very simple: We listen to our customers, constantly keeping our ears open and looking for challenges. For example, we were first to market scanning OTAs from multiple points of sale, or scanning mobile apps and were the first company to monitor distribution - and actually identify the root cause of rate disparity. These are just three examples of our customers sharing their biggest challenges that were unfulfilled by their incumbent vendors and for which we provided the solutions.

Fornova acquired HotelsBI in early 2019. Are more acquisitions part of your growth strategy?

It was exciting for us to come to the market with a product that we didn’t develop from scratch, and have to got through all of the initial development stages but, at the moment, we are focusing all our efforts on maximum adoption of our existing products and on launching some new innovations that we developed in-house, which none of our competitors have.

What are your priorities for Fornova in the next five years?

Our first priority is to attract more hotels to our suite of solutions. We are an enterprise-oriented company working with the largest hotel brands and we are now expanding our reach to support smaller chains and independents.

Secondly, we’re working on launching a category-defining solution that none of our competitors are able to offer. We’re currently trialling with a major hotel brand and look forward to updating you on that later this year or next, as I said before.

What advice do you have for young people just entering the travel industry?

My advice is to be adaptable and multi-disciplined. Increasingly, the industry needs cross-disciplinary professionals, who are likely to specialize in areas such as revenue management or distribution management but will also have a broad knowledge of the other commercial functions, such as sales and marketing. With a sound operational background, they will be able to develop a career as a strategic advisor - which will help safeguard their role over the long term.

If I have time for one more tip, it is to not give up on the travel industry - you are in this for the long term and travel will come back with a vengeance. It will return to being one of the largest industries in the world.