Playa Hotels & Resorts CEO Discusses How New Tech Is Driving Growth
During Playa Hotels & Resorts' Q1 2019 earnings conference call, CEO Bruce Wardinski discussed in detail how his company has recently implemented powerful technologies to drive growth, including: the launch of a targeted upsell technology, a new yield management system, and a book direct initiative.
According to Wardinski, Playa's customer database has grown more than 25% in the last year alone with 8.5% of rooms booked during the first quarter of 2019 coming through the brand's website. This is up nearly seven percentage points from 1.6% in the first quarter of 2018. According to Wardinski, the company launched a revamped website and search engine optimization technology during the summer of 2018, to which he attributes to the growth in direct bookings based on the fact that every month – since its launch – the company has shown sequential improvement in direct bookings.
"In aggregate, during the first quarter of 2019, 30.7% Playa managed booked revenues were direct, up 10 percentage points year-over-year and 60 basis points sequentially," Wardinski continued. "We are confident that, we are on target with our five-year plan to increase consumer direct business for a goal of at least 50% by 2023."
Recently, the company began a soft rollout of a new end-to-end up-sell and rebook technology at some of its resorts. This technology uses algorithms to identify in real-time new revenue opportunities via the scale of ancillary items and additional room packages to guests – this could be a suite upgrade, late checkout, airport transportation or the ability for the guest to rebook their next trip seamlessly.
"Our goal is to delight our guests, increase loyalty and optimize profits by making the right offer to the right guest at the right time," Wardinski says.
Currently, five of Playa's Cancun-based properties are using this technology specifically for room upgrades. Playa Resorts will be rolling the system out across the balance of the owned and managed portfolio in the next 60 to 90 days. Additionally, by the end of the third quarter, Playa will expand the advanced sales offerings to include tours, candlelight dinners, spa appointments, airport transfers, and more.
"Ultimately, we expect these non-packaged revenues to be at least as large as the rooms upsell piece," he explained.
The company also rolled out a new yield management system and it's starting to get recommendations on pricing and channel mix. Playa is hopeful it can get roughly half of its portfolio on the system by year-end.
It plans to operate the yield management system in parallel with our current forecasting processes for at least one year before making the full transition. This means that the benefits of the new system are not likely to show up in our financial results until late in 2020. But the potential from this initiative is significant.