Forbes Travel Guide’s former CEO, Jerry Inzerillo, on reinventing hospitality in the Experience Economy.

2019-10-03
|In Hotels

The hotel industry, like so many others, is living in turbulent times.  Buffeted by massive changes in technology and consumer behavior (including the rise in Online Travel platforms and the Experience Economy) the hospitality sector finds itself in a state of perpetual transformation as it tries to reinvent itself for a more profitable and sustainable future.

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Gerard (Jerry) Inzerillo
In our efforts to understand the state of this industry, I reached out to a recognized expert in the space -- the CEO of Forbes Travel Guide from 2014 to 2018, Mr. Gerard (Jerry) Inzerillo

Here is a transcript of our very candid discussion in June 2018 where Jerry not only lays it on the line about the disruptors in the industry, he also gives us insights into what inspires him and what keeps him awake at night.  I think his commentary will both surprise and delight you.

Thank you so much Jerry, for taking time out of your busy schedule to chat with me about the current state of the hotel industry, including the luxury sector where you’ve spent the past four years. 
To clarify things a bit for those who aren’t as familiar with Forbes Travel Guide ratings, what distinguishes a four or five-star hotel from a three-star hotel, not in terms of the list of amenities they provide, but in terms of their interaction with guests and the experiences that they create?

I'm asked that question often and it's actually a very excellent question. Here's the way we frame that. Today, there is a much higher level of expectation from guests are more sophisticated.

One of the good aspects of the internet is that people are more informed; people are more curious. With the proliferation of cable television, people have a lot of information, especially visual information.

In terms of the luxury category, when Forbes Travel Guide started in 1958 as Mobil Travel Guide, it was a verification mechanism to protect all consumers. For 55 years, we stayed true to the original form of the company, which was the One-, Two-, Three-, Four-, and Five-Star rating system.  It gave people, who primarily traveled in their cars throughout North America, someone that they could trust.

Now, it's different.  In the low-transactional marketplaces, which are the prolific one- and two-star hotels where levels of expectation are lower, we stopped reviewing those hotels because it was far too subjective and quite frankly not the base audience of what our people wanted.  So we said, in order to get the coveted Recommended status, which was the replacement for what used to be referred to as the Three-Star hotel, there had to be a compliance to about 800 standards.  Most of that compliance was in behavioral interaction in service and in greeting.

In order to make Recommended, you really have to have a high competency of technical continuity. In other words, was the first guest experience the same as the second?  Was the food consistently hot, was it consistently delicious, was there a sense of welcome, was the property clean, was it well-maintained, and did it have diversified amenities?  These general categories break down into hospitality, anticipatory service, cleanliness, safety and security, repair and maintenance, graciousness, etc.

With 3,000 inspections a year and over a hundred marketplaces geographically-distributed around the world, we have a very, very good perspective of global standards that separate the Recommended status—the former Three-Star—and the Olympic gold medal—or the Four-Star. 

People who win the gold medal have a much higher sensitivity to the emotional component of travel, which is engagement, graciousness, anticipating guests’ needs, and satisfying guests’ expectations.  Becoming a Four-Star requires a greater consistency of the emotional engagement and touchpoints. Not the physical touchpoints—the emotional touchpoints, which make guests feel, “Wow, that was actually different. That was actually better than I expected.”

But when you float to the 199 Five-Stars, which we refer to as the “Michael Phelps,” those properties do it at such a high, consistent level, year after year, that their level of devotion and execution almost becomes cultural, without being overly programmed.  

 

         The Pierre, A Taj Hotel, New York, Forbes Travel Guide 2018 5-star award winner and PressReader Partner

 

They have taken it to such a cultural level that they perform with uncanny consistency, graciousness, and thoughtfulness, that it elevates them into an elite status that's almost peerless.

Hermes didn't become Hermes in one year. Ferrari didn't become Ferrari in one year. The reason why some of the more glamorous luxury brands have their reputations is because they earned them over a very long period of time with a trust factor and the prestige factor that separated them very distinctively from their competition.

But the peril in that is that if luxury brands don't reinvent, they face the problem of losing their audience because they didn't adapt with the times. We know many luxury brands that no longer exist because they failed to adapt.

In terms of brands’ failure to adapt to the changes in consumer behavior and expectations, if we zero in on those changes and focus on technology, how are hotels using technology to enhance that customer experience, to provide that wow factor that guests are looking for?

We have two very major feelings on technology.  Anything that enhances the guest experience to make it more efficient, more pleasurable, and easier, we are fully behind. Anything in technology that interrupts the emotional connection between the guest and the servant, we are against.

Let's illustrate that. Some people say, "When I get to the hotel, human interaction is not important to me, so I don't care if there's a kiosk to check me in like there is at the airport."  While others say, "When I get off a 10-hour flight, I want someone to ask me, ‘How are you? Do you need anything?’”

Over the next five to 10 years, should the reception experience be automated?  Maybe it's a combination of both to provide choice to the guest.

A personal interaction may be welcome when you're weary or you're in a new place for the first time and you're unsure about certain things.  Online check-in or a kiosk may be preferred because it’s your desired method of checking in or you are already familiar with the hotel.

If you want to check-out and give some comments to the hotel or get a hard copy of the bill, you have that choice. If you want to check-out on the TV in your room because it's easier and it's all electronic, that’s fine too.

That's elective technology and we like elective technology.

Other aspects of technology are wide ranging.  We are thrilled about voice prompt technology because in the next five to 10 years it will be common for a guest to walk into the room and say, “I prefer to speak in German,” and have the system switch languages.

You could say, “I'm hot. I'm cold. Turn on the TV.  Turn on CNN, play French music or play western movies on the TV” – all voice activated in your choice of language.  This is excellent.

There are also types of technology that make the guest experience logistically easier.  For instance, now you can embed something that is the size of a sesame seed on a tablecloth or on a napkin and you could put that on a room service table or tray.   When guests finish with their meal and don't want to call someone to come up and disturb them, they can put the tray or the table out in the hallway, triggering a prompt in Room Service telling them it’s time to pick up the table.

In the environmental age of water conservation, energy control, heating, and ventilation, new technologies such as motion detection or open-and-close, make properties much more efficient.  These are all great things.

What you don't want is the situation where you have a problem, call down to the front desk and can't get anybody to answer.  You want to pull your hair out because you’re so frustrated. This happens, it happened to me, and it interrupts the guest experience.

Look at PressReader, look how liberating and how smart PressReader is because now you can have any information you want and you're not stepping over publications that are littering the hallways and looking terrible. 

If you want to read a newspaper, a magazine or a blog, you have it all right there.  It has become liberating where almost everybody, when asked what newspaper they would like to have, says, "No thanks, I can read it on PressReader." It's common sense now.

With technology, anything that makes the guest experience easier and more enjoyable, we are all for, passionately. Anything that interrupts human connectivity when the guest wants that human connectivity, we frown upon.

I like what you said about giving people choice.  But it doesn't have to be just the choice of content; it should also be the choice of medium. 

I'll tell you, before I met you as a team, my friends and I were big advocates of PressReader.  We thought it was the next step forward because it gave you so much choice in medium and in content.

That also doesn't mean that print needs to completely be eliminated from hotels. There are guests that prefer that one-on-one connection with a printed product, so that is about providing that choice as well.

We call that abstracting. In other words, when you have the base product in the hotel like PressReader, if you find that 42% of your guests want [the print version of] The New York Times, then don't eliminate The New York Times – just don't buy a 100% of it if only 42% want it.  The same is true for magazines in the room.

With the liberation of having the base product like PressReader, which satisfies a big part of the need, you can abstract the elective part to further enhance the guest experience. But you don't have to carry the extra costs of shipping for all the publications in a medium you don't need. That's true of a lot of things in a room.

Is the trend towards adopting digital publications in hotels accelerating?

Oh, rapidly.  As a matter of fact, I think the traditional way of providing newspapers and magazines in five years will be 1% of what it is right now. It won't even be 10% of what it is right now.  It's not growing rapidly, it's growing super-rapidly.

There's very, very strong evidence for it because of the efficiency of electronic mediums, the color quality of these smart devices, the ability to range through different mediums, and different genres. A lot of people will now jump from print to digital magazines, to video, and to podcasting.

As a matter of fact, there are a lot of guests now, more than you would imagine, who do that.   In the year 2000, probably 99% of guests turned their television on during some point of their stay. I bet that number is well below 90% now.  And by the time we get to 2025, I bet 25% of guests will never turn their TV on at any time during their guest stay.

Almost every industry in the world is being disrupted by 3rd party intermediaries: mainstream media has Facebook and Google, music has Spotify and Apple, video has Netflix, and hotels have OTAs and alternative accommodation providers such as Airbnb.  Can hotels capitalize on this disruption, and if so, how?

What happened with the disruptors of the traditional distribution of music and film is that the disruptors actually did it better than the institutionalized way.

What happened was that the record companies got fat and slow, so when the disruptors came in, they came up with a better program, a better model and people took to it. They actually served the community better in terms of how one downloaded music for the enjoyment of listening to music.

The disruptors in television actually did a better job than the broadcasters because they behaved like monopolies. They behaved like commodities instead of service vehicles.  The same was true with film when studios got fat and old because they believed, like music, TV, and film, that they were untouchable.  This rendered them vulnerable to new mediums – mediums brought in by very smart people.

Well, you would think that the same thing would apply to one of the largest industries in the world, which is tourism, but it didn't happen that way.  What happened was that the disruptors (OTAs) built very, very large businesses in one of the largest industries in the world because they made it easy to book a transaction. Very little of that marketplace is qualitative.

98-99% of the people who often fly first class are not booking flights through an airline travel site.  They want the personal touch and interaction because their lives are more complex.   They’ll use the concierge available through an American Express Black card, a platinum card, a club. But more people who fly business class are now booking tickets online.

Where the disruptors got it wrong was on the hotel side. They made a gigantic mistake because they put a narrative out into the global marketplace without verifying the quality levels. They left the verification of the quality level up to the guests to find out by themselves.

People today will use TripAdvisor to do basic research, but the reason why TripAdvisor is not doing well as an OTA is because no one trusts them. In the case of Priceline, Expedia, and Hotels.com, people don't feel vulnerable on a one- or two-star transaction, even on a three because their exposure's not great. But nobody's booking them for four- or five-star because it's too expensive and they don't trust them. So when they say this is five-star, six-star, seven-star, or eight-star, what's the criteria for giving that rating to a property?  When the guest got there, it didn't turn out to be that way.

I wish it wasn't so, but one of the reasons why Forbes Travel Guide, in the course of five years, has been able to go from a handful of countries to a hundred countries, and has become the most trusted name globally, is because everybody believes that we've been there, we've verified it, our standards are tough, the system has integrity, you can't game it, and you can't buy it.

The Ritz Paris - Forbes Travel Guide 2018 5-star award winner and PressReader partner.

The one mistake the travel industry made is that the disruptors never put into their formula what the music people, the TV people, and the film people did.  They didn't put the quality element in, and that's where they're going to get burned going forward.

You're absolutely right and that's something that we're seeing even with Airbnb now. They're investing in human verification of about 2,000 properties, but I can’t imagine how they can scale that to bring quality standards into the platform as a whole.

See, now there's another distinct point. If you make a mistake downloading music or you make a mistake downloading TV or even film programming, how big is the mistake?

You make a mistake booking a trip with your family, not only is the mistake potentially super expensive financially, what's the cost of the mistake in terms of time and emotional discomfort? Gigantic, and that's happening with great regularity.

What is the value of an OTA to a hotel then?

There are only two values. Its value to the consumer is transactional and convenient.

The value to the hotel is the temporary increase in market share. But what all the hotels are now realizing is that if they increase market share by bringing in the wrong guest, it's more of a problem than a benefit.

Because the industry has grown so fast, it has adopted a market-share philosophy instead of an average-rate philosophy. If one looks at luxury, from 1950 to the millennium, the entire industry was driven qualitatively by the right guests who supported the rates of the hotel.

Post-millennium, the entire industry shifted to an occupancy strategy, which made hotels do deals with the OTAs – deals which many of them now are regretting.

Very interesting. It reminds me of the publishing industry that got into bed very quickly with the facebooks and googles of the world and is now very much regretting that.
The discoverability element of smaller properties is certainly something that cannot be disputed as a value in working with OTAs, but there’s a very big piece missing there and that’s the ability to subsequently engage with that guest. How do hotels establish that personal relationship with a guest who has booked their stay with a property through an OTA?

All hotel companies, independent and corporate, are being forced to go back to what the OTAs told them was going to be too expensive – direct communication and pre- and post-direct contact with the guest. People said, “We'll take the cheaper alternative and trust you.” Now everyone has realized, that may have been a generationally-defined mistake.

So now the hotels are going back to a much deeper, pre-communication with the guest, which is new because they very rarely had any pre-communication.  Prior to arrival, and then post-departure they now say, “Was everything up to your expectation? What would you like the next time you come back? We were really thrilled that you were here. We haven't seen you in a year. We have these offerings...”

The pendulum has now swung the other way and, by and large, the entire global luxury community is not only going back to the model of during- and post-communication, it has now embarked on a very aggressive, pre-arrival communication to set the tone of what you want individualized to enhance your experience. Because if you get the guest off on the right foot, there is a much greater chance their entire stay will be more satisfactory than not.

Has that forced the OTAs to provide these details of people who are booking?

No. No. No! They refuse to because now they're acting like commodities.   As a result it's set off a gigantic Transformer-like war between the OTAs and the major brands.

What you're going to see is that as the mega-brands continue to buy sub-brands – like what Marriott/Starwood has done, what Accor is doing internationally now, what Intercontinental is doing, what Hilton is doing, Disney, and Hyatt – those mega-brands now are going to form new strategies and they're going to go directly head-to-head and cut or severely limit the allotments to the OTAs.

There's a big war brewing. It's already started, but it will play out over the next few years and it's going to be the first lodging world war. It’s going to be luxury lodging versus the OTAs.

Going back to the change in consumer behavior… The younger generations have grown up in a very different world without brick and mortar travel agencies. How do you see hotels adapting to their needs, given their very different expectations?

I would suggest to you that it's no different than other generational adjustments. When the jet arrived in the 1960s and deregulation of the airline industry came in the 1970s, they completely altered travel patterns. You had foreign guests that you never had before.

What happened when all the Chinese showed up, when all the Japanese showed up? What did you do when you didn't know their [cultural] customs?  It took time for the industry to adapt to that.

The millennial generation is easier and I'll tell you why.

They have a much higher disposable income than previous generations of their age. They have a much higher inherent knowledge of their age and a much greater global sophistication than previous generations.

So they're more sophisticated, they're more knowledgeable, and they have more resources. What they don't like being told is how to do things because they're not trapped in the self-esteem generation of their grandparents and parents. They're the first generation of the self-actualization that says, “It's not important for me to show you what I earned.  I don't have to impress you with my jewelry and my car and my houses like my grandparents and parents did. That's self-esteem. It's important how people see me. It's important how I see myself and that will define how you see me on Instagram and different social media that are sharing experiences, not necessarily material goods.” 

So the touchpoints are less with millennials than with their parents and grandparents who want a lot of interaction because they like the feeling of being served where they couldn't be served before.

The kids now, or the younger ones are more sophisticated, they're saying, "It's not that I don't like being served, but I will tell you, or I will show you, or I will behave in a way that indicates I want to be served; and when I don't want you, give me my space."

In other words, circa 1980-1990, when Mr. Jones was told by the hotel that they were giving him a butler, he would respond this way, "I bought a suite at the St. Regis and now I have a butler. Wow, that's cool. My wife loves the fact that they’ll unpack for her and pack for her because that's an amenity and a service that my parents could never afford and we could never afford. Wow, having a butler makes me feel good about myself.”

Now, the millennial generation says, "Hey, that's cool. I like having a butler, but I don't want them hovering over me. I know where they are when I want them."

Millennials are misrepresented by those who say they're twitchy or that because of technology they're non-communicators and don’t like human interaction. That’s actually not true.

What is true is that they like less interaction, which means as a hotel, instead of having one in 20 chances to please them, you may only have one in 10 chances to please them. You've got to be able to read them in terms of their sonar that indicates, “I'm ready to be served.  Or not.”

It's going to take the luxury global community two to three years to catch up with the mores and norms of that generation, but we're learning it very quickly.  They're going to be the easiest generation to take care of as compared to the three or four generations the preceded them.

That's very interesting. On a more personal note, what inspires you?

Two things. On a deeply personal level, what inspires me are acts of kindness, courtesy and graciousness – when people are unforced and thoughtful because that's the humanity that connects us.  It’s who I am; it’s in my DNA.

The other thing that's highly inspiring is that we may not like the same things, we may not share the same ideology, but like Sting said, we share the same biology.

One thing you know, Nikolay, is that the more you travel and the more you interact, the more humble you become.  You’re humbled because you realize how small you are in the big picture of things, how unique cultures are all over the world, and how their culture is expressed in dance, music, and cuisine.

That's why losing my pal, Tony Bourdain, was very painful because he brought a different type of signature to travel and made it more accessible to people.

Everybody's globally tied in now and that to me is very, very inspiring.  And I love the fact that there's no industry that joins humanity and connects the dots of the touchpoints of humanity more than inn keeping and tourism. Certainly, we've done a lot better of a job than the airline industry, which has now become a commodity where it's just like moving cattle.

When you travel, what are the things that you miss the most when you're away from home and how do you satisfy those things that are missing?

You miss the people you love. Period. You miss the people you love and you miss the conveniences of your idiosyncrasies that are programed for you, which are generally around your work and your community – things that are familiar, things that are particular to you because you built your life around them.

If you're a cyclist or a book worm, if you draw or are a cartoonist, your house usually is set up around these hobbies or habits. When you get detached from them, you miss them, but a lot of times what you get on the other side is enlarging because you will always pick up something of enlightenment or something that was not anticipated.

The one thing that's unbelievable is when you see the kindness and graciousness of every culture despite language, theology, gender, or sexual orientation. When you see people who really care and provide a sense of welcome, that's a beautiful thing.

So, what keeps you awake at night these days?

I think there are two things. One is terrorism and the fact that there are a lot of things that are beyond the control of us in the tourism community; no place is exempt. That causes a caution and deliberation of people traveling and interacting, so that keeps me up.

The other thing that keeps me up is the normalization of things that are selfish or that interfere with things that join us together. I would rather have magnets that draw people together than the opposite ends of the magnets that repel.

So, what keeps me up at night is not just our industry and terrorism, but also anyone who deceives, or lies, or is ungracious or unhelpful, or doesn't keep a promise. That's what keeps me up at night.

Thanks so much Jerry.  Do you have any closing advice for our hotel partners?

I think the closing advice is that the biggest component in travel in the next five to 10 years is going to be that people are going to go.  You're not going to put that genie back in the bottle. People are going to explore, because it’s about the luxury of time and experiences, not the expectation of accumulating material things. 

But “if you build it, they will come” no longer suffices because it doesn't tie into human connectivity. Those who build uniquely will have a slight advantage. Those who program will have a slight advantage – how you engage your guests, what restaurants you have, and what entertainment you offer. 

But those who serve and provide graciousness and human connectivity, they will have a huge advantage on emotional connectivity and loyalty. That's the Holy Grail.

Jerry, thank you so much for sharing your insights into the hotel industry and of yourself. I really appreciate how you, as CEO of Forbes Travel Guide, are driving the industry towards making the world a better place, helping to connect people, and allowing us to continue to enjoy life through unforced acts of kindness and unexpected courtesies that we experience along the way.

Well, I thank you, too, because you've been trailblazers, all of you.  You're an exceptional group of people.  We fit into each other with our commonality of point of view. We're both surrounded by a lot of great people and you have our respect and our admiration as an organization; it's our pleasure.

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About Gerard J. Inzerillo, CEO Forbes Travel Guide (2014 - 2018)

Jerry, as he is known by most in the business, is a visionary recognized for his trademark innovation and his extensive network of contacts in tourism, hospitality, entertainment, and business, cultivated during his five decades as a manager and executive in the hospitality and entertainment industries.

During his storied career, Inzerillo has developed some of the world's most famous and successful lifestyle brands in tourism and entertainment.

His leadership has been instrumental in the successful globalization of Forbes Travel Guide as well as in the conceptualization and operations of breakthrough properties, such as Atlantis, One&Only Resorts, Ian Schrager Hotels, Four Seasons and Hilton Hotels.

During his tenure as CEO of Forbes Travel Guide, Inzerillo led the company from its North American origins to the most trusted and respected recognition of service excellence worldwide. Forbes Travel Guide evaluated more than 2,000 of the world's finest properties.

Post Interview: On September 5, 2018, Jerry left Forbes Travel Guide for his new role as the CEO of the Diriyah Gate Development Authority in Saudi Arabia.  We wish him all the best.

 

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