Diamond Collection Feedback

We’ve been hearing quite a bit of feedback on the new Diamond Collection program and I wanted to address it in more detail. It seems like there are a couple main themes that keep coming up in the questions, and those are “why did you launch it, and is it going to hurt my B&B if I am not a part of it…” Certainly there are other questions, but initially I’d like to focus on those two as I think they are the main questions folks have.

So why did we launch ...

the Diamond Collection? It has to do with our goal of expanding the B&B consumer market. Everything we’ve read indicates that only 4% of traveling consumers have ever stayed at B&Bs. That means out of every 100 travelers, only 4 of them will stay at a B&B. While it seems that a lot of innkeepers are OK with that number, that is something that those of us here at BedandBreakfast.com are just not happy with at all. We want that number to go up – period. We want some of the rest of those 96 travelers to stay at B&Bs.

So how do help make that happen? The answer is both simple and complex at the same time. The simple part is figuring out why they are NOT staying at B&Bs. We think we have a pretty good grasp on the two groups of consumers – the 4 that stay at B&Bs love them, and the 96 who may have a lot of inaccurate perceptions. But as the saying goes - perception is reality. Here are some of the things we hear from consumers:

1) A lot of them still think that staying at a B&B is like staying in the private home of a stranger. It’s not a “real” businesses, and they don’t want to stay in someone’s extra bedroom

2) If they don’t think it is the extra bedroom, they are still afraid they’ll have no privacy, and will have to endure “death by doily”

3) They don’t equate most B&Bs with a “luxury” experience

4) They think it is hard to find B&Bs, and that once they do find them, it is hard to book them online

5) Once they do find them, they find an incredible variety in the quality of websites, information, and find the whole “shopping” process on B&B websites to be very difficult

6) They have the feeling that B&Bs don’t represent a good “value,” meaning the price of the stay is high compared to the experience

The complex part is figuring out how to act on those findings, change consumer perceptions, market and promote to consumers to grow the industry, and keep products and pricing in place that continue to provide innkeepers with a nice return on their investment. This is what we try to tackle every day.

Clearly those perceptions are usually completely and utterly false. At BedandBreakfast.com, our employees all share a common experience – spreading the word about how great it is to stay at B&Bs. In virtually every case we hear the same response from inngoers after they try it out… “I had no idea how nice a B&B could be! – I didn’t even know places like this existed…” The responses are typically the same.

So we know that we need to change the perceptions of 96% of travelers. That is a BIG job – but that is our goal and what we are in business to do. Just think… what if we can get only 2 of those 96 travelers to start staying at B&Bs? That would mean a 50% increase in business for our industry! This is the type of goal we are trying to achieve and efforts like our review program, gift cards, distribution through Expedia, Travelocity, etc. and this new Diamond Collection are ways we think we can further that goal. If you are happy with only 4% of consumers staying at B&Bs, then you may not agree with that goal in the first place. From what we can tell, most innkeepers would like to see that number grow.

Now keep in mind we are trying to achieve those goals with a site called BedandBreakfast.com. Take off your innkeeper hat for a minute – and put on the hat of one of those 96 travelers who don’t stay at B&Bs. If you were one of those travelers, what would you expect to see if you came to BedandBreakfast.com? Would you expect to see a very comprehensive group of properties? Would you expect to see consumer reviews? Would you expect to be able to make bookings? Would you expect to be able to link directly to a property website? Would you expect to be able to easily find the right property for your exact travel needs?

These are the types of questions we ask ourselves at BedandBreakfast.com. One of the things we have heard for quite some time now is that consumers felt they needed to look elsewhere to find luxury properties. They felt that if they wanted a luxury stay, they needed to go to other websites like Relais & Chateaux, or look for AAA 4-Diamond properties for instance, rather than come to BedandBreakfast.com. That really doesn’t do any member of BedandBreakfast.com any good at all. If the luxury consumers shy away from BedandBreakfast.com, then they’ll never see any of our member properties. These inngoers felt that we had a very comprehensive group of mid-range properties, but for something special, they had to look elsewhere. This of course is a perception that we do not believe is a reality, but again – perception is reality. So the question is – what do we do about it? How do we make sure consumers realize that BedandBreakfast.com does have the widest selection of properties, and they should come to us to see them all, not just the mid-range?

So we came up with the Diamond Collection. We think that consumers will be much happier with the selection on BedandBreakfast.com if it is clear there are all varieties of properties, and ultimately we think it is better for the industry if a large industry platform like BedandBreakfast.com has a broader offering.

Clearly every B&B may not agree with this strategy, but I’d ask each B&B to take off their “what’s best for my B&B” hat and put on their “how do we get more of those 96% of consumers” hat. That is the hat we at BedandBreakfast.com have to wear if we are to grow the number of folks that experience our industry.

We wear that hat often – and often times there are individual B&Bs that don’t agree with every business practice we adopt, but we feel that we have had good results on growing the industry. We feel our proactive approach is what has kept us vital and growing and it needs to continue.

There are a lot of things we are proactive about that are often overlooked or forgotten. PCI compliance for PMS and online availability calendars is a great example. While many of our competitors are claiming compliance - and putting a lot of innkeepers at risk - we have hired certified, independent auditors to come into our business every year and make sure everything checks-out at the highest level of security available – the same type of audits major banks go through. No one else is going to that trouble or expense that we know of. Maybe our competitors are laughing at us for all we know since they seem to be happy to avoid it – but we do not – we don’t feel good about offering a sub-par product.

Our Gift Cards are another example. We know that many innkeepers do not like our higher commission, but we knew as a business that in order to compete in the marketplace we had to have a better product than a simple piece of copy paper that is run through a laser-printer and we were going to have to invest heavily in getting the products on retailers shelves. If we were going to take on the Marriott’s of the world on Safeway’s shelves, or if we were going to get into the Dell employee incentive program – we needed to have a card of matching quality. So we invested a massive amount of time and money into these products and systems. It comes back to wanting to change the consumer’s perceptions. If a consumer gets a home-made looking gift certificate for a B&B that looks cheap – their first impression of the B&B industry is that it is home-made and cheap… If you are happy with that perception as an innkeeper, than we are just going to have to agree to disagree – we’ll never believe that is the answer for the industry.

What is ironic is that many innkeepers seem happy with a lower commission, cheaply made gift certificate, yet in the same breath, many complain that they don’t want a Costco consumer because they are worried that the Costco consumer only wants something cheap… We understand that innkeepers want to pay as little as possible for any type of service, but it seems difficult to want to have it both ways. It’s almost as though these innkeepers are the type of guest they would not want to stay at their own property… The irony is that Costco has one of the wealthiest consumer groups of any business, buying everything from $100+ bottles of wine to $5,000 flat-screen televisions. Our industry needs to get in front of these people with a great-looking high-quality product that gets them to notice how good B&Bs can be. Getting in front of such large numbers of wealthy individuals is yet another way to grab some of those 96% of people that don’t already stay at B&Bs.

Just a few years ago innkeepers revolted when we launched our review product. Can you imagine a world now where we didn’t offer reviews on our website? Were we a bit ahead of our time? Sure – our competitors only lately have started offering review products of their own, but our goal is to be the leader in this space, not a follower.

Likewise, a lot of innkeepers ask us why we haven’t launched an iPhone app yet. Our answer is that so far we haven’t heard from consumers that they really want one. We have some things in the works, but it hasn’t been something that appears ready to drive a lot of business. We’ll get one going in 2010, and in fact we are going to launch one for RezOvation within the next few months since we’ve heard that innkeepers themselves would really find it handy.

Ultimately our business needs to be a balance of getting traveling consumers what they want, and providing innkeepers with products and services to meet their needs while providing them with great ROIs. All Innkeepers may not agree with our strategies in the short-term, but we do feel we put a lot of time and research into what is going to expand the industry. The Diamond Collection is just such a product. We expect only a few percentage points of our members to join this new product, so there will not be substantive changes to our underlying business. Nevertheless, this product niche can better convince more consumers to come to the site and try B&Bs. We think a lot of people drawn in by the Diamond Collection will be looking at all properties to find one that best suits their needs – but without the Diamond Collection those travelers may never have come to our site in the first place. That is our take on it. Clearly there are others who will have different opinions, but wearing our industry and consumer hats, we think the decision is clearly in the right direction to grow the market.

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