Hiring the optimal mix of vendors: why a diversified strategy isn’t best

The hotel industry is now overwhelmed by specialist tech vendors. Working with multiple vendors has become part of the industry landscape — they can each help a hotel overcome technological deficiencies and meet the needs of their tech-obsessed traveler.

In theory, this kind of diversified strategy might make sense: different vendors will hold one another accountable while all working towards a common goal. In reality, hiring too many specialists can lead to less than optimal results.

If your hotel hires a dozen parties to work on a new marketing strategy, each party will be operating in their own silos. Within this disjointed ecosystem, your hotel may be left with a number of siloed tools that don’t function as they should, making it impossible to interpret and action the data and performance measurement each vendor provides you.

A better approach is required. This approach involves hiring the optimal mix of vendors for your business needs. Before offering our top tips to select the right partners, let’s dive into some of the key benefits of avoiding a diversified vendor strategy.

Easier to track data

Digital tablet against city backdrop

When you work with multiple standalone vendors and technology partners, it’s incredibly hard to compare data in a meaningful and accurate way. If you receive huge amounts of disjointed information from different teams that separately manage your branding, social media, performance marketing, channel management (etc), you can’t determine true value and returns on a channel-by-channel basis.

In contrast, working with a smaller group of vendors makes it easier to create an integrated ecosystem. Today, established vendors with multiple functionalities can analyze and collect central reservation system data in a way that wasn’t previously possible. When data is centralized and easy to access, hoteliers have the clarity to make more informed decisions and gain major competitive advantages.

Frees up time

Think of the time it takes to deal independently with a dozen suppliers. You need to maintain ongoing communication with multiple vendors, track their performance, and continually evaluate the value of each working relationship. All told, this commitment can lead to a lot of wasted time and take up resources that can be put to better use elsewhere.

Greater accountability

Hotels sometimes fear to give a digital partner too much control over sections of their business. For instance, a partner might manipulate information and present their results in a way that’s most favorable to themselves. While this is a valid concern, the reality is that holding a few vendors accountable is easier than a dozen.

As we’ll come on to, there are ways to track a partner’s efforts and hold them accountable. And when you’re strategic about picking a partner with credentials you can trust (more on that too), you’ll spend less time fretting over their motives and benefit from an all-round better working relationship.

How to choose the right vendors

Business meeting in bright office

To be clear, this isn’t about severing ties with all of your vendors and hiring just one organization to handle everything. It’s simply impractical for a single party to take care of your end-to-end marketing program.

However, you might be able to reduce your vendors down from 8-12 to just 2-3. With that in mind, here are our top tips to choose the right vendors and effectively monitor their efforts.

Trust and transparency

Trust is at the heart of any vendor relationship. It’s understandable that you won’t fully understand the complexities of the tools they use, so you need to be entirely confident that they’re being transparent about the information they provide you.

While trust takes time to build, you can be systematic about the way you select a partner based on their credentials and history.

First, carefully sift through a vendor’s online reviews, testimonials, and case studies. If you’re seeking further validation, contact the vendor’s existing clients. Are the results they’re claiming accurate? Are they reliable and easy to deal with? Are they prepared to share information and take ownership of their business segment?

When it comes to reviewing your existing digital partners, can they present their working processes to you with clarity? Challenge them about the economics behind their programs, and how performance is measured. If they don’t reveal the financials behind their strategy for your hotel, you’ll probably want to reevaluate your relationship.

Check their attribution models

Your vendors may use different marketing metrics to show you how well your campaigns are performing. As a result, it can be tricky to compare how well each vendor is serving you. But one thing you can do is dig into the metrics they use to measure your hotel’s financial performance and marketing efforts.

Unfortunately, a lot of agencies rely on overly generous attribution models to make their results look more successful than they actually are. These “vanity” metrics can mislead a hotel about their true ROI, and ultimately derail their whole marketing performance.

Common examples of vanity metrics include page views, number of followers, number of bookings, and number of hotel display ad impressions. To find out more about this topic, take a look at our post on common vanity metrics.

Seek out the innovators

The hotel technology space is moving fast. If you don’t want to be left behind, look for digital partners that are innovating. When you’re searching for a new vendor, ask about any new products they’ve launched in the past year, including the impact those products have had. Check to see if they have any exciting innovations in the pipeline, and how these might benefit your business.

In addition, consider taking a fresh look at vendors you’re already familiar with (and have potentially disregarded). Perhaps they’re launching a new product, or innovating in a new space that aligns with your own goals and visions.

In recent years, the hotel technology industry has seen plenty of acquisitions and mergers, and these new relationships have given vendors a far greater range of offerings than they previously enjoyed. As such, it pays to keep an open mind and consider new opportunities to work with industry innovators.

Be clear on expectations

Before hiring a vendor, make sure you’re clear on expectations. Request a comprehensive agreement that outlines exactly what you’ll be receiving from your vendor, including a descriptive list of services. Make sure there’s no ambiguity and seek clarity over any “grey areas”.

The most common issues encountered relate to content, ADA Compliance, and hosting services. If you’re getting vendor quotes to have your website redesigned, ask them if they include website copy, create websites with ADA compliance, and offer hosting services. If these things are not discussed, you could end up wasting time and money getting them fixed later down the line.

Benefits of working with an established vendor

Business colleagues checking document

Finally, it can be helpful to conduct an audit of your property’s capabilities to learn what your true needs are. Do you really need the expertise of an outsourced digital partner? Or can you take care of certain projects in-house? If so, might this require creating a new internal position?

Ultimately, many of these questions will come down to your available budget and bandwidth. But if you find a skilled vendor that matches your business goals and can help you save costs and create efficiencies, they may relieve the burden on your internal teams and ensure you don’t overtask or over-hire in-house talent.

Nate Lane

Nate Lane

Nate Lane is a senior global director of business development, product development, and agency operations with 10+ years of experience driving growth and innovation as an "intrapreneur." He's an avid mountain biker, a coffee and craft beer enthusiast, and a proud family man. Contact him at nate.lane@pegs.com.

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