IBC HOSPITALITY: AT THE FOREFRONT OF TECHNOLOGY
Pamela Barnhill is an American entrepreneur transforming the hospitality industry through innovative technology. Her experience and knowledge as a second-generation hotelier has enabled her to create a worldwide platform that connects travelers with unique lodgings and provides independent hotel and property owners with the tools and services they need to compete and succeed in today’s market.
Could you share your background and how IBC Hospitality began?
I grew up in a hotel family business. My dad has always been a hotel owner and operator, but I did not plan going into the business. After university, I worked for Motorola in the United States and in South East Asia. When I came back, I got my MBA and worked with management consulting on the East Coast of the United States. Later, I moved to Arizona to help my dad with our family business.
We had thirteen hotels at the time, independent and branded. We found out that we could make more money with our independent hotels than with our branded ones if we leveraged the relationships we had made in the hospitality industry.
This was the initial thought behind IBC Hospitality, creating a loosely affiliated group of independent hotels to help each other out. Like Beeleev, the idea was that we’re stronger together than apart. The idea expanded to a model combining groups and saving money to generate more revenue.
“The initial thought behind IBC Hospitality was to creating a loosely affiliated group of independent hotels to help each other out.
Nearly 10 years ago, I couldn’t find a loyalty program for 3-star independent hotels. The two main players were Stash and Voilà. At that time, they only worked with 4 and 5-stars hotels and hotels highly ranked on TripAdvisor. They had no interest in going down-market.
So, I put out a request for proposals and hired some developers outside of my geographical area who we still work with today. They have been wonderful to work with and are very loyal. This leads me to my first piece of advice: even though it may be inconvenient to work with people in other time zones, you can go further, faster and get to your first MVP (minimum viable product) if you’re willing to work with people who aren’t right next door to you.
I caught a lot of flak for that back in 2008, it was during the Great Recession when popular opinion was to take care of the people in your own backyard first. But for me, the only way to start a business at that time was to be bootstrapped. You need to be very careful with money, see how far you can go with what you have, and you make sure you have a business idea that works, before throwing a ton of money after it. Being flexible, willing to get started, looking for different possibilities, and asking for help to arrive at that minimum viable product is very important.
Developers told me we had a robust open API (application programming interface), which means that you can start connecting into lots of forms of supply and demand. All I needed to do was contact each company, get an NDA (non-disclosure agreement), a master of service agreement, their technical specifications, integrate systems, and we were up and running.
As we serve hoteliers through time saving techniques and supplemental revenue, integrating with as many systems as possible and optimizing those connections down to room level across multiple channels was very important. Today we have over eighty of these and are continuing to grow.
I think a lot of companies realize the new consumer doesn’t care about the channel they book on. They care about the story behind it – provided that it’s fast, easy, and simple to use. The fast, simple, and easy is where we’ve been coming at the market and making it happen.
Everything has got to be live and quick: reservations, availability, hotel information and pictures. From a network standpoint, we help hoteliers both save and make money. We also provide services that combine three different types of companies that charge thousands of dollars a month, but we do it for a fraction of the cost. We know this combination works because we did for ourselves first.
IBC offers three different services in one. How it works?
We are a robust CRS (central reservation system), which means we are a cloud-based software that you log into to manage all your rates, availability, pictures and descriptions. We also provide digital marketing services and soft brand benefits like the buying group (IBC Marketplace), loyalty program (patent-pending InnCentives), education and training, and idea sharing. All those ideas rolled up into one easy to use interface. Other companies offer one or two of these services at the same time, but IBC Hospitality is the only one to offer all three together.
Is IBC Hospitality only for hotels owners?
This has been point of confusion. When people google IBC Hospitality they find ibchotels.com and think IBC is an OTA (online travel agency), but IBC hospitality is our B2B (business to business). Rather than explaining this, we are in the process of separating out our B2C (business to consumer) brand and keeping IBC as the B2B.
It’s been a very interesting ride to say the least. What sets IBC Hospitality apart and makes us different is that we give the guest information back to the hotel owner. This way they can keep that guest close by adding them into their retargeting and email marketing. We do serve all independent and boutique hoteliers (1-5 star) as well as villas, hostels, B&B’s and we are starting to see more demand from serviced apartments or “Apart-hotels”.
“What sets IBC Hospitality apart and makes us different is that we give the guest information back to the hotel owner”
Brands like Expedia, Booking.com, Best Westerns and Marriott’s don’t share guest information with the hotel owner. So guests stay the top of their search funnels triggering commission after commission for themselves at the hotelier’s expense. This is a real problem.
As hotel owners and operators, our revenue has increased over the decades we’ve owned hotels, but our profitability hasn’t grown in proportion because of the customer acquisition costs in the middle. What we are trying to do is to help hoteliers, namely from this perspective, drive more direct bookings.
Giving that guest email address and information to the hotel owner is very important, because it gives them a chance of getting repeat business from the guest for free in the future, rather than having to pay 15-30% commission each time. Some opaque channels even exceed 30% commissions. Let’s say you book a room in New York on Expedia. The hotel in New York knows your first name and your last name, but doesn’t know your email or address unless you give it to them at check-in. Hotels do try and get that information from you, but half of the time you’re tired and just want your room key.
Rather than risk upsetting you and getting a bad review, they give you the key without getting your information. Now Expedia will keep marketing to you, but the hotel can’t, because they don’t have your information.
Do you offer other services apart from booking?
Yes. In the booking engine, there are simple and cost effective add-ons for activities, rental cars, and cancellation protection. We also offer a free patent-pending loyalty program called InnCentives, whereby after you stay twelve nights a credit is automatically put into your account equal to an average cost of those twelve nights. You can access your free night through Facebook, Google, or email and use it around the world at any one of sixty thousand hotels. Coming the next month, the number of hotels is going to increase to 1.2 million and include airline miles and discounts at retailers and restaurants globally.
How IBC Hospitality started to have an international presence?
We started mostly in North America and the Caribbean. It has grown from there. I think TripAdvisor, Google and Airbnb have all legitimized independent hotel stays. Even though Europe and the rest of the world has been very comfortable with non-branded hotels for years, it’s finally becoming an accepted way to travel in North America too.
Reviews and pictures make it easy for people to decide what they want with few surprises. In life, I think we all crave something new, something a little bit different and exciting, but don’t necessarily want too much excitement. No one cares what the name is anymore if it’s located where they want to be, next to what they want to do, has great pictures and reviews.
“In life, I think we all crave something new, something a little bit different and exciting, but don’t necessarily want too much excitement”
How do you find new hotels to join your platform?
We have sales people going out to different hotels. Hotel owners are bombarded with so much information that growing simply through email marketing is not sufficient. Today it’s possible to find commission-based sales people internationally and inside sales people located wherever you are, who are willing to work different hours to contact businesses in different time zones.
I think a combination of in person and by phone is most effective. Paying on a commission only basis is important. You don’t have to hire people for a salary anymore, today’s workforce and peer-to-peer platforms enable you to find well-qualified contract labor that wants to work part-time on their own hours. There are some very talented people, you just have to be willing to work hard and look for them.
What are the most challenging aspects of being international?
Trying to realize what’s real and what’s not real. People will tell you a lot of different things and getting to the bottom of what is important can be challenging. Language is significant, of course. I recommend starting out with Google translate, then you can determine how many people are using the translate function and in what languages.
We’re finding that we have a lot of requests for Spanish and Portuguese speakers. We get hits in French, Italian and German, but not as many as Spanish and Portuguese, so that’s where we are spending most of our time.
What is hard about having many locations around the world?
You have to be very careful with payment processing and currency exchange. We found a very robust API (application programming interface) to assist us with that. Having a safe way and PCI (payment card industry) compliance on data and credit cards is huge.
Do you go through different providers to meet your multi-currency needs?
We use a few different providers. We have some that do wire transfers. American Express is great to work with, PayPal is easy and popular. In South America, we’ve had to work with a local provider similar to PayPal and in parts of Asia we’ve also had to adapt. The guest want to book in the local currency, so you need to make sure it can be shown on the site.
What not to do when developing a business internationally?
I think we all make decisions that may or may not be good for someone else, everything is so individualized now. What I can say is that when I was starting out a lot of people told me it was a terrible idea. I persevered anyway because I knew the industry and the space and that I had a great idea. It is important to have confidence in yourself and to take feedback with a grain of salt sometimes.
How Airbnb affects IBC offerings and the market?
Airbnb, as well as Expedia or Booking.com, have quickly legitimized the fact that alternative lodging is a viable product for consumers. They also connect with American Express now. I went to a travel show in Berlin and I used my American Express points to book an apartment and it was pulling inventory from Airbnb. The apartment was serviced, had two bedrooms and a kitchen, and was in a great location for the same price as a hotel room. It was awesome!
What kind of clientele does IBC attract versus Airbnb?
On our consumer side, I would probably say that Airbnb is a competitor. However, on our B2B side most of the people using Airbnb are multi-unit owners who need software to manage their units, input information, drive demand, and save costs. IBC Hospitality is the only solid platform for that now, so I think there’s a lot of opportunity for us to grow in the alternative lodging space. Expedia has 700,000 listings, Booking.com has 1.1 million, and Airbnb has 3 million. A lot of people will argue that Airbnb is just one house or one villa, but it’s one hotel room at a time, isn’t it?
What do you wish to had known from the start?
The hospitality industry has been so slow to embrace technology. It only started to embrace it in the last five to ten years. When we started our business, nine years ago, we could forecast the creation of Airbnb or that over 90% of North American online bookings would be controlled by two monopolistic players (Expedia and Priceline).
Independent hotels have always been a part of my life and I’ve always been comfortable staying in them. But I could never have predicted that consumer preference today would be independent and experiential rather than branded.
So much has changed in the last five to ten years that I don’t think I could have forseen any of it, except that I feel like we built IBC Hospitality at the right time. There have been certain things, like software, that I wish we had developed sooner than later. There are always things that you could do differently or better. However, I think that in the whole scheme of things we’ve done a great job and have stayed ahead of the market.
“Independent hotels have always been a part of my life and I’ve always been comfortable staying in them. But I never could have predicted that consumer preference today would be independent and experiential rather than branded.”
What is the best advice you’ve ever received?
Get your project started, ask for help, stay positive, take negative feedback with a grain of salt, and just keep on going and don’t give up. In the early stages there are so many hurdles. You may think “I can never do that,” but if you believe in yourself and ask for help, you can get there.
Interview by Kassandra McCleery for Beeleev