Digital Chatter Episode #002: Aaron Gravett
Eric: Hello and welcome everyone. I’m Eric Sharp and this is Digital Chatter. And today I have as my guest Aaron Gravett. Aaron, say hi to everyone.
Aaron: Hello everyone.
Eric: So Aaron is the former Director of Global Sales and Marketing for IHG and he is currently a consultant out in the field working in the hospitality industry. And has quite the career doing business strategy and marketing. Aaron, tell everyone a little bit more about yourself and how you got to where you are today.
Aaron: Thank you, Eric. Love to and thank you everyone for joining and hopefully learn something new about me as well as hopefully I can add some value to your business. So I have a background in real estate as well as finance by education in finance. But my passion really is creating business models and how companies can help and deliver to customer segments value proposition. So the past two years at IHG, I’ve been working on confidential projects, NexGen Technology Solutions products as well as services to deliver to 5,000 hotels four different regions and how do you package that and deliver that to hotels in a cost effective and value-add manner. So background is a little bit scattered but really all tied together through looking at business models and value propositions for customer segments.
Eric: It’s great you bring up value proposition in the marketing field the same field that I’m in, I mean that’s huge. I mean having this value proposition. How important is it to differentiate yourself in the market?
Aaron: Differentiation means a lot of different things to companies. So a global company tries to differentiate by offering a plethora of services, products and services, within a portfolio. Smaller companies try to differentiate themselves by offering niche services. So it really depends on what the target audience is, what the customer segment is. Obviously you can go through a mass marketing and mass effort or even go through the niche. So for me it’s really trying to figure out where the company – what products and services they currently have and how they’re going to leverage those core capabilities and deliver that next gen product and service to their core customer segments.
Eric: OK, tell me what were some of the more effective methods while you were working with IHG that you can confidentially discuss with us? What were some of the positives that you found from that?
Aaron: The positive is that the IHG business model is the franchise model so that the company itself doesn’t own a lot of hotels. Therefore we are servicing hotels and from an operational perspective we have owners that we engage with. So over the 5,000 hotels we have many different ownership groups from the luxury property all the way down to the mid-scale versions of our properties such as Holiday Inn and Holiday Inn Express. So we found success by working directly with the owners on targeting specific problems and pain points, if you will, not trying to boil the ocean but trying to really isolate what can we solve the next few years and what are the major issues and headaches that we can tap on and take off the list quite easily for the owners where it’s going to be a win win for both the customer and the hotel user. And then also the owner. So we actually serve two masters, if you will – two customer segments. One is the owner and then the second is the actual hotel guest.
Eric: Yeah that that’s true. Anytime in business it has to be a win win. The owner of the hotel needs to be generating income which makes the hotel continue forward, and it’s all for the guests. It needs to have that positive experience that keeps them coming back year in and year out. Not only to that hotel but also the line of hotels that you all are with. So you you most likely did something like loyalty programs. Am I correct? And how was that impact?
Aaron: My focus really wasn’t on the loyalty programs, it was more on the hotel systems themselves. So if you’ve ever checked into a hotel, the system that you used to check in, it’s called a property management system. What’s changing right now, in addition to the landscape of the Airbnb’s out in the world, hotel technologies are changing rapidly moving from client and server base property based systems to more cloud or hosted base. So we looked at three main property systems within the property systems within the hotel. So the property management system, a back end system called Sales and Catering which the customer doesn’t usually understand or use, and then the point of sale system which if you’ve ever gone to a hotel restaurant that’s the system. So we’ve looked at these three core systems and we tried to integrate a user interface, if you will, a consistent look and feel. Moving it from property based to cloud based across 5,000 hotels. There was a loyalty tie-in so we had to work closely with our loyalty teams. But my focus is more on the hotel products actual on-property systems and dealing with owners and how do you get someone excited about a technology that’s going to completely change the way they do business and operationalize their systems.
Eric: That’s great. And I can only imagine that the task at hand of trying to get 5,000 hotels to swap over and to move into the cloud so to speak and obviously there’s some training involved in terms of making sure that the owners understand what’s going on, basically what are they paying for. They want to know what they’re paying for and how is this going to benefit the customer. That’s probably the number one thing that they’re thinking about. And then also the training involved for staff. What were some of the headaches? What were some of the difficulties involved with moving everything into the cloud and the systems. What things stood out for you?
Aaron: What stood out for us is that because of the company’s business model, we didn’t know what we didn’t know. So we didn’t know exactly what technologies were on property and all the interconnections and interplay between these – the complete ecosystem, if you will. So for us it was trying to figure out through pilots in various regions what technologies are on property and how is that going to impact our implementation plan over a five to ten year window. Which regions can we start with off the bat because we understand, we have a good base understanding of what is there, versus which regions or sub-regions do we not really necessarily know. But as we move throughout the program we can get a better understanding with people actually on property and understanding the technology. So not only from an implementation perspective was it massive but also, you touched upon it Eric just a moment ago, and that was a training perspective so if someone is used to a Windows platform, if you will, moving them or migrating them to a Mac, just trying to use an example here, while you can still do the same task, the way you do it and how you interact with the system is completely different and that was our analogy going from Windows to Mac. You have to have a comprehensive training program that is broad and not as well specific enough to impact or influence the decision makers on property to actually use that system. What you don’t want is to implement a new system and then have everyone on property work around the system you just implemented. Start using notepads to share, for example.
Eric: Yeah they end up circumventing the system and it fails.
Aaron: Right. Yeah.
Eric: Training is always an extremely important thing and you touched on a great point which is doing pilot programs. That’s something I always advocate, whether it’s with marketing and testing different things, testing different markets and seeing how people react. You know I do a lot of that with Facebook advertising but in any field, in anything, doing testing is extremely important and you hit the nail on the head with that. It’s like something on the east coast might work a different way than it is in the southwest or northwest or central United States or you know let’s talk International. I mean that throws a whole different perspective out there. It sounds like you all did a phenomenal job at really thinking about each market individually and trying to find the problems ahead of time. I mean really digging a knife in there and getting at what could potentially mess things up in the future.
Aaron: Right. And that’s always a challenge with large scale programs is that again you don’t know what you don’t know until you actually start something and that comes back to a philosophy we had, and something I carry on to this day. Start, learn, and then fail fast, right? So that the thought process is instead of talking about something you have to actually do it to learn from it, fail fast meaning to get the learnings quickly, and adopt, right? So it’s that kind of that agile methodology to understand exactly what’s not working, quickly adopt, and change to get the program back on track and moving forward. So yeah I think the one takeaway is really that – to start something instead of talking about it. Implement it quickly into the pilot programs and then adopt and change from there.
Eric: Sure, yeah. I mean like you say you don’t unleash it on everyone right away but yeah some sort of pilot program. Maybe you test out with five hotels to start and then you figure out how it works with them, you really let the hotels know, “look this is a pilot program. We need your feedback. We are looking for information from you,” so try not to give up right away but definitely keep that open communication. Tell me more about that, actually, as you went to do these. I don’t know how much you’ve gotten into the implementation part but I mean, what was the feedback process with your customers, which were technically the hotel owners?
Aaron: Right. So the owners were quite sensitive to, and any hotel owner will tell you if it’s working don’t break it. And hotels don’t close. And that’s something that it’s hard to grasp because hotels are open 24 hours a day, their systems are always always on. So that became a challenge for us. How do you implement a new system while one is already working and working well. So that was something that we – I left the firm before we actually implemented the pilot within a hotel, but what we did prior to me leaving the firm is that we did a lot of highlighting on the systems in a test environment. So we had two different parallels or parallel programs. So we had one system that was mimicking the on-property system that was current and then we had the other one that was mimicking the future state. So we were trying to learn how and when to cut over, what systems are working and how they’re working. Yeah, a lot of complex and anyone that’s listening to this cast can tell you that any implementation or new technology the cut over is always the tricky part. You think it’s going to take a week and it takes two or three times as long as you anticipate.
Eric: It’s understandable, it’s aways a scary point flicking that switch. As we know throughout history there’s been disasters. Flint Michigan being one of them with the water issue and I mean that’s affected hundreds and thousands of people and it will be a generational thing. Certainly no one knew when they flipped the switch or maybe some people did. You always want to avoid those disasters when you’re doing these tests, and that’s great advice. Great advice, Aaron. I’d like to actually figure out a little bit more about how you got into this. Tell me – you’re an MBA-er – where did you get your MBA from and how did you weave your path in all of this?
Aaron: Great question. I received my MBA from Georgia State University. And my passion has always been real estate. I have a strong history with real estates and my father was a real estate developer so I understood how you can take a parcel of land and add value to it so it could just be dirt and you go through the zoning process and you figure out if you can build homes on it or what’s the highest and best uses. Is it homes, is it commercial, is it mixed use, if you will. So from there I learned the value of a dollar and time value money within Georgia State going through the MBA Program and Finance also. There’s always a tight connection between financing and real estate. And IHG was a company that was within my top 10 of companies that I wanted to join coming out of the MBA program. And so coming out of the MBA program I also have a Masters of Science in Finance degree so I figured I’m already in school lets go a little bit longer.
Aaron: This was pre-children so I had had some time and right out of school I had an opportunity with IHG to join with the global finance group and from the global finance group, I realized that man I really do love finance but yet my passion for real estate has not been fulfilled. The great thing about IHG is the culture is such that if you have a passion and desire to move from one group to the other, the company will help you do that. So I took some opportunities and risks, if you will, and moved from finance over to our asset management group. And there I had a fantastic time working with owners of our hotels and that was where I really understood the owner’s plight in terms of what is important to them and how they look at cash flow within their business.
Aaron: So a hotel is really operating cash flow and you have to have the finance mentality, understand how cash flow comes in, how it’s used, and how you actually recycle the cash in a hotel. From there I had an opportunity to move over to our technology and global sales and marketing partnering with technology, to look at these new products and services at that hotel. And with my background in real estate as well as on the owner’s side, on the owner relations side, if you will, it was just a natural fit to move into looking at new business models from a company perspective but also the value proposition to owners. How are we looking at customer segments, owners, if you will. How are we looking at them because an owner of a luxury hotel,, a Ritz Carlton is completely different from someone that’s at an Embassy Suites or a Ramada Inn. So I know that’s a little bit over a high level overview but again I think the great thing about where I’ve been over the past seven years is that I’ve been able to take off and really add value within three distinct organizations within the company. And that’s finance, asset management within a real estate group, and then sales and marketing.
Eric: That’s phenomenal, thank you for sharing that. It’s always great to find out the path of the way people land into certain areas. You go to school studying one thing but having a passion for another. You always try to eat them together or you start out going to school for your passion and realize maybe I don’t want to do that. It’s always a scary time being young and not knowing what to do and then by the time you get up there and you get higher up in the ranks, you know, things have changed and you realize this is this is great. I control my destiny. I have been preparing for this my whole life. So tell me a little about your personal life. I know that you like to run.
Aaron: I do, yes.
Eric: So what kind of runner are you?
Aaron: Well it depends on the day. So I actually just completed the Atlanta P and C Ten Miler this past weekend so that was a fun run, very hilly as most downtown Atlanta runs are. I can run anywhere between three miles to the half mile distance. From a 5K all the way through to a half marathon. So I started running about nine years ago. About five years ago started to take it more seriously and realized that not only was it a great way to exercise and help as you get older that you have to find your your exercise routine, if you will. But I also found it useful to clear my head and get away and just really focus on me. It’s an hour or so of time where I can put on my headphones and listen to my crappy music as my wife says, you know, my electronic music all the way through my 80s music. I can listen to it without anyone having to judge me. Those who are reading don’t judge.
Eric: Don’t worry we won’t expose the playlist on this episode.
Aaron: But you know for me though it’s not just about going out and spending half hour to an hour so whatever the time distance is. It’s a way for me to challenge myself and I try to tie it back into business since this is you know a more business-centric video. So for me though if I tie it back to business it’s about challenging yourself. It’s realizing OK that Hill is a half a mile long and how do I prepare to actually go over that hill and climb the hill. Am I going to go all out and if I go all out will I have the stamina to run the additional three miles afterwards? Or do I pace myself to get up the hill and then continue on with the three additional miles or whatever the distance may be.
Aaron: And it’s continuing to challenge myself on different routes different terrain types and again I tie it back to business. I always try to challenge myself and learn something new about whether it’s hospitality industry, whether it’s new business models. How you take an existing business model and change it over time and that to me is the interesting aspect of it. And tying it back to business you know look at Uber for a taxi service right? So where was Uber 7 – 10 years ago. Nowhere right? So Uber completely changed the business model of taxi service and same thing with Airbnb, they’ve completely changed the hospitality industry, right. So where are those disruptors or optemizers that in the next few years? They’re nowhere now but where are we going to be in the next few years that companies are trying to think through that next business challenge and solve something for us.
Eric: Sure, you know you bring up some good examples, Uber being one of them. I know I’ve worked with a taxicab company before and they had an app and they had to do it to compete with Uber. But it didn’t take on the way Uber did because Uber quickly had test markets and then they began to nationalize as quickly as possible. Airbnb, I mean, there was the BRBO way before Airbnb and now people been using Web based services for years. But you know the question is why did Airbnb take off so rapidly, you know? And that’s actually my question for you. Why do you think some of these companies are taking off more rapidly than others?
Aaron: Yeah, I think it really comes down to an optimized business model honestly. It goes back to start, fail fast, and learn from it. So Airbnb, I think their business model’s changed slightly from when they launched but really their business model is little cost to them. So they really rely on host to tap into their infrastructure so their capital costs are very low. So what do they have – they have servers and they have a platform, and that’s basically it. So that they’re completely asset-light. They don’t own the real estate. All they own is the IP intellectual property rights of the platform and that’s all they have to build. And obviously now that they’re bigger there’s the marketing aspect of it. So yes now they have a bigger P&L but when they started they were pretty lean and they were able to completely flip the business model from a very heavy P&L to something that was very light.
Aaron: Their margins were probably very high initially. I don’t know what they are right now but you know that’s really it. Its finding what your customer segment wants in terms of solving their pain and then how do you enhance their market presence. How do you enhance their financials. So how do you grow their business because that’s what they’re looking to do. They’re looking to grow their business and they want help along the way. So what can you help them gain and what pain can you take away. If you can solve that you don’t have to boil the ocean so it’s two or three things for gain and for solving the pain and that’s it. That’s exactly what Airbnb did.
Eric: You’re exactly right and ultimately Airbnb empowered each individual to act as if they ran a hotel really. And I know plenty of people who use Airbnb for renting purposes other people are more of the hosting side. Best part is you can be both.
Aaron: You can be both, right. Absolutely.
Eric: Or you can be a tenant and I just stayed in an Airbnb place, well it was like an Airbnb place, this past weekend. It’s incredible, absolutely incredible. So I think you hit the nail on the head with that though – they stayed lean in the beginning. That’s important for any business to understand to stay lean in the beginning and then at a certain point you know you start to crescendo and you start to figure out what’s working. That’s when you really drive things home. When the rubber is hitting the road at that point and you start to just crush it with marketing and advertising.
Aaron: Right, it’s all about scale and how do you scale in such and such a manner that you’re not impacting your margins and that’s what Airbnb as well as Uber have been able to do because of their platform. Their platform is scalable right. So they are able to take their platform, scale it across globally, right. Their margins stay the same or even grow because because of that so they’re not having to add tons of staff. They’re not having to invest heavily on the capital expenditure side in which for them it is great because their operating margins are high, and that’s exactly where they want to be.
Eric: They also knew who they were going after. I mean I would argue and say the Airbnb started out going after the people who had a second or third home that they wanted to rent out. They weren’t going after these massive multi-unit places, they weren’t trying to do that. And little by little certainly their market has changed. Now people who own 10 or 20 units across the United States are now using Airbnb. And certainly there’s different tools for them at this point. But they really understood their market right away and I think that was the important thing that they did. They got in, they tested stuff out, they figured out what their customers wanted and then they drove it home. They drove home the problem that they were solving. They made it easier to host people and they made it easier on the host and easier on the people staying there. So and that’s ultimately what you did with IHG as well. That is the goal, to satisfy customers, so I think that’s good.
Eric: Well I’ve got a couple more questions here for you. Tell me what do you stand for? What’s one of your big passions in life?
Aaron: I think I’ve already covered it. Running, that’s one of my passions. It’s about bettering myself. I think I stand for always trying to learn, learn something new. Whether it’s learning about new industry or new vertical or a new service offering, how to better myself. Or it’s maybe how best I can leverage my current skills in such a way that, how do I add value. And I always come back down to that. Am I adding value right now? And if not then I need to do something different. And that was really the decision point for me at IHG is I wasn’t adding value any longer in my role when there comes a point where within a strategy role, the strategy piece is over, and I was transitioning off of the strategy piece into potentially another role and realized, I wouldn’t add value to that role.
Aaron: So for me it was a very easy decision to decide, am I going to add value? Probably not in this new role so let me figure out something else and take the risk from that. So I would say that as well as trying to figure out how to better a community. And that’s something that I stand for and outside of business life I I’m passionate and active within my community. I am on the housing authority within Roswell as well as the arts commission. So housing, low income housing is a big big area that I’d like to focus on as well as the arts. I don’t think we’ve focused enough on the arts within communities and over the past few years I’ve been really engaged within the local community, Roswell, to be specific, and trying to change the dynamic within the arts community as well as the low income housing. And that’s something that at least on the housing authority side has been great to see. We actually during the downturn of the housing market we were able to take some key land positions and recycle some capital so we ended up selling some assets.
Aaron: We purchased some assets and now one of the assets we purchased is actually being re-developed into a mixed-use community in terms of residential and commercial, but also mixed income. So we have low income housing as well as higher income housing within one parcel of land. And to me that’s phenomenal to see within the community and not only from my perspective exciting but also to see the community get excited about it. To me that’s a win win, both sides.
Eric: That’s great to hear. I always love it when when people are building their communities. Definitely one of my passions as well is to build up our local communities. You know for some people that’s that’s building up the state. If you hang out on Capitol Hill every once in a while that’s your job. But Aaron it’s been phenomenal chatting with you today. Thank you so much coming on.
Aaron: You’re welcome.
Eric: Is there anything else you want to leave anyone with?
Aaron: You know well I guess the the closing statement I have is thank you very much for this opportunity. I appreciate it. And if you’ve heard anything that you like here please check out my LinkedIn profile. I’m obviously looking for my next opportunity, I think I can add value in the real estate space, hospitality, obviously, certainly finance space. My passion is on creating business models within an organization and how you tie that in with a value proposition or customer segments and if that’s something that your firm is looking at, please certainly connect with me and let’s let’s chat and see if there’s some mutual interest and how we can add value to each other. So Eric thank you very much for the opportunity and with that, that’s all I have. Thanks.
Eric: Thank you all so much. Aaron, bye bye!