Latest / The Modern Hotelier / #317: Navigating the Shifts Disrupting the Hotel Industry | with Kathleen Cullen
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- The Modern Hotelier #317: Navigating the Shifts Disrupting the Hotel Industry | with Kathleen Cullen === David Millili: Welcome to The Modern Hotelier, hospitality's most engaged podcast. Please make sure to follow, like, subscribe and let us know in the comments what you think about today's episode. I'm here with Kathleen Cullen, executive vice president of PTG Consulting. How you doing today? Kathleen Cullen: Doing very well, thank you. It's nice to be here. David Millili: That's good to have you. So we're gonna jump in, we're gonna go through a lightning round, get to know you a little bit better, and then dive into some industry topics. Kathleen Cullen: Great. David Millili: Sound good? All right, here we go. Sounds good. What did you wanna be when you grew up? Kathleen Cullen: I didn't have a specific career. I just knew I was interested in the corporate world. I used to go to New York City with my father, and he was a big corporate guy, and that's where my interest was. David Millili: All right. What's something you wish you were better at? Kathleen Cullen: Public speaking. David Millili: Okay. What's a luxury you can't live without? Kathleen Cullen: Travel. David Millili: So if you could take a person dead or alive to lunch, who would you take? Kathleen Cullen: George Clooney. David Millili: Okay. All right. If you could have a superpower, what superpower would you like to have? Kathleen Cullen: Maybe bionic ears. David Millili: Okay, that's a good one. What's something that's on your bucket list? Kathleen Cullen: Bali. David Millili: Okay. Kathleen Cullen: Yeah. Let's David Millili: do it. All right, so now we're gonna dive into your background. So where did you grow up? Kathleen Cullen: I grew up just north of Boston in a town called Andover, Massachusetts. David Millili: Okay. I've heard of that. How did that shape you to who you are today, growing up there? Kathleen Cullen: I would say that we lived a very nice, comfortable lifestyle in Andover. Maybe a bit sheltered, but because of what my dad did for his career, we traveled extensively. I would say that that is what really got my interest in hospitality. I used to... It sounds so dorky, but we would go to these really nice hotels, these beautiful locations, right? Like Maui for two weeks. Right. Wow. Right on the ocean. And one of my favorite things to do was to sit in the lobby and people watch, and to watch the interactions with how the front desk interacted, how the bellman welcomed, how people handled themselves. That was me as a teenager. I loved it. I was fascinated. So that's what brought me—yeah ... to hotels, to be honest. Right. Was those experiences. David Millili: So you got your degree from Fitchburg State University. Kathleen Cullen: Yes. David Millili: What led you to go there, and what was your degree in? Kathleen Cullen: Finance, back when it was super simple. Right. There weren't a whole lot of degrees to choose from, and I think it was probably location. That's really why I picked that one. It was close to home, easily accessible, and I was very interested in finance. David Millili: As you were talking about, travel's always been in your blood, and when you traveled as a kid, what you said is you loved staying in the, looking in the lobbies, and that really is what made you interested in hotels. Was there anything else that from those travels that really just kinda, outside of the people watching, that made you really have that thirst for travel? Kathleen Cullen: Yeah, I loved exploring new locations. I loved exploring beyond the borders of Andover, Massachusetts. We did mostly domestic travel, so I never really had a good understanding of the potential for me to travel globally. And when I got my first what I call adult job—yeah ... that really opened up the ability for me to do global travel, and that experience I would not give up for anything. Yeah. Because I traveled to different parts of the world that I probably never would've otherwise seen. I got to learn all about new cultures in a way that you can't read in books. I had the opportunity to work with many different people in many different places, see a lotta different ways of doing things, what works, what doesn't work, and the best part was I made friends all over the world. David Millili: All right, so now we're gonna talk a little bit about your career. And so you started on property as a front office manager at the Sheraton Needham. Kathleen Cullen: Yeah. David Millili: Right? Overseeing everything from the front desk and reservations to the concierge team. What did those early operational years teach you that you still take with you today? Kathleen Cullen: I remember that's where I found my very first mentor. I didn't know much, right? I really didn't. I was really good, though, at hiring the right people. That's always been one of my specialties, hiring the right people. The rooms director at the time took special interest in working with me. And she taught me this thing called yield management. David Millili: Right. Kathleen Cullen: And at the time, like, it really wasn't—yeah ... even a phrase. We used to get the reservations printed from the Reservatron. Yeah. I remember. You know, with the little perforated sides. David Millili: The OBADA printer. Kathleen Cullen: Yes, exactly. So she taught me how to basically set rates and optimize your revenue potential in a very manual way, and that's—I learned so much from her, and I will never forget her for that. She really taught me strong discipline in that area. I also had a very tough general manager who put me through the wringer. So that made me get a thick skin. I still needed to grow a thicker skin— David Millili: Right ... Kathleen Cullen: along the way, but those are kind of the two things that I learned there. David Millili: So at Swissôtel, you went from managing reservations and room revenue in Boston to overseeing global distribution as e-commerce was beginning to transform hospitality. How did you make that transition, and when did you realize revenue management would become your specialty? Kathleen Cullen: That's a long time—it feels like a lifetime ago, but that was a lot of fun. So I had the pleasure of really working at the Swissôtel Boston—yeah ... overseeing reservations, and still at the time, this thing called yield management. Yeah. And another amazing boss, David Gibbons, general manager there, he would come into my office and say, "Ms. Cullen, how are you doing it? What are you doing?" And I thought I was in trouble. What? Here's the big boss. And he's like, "You are making us money hand over fist." That's great. So, well, I'm not really sure. It's this thing called yield management. I'm setting the rates, and I have this board behind me, and it kinda helps the res team know what to sell and what not to sell. And then I got to install the very first revenue management system at the time, Topline. Right. It was just called Topline—yeah ... through Opus 2, and I learned a ton through a gentleman called Eric Orkin. And I took such copious notes, asked so many questions. He was such a wealth of knowledge. I learned so much from him. Then I had the opportunity to move to Chicago and work for my next mentor, Michelle Woodley. She taught me so much, and that's when I started traveling the world, going around teaching everyone what I had learned about the systems, about yield management, how to set rates, how to optimize your revenue. And I got to go around the world and install, help install with Opus 2 Topline revenue management system. So you can't read that stuff in a book. It was all hands-on learning, and again, in many different cultures, many different ways of doing business, and I got to do that firsthand. It was such a blessing and such amazing experience. David Millili: After working your way into a senior leadership for Raffles Hotels and Resorts, you stepped away and co-founded Inspire Resources and spent more than six years building your own consulting company. Kathleen Cullen: Yeah. David Millili: What motivated you to that entrepreneurial leap, and how did running your own business change you as a leader? Kathleen Cullen: You know, quite honestly, it was an accident. Right. I never intended to have my own business. I left Raffles because I had my first child—right ... my son, who's now 23, and I didn't wanna travel the world when I had an infant, so I stayed home for a little while. And I started getting phone calls from people that I had worked with at Swiss Hotel and other companies that I kind of knew in the industry. And they were, you know, "Do you want to talk about this job?" "No, not really, but thank you." And then those phone calls started talking into, talking about, "Oh, well, we have this project that we need done. Would you be interested in doing that?" "Oh, that I can do," 'cause it had a beginning and an end. Right. And literally, those phone calls turned into a company. And I had an amazing business partner. We're still friends today. We built this company together. She did the same thing, staying home with her child, and it turned into a full-blown consulting company purely by accident. And it was a lot of fun, but a lot of pressure too when you have your own company, 'cause you're responsible for everything. You're responsible for all your expenses, your reputation, for getting the new business. So I really got a much deeper appreciation for how all of that works and how hard it is. Yeah. Also, how much will you pay in taxes when you have your own business? Yeah, I've been there. Yes. That one was a hard pill to swallow. David Millili: So you came back to hotels through Heritage Hotels—yes ... and then Commune Hotels, where you helped integrate Joie de Vivre and Thompson Hotels. That was a great time. Followed by a much larger merger with Destination Hotels that created Two Roads Hospitality. Kathleen Cullen: Yeah. David Millili: When you're combining different teams, cultures, technologies, and strategies, where do you begin, and what was the most difficult part of bringing those organizations together? Kathleen Cullen: Yeah. That was definitely fun times—right ... hard times, challenging times, rewarding times. So I was hired to bring two different cultures together when it came to bringing Joie de Vivre and Thompson together under Commune Hotels. The two companies operated completely different. One was very New York. The other one was very California. And everything, like they were literally opposite coasts, opposite cultures, opposite operations, technology, data, approaches, everything. So I had to take the best of both worlds and even in some cases throw out— Steve Carran: Right ... Kathleen Cullen: what they were both doing and introduce something new. And that was a lot of hard work and a lot of resistance, a lot of change management. Some people embrace it. Some people don't embrace it. And nice thing is, is that we were able to really get the full portfolio for the most part performing and seeing year over year growth, so we had happy owners. If you have—What's the saying? If you have happy employees, you have happy customers, and then you have happy owners. Right. So we were able to achieve all three, which was really nice. I also, as I mentioned, I'm really good at hiring—yeah ... really good people. Like, that's one of my specialties. One of the things that I can do very well is take a look under the hood to see how things are working and identify what is needed, whether it's technology, people, processes, and then I'm really good at filling in those pieces to make the work happen and get to the success that we need. So I did all that, and then I had to rinse and repeat when we merged with Destination, and became Two Roads. David Millili: All right. That's great. So for the past seven years, you've been at PTG Consulting. What made you decide to join? Kathleen Cullen: So when we were—when I was at Two Roads, I had—that had been three years of working at Two Roads, and the owners had decided to sell to Hyatt. And, you know, I thought, "Okay, well, what do I wanna do with my next steps, my next part in my career? Where do I wanna go?" I knew I didn't wanna move because I had kids in school, and I had already moved them a couple times. Had the opportunity to move back to Chicago for Hyatt. Didn't wanna move. That one I knew. Right. So I started looking around and I didn't wanna just go somewhere else and do the same thing. Right? And it comes full circle now. I got a phone call from one of my very first mentors, Michelle Woodley, who's now my boss at Preferred Travel Group. She called me and said, "Hey, we would like to start up a consulting division, and we need somebody who can start that and grow it and make it into something. Is that something you're interested in?" I said, "Yeah, I'm in." And here I am almost eight years later. David Millili: Wow. Kathleen Cullen: Yeah. David Millili: That's fantastic. And so for those who aren't familiar with PTG Consulting, can you tell us a little bit more about what you guys do? Kathleen Cullen: Yeah. So we are a division of the Preferred Travel Group. David Millili: Okay. Kathleen Cullen: And we're owned by a family, wonderful family called the Ubroths. Most people know Preferred Travel Group as Preferred Hotels and Resorts, but actually, Preferred Travel Group is like an umbrella company, and there's several different brands. So there's Preferred Hotels and Resorts, Historic Hotels, Beyond Green Hotels, which is our sustainability, our sustainable hotel collection, and then we have PTG Consulting. And PTG Consulting has grown, like I mentioned, from the time that we started up the hospitality focus. We do a lot of work with Preferred Hotels and Resorts, but we also do a lot of work with non-preferred hotels. Main services that we offer are, not gonna be a surprise 'cause of my background, revenue management services, sales services. We have PR services. We do technology advisory services. We do technology installs, configuration. We do assessments, general advisory services, helping hotels kind of figure out how to transition from who they are today to what they want to be tomorrow. So we offer a lot of different types of services. And under each of those, quite honestly, there's many different aspects to it. David Millili: That's great. All right, so now we're gonna jump into some industry thought leadership topics. So what are the biggest commercial challenges hotels are facing today, and how can they position themselves for long-term success? Kathleen Cullen: It's a really good question, and actually one that we have been talking a lot about lately because the industry is going through a significant change right now. There is a lot of things happening, these shifts behind the scenes, and we've been doing a lot of work with our clients and a lot of education around this topic, and it's basically the convergence between three main areas. There's a big shift with the third parties switching their focus from B2C to B2B growth, and that is causing a big disruption with hotels. And they're very honest and upfront about it. And if hotels look to see what kind of business that they were getting before, like even a year ago or six months ago, it was more B2C, and now it has significantly grown into B2B business. And what that means for hotels is that they're now seeing the shift in how their bookings are being made and at what rates the shift is happening, and there is a lot of discount stacking that is happening through the shift. And so it's this convergence between this B2B2C— David Millili: Yep ... Kathleen Cullen: discount stacking, and there's a lot of rates that are being put out there that are not intended to be put out there by hotels. So we can have the tour operator net discount rates. They're stacking these discounts and putting it out there, and we're getting these net rates that are undercutting our own direct public-facing rates or even undercutting the corporate rates. So there's this whole shift, this whole landscape, and it's very difficult to control and it's very difficult to figure out. So that's one part. Then the second part of this convergence is AI and how AI is discovering hotels. Hotels now have two different audiences that they have to really make sure that they're discoverable through. One is consumer, right? We've known that for a long time. But now add on AI as an additional audience. So hotels have to make sure that they're discoverable through AI. And when AI is out there searching for hotels, it can easily find the lowest rate. David Millili: Right. Kathleen Cullen: Right? And book that lowest rate. Now, the booking is still a little clunky and still a little work in progress, but it's incredible how fast you can just ask AI to find the lowest rate or find an experience that's out there, and it will pick up the very lowest rate, those rates that you might not have intended to put out there, and that's the booking that you're gonna get. The third piece of this convergence is the impact of these two on asset value, and that's a much bigger discussion, the asset value and the profit loss or the revenue capture that hotels are seeing year over year. Every single owner feels and sees on their P&L making less and less money here, and so what they're trying to do is they're trying to squeeze out, like, do more with less, right? David Millili: Right. We all hear it. Sure. Kathleen Cullen: Do more with less. That's not really the answer. The answer is to fundamentally understand what is happening and why it's happening, and get down to the root of the problem. The way hotels are operating today, the way the consumers are searching, the way meeting planners are searching for space and hotels to hold their meetings, completely different. When was the last time you saw a sales manager taking a meeting planner to lunch? David Millili: Right. Kathleen Cullen: You don't see that anymore. The sales manager is now behind their computer answering RFPs. I can't even tell you how many times PTG steps in to do group sales for a hotel or BT sales for a hotel, to act as their salesperson. We look in their system of choice for their RFPs, and most of them are unanswered. David Millili: Wow. Kathleen Cullen: Or their profile isn't filled out properly, accurately, or wholly. These are all issues that we're finding at the hotels and what hotels are honestly missing because they're still trying to operate in the way that they operated years ago. That landscape has completely changed, and so it's really about education and understanding now, maybe how to take a step back and not add or subtract staffing, do more with less. Instead, what staffing do we need in today's environment? Is it the same type of person that we need to hire? Are we still hiring that same person that loves the relationships? I'm not saying relationships are not important because they are. But that person needs to be able to have that relationship while at the same time respond quickly to the RFPs because the hotels that don't respond quickly and accurately and fully are not gonna get the business, and that's just the way it is. I had dinner the other night with a commercial leader here in Nashville, and he said his sales managers were all out. They ... He didn't have anybody to respond to an RFP. He looked at it himself. He knew it had to be responded to immediately. Because of his quick response, they got the business. I've heard from so many meeting planners through industry conferences, they don't reach out to hotels that don't respond or don't respond properly. So the way we're doing business has completely shifted. Leisure business, you cannot go into a travel agency office anymore. But yet so many people still expect to send their sales managers for that one hotel into a travel agency for a travel agency visit. Doesn't work that way. You can usually get in the door and take travel agencies out or on road shows if you're representing multiple hotels. Yeah. They don't have time anymore to ... They don't have the offices. They don't have time to talk to you if you're one hotel. So again, it's just thinking about things differently. It's staffing differently. So there's so many different ways that we really have to take a step back, wipe the slate clean and identify what the proper staffing and resources and tools are for your particular hotel for today's needs. And by the way, that will probably change next year. David Millili: Yeah, I think you're right. So let's talk about why is an integrated approach to revenue management, sales, marketing, PR, and distribution now so essential for hotels' performance. Kathleen Cullen: It's critical to have one holistic approach. Gone are the days of having the siloed departments. Everybody needs to be working towards the same goal, and really that goal should be profitability, not top line. Top line's important, but that's not the only piece of the picture. So you need to have your sales, your revenue, your marketing, your PR all marching to the same goal, all being measured on the same thing, all working to understand how these promotions, content, including PR, 'cause PR is huge with AI, that's critical piece of it. Everybody has to understand exactly how their pieces impact the other piece because it's no longer just about creating a promotion, loading it in the systems, adding a price to it, and then marketing takes it and promotes it. Instead, it's all about how it works in the digital world, in the AI world, everywhere, so they have to act as one team. David Millili: So how should hotel leaders approach technology investments to ensure they're improving both the guest experience and the commercial results? Kathleen Cullen: That's a good question, and a lot of work that we've been doing with our clients lately, and this has actually become more and more popular, is we're seeing hotels take a pause and say, "Okay, we know the technology that we have is not really working or might work for us today, but we're not sure if it's going to work for us tomorrow and help us achieve our business goals." So what PTG Consulting always recommends and starts with is let's define the guest journey. Let's lay out that guest journey at every touchpoint, and then do the same with the employee journey. Let's lay out that employee journey to support the guest journey at every single touchpoint. And then we can map out how your current technology may or may not work and what we need to do in order to fill the gaps, in order to achieve your business goals and be able to effectively service your customer, your specific customer segments. And there's no one size fits all to that. It really is different. And so I think one of the big things is take a pause. Don't just think that this technology is the right piece of technology. Understand how it works for your specific needs, your guests' needs, your employee needs, and how it's also gonna integrate and work with the other pieces that are gonna be critical for the success. David Millili: Yeah, that makes sense. Very smart approach. So independent hotels have more freedom than the larger brands but fewer building resources. So where does that flexibility give them a real competitive advantage, and what must they get right to capitalize on it? Kathleen Cullen: Yeah. So yes, independents have a lot more freedom. It's freedom on their own terms really. Right. But they also lack the resources, right? The big brands, the hard brands, the Marriotts, the Hyatts, they have the corporate structures to be able to tap into. They also have the corporate guidelines that they have to work within. Independents don't have either one of them, so they have to find their own resources. That's where a company like PTG Consulting can come in to help augment whatever resources they might need. But also, one of the things that I love about the independent space is you don't have those guidelines, those borders—yes ... right? You don't have to stay within certain rates, because your sister property needs to be $10 higher than you, or you have to be $10 lower than them. You can price yourself as the market needs to price. So you have the freedom to do what you want, what you need. You can also create your own story. You can create your own destiny. You can create your own customer journey. You can decide what your services should be. You can decide what your ethos should be as an independent hotel. I find that so fun and so exciting. David Millili: Yeah, it's well said because my career when I worked in hotels was on the independent side, and that was because as I did research and talked to people, I was like, "I don't think that sounds fun working" no offense to, I won't name the brand—yeah ... but I don't think that sounds fun. Kathleen Cullen: Right, yeah. David Millili: And so when I got out of school, I just went and worked at independents, and I felt like I had exactly what you said, I had the ability to do what I wanted to do. Whereas I knew—That's just who I was, and I didn't want to be stuck with certain guidelines. Kathleen Cullen: Right, right. Yeah. I've always liked to create my own destiny. David Millili: Yeah. No, I agree with you. All right. So based on your experience advising hotels, what trends will define the next generation of successful hospitality businesses? Kathleen Cullen: Trends. Well, there are so many. And whatever trends we're dealing with today will change tomorrow. Yeah. That much we know. I would say one of the key trends that we're seeing right now is hotels redefining who they are, and wanting to really do things differently. So, we have been helping hotels go from, like, having a heavy, large group focus to shifting over into that luxury leisure focus, that was their particular mission. We have a client that we're helping create their story, who they want to be for a brand-new building that they're building right now, and how to do that. So I think it's really about creating new stories, creating that independence, creating that sense of localization with the customers. It's all about being a little different and doing it in a very unique way to be able to handle the customer segment that you're going for. David Millili: Okay, great. All right. Well, this is the part of the podcast where you get to now ask me a question. Kathleen Cullen: Ooh. Did you learn anything from me? David Millili: Yeah, I didn't really know how deep the company was, I mean, as far as what you guys did. You know, I knew of it, and we've talked in the past, but I didn't know that you did all those things. Yeah. Because my brain was going through just thinking about how many properties I've come across that I know need help and— Kathleen Cullen: Yeah. David Millili: you know, as you were talking about, you know, kind of back in the day, I was just, for some reason I was kind of chuckling in my head because there was a woman in New York who told me in 2004 that she didn't believe in revenue management, 'cause that was even new back then. It was somewhat of a new term. Kathleen Cullen: It was, yeah. It was up and coming. David Millili: Yeah. And it was just, I thought it was just funny because obviously back then you knew this was important, and you were like— Kathleen Cullen: Right ... David Millili: "Wow, this is— Kathleen Cullen: Right ... David Millili: the future," because back in the day it was, "Oh, we hit 80% occupancy, raise the rate $10." Right. You know, and then every other rate category followed. Kathleen Cullen: Right, David Millili: yeah. And things of that nature. So I think what you guys are doing are great, and I think it's a great service and people, hotels definitely need it. Kathleen Cullen: Great. Thank you. David Millili: All right. All right. Well, that does it for another episode of The Modern Hotelier. This is where you get to let people know how they can get in touch with you and how they can find out more about the company. Kathleen Cullen: Great. They can go to our website, ptgconsulting.com, and contact information is there. David Millili: All right. Well, that does it for another episode of The Modern Hotelier, the most engaged podcast in hospitality. Whether you're watching or listening, we appreciate you and hope to be with you again soon. Thank you for joining us. Kathleen Cullen: Thank you.