How to book revenue even when climate derails the guest experience
In this episode of Hotel Moment, host Karen Stephens is joined by Nick Cavanaugh, Founder and CEO of Sensible Weather. Together, they discuss the technical and financial aspects of providing a weather guarantee and how Sensible partners with hotels and booking platforms to integrate this service seamlessly into the booking flow. They also touch on the increased demand for travel insurance post-COVID, Sensible Weather’s strategic partnership with AMEX Ventures, and their plans for expanding their services within the hospitality and outdoor travel sectors.
Meet your host
As Chief Marketing Officer at Revinate, Karen Stephens is focused on driving long-term growth by building Revinate’s brand equity, product marketing, and customer acquisition strategies. Her deep connections with hospitality industry leaders play a key role in crafting strategic partnerships. Karen is also the host of The Hotel Moment Podcast, where she interviews top players in the hospitality industry. Karen has been with Revinate for over 11 years, leading Revinate’s global GTM teams. Her most recent transition was from Chief Revenue Officer, where she led the team in their highest booking quarter to date in Q4 2023. Karen has more than 25 years of expertise in global hospitality technology and online distribution — including managing global accounts in travel and hospitality organizations such as Travelocity and lastminute.com
Transcript
Intro- 00:00:04: Welcome to The Hotel Moment podcast presented by Revinate. The podcast where we discuss how hotel technology shapes every moment of the hotelier’s experience. This podcast is hosted by Karen Stevens, Chief Marketing Officer of Revinate, and she is joined by leaders in the hospitality industry. Tune in as we explore the cutting-edge technology transforming the hospitality industry and hear from experts and visionaries shaping the future of guest experiences. Whether you’re a hotelier or a tech enthusiast, you’re in the right place. Let’s dive in and discover how we can elevate the art of hospitality together.
Karen – 00:00:43: Hello, and welcome to The Hotel Moment podcast. I am your host, Karen Stevens, the Chief Marketing Officer of Revinate. And today I am joined by Nick Cavanaugh. With a background spanning climate science, data analytics, and finance, Nick brings a wealth of expertise to his role as founder and CEO of Sensible Weather. His multidisciplinary background and passion for leveraging technology to address real-world challenges have propelled him to innovate in the hospitality industry and beyond. Nick and the team at Sensible Weather were also proud sponsors of our Navigate Miami conference this year. Welcome, Nick.
Nick – 00:01:18: Thanks for having me.
Karen – 00:01:19: It is a pleasure to have you on the show. We talk to a lot of hoteliers, and it’s great to have a partner out there. Your offering is so unique, so I’m really excited to dig in here. You kind of lead at the intersection of science, climate, data, finance. So could you tell us a little bit about what initially drew you to this field and what sparked your passion for leveraging technology to address climate-related change?
Nick – 00:01:44: Sure. So Sensible was sort of the third installment of my career. I spent the first portion of my career as a climate scientist, so working for the government, the Department of Energy, did a PhD and postdoc in the space in the UC system. I was studying climate risk, so in particular, weather variability and predictability within sort of the broader context of climate and climate change. How do you model these things? How do you predict these things? How do you assign probabilities to rare events, potentially damaging events, and then figuring out how to mitigate risk? After my career in academia, I went into hedge funds where instead of just, putting a probability on some event, you actually have the opportunity to do something about it. So you’d be basically buying and selling products. They would trade around weather risk. Those could be in futures markets, they could be carbon credits, they could be insurance, they could be derivatives, sort of all sorts of products that are meant to offset weather risk. So one counter party has essentially like, there’s a probability of a bad weather event. I mean, if that bad weather event happens, somebody loses money. So they figure out how to transfer around that risk within markets. So that was sort of second installment of my career. And Sensible was really the intersection of those two things, plus the third thing, which is an action of mine, which is the outdoors and travel. And so, you know, this climate data and finance thing, I find incredibly intellectually fascinating. But in my free time, I’m a big skier and I love traveling. But I’m seeing back when I started, founded Sensible, I was seeing effectively, a lot of climate risk starting to accumulate in the hospitality sector. Nobody was doing anything about it. And I was like, wow, for one of the biggest markets in the world, travel and hospitality, an awful lot of it is outside and is really exposed to inclement weather and climate. And in the end, climate change, there’s simultaneously something that I could really apply my passion to there. It was also an incredible opportunity. So I found it sensible on that premise. And what we do today is we have a weather guarantee product, which people buy at point of sale when you’re booking your hotel or your theme park tickets or whatever it is you’re doing, resembles travel insurance. There’s some coverages that says, if the weather is bad on this day, there’s some coverage, then we will automatically reimburse you for the average daily rate or the cost of your tickets or whatever it is, if that bad weather happens. So essentially, it’s providing a weather insurance coverage for outdoor travelers.
Karen – 00:04:01: Yeah. So and I’m really curious to know about that because you’re using so much technology on the back end. So if I’m trying to book a hotel during hurricane season in an area that’s known to have hurricane, am I going to pay more for that policy or do you even offer that policy? Depending on that, I’m just curious how the bacon is made on the back end.
Nick – 00:04:20: Yeah. So it was a trade-off between coverage and price. So you will either pay more for the same coverage or you’ll pay the same amount for less coverage. It turns out in the end, consumers like to spend between 5% and 10% on these ancillary insurance-like products. So essentially in that instance where maybe you’re going to Florida in September or something, you’re still spending, let’s call it 7% of your room, but your coverage, the bar for getting reimbursed will be higher.
Karen – 00:04:48: Got it. Wow. That’s great. So one thing that when we were at the Navigate conference that just happened in Miami, we had a lot of speakers. Deloitte was one of them. And one of the things that they were showing is that we had kind of the burst of revenge travel that happened after COVID. Obviously, that’s changing a little bit. But what we’re still seeing is that prioritizing vacation, it’s a thing. It’s not going away. It’s like even if you’re working from home or you’re back out being a road warrior, it’s still something that has become really the forefront of people want to save for that trip and go for that trip. So have you seen anything in your data? I would just be curious, coming out of COVID and now what you’re seeing, the trends, people taking longer vacations, different destinations, what are you seeing in your data?
Nick – 00:05:35: So we saw something even pre the revenge travel, the brick and mortar, jump on a plane, go stay at a hotel, revenge travel. One of the markets that we found a lot of success in early was camping in Glamping. And this was during COVID. It was basically like nobody was flying anywhere. Hotels, maybe they were closed. That said, people still wanted to travel. And they’re like, okay, I want to drive somewhere. And I want to get an auto camp or I want to stay in a tent or rent an RV or whatever. So we saw a boom in that travel wave first. And that market absolutely exploded during COVID. And then as COVID kind of tapered off, there is the wave of traditional revenge travel. And I think the thing that we’ve seen that’s particularly in Europe, but is really shocking, is booking week time. People are booking trips like more than a year out, which is pretty wild. We had ski partners launching in Europe last year. So dated tickets on ski vacations, and they put up these tickets in like June of last year. And there were people booking ski trips in June in Europe, which to me, I was like, that’s crazy. Like who’s thinking that far ahead on a ski trip? But in the data, sure enough, we see a lot of people booking really far ahead, sometimes very expensive trips, long trips. But yeah, it’s pretty wild to see it all flow through at scale.
Karen – 00:06:52: Yeah. So does your product also guarantee snow?
Nick – 00:06:55: Yeah, yeah. Absolutely.
Karen – 00:06:58: I’m going to Chamonix and then there’s no snow. And I’m like, this is my $10,000 trip.
Nick – 00:07:04: With no snow, the snow coverage problem with a ski resort, that’s a very, very common ask. So it turns out we can and we actually have price like the powder guarantee, like the fresh snow guarantee. It ends up being pretty expensive because it’s rare. In most places, it doesn’t actually snow all that often. The exceptions in the U.S. Were Salt Lake City area and Steamboat Springs, where it basically snows a little bit often. That said, there’s no snow on the mountain. The resort is closed. We see a lot of demand from ski resorts for that. Which is a product that perhaps in the future we will make. It’s sort of an interesting product to think about.
Karen – 00:07:38: Well, that’s so clever because, well, guaranteed powder is hard, but at least that the ski resort is open and that it’s a decent thing. So explain to me how you interface then with hotel companies and with ski resorts. Is it something that you’re selling to them that’s in the booking flow? Like where do consumers find your product?
Nick – 00:07:55: Yeah, so most of the time it’s in the booking flow. When you are booking the thing, we find it’s best to be building the offer that’s in context, when the person is deciding what they’re doing, where they’re going, when they’re going, that is the best time to place an offer. How we generally partner with the hotels or ski resorts in order to get in that flow, there’s a variety of software providers, verticalized software providers that essentially build the software that powers checkouts on behalf of the hotels. So we partner with those platforms. So we integrate with the platforms to make the product available to all of the hotels on that booking platform. And then the hotels basically say to their platform, I would like you to activate sensible weather in my checkout flow. So that’s usually how we get in the checkout flow for a lot of our partners. In some cases, the platform is the same as the merchants. So for example, last week, we launched a partnership with KOA. KOA runs their own tech, but it’s still the same idea.
Karen – 00:08:55: Okay, got it. So KOA, and then do you also work with CRS platforms? You’re talking about booking engines?
Nick – 00:09:00: Booking engines, yeah.
Karen – 00:09:01: Do you want to go ahead and list them off so that our customers know, or listeners know, who to talk to if they’d like to join up with Sensible Weather?
Nick – 00:09:09: So currently we work with AZS and SelfQuick. We have two more big ones coming, which weather guarantees will be widely available to tens of thousands of hotels, hopefully within the year.
Karen – 00:09:20: Okay, that’s fantastic. Because I really feel like, you know, for most of our listeners are hoteliers. And I feel like this is such a clever idea because their hoteliers in our product largely serves the leisure segment, primarily, with really beautiful brands. And again, when your consumers are spending that much money, this is so clever to know, hey, I can be rest assured that… If it rains the whole week, that I can get some of that back. So can you take me through that, actually, if I go ahead and purchase a policy, so I’m going to go to Hawaii. And three days before my trip, even though I booked this thing a year ago, I look on the weather and it’s going to rain the whole time that I’m there. What do I do?
Nick – 00:09:57: So say you booked a trip to Hawaii for seven days. For simplicity, you’re staying at the same hotel. You’re not moving around. If you bought weather guarantee for the entire trip, you effectively have seven daily policies where each day, if your coverage threshold is triggered, you’ll get refunded the average daily rate for that day. We check both forecasts in the morning as well as observation at the end of the day. Most of the time, your reimbursement actually happens at the beginning of the day. So at 8 a.m., when you wake up and you’re in Waikiki and you’re like, I’m going to go to the beach or whatever, but it’s looking like there’s rain. You know, it’s raining right now. It is raining forecast. I’m not going to do that. We find that that is the moment of pain for the consumer when they realize that the day is not going to be what they want it to be. We want to trigger a reimbursement then. So we send a text message, text message in an email, but most consumers respond to the text message that says, hey, you’re at whatever hotel Waikiki. Your weather guarantee coverage is triggered for the day. Click here, get a reimbursement. There’s then some options about how to get your money. The goal is, you know, we want to make that as seamless as possible. So really pushing the boundaries of this sort of insurance-y idea. We want to stay as far away from claims, long windows for getting reimbursed, whatever is possible. We send you a text message that says, here’s money. Click here, get your money, go to the spot, go to a restaurant, whatever it is. So we think it’s incredibly important. It’s incredibly important to do that because that experience aligns very well with the consumers as well as with the merchants, with the hotel. So we’re trying to encourage people to travel, to go on trips. Maybe you have one or two bad days on a seven-day trip. Take that bad day, here’s some money, turn it into a good day. That’s really what we’re trying to do.
Karen – 00:11:40: I love it that you’re out in front of that claim because that was going to be my next question. You know, here I’ve purchased an insurance policy and now I’m taking pictures of the rain on my one eye. Try to get somebody to pay me back. So you’re using all the technology on the back end. So you know what the weather is and you’re like, hey, it’s going to rain. And I love that. I think it’s also cool. I’m not sure if this is in your product, but I’m just thinking, go to the spa. What a wonderful way to say, here’s your money back. And by the way, there’s a great spa on property. I don’t know if you’re that linked in with the hotels you’re working with yet or if that’s a goal.
Nick – 00:12:14: It’s a goal, definitely. The way that we think about that, whether it’s, you know, here’s some cash, some dollars and a recommendation on how to spend it, or here’s credit to the spa. Essentially, that credit to the spa or points or milers or whatever it is, it’s just a different form of reimbursement for us. So long as we can do it by an API, we’re happy to integrate it. And moreover, if we’re reimbursing in credit, we can essentially provide more value to the consumer because they’re on-prem, money that they would otherwise be spending anyway, but we can credit it and get a discount to dollars. So we think that that’s potentially a really good way of how we grow this experience when you’re in destination.
Karen – 00:12:57: I think that’s a fantastic idea because I think going back to the lead time you’re talking about, that money is already spent. It’s already been gone. So now if I get a credit and because I’m still on vacation, so I’m more concerned about turning that what otherwise would have been a disappointing day into an awesome day. And having the money in the bank already to do that, just roll it over, right?
Nick – 00:13:19: Completely agree. That was kind of an early thought, particularly for destination hotels. If you’re going to an all-inclusive resort or you’re in Fiji or whatever, we send you a thousand bucks at the beginning of the day because it’s going to be raining. What do you do? You spend it. What else are you going to do?
Karen – 00:13:36: You just got free money. I mean, you know, quote unquote, free money. Feels like free money. Great. So can you tell me a little bit more about the business model with the hotels themselves? So when they decide to work with Sensible Weather, is it a RevShare? What happens to make that happen?
Nick – 00:13:50: So we offer a RevShare both to the hotels and to the platforms. So there’s the rev share component, which can be meaningful, especially at scale. Most of the time, individual hotels, the real perk is marketing and guest experience. So encouraging. So we can see conversion uplift when we provide weather guarantee offers when people are booking. We’re essentially reducing friction in the cart by giving them an opportunity to offset weather risk. If my day is bad, I’m covered, then I’m going to go through and buy that hotel night anyway. So we see that. So it’s sort of this guest experience thing and marketing around that guest experience thing. But then we also see in destination, when it’s rainy and there’s a bunch of cranky hotel guests, we can make them less cranky, less complaints. So, yeah, we see that a lot. I mean, where that’s exceedingly common is ticketed attractions. So theme parks, ski resorts, golf courses, that kind of thing. Where somebody books something ahead of time and it’s a terrible day and they have their screaming kids. They’ll be core sensible. They go up to the ticket office and complain and say, I want my money back. Now we’re just sending them their money back. And so we get a lot less of that.
Karen – 00:14:59: Absolutely. No, that’s really interesting. So I also saw that you recently received a strategic investment from Amex Ventures. So can you tell us a little bit about what that is and how that worked for your company?
Nick – 00:15:10: Sure. So Amex Ventures is a corporate VC arm associated with American Express. Within our, call them, roots to market, credit cards and the various travel portals associated with credit cards and banks are one large flavor of how people book travel. So we were in discussions with all sorts of credit card networks. And in the end, American Express wanted to make an investment. So we’ve been working on a deal with American Express for quite a while now. But essentially, within American Express, there’s three different ways that we could partner with American Express. The first way is amextravel.com, which is an online travel agent, an OTA where you book hotels and airfare or whatever. That would look like any other integration of ours. The Platinum Group, which runs their premium travel cards, where weather guarantees could be embedded either as an included benefit. Like, for example, when you book a trip on your Platinum card, you have travel insurance included. We could do that with a weather guarantee as well. We could also surf this offers after somebody has booked a trip, if you booked it on your American Express. And the third way is American Express’s tentacles within the hospitality extend very deep in their sponsorships and partnerships groups. There’s tons of things that American Express co-brands with basically anything under the sun, whether it’s hotels, for example, Amex Fine Hotels Resorts. They have partnerships with theme parks, ski resorts, live events, all sorts of things that we could sort of co-integrate with top experience American Express intensible.
Karen – 00:16:43: What a cool partnership, as you mentioned. I mean, obviously, American Express is the card that a lot of folks that buy in the luxury sector have in their wallets.
Nick – 00:16:54: Yeah, I mean, Amex is the one. There are others. And within credit cards, everybody’s kind of making a run for it right now. But Amex is definitely still the leader.
Karen – 00:17:03: That’s great. And then this is a question I’m just curious. Do you also provide any weather data into kind of pre-arrival communications with hotels? So pre-arrival emails? Do you have that ability? Is it something you’ve looked into?
Nick – 00:17:16: We have that ability. We’ve gone back and forth on it. On the one hand, we think it could be a nice value-added benefit, particularly if the weather looks bad. That said, we kind of want to have this experience that feels like a win-win, where if somebody’s going to have a good trip, we don’t want to interfere with it. We want them to forget they bought a weather guarantee and just have a great time. And to that end, basically, the less communication, the better. And most of the time, people have good trips. Everybody has that one trip. Then like, oh, that was completely rained out, whatever. But most of the time, trips go well. And we want those trips to go well as frequently as possible. But then how we mitigate that and change that experience when it isn’t going well, that’s nuanced. And just spamming people with communication might not be the right approach. That said, we’re still thinking about it. That’s something we need to refine.
Karen – 00:18:09: Well, especially if that’s going to be the bummer. You know, like, hey-
Nick – 00:18:14: Totally. That’s exactly right. So a secondary part of our product, potentially, but a very sensitive one. So we want to make sure we think about it correctly.
Karen – 00:18:24: Absolutely. Well, and I do love the idea of like, if something does go wrong, you just proactively reach out. Here’s a text message. We’re going to make good what we said we would do. And please go have a great day. I think that that is really cool. So looking ahead, what are some of the areas of innovation for growth for sensible weather in hospitality and beyond? What’s next?
Nick – 00:18:43: This summer, we’re actually sort of like very much in crunch time, integrating a bunch of partners. A few have launched, a few more launching later in May and in June. Everybody wants to get live for the summer rush. So you’ll be seeing a lot of us very broadly across sort of outdoor lodging, everything from tent camping in the dirt up to $1,000 a night rooms at collective retreats, Hill Country. We have a big partnership in golf. You’ll be seeing a lot more of us in golf in the coming months. Some more skiing stuff this next winter. And then 2025 is going to be the year of hotels. We know that already, that 2025 is going to be a lot of hotels.
Karen – 00:19:29: This is going to be the space to watch because it sounds like you got some stuff cooking. You can’t. I can’t talk about yet. So I’m excited to see.
Nick – 00:19:34: There’s always stuff cooking I can’t talk about yet.
Karen – 00:19:37: I also have to say, what a fun job you have if you’re already a skier and you like to be outside. So you’re like, hey, I’m going to go talk to the glampers, the campers. I’m going to go skiing. I’m going to go golfing. I mean, it sounds like a good life, Nick.
Nick – 00:19:49: It’s finally starting to funnel in that direction. I did have a really fun trip where I met with two of our ski partners in France and Switzerland back in, I guess that was end of March, where skied. Seven out of 10 days, five resorts, met with the execs of two of our partners. And in the middle of
that, I was like, right, this is my job. Neat.
Karen – 00:20:14: This is why we chose hospitality and activities instead of finance. That’s why we got it. That’s how you move over. Well, you have such an interesting background. Kind of at the beginning of this, you told us how it led you down this course. What advice would you offer to aspiring entrepreneurs and innovators who are passionate about leveraging technology to address specifically unique environmental changes? It’s always interesting to see how people ended up where they are. But if you’re just starting out, you’re young, you’re listening to this, what advice do you have?
Nick – 00:20:46: Take risk. As simple as that. Take risk. Especially when you’re young, it may seem like you have a lot of responsibilities and a lot on the table. You really don’t. And I wish I learned to take risk sooner. And measuring risk and understanding risk reward and ultimately taking the points. Be bold. Take risk.
Karen – 00:21:07: I love it. That is, I think, some of the best advice I’ve ever heard. I mean, it is true. When you are young and you’re coming out, the mortgages, the kids, the family are not carrying the weight of the world. You can absolutely try and fail fast and keep going. So thank you, Nick. That was awesome.
Nick – 00:21:22: Absolutely. Spread them like gospel. That’s my advice to everyone.
Karen – 00:21:25: That’s fantastic. Well, Nick, it’s been a really awesome conversation. Thank you for joining me today. And we’re going to keep an eye out. So my guest has been Nick Cavanaugh, who is the founder and CEO of Sensible Weather. Thanks for the conversation.
Nick – 00:21:37: Thanks so much for having me on.
Intro/Outro – 00:21:42: Thank you for joining us on this episode of Hotel Moment by Revinate. Our community of hoteliers is growing every week, and each guest we speak to is tackling industry challenges with the innovation and flexibility that our industry demands. If you enjoyed today’s episode, don’t forget to subscribe, rate, and leave a review. And if you’re listening on YouTube, please like the video and subscribe for more content. For more information, head to revinate.com/hotelmomentpodcast. Until next time, keep innovating.
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