5 Dec 2017
Innovation and Technology are Changing the Hotel Industry
The hotel industry has always been a people-driven business, taking pride in its customer-focussed approach. But as technology advances, many hoteliers aren’t using it to service customers in the way they expect. By contrast, innovative newcomers offer guests a more tailored service, fuelled by cutting-edge technology and data-driven customisation.
To stay relevant, hotel leaders need to explore how disruptive and agile competitors influence the market – particularly where technology is helping them gain market share. At the Africa Hotel Investment Forum on 12 October, I’ll be speaking on innovation and trends in the hotel industry – a topic that’s key to getting ahead. Here’s an advance introduction to the changes shaping the industry’s future.
The drag of legacy systems
Hotels have developed rapidly worldwide, but their adoption of technology has lagged behind. Despite shifting from manual administration to electronic systems, not much has changed in the way guests are served. Other industries have shown how harnessing technology helps them to better interact with customers, reduce costs, personalise the offering and enable self-service developments that could also help hotels.
The reservation process is a clear example where hoteliers fall behind. Today, customers expect a greater degree of autonomy when making a purchase and many appreciate being able to customise their choices to suit their individual needs. Yet, contrast hotel bookings with the choice we have when choosing airline seats and its clear the lack of self- and pre-selection options – is holding the hotel industry back. By simply investing in more interactive platforms, hoteliers could improve the room selection and tailoring experience of their customers.
Outsourcing customer relationships
The internet has benefitted the hotel industry by enhancing its reach and amplifying messages – but it’s also brought challenges. Hotels have unintentionally delegated their customer access to online aggregators, meta-search sites, online travel agencies (OTAs), and airline or car rental sites. This reduces their offering to the lowest common denominators-cost and location. So, hoteliers end up competing in the same digital space for the same market, but with higher commission costs. Sites such as Booking.com and Trip Advisor have further disrupted the industry by shifting from guest review sites to end-to-end booking systems. With customers researching, booking and accessing wider services directly through these sites, brand experience – and brand loyalty – lies with the OTA or aggregator, instead of the hotel.
The good news is that some hoteliers are reshaping the industry by recapturing distribution and rate control from OTAs and aggregators. This gives them ownership of the customer relationship. But handled properly, it also provides valuable data insights and enables them to engage with younger generations through personalisation and technology. In 2016, Hilton Hotels launched its largest ever campaign called ‘Stop Clicking Around’ – urging travellers to book directly through its mobile app and assuring the best rates.
Big data means personalisation
Guests in some hotels now have the opportunity to personalise through technology-based self-selection. At some Starwood Hotel locations, guests can use their smartphones to programme lighting and playlists, or schedule their morning coffee. However, while this offers an encouraging degree of flexibility, it still doesn’t represent true personalisation.
In order to personalise guests’ experience, hotels need to understand in advance what it is they want and provide it automatically and pre-emptively. We are seeing the beginnings of this. The Bratislava Sheraton, for example, researches its guests publicly stated ‘likes’ on social media and presents them with a tailored gift on arrival. Kimpton Hotels, meanwhile, offers guests loyalty recognition if they engage through social media: its aim is to “get to know the guests better so we can deliver the best experience.” But hotels are not yet harnessing for action the data they have, nor are they using the opportunities to collect better data. While the information and opportunity is there, it will take a while before most hotels use insight into their preferences, likes and lifestyle, and stay history to pre-empt guests' needs.
A softer approach
Looking at broader tailoring opportunities, some hoteliers are adapting the physical estate to engage better with target markets. For example, certain brands are launching lifestyle boutiques to capture Millennials’ appetite for eco-awareness, wellness and sustainability -from the Marriott’s Element, Aloft and Edition to Hyatt’s Andaz and InterContinental Hotels Group’s Hotel Indigo.
Testing a less radical approach, other brands are providing curated content (a defining feature of Millennial culture) to enhance their brand. London’s Hoxton Hotel, for example, publishes ‘Hoxtown’, a programme of events, blogs and guides to highlight local attractions. Meanwhile, Fairmont Hotels & Resorts commissioned leading photo journalists to offer guests a glimpse behind the scenes of its hotels.
Models of the future
So what will the hotels of the future look like? For a start, apps are likely to play a greater role, with hotels adopting full-service apps so guests can control every element of their stay: from selecting rooms to checking-in; customising the mini-bar; and accessing additional services. Not only will this improve satisfaction, the data it generates will enable hotels to offer a richer service and target more sales opportunities.
Agile digital interfaces may also allow hotels to enter the customer value chain earlier -from booking airport pickups to requesting luggage collections Mobile devices may become the booking medium, room selector, electronic key card, and connection system – creating an end-to-end link between the hotel and guest.
Some possible developments we can’t fully visualise yet. The most significant of these is AI and robotics. While some hotels already use Service Bots for basic hotel operations, they may become more pervasive and personalised, handling many service aspects. Analysis by McKinsey & Company suggests 73% of activities performed by accommodation and food service workers could be automated. This will free up hotel employees to act as roaming ambassadors and offer a more flexible, bespoke guest service.
Staying ahead of the curve
The hotel landscape may be on the cusp of a huge transformation, and horizon scanning is vital to future success. With powerful disrupters taking market share, hoteliers need to observe developments within and outside their industry, to capitalise on social, technological and data opportunities to improve customers’ experience. Now is the time to identify innovation and adaptation strategies, and meet guests ‘changing expectations.