What Are The Top 3 Things Hotels Need To Do To Stay Relevant In The Future?
by Manoj Sharma, CEO of CusJo
The Future Looks Good, But It May Not Be Great For Everyone.
The truth about the hospitality industry is that, it has had almost a decade worth of a good run. But the past is often not an indicator of the future in a dramatically changing world.
Largely, the short term forecast is just ok. The supply of hotel rooms (+2.2%), demand for rooms (+2.0%), average daily rates (+2.7%), and revenue per available room (+2.7%) are all set to rise, with the exception of a drop in occupancy rates (-0.2%). This is according to STR’s forecast for 2018. Having said that an average of +2% growth does not translate into industry leading statistics for ambitious establishments with escalating cost structures. 2% barely keeps your nose above water. The mid term survivors and winners in the hospitality industry need to do a lot more. If you reflect on your own guest experience you’ll find it’s rising too, but at a lot more than 2% a year.
So, What Do Hotels Need To Do To Remain Relevant And Generate Healthier Revenue To Mitigate Escalating Costs?
i. Localise.
This is the move towards creating a unique local identity for the hotel. It is complemented by building a repository of knowledge about the locality and curating experiences that cannot be replicated anywhere else in the world. That is of course with the exception of the hotel’s competitors in the same locality who too are attempting to distinguish themselves by localising just like the hotel right next door to them. Nevertheless, this has been vaunted as the hotel industry’s answer to the stay-local trend that is the cornerstone of the room sharing economy and possibly one of the reasons why hotel occupancy rates have been showing a negative trend.
The problem with this approach is that large and even boutique hotels cannot replicate the authenticity of staying in someone’s abode. How does a concierge compete with a local host, who welcomes you home to experience life as he or she experiences it?
ii. Reinvent.
Some hotels have turned to redefining their business model, making it more flexible and rethinking what a hotel means to guests.
The trend of paying by the hour for capsule hotels has been in existence for more than 2 decades. The logic revolves around the idea of not paying for a room by the day, but paying for a bed, as well as storage facilities when one needs them. Add to this other pay-per-use shared services such as wifi, showers, spas, gyms, and other facilities and the model gets brought up to speed to match the millennials ideal of a hyper transactionary shared services society. A society where consumers are willing to pay good money for what they deem to be of value and only when they need it.
Hotels today are also isolated private experiences with little or no interaction between guests. Juxtapose that with co-working spaces that promote interaction between a diverse group of people who have largely nothing in common except a willingness to work in a common space. The new digital nomads who are happy to pay, plug and play might just be showing hotels how to increase their profitability per guest. That is of course if hotels are willing to reinvent their business models.
iii. Automate.
Smart reservations, check ins and room access using mobile apps. Smart TVs that serve as digital assistants. Smart food delivery so you can provide your guests with endless options without being limited by your kitchen. Smart offers to self-upgrade and enjoy various amenities and services. Smart mirrors that can play you a yoga tutorial. Smart closets that give you the weather forecast for the day ahead so you can dress appropriately. It’s a smart whatever you can put a smart in front of it world.
If not that, bot it. Ro-bots to deliver things you’ve asked and paid for. Chat-bots to provide you with the necessary information at all hours of the day. Voice-bots to control temperature, lighting, bath water and the TV too.
The Smart and Bot world, with the data they create could well lead to efficiencies and profitability that hotels have not yet imagined were possible.
Conclusion.
What is necessary seems to be clear. For hotels to improve their profitability and value proposition they need to localise their experience, reinvent their business model and automate whatever they can using technology. This is an absolute necessity even if means investing a significant amount of time and money, cause the alternative is to get left behind due to irrelevance, perish and die.
A Few Quick Questions.
- Honestly, where does your hotel stand when it come to how it’s progressing on the 3 things it needs to do above?
- Are you engaging your guests in an ongoing open conversation across all touchpoints in your hotel to factor in their points of view towards open innovation?
- Are you using AI to make real-time sense of all the quantitative and qualitative data you are collating and making it accessible to all your key staff at every touchpoint instantaneously, so they are co-creators of your future guest experience?
The Reality.
Once someone gets a grasp on things, the why things needs to change and what needs to change is usually fairly obvious. The difficulty tends to lies in the fact that organisations simply don’t have the know-how on how to use appropriate guest experience analytics to getting it done. More on that later. For now let’s just focus on localising, reinventing and automating — the top 3 things hotels need to do to stay relevant in the future.
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Manoj Sharma is the CEO of CusJo.com - When you need human intelligence to be enhanced by AI, for all your market research, customer experience and employee engagement needs, CusJo has you covered. Experience the world’s most advanced qualitative and quantitative primary research platform, with data science and artificial intelligence capabilities.
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