Opportunity and Challenges of the Hospitality Sector
Imagine a world where the room knows you, and you know your room. -Christopher Nassetta, CEO of Hilton
The hospitality industry is one of the most exhilarating and fast-paced sectors in today’s society and it can be seen as a building block towards the apprecition of different cultures. Being a subsector of the hospitality industry, the hotel industry specializes in providing customers with temporary accomodation and is one of the main pillars of tourism.
In early years, the hotel industry was fully reliant on the human component; people would come in, talk to the owner of the establishment, pay in cash and then go. One hotel would not look very different from another and the service offering would have a minimal complexity. With the boost of digitalisation in the society along the years, technology has become a key component in the hotel industry, changing its processes completely and rising people’s expectation on the traditional ways.
However, as with every major change, there are many opportunities and challenges to be evaluated in relation to the digitalisation of the lodging sector.
Guest Engagement, Acquisition and Retention
There is great room for improvement when it comes to guest engagement, acquisition and retention, as hotels are still ignoring some important aspects of it, for example: Online Distribution Technology.
Over recent years, the industry has become somewhat better at adopting Online Distribution Technology: cloud-based website booking engines (WBE), central reservation systems (CRS) and channel management platforms. However, many independent hoteliers still use separate WBEs, CRS, and CM retailers. Most of them even use inefficient and slow WBEs, with interfaces that are not mobile-friendly. Hotels have the opportunity to reduce friction and lower their costs significantly if they would use a cloud-based distribution technology vendor which provides all three services and offers WBEs with certified user experience records.
Guest Services Digital Technology
When I book a hotel room, I look to receive better technologies and amenities as opposed to the ones at home, but due to recent trends, this is no longer the case. Majority of today’s travel consumers enjoy high-tech amenities at home (e.g. fast internet, voice assistants, streaming services, etc.) which substantially diminishes guest services. Therefore, the current standing challenge to lodging companies is to create an environment that exceeds their guest’s home environment, hence creating an opportunity for better experience by tracking guest room data.
Hotels can look to adopt the idea of Smart Guestroom which is fully personalized according to a guest’s likings: lighting, bedding, decorations, media preferences, etc. This has started to become considered amongst some of the high-end hotels, yet this is something every hotel, despite its size, can incorporate.
Next Generation Technologies
Next Generation Technologies are already moving onward to the hotel industry, although hoteliers could try to integrate them in their processes more. Their operations could greatly benefit from adopting Artificial Intelligence (AI), Internet of Things (IoT), Voice Assistants, Chat Bots, Robotics and so on:
- Artificial Intelligence (AI): Customer service (chatbots), personalization, database management and loyalty programs.
- Voice Assistants/Voice Search: Integration of popular brands with voice assistants like Alexa, Google Assistant and Apple Home Pod, customer service (voice assistants in hotel rooms).
- Internet of Things (IoT): Customer service (concierge, hotel lobby, room service); hotel security, operations (power and A/C management).
- Robotics: Could be used for replacing human jobs (in the kitchen, at the reception)
Challenge 1- Reluctance to Digitalisation Investment
Reluctance to invest in digital technology is the main challenge in most businesses. This reluctance comes from the lack of understanding of what these technologies do and how massively they can improve customer satisfaction. As we all know, people are inclined towards comfort and familiarity and they prefer to do business the traditional way. However, ignoring guest-facing digital technology applications and devices (like streaming media hubs, voice assistants, messaging capabilities, mobile-first property website etc.) would be a wasted potential.
Challenge 2- Fast- Paced Technology
Nowadays, the technological environment can be argued to be very dynamic, which can make it disruptive. Staying technologically relevant has become a full-time responsibility for businesses, if they want to survive in the market. As the trends change constantly, hotels need to make sure they invest enough in digitalisation, in order to keep up with the customer’s needs and expectations. However, in opposition with other industries, people still care about the human component when they book a room to a hotel. Statistics say that 60% prefer to have a conversation with a concierge/receptionist, instead of fully relying on online support.
Challenge 3- The Right Tech Partner
Hoteliers are overwhelmed by the multitude of vendors they have to choose from and work with, which can be an impediment to their process. Choosing the right partnership can greatly affect the business, either positively or negatively. Therefore, the hoteliers need to conduct extensive research before going for a vendor, and they need to make sure that their partner can provide as many capabilities as possible.
Challenge 4- Airbnb
Since it launched in 2008, Airbnb has grown in popularity as an alternative to hotels and it currently has listings in more than 220 countries and regions. The company can be considered the largest hotel chain in the world by room count.
What Airbnb can offer and traditional hotels can’t, is a unique experience. The clients can choose from a variety of locations, prices and types of rooms, it is much more affordable for people who are conscious of their budget and it creates a close community (hosts and guests). Everything happens through an app, which is considered to be user-friendly and accessible for everybody and has integrated cloud-based technologies. Therefore, Airbnb is considered a disruptive innovation to the hotel industry and has changed the customer expectations on hospitality.
Conclusion
Although customers are still reliant on human interactions, the hoteliers need to remember that digitalisation is the only way to survive in the market for a long time. Indeed, the challenges are numerous and very hard to overcome, needing extensive research, training and investments, but once they have been reduced, the hoteliers will enjoy great success and profit.
The newest competitors, like Airbnb, can be considered a threat for the hotel industry. However, hotels can look at them for inspiration and adapt new business models, which might help them keep up with the trends and to improve customer experience.
