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Tech Innovation for Hospitality

Fernanda Mangini
TOTVSLabs
Published in
12 min readJan 5, 2017

Competitiveness in the hotel segment is rapidly increasing due to mergers, acquisitions and the increase in the power of networks in relation to independent hotels. It is becoming increasingly difficult to attract and retain customers. Challenges grow even more with the arrival of new competition and the concept of a shared economy ("Hello, AirBnB!").

In this new scenario, hotels need to differentiate themselves from the rest, attract new customers and secure their loyalty. Technology has supported and directed consumer experience across a variety of industries, and hospitality is no different. Technological innovations encompass both the physical structure of the hotel (new ways of opening room doors, for example) and electronics (new ways to improve guest services).

Hospitality Market

Do you know how many people travel annually? In 2015, more than 1 billion people traveled the world and spent approximately $ 1.3 trillion.

International tourism now represents 10% of the world GDP and 2015 was the sixth consecutive year of growth above the industry average. The main factors that influenced travel were: strong fluctuations in the exchange rates, a decrease in the price of oil and other commodities and the increase of the global concern with safety. The industry trend is continuously growing, estimated at 3.3% per year between 2010 and 2030, reaching an estimated 1.8 billion visitors worldwide in 2030.

Evolution of the number of world visitors and tourism revenue since 1950

Among the regions of the Americas (North America, South America, Central America and the Caribbean), North America represents the largest destination. The United States stands out as the second largest destination in the world (France is the first), and it is where most of the revenue is recorded (16.2% of the world total). In South America, Brazil and Argentina are the largest destinations.

To support the high demand of the market, it is estimated that more than 16 million rooms are available worldwide, with 30% of them in the United States and 3% in Brazil. In Brazil alone, there are 12,000 lodging facilities and 19,000 travel agencies serving more than 6 million international visitors, in addition to domestic demand.

Although the percentage of hotels affiliated with hotel chains in Brazil is still small in number (9.5%), we can see the growth of large hotel chains, either by consolidating competing brands or by building new hotels.

When considering the number of rooms, the role of chains becomes more representative, reaching 32.1%, of the total number of hotel rooms available in Brazil.

More recently, we have seen a movement of residential rooms becoming paid accommodations, available for rental by Airbnb. The wide and diverse range of rooms available worldwide offers multiple hosting experiences, catering to the different profiles and demands of each guest, wherever they may be.

Guest Expectations

But after all, what do guests want? The 2016 Customer Engagement Technology study revealed how technology influences the guest’s decision-making process.

We can observe that the offer of free wi-fi motivates the choices of 91% of those surveyed when searching for a hotel. 87% cited access to photos and videos of the hotel, as well as the ease of making online reservations and the existence of comments and positive reviews on the evaluation sites.

When one takes into account the age of the guests, the importance of each technology offered changes. The comparison below was made between Millenials (18 to 29 years old) and people over 40 years old.

It is essential that the hotel knows the wishes of its clients so that it can offer the appropriate services to each profile.

A mix of trends, innovation and reality

Nowadays, innovation is focused on improving the guest experience in the hotel, either by providing online services that traditionally would only be possible through interaction with employees or physically inside the room. Hotels should prepare for this new trend by offering better customer experiences throughout their journey, whether their purpose is business or pleasure.

A few messages must be kept in mind so hotels are not swallowed by the competition in the next years:

  • Reservations at your hotel should be made easily through any mobile device
  • Rooms must be interactive
  • The internet at your hotel needs to be robust and secure
  • Guest data is your most valuable asset and should be used to enrich the guest experience

In the United States, a study of the six mega-trends of hotel technology (6-Mega-Trends-in-Hotel-Technology) highlights that hotels were expected to invest 54% more in technology in 2016. Such Investment would be made according to the priorities highlighted in the chart below.

Offering convenience and efficiency to the online guest in terms of payment via web and mobile applications, coupled with privacy concerns has made 62% of surveyed hotels prioritize investments in online payment and data security in 2016.

There are investments to improve the technology in the apartments, improvement of the quality of the internet and mobile solutions for interaction with the guest — 30% of hotels are investing in mobile geo-location solutions.

The buying experience

Online sales for the hospitality industry is mandatory. The “Travel” category was included for the first time in the “Brazilian E- Commerce Conversion Report 2016”. Tourism appeared as the category with the highest sales volume (15.03%) and revenue of R$10,5 billion. According to the study, these figures could be even higher if online sales websites were accessible by mobile devices.

Search and booking sites are already used by 60% of Brazilians, while social networks are used by 45%, according to the latest report from the search engine Momondo. The study analyzed the travel habits of 20 countries and Brazil is the one that makes the most use of the Internet for this purpose. Despite this, Brazilians continue to explore traditional ways to decide their next destination — 43% seek guidance from physical travel agencies and 51% also take into account the opinions of relatives and friends.

On average, it takes about 53 days for a person to book a trip, with visits to 28 different sites before finalizing the purchase. Currently, TripAdvisor sites (hotels rated by past guests) and OTAs (Online Travel Agencies) such as Booking.com, Decolar.com and HotelUrbano.com are required stops when planning a trip.

Meta searchers such as Trivago, Mundi, Google Hotel Finder and even Trip Advisor have the role of saving travelers research work by consolidating information from multiple channels, including from the hotel’s own website, in one place.

Hotels need to be prepared to strategically take advantage of the huge brand exposure that these powerful giants can bring. It is essential to have an attractive website, where sales can be made through any mobile device and that, in fact, offers the option to book online. Many hotels still think that making a request form available on the site can be considered “booking online”. Not the case!

It is essential that the hotel knows how to use each of these platforms available and, even more, promote its own channel. Although there are new studies that show the potential of the Billboard effect, the potential of OTAs is undeniable for hotels. A study by Cornell University in 2009 found that many direct reservations are driven by the hotel’s presence in other distribution channels such as OTA’s: the user searches the agency’s website but ends up buying directly at the hotel.

According to an article published on the site Panrotas, the portal Melia.com grew 35.8% in relation to the first half of 2015, reducing dependence on OTAs and increasing the revenue per available room (RevPAR) of the network. France’s Accor has been investing in its direct channels for years. The head of Sales for South America reported in an interview that in 2016 sales through direct channels already represent 70% in the region.

Mobile Devices

According to the 6-Mega-Trends-in-Hotel-Technology study prepared by Hospitality Technology Magazine, 60% of the major technology launches in the United States in 2016 had a mobile component. Bookings via apps, online check-in and mobile keys dominate the list. The study reveals that 84% of American hotels intend to have the technology within the next 18 months. In the same period, about a quarter of hotels plan to deploy mobile keys.

For example, the Hilton network has a new application that allows the guest to make a reservation, choose the desired room, and request extra pillows. Using beacon and GPS technology, the app also functions as a personalized travel guide that takes into account guests’ preferences, their location, and the time of day.

In a study by Phocusright regarding the behavior of early adopters, the services provided by hotels through mobile devices were the champions in the wish list.

“We no longer have customers online and offline. Mobile devices have created a permanent sense of immediacy, which totally changes the way guests interact with the hotel and how they expect the hotel to interact with them.” This is Henry Harteveldt’s analysis, voiced at the HTNG’s 2016 North American Conference in March 2016.

With the use of wearables, for example, hotels will have the opportunity to interact with guests before, during and after their stay, as well as allowing the guest to control their room and request services throughout the hotel on their mobile device.

It is important to emphasize that providing self-service options streamlines the guest experience, and also represents a cost reduction for hotels, as it may eliminate operational positions or move staff to perform activities that will truly add value to the guest experience.

Internet of Things (IoT)

We can already see the practical application of the Internet of Things (IoT) in hotels that offer apartment control systems or that “miraculously” send you an offer on your mobile phone for your next stay when you enter the lobby of the hotel for the first time.

The ability of software and machines to collect and synthesize data over the internet of things will improve the ability of hoteliers to adapt offers and anticipate the preferences of guests to meet and exceed expectations. The rooms will become “homes away from home” with pre-set temperatures, radio and TV stations, welcome messages, and personalized offers created through big data specifically for each guest.

In addition to enhancing the guest experience, applying the internet of things will also help with the operational issues of the hotel. Some airports are already using technology beacons to control the time of service in queues. In addition to reports with real- time information for airlines to position staff, the solution also allows you to forecast passenger volume based on analysis of the combination of the data provided in real time and history. This feature can be easily adopted by the hotel industry to more effectively manage the work schedule of employees at the hotel reception, restaurant or pool, for example.

In addition, controlling the consumption of water and energy represents a great way to reduce costs for the hotel, as well as becoming known as an ecologically conscious hotel.

Guest Experience Management

Offering excellent service, anticipating the needs of guests, and creating unforgettable experiences are basic principles of hospitality.

Hotels have, for the most part, accumulated data for a long time, but do almost nothing with it. Currently, data is generally isolated within different departments. Part of the data is in one place, other information in another. To meet the needs of the hotel of the future, these silos should be replaced by a single integrated data storage location, allowing information to be exchanged between different systems.

It is through the data that the hotels will be able to personalize the services offered to their clients. Mobile technology is exponentially increasing the receipt of information, especially with geolocation features.

According to a publication on the Hospitality Technology website, the combination of mobile data with data from reservations contained in the systems of the Fointainebleau hotel in Miami has helped to increase the sale of early check-in and late check-out by means of special offers to guests.

How can we effectively manage the data and revert it into opportunities for revenue and interaction with guests? Customer Experience Management, or CXM, is the next evolution in CRM. A CXM strategy monitors and organizes every interaction between the customer and the brand. CXM’s goal is to keep customers satisfied at every step of their journey, and as a result, earn their loyalty, recommendation and, of course, additional revenue.

Hotels need to focus on seeking an unified view of customers, with data that goes far beyond name, address, gender, floor preferences, pillow and lodging history. The hotel should also conduct behavioral information management, such as meal preferences, and spa appointments, with details such as frequency, time and amounts spent. This type of unified guest data gives a sense of the potential of spending each guest and also the costs involved in their care.

What’s next?

  • Augmented Reality: Several hotels have taken advantage of the Pokemon GO fever to promote their hotels. Below the Intercity network post on facebook.

The use of interactive walls is already being used by hotels in the United States, such as the Renaissance New York Midtown, and in the UK, The Hub Hotel. The first has an interactive wall in the lobby that responds to guests’ movements through the use of motion sensors, projectors and 3D cameras. In The Hub, each room has maps on the wall and, when pointing the phone, the guest can see information about the sights.

• Virtual reality: has already been used in the hotel industry for visits to convention rooms and apartments. Studies say that 14% of hoteliers believe that holograms have the same potential as concierges and face-to-face guides.

Another example of the use of virtual reality, even more common today, is the opportunity to “visit” different places remotely. Hotels can allow guests to view the attractions of the destination, enter the apartment, visit the swimming pool and the gym, before even making a reservation! Another practical example, especially for very large hotels and resorts, would be the use of virtual reality as a concierge.

• Artificial Intelligence: One of the Hilton hotels hired a robot at the beginning of the year as a concierge. Connie, the robot’s name, interacts with guests, answers their questions, and becomes more intelligent when interacting with guests. The Henn-na hotel in Japan already has among its “collaborators” a series of receptive robots replacing humans. The company’s intention is to automate 90% of its operations. It is the use of machine learning technology, in which machines are programmed to learn and perfect activities.

Long before we reach the era of humanized robots, the use of chatbots will be prevalent. They will be trained to make reservations and answer guests’ frequently asked questions quickly. It is the technology supporting the quest for excellence in service.

Meanwhile in Japan, at The Henn-na hotel, apartment doors are opened by facial recognition and the lights are controlled by voice command. In hotels in the United States, such as the Hyatt Regency Riverfront in Florida and the Pan Pacific in San Francisco, artificial intelligence is being used to manage the team’s scale, based on demand forecasting, and to forecast the consumption of food and drinks.

Certainly more practical applications for artificial intelligence will have a much faster growth than the use of robots to replace humans. In addition to making technology available to the guest, customer experience management will enter a new stage, requiring hotels to also manage guest experience, making customers feel satisfied and welcomed as if they were in their own home. Satisfied customers become loyal brand ambassadors.

The increase in supply makes challenges increase every day in the hospitality industry. In such a competitive market, it is increasingly difficult to differentiate and to attract new customers while retaining existing ones. Those who invest in providing a differentiated service to the guest, through investment in technology, will certainly stand out.

Successful hotels in the future will be those that are able to serve customers everywhere, anytime, at any point in the guest’s life cycle, creating personalized experiences that truly add value.

Sources

Technology
Hospitality
IoT
AI
Virtual Reality

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Fernanda Mangini
TOTVSLabs

Written by Fernanda Mangini

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