After decades of avoiding disruptive change, the hotel industry may be totally transformed by technology. This unprecedented change will impact the way hotels attract businesses and guests of tomorrow says Gillian Saunders, global leader of hospitality and tourism at Grant Thornton.
Millennials are predicted to overtake baby boomers as the main target market of hotels by 2017. Hotels need to make changes in four areas:
Technology is driving this trend through increased use of mobile and digital platforms by consumers, explains Saunders. Guests are now empowered to make direct requests to hotels, through apps and other cyber touch-points. About 46% of millennials surveyed indicated that digitally enabled check-in/out services influence their decision to return in the future.
By incorporating data analytics to track guests’ information from digital platforms (travel patterns, credit cards and mobile phones), hotels can better understand guests and offer personalised services throughout the entire customer journey. There are cyber security risks and hotels need to set up infrastructure to protect information, says Saunders.
Hotels can also customise their services to foreign markets. The Conrad group of hotels and resorts customises languages on television channels and menus for their mandarin-speaking guests. “They’re already customising the cultural difference using mobile technology,” says Saunders.
The banking, financial services and transport sectors have already adapted to technology, but the hotel industry has arrived late to the digitalisation era. Hotels need to prioritise investment in digitalisation, technology and talent.
Besides incorporating technological infrastructure like sensors and other IT investments, hoteliers should recruit talent that is more digitally ready and trained to use technology, says Saunders. Employees must learn how to interact with apps and cyber platforms, as they do face-to-face with guests.
People who are really clever in the sharing economy will develop massive businesses without investment in assets.
Finding talent is difficult and Saunders suggests hotels partner with technology firms for help. Hotel schools should start introducing digital training as a solution to the widening digital gap. Unfortunately it is possible that some jobs may become redundant as technology takes prominence, says Saunders.
Hotels need to differentiate themselves, which is challenging as all hotels offer a “lifestyle brand” says Saunders. Guests often use convenience and price aggregators like the TripAdvisor app to find suitable hotels instead of visiting hotel websites. “Millenials trust those spaces, not brands,” says Saunders.
Hotels can rely on technology to differentiate the guest’s experience. The mood of a room can be changed for the guest’s specific needs using digitally enhanced lighting and smells.
New business models
Disruptive technology is forcing business models to change. This is seen with the Airbnb business model which relies heavily on the sharing economy. Airbnb offers accommodation with hosts across the world using online bookings. Airbnb’s website visits have grown by 343% over two years. “Millennials trust this sharing economy. People who are really clever in the sharing economy will develop massive businesses without investment in assets,” says Saunders.
To attract guests, multi-pricing and destination integrated experiences for guests who do not want a “tourist” experience but rather a true, local cultural experience is also popular. Hotels are being erected in areas of urban regeneration in cities to give guests a local experience. These “off-beat” hotels probably appeal more to millennials, explains Saunders.
This article was featured in Finweek magazine.