Hospitalitynet Asks: Hotel Technology During Crises, Does it innovate?

“Digital Darwinism” will finally impact the lodging industry. The hotel and hotel brands that innovate will prevail; those who don’t will become commodity products in the hands of the OTA’s, “alternative accommodation” operators, and the meta-search giant, Google.

3 min read

Note: John Burns and Marco Correia are co-authors of this viewpoint. It is the result of one of our regular brainstorming sessions about the status of technology in our industry.

Let’s start with a controversial statement. During the crisis there has been little to no innovation in our industry. Chatbots, mobile keys, self-service kiosks were all existing technologies, slowly being embraced by the market.  The pandemic brought much swifter adoption of those technologies, motivated by a combination of safety requirements and a change in consumer behaviour and expectations.

It is this change in consumer behaviour that will drive the real innovation that we expect to see in the next months/years. The consumer has become mobile-centric – and increasingly “mobile-only” – in their acquisition of goods and services. Mobile devices are front and centre of their activities.  They come with expectations of customer recognition, simplicity in use, and breadth of choice, all accompanied by excellent service delivery. Think about food ordering, Uber, newspaper access, music, or anything from Amazon.  Hospitality will not be exempted from these performance expectations, and at the moment, we are very far behind.

“Digital Darwinism” (a phrase now a decade old) will finally impact the lodging industry.  The hotel and hotel brands that innovate will prevail; those who don’t will become commodity products in the hands of the OTA’s, “alternative accommodation” operators, and the meta-search giant, Google.

Let’s analyse some of the battlefields where the struggle for the new generation mobile-first consumer will take place.

First up, the mobile experience per se.  Will we in the hotel industry be able, as the airlines already are, to aggregate and digitalise in one single interface, the processes related to the pre, during and after stay? Some of the larger hotel groups (e.g. Wyndham) have already expanded their brand apps to the degree that converts the customer experience into a  single mobile-centric one.  But what about the large majority of the industry, those smaller groups or individual hotels without the money or the expertise to do so?  Will we see a rush to join the more prominent brands? Or will we see the new philosophy of open API’s aggregate all those microservices into one single platform with two storefronts, one for the customer, another for the associate?  Oyo’s experience has shown that this is possible and achievable. Will this innovation find traction? Will it represent the end of the myriad of systems that we use now and the relevant functions’ aggregation into deeply integrated, app-accessed platforms?

Innovation will have to address the issue of data. There is much talk about data, big data, AI, machine learning, to mention just a few of the buzzwords we hear repeatedly. A 100-room hotel generates approximate 5,000 data events daily. It is great if we can capture, analyse and act based on the data sets we are collecting.   Yes, we are making good progress on “capturing’ but arguably less on analyzing, on extracting lessons and formulating plans, and less still on translating those plans into action.

Data sets to be relevant need volume, and in this industry, the larger hotel groups have already gained an advantage. However, we question if this advantage is a competitive one. Discussing this subject is out of this article’s scope, but we strongly recommend reading the excellent article “When Data Creates Competitive Advantage” (Harvard Business Review, February 15th 2020). A hint; data is not synonymous with a competitive advantage.

Loyalty and business travel is our last point. It is widely agreed that leisure will recover faster than business travel.  In our opinion, the figure of the “road warrior” is extinct.  When business travel returns, it will be based on the concept of “travel with purpose”.  No longer two days on the road for a couple of meetings or sending a squad of people for a product demo. This new reality of travel with a clear purpose (and an identifiable ROI) will have a profound impact on the loyalty programs designed for frequent business travellers.

For the leisure market, both Booking and Expedia have already launched aggressive membership programs to earn the new customers’  patronage and loyalty.  They are mobile-centric, brand-agnostic and hyper-focused on hyper-personalization. Yes, these OTAs offer important lessons to hotel operators.  That said, we are reminded that leisure travellers’ patronage and loyalty also depends on the quality of the delivered product, the depth of available on- and near-property experiences, and the potential for happy memories. 

What about the corporate segment? How will it change?  How will our industry react and innovate to satisfy new expectations while maintaining member loyalty?

Maybe before any innovative or disruptive initiatives emerge, we need to get our act together. It was stunning to see the results of a recent study by h2c where hoteliers reported that integration between their CRM, Booking Engine and loyalty program was mostly low or non-existent. This disconnect is an invitation to lose engagement with customers. The new customer that we described earlier in this article is mobile-centric, impatient, demanding and adamant about personalised and meaningful experiences.  Our challenge in the hotel industry is to refocus our mindset and retool our technology to address the evolved traveller and the expanded marketplace.