Those with good memories can recall studies going back five years or more bemoaning the paper and pen nature of the hotel industry.
Fast forward to 2021 and, for many, not that much has changed.
Independent properties still rely on this outdated and inefficient way of doing things, while hotel groups and chains have dipped a toe in the technology waters with some basic automation.
There is work to be done.
Certainly, balance sheets heavily impacted by lockdowns and the pandemic play a role. However, so, too, does a paralysis brought on by fear of embarking into the unfamiliar world of modern technology and the related costs.
In truth, this mindset was present long before the pandemic, in better times, when occupancies and revenues were high.
Today, there’s a growing consensus that hoteliers need to switch from this legacy mindset to a nimble mindset before they get left behind, by their guests and unassuming competitors.
New competition looming
While many hotels have sadly not survived through the pandemic, the competition remains strong. In fact, there are an increasing number of players and they aren’t all properties nearby.
Indeed, it’s not only the online travel companies that are knocking on the distribution door. Also potentially waiting in the wings are online retail giants such as Amazon and Alibaba that attract millions of eyeballs.
These retailers have not only grown their size during the pandemic, but their influence on consumer behaviour. Perhaps more stark is how easily they could move into the sector, viewing hotels as just another product set.
In the UK, Tesco has gone from offering only click & collect for almost 10 years to achieving 99% same-day delivery last year.
Sure, hoteliers will be thinking they have heard it all before. But these same retailers have not suffered in the pandemic. They have increased their following, and that following is often a trusting, loyal customer base.
With the backdrop of changing consumer expectations and increasing competition, the hotel industry can start thinking now about how it wants to grow for the long term.
Consumers have moved on in terms of their travel behaviour and especially their expectations. As cases in point, consumer research conducted by SiteMinder last July revealed that:
- 39.5% of Americans intended to take a slightly shorter or much shorter trip than they would have taken prior to the pandemic. Yet, SiteMinder data shows that the average length of stay in the United States over the first quarter of 2021 has been 1.72 days compared to 1.58 days during the same period two years ago.
- 49.3% of Americans would book accommodation months in advance for their next domestic trip. Yet, SiteMinder data shows a last-minute booking trend. At the time of writing, 43% of all hotel guest arrivals expected over the next 12 months will arrive in the next five weeks.
There is no doubt that the adoption of digital technologies among consumers has accelerated. In order to take their own technology and digital capabilities to the next level, now would be a good time for hoteliers to find ways to seize the initiative while business is still relatively quiet.
Yet, too many hotel groups and chains continue to play a waiting game and rely on existing resources pre-pandemic, such as loyalty scheme members, to take them forward.
Reduced revenue streams, combined with inefficient ways of operating and with fewer employees, show a path to at least consider more modern, best-of-breed technology.
Many remain hampered by older systems and hardware that at best can be costly to maintain and cannot be integrated with newer technologies – and, at worst, are no longer fit for purpose.
Technologies such that are native to the cloud are now the only serious contenders for any hotel business that is looking to modernise. Those that dismiss these technologies might do well to look at how large digital/online travel companies think about the cloud.
They see it as enabling them to gain efficiency in many areas, which frees them up to concentrate on innovating. They also see it as a means of tackling complex problems and breaking them down into easier building blocks of services.
Finally, these companies see a way of providing their products and services to customers more quickly which means a faster return on investment and more cash in the bank.
A full team challenge
This is not a journey that hoteliers have to embark on alone. There are many established companies and startups that specialise in these technologies, and they are ready to partner with hotels to help them get back to growth. But it’s going to take a top-down, cohesive approach.
Many are predicting that a lasting effect of the pandemic will be collaboration in travel like never before. That goes for internal stakeholders just as much as external partners, investors, owners and every department within a hotel company. They all have an important role to play.
A changing mindset from leadership must seep down to revenue and operations teams who are also ready to embrace change and digital technologies. You can’t successfully roll out centralised ways of pricing, promotions and reporting if the revenue and marketing teams aren’t together and on board. Nor can you address operational inefficiencies with smart working systems if front and back-of-house staff don’t see the benefits.
The opportunities are many, from new revenue streams in food and beverage at a simplistic level, to delighting guests through a personalised approach and access to a wide range of services as they return, on a broader level.
Tough times call for tough measures. Already, the brave are seeking efficiency and looking for new business models.
The trend to digital transformation in hotels will only accelerate further and the industry will be the better for it.
As originally published in Hospitality Upgrade.