Digital Transformation of Hospitality Industry in the Next 5 Years
Identifying and fulfilling customer needs and expectations is the bread and butter of the hospitality industry. Digital transformation helps hospitality businesses not only interact better with customers, but better understand them, as well. If your company isn’t doing this over the next five years, you can be sure your competition is. And five years from now will be too late to catch up. A digital transformation consultancy can work with hospitality companies to reinvent customer engagement by deploying these key digital transformation tools.
Internet of Things (IoT)
There’s a bit of a buzz about IoT these days, and rightfully so. We’re on the beginning of a transformative era in which devices, databases, machines and other technologies all get connected without human manual intervention. A recent Mckinsey report estimates the potential economic impact of IoT between $4-11 trillion by 2025. An industry that is all about making person-to-person connections stands to reap a number of advantages by the more efficient connection of things. These include:
- Digital key card apps. No need to swipe physical cards. Send electronic key cards directly to customer smartphones. Besides convenience, key apps can store customer information in terms of room preferences and locations to expedite future hotel stays and elevate customer satisfaction and loyalty.
- Self check in. Eliminate wait time. Enable customers to book and pay for lodgings directly from a mobile app. Increase customer satisfaction by providing a seamless booking experience with immediate access to room and reservation information, all without need of a human reservation clerk.
- Room personalization. IoT provides the ability for homeowners to control thermostat settings, lighting preferences, even program morning coffee brews, remotely from a smartphone app or through voice recognition technology in the house. Hotel guests can do the same. Provide them with the same convenience they have had home, and guests will continue to call the hotel lodgings their home away from home.
- Automated Up-Selling. As Forbes contributor Daniel Newman points out, “If the IoT data tells them the customer has visited their resort every year for the last three years, it can automatically send a message proactively asking the guest if they’d like to make another booking this year. You just saved your customer a step—and guaranteed a booked room—without ever lifting a finger. The same could be said by harnessing information about food selection, excursions, and in-room amenities.”
The value of apps to customers is convenience and improved experience. The value of apps to hospitality companies, in addition to providing best-in-class satisfaction, is valuable data to discover what customers want, how they want it and, equally important, what they don’t want. Analytics allow for personalization, cross-sell and up-sale opportunities and identification of key factors that contribute to providing the highest quality guest experience. In addition, data analytics help hotel and leisure operators target “high-value customers”—those that spend money on additional amenities such as dining and entertainment, as opposed to just checking in and out, as well as those customers who might not spend a lot on amenities, but are likely to return frequently (i.e., travelling salespeople) and thus represent potential higher value over time.
Analytics has an equally important role in improving yield management to ensure optimal room price during periods of peak and low demand dictated by cyclical patterns, weather and upcoming events. Bernard Marr writing in Forbes points out the example of Red Roof Inn, which determined the value of its hotels near major airports at a time when flight cancellations were high. Considering that some 90,000 passengers were being left stranded every day, the chain’s marketing and analytics team worked identified openly available public datasets on weather conditions and flight cancellations. Assuming that most of their customers would use web search on mobile devices to find nearby accommodation, a targeted marketing campaign aimed at mobile device users in the geographical areas most likely to be affected led to a 10% increase in business.
Overall, a Silver Touch study found that analytics “can improve the profits of an organization by 200% if it is used for yield management, sending out personalized offers to customers, managing Omni channels for booking effectively and improving forecasting.
Provide a Better Reality
Seeing is believing. Virtual reality (VR) apps allow customers to literally experience hospitality features before an actual on-site visit. As Harish Thyagarajan points out, “Instead of just providing customers with an age-old brochure, hoteliers can go about providing them with a virtual reality experience to give them a detailed tour…customers can now explore the hotel, check out all the facilities that are offered and also explore the nearby hangout spots such as cafes or malls.”
And once a guest has registered, you can make the actual visit even better through augmented reality (AR). This is an app that provides computer-generated perceptual-information superimposed on what people actually see. The most famous example of AR is the Pokemon Go game where characters would materialize in your living room. A great way to add value to customer stays is a mobile app where if you are standing in a restaurant, a menu plus dining reviews of favorite dishes pops up over the view of the entrance. Or if you’re looking for the quickest way to walk to a spa, a route to follow appears over a view of the street you’re on.
Robots Aren’t Coming…They’re Already Here
Opened in 2015, the Henn-na Hotel in Nagasaki, Japan is the world’s first hotel staffed by robots. There is some debate about whether “robo-receptionists” can actually replace the value of human-to-human interactivity. For the near future, this perhaps has potential for no-frills hotels that specialize in “get-in, get out” short-term stays. But adoption is likely to be slower for luxury-end venues that compete on personalized concierge attention to guests. Even so, robots are being deployed for room cleaning and porter duties, and even waitering.
A different king of robot, however, is in more widespread use helping to make the customer experience more personal, even while sidestepping human intervention. Software robots, more commonly known as chatbots or simply bots, streamline access to and delivery of information. A hospitality app that utilizes bots can assist guests with basic questions and requests, and in a range of languages, freeing hotel staff attention to focus on more complicated tasks. Customer satisfaction is improved due to the ease and immediacy of getting the information they want, without standing in line, and hotels become more productive while reducing costs.
Living in the Future
Digital transformation of the hospitality industry is already here. Over the next five years, companies that fail to take advantage of further advancements digital transformation may become companies transformed out of the industry.