Robert Rauch’s Top 10 Trends in Hospitality for 2017
By Robert A. Rauch, CHA, President of RAR Hospitality
Just 10 years ago, Facebook morphed into a mainstream business tool, Twitter arrived, the iPhone exploded on the scene and Android phones were born. Today, the pace of change has accelerated dramatically. In his new book, Thank You for Being Late, Thomas Friedman explores this very age of acceleration. Our trends this year do not include every trend, just what we believe are the Top 10. Certainly we could add the Internet of Things (IoT) but we cover some of that in our technology trends below. We could also add the proliferation of brands but that is more of a continuation of the past few years. Feel free to weigh in on social media or on our website!
Artificial Intelligence (AI) and Robotics
are for real. AI is a fast-moving technology that enables machines to perform tasks that could previously be done only by humans. Robots will have an impact on some area of the guest or associate experience in 2017. One of the benefits of robots will be the data they provide us as guests utilize the services. The Residence Inn LAX uses a robot named Wally to retrieve items for employees and guests. Maidbot has developed a housekeeping robot, Rosie, and Hilton has Connie the Concierge. Hotels will use the robots just as much for customer service and excitement as it might be doing for ultimate savings on labor costs.
While there is a threat to workers whose jobs are "routine," AI will not cause mass unemployment. It might, however, have a positive impact on net income as a capital expense replaces a labor cost and at the same time may require many workers to learn new skills. The overall result of mechanization in the past has actually created new jobs. Only time will tell!
Text and Chat
are here to stay. Chat apps like Facebooks's Messenger and WeChat, the app that I use when dialing abroad and the most popular communications app in China, have huge implications for our industry. Texting guests in response to "in the moment" needs, safety and security issues that would require immediate and subtle communication or eliminating language barriers are all technologically feasible and available. Texting can provide for ancillary revenue streams (we've beta tested an "eat, play or shop" app that guided guests to local deals including at our own facilities). Chat is already global and Chatbots are basically AI that can appear as customer service assistants. Services like Zingle allow us to communicate with our guests from one central hub (whether they are using a messenger app or texting) and offers automation.
Mobile Check-in has been around for the last few years but will hit full stride quickly as the technology has been refined. Just about every guest has a smartphone and if a guest does not actually utilize mobile check-in by going directly to their room, they will show up at a pod rather than a formal front desk. In the future, these pods will be tablet based kiosks like you see in the airport. A guest can pick their room directly from their phone and the door lock will be programmed to only open when that mobile device is nearby. Taking this idea into the rooms themselves, some brands have begun to move away from having the traditional guestroom phone. Instead, they opt for an in-room tablet that controls every aspect of the room. Ideally, these two sets of technology will be merged into one so that a guest can control everything directly from their mobile device.
Sharing Economy or Alternative Lodging, call it what you want, but Airbnb and Uber have created a firestorm in our industry. Uber has virtually put taxis out of business and Airbnb threatens to become a primary lodging force. While Airbnb steals some market share from hotels, its future is likely as an online travel agency of sorts. Their low commission structure allows them more upside as a very unique distribution channel that represents both hosts and hotels rather than a traditional competitor to hotels. Additionally, they will become tired of the litigation with hundreds of cities. These companies, Airbnb and Uber are perfect examples of how technology can simplify a business by streamlining the purchase process. Hotels should look to them for inspiration rather than as the enemy and seek to answer the question, "why would a guest choose to book Airbnb over my hotel?"
Loyalty Pricing is a huge component to revenue management! Getting guests to book direct and determining the value of each guest are keys to success here. With online travel agencies (OTAs) charging high commissions, it is imperative to manage the cost of acquisition of each customer and find ways to educate them to book directly with the hotel. OTAs have spent hundreds of millions of marketing dollars to condition consumers to think they have the best deals available. Brand campaigns like Hilton's "Stop Clicking Around" are a great start to combat this perception. Millennials are not as brand agnostic as we once thought so let's educate our guests on the benefits of booking direct and ensure we know the cost of each channel (Kalibri Labs is the expert on this subject).
is vastly different than it was at the turn of the century. Today's guests expect the in-room entertainment experience to be better than or at least as good as they have at home and they want it on demand. Gone are the days when "Free HBO" on your marquee will build hotel business. If a guest cannot access their Netflix account or various on demand streaming services, then how is the in-room experience better than what they have at home? Additionally, look for various customizable technologies to start being included in room packages. Everything from custom lighting, smart mirrors and in-room tablets will be tailored to the specific guest's preferences before they arrive.
Marketing and Social Media 2.0 is here so it is time to measure the results of all these new data points. Creativity in social media has caused lots of fans, likes and followers but quantitative success does not always transfer to tangible ROI. Data and analytics must be mined to measure successes and look for new ways to improve our guest experience or market toward a specific demographic. Search engine marketing, optimization and advertising initiatives are crucial to our hotels' success in this digital age and remember that mobile is king!
are expanding beyond the standard hotel restaurant. Guests expect an experience at every level when visiting a hotel, so F&B should not be an afterthought (even if it is just a Grab n Go option). Locally sourced products (especially the concept of root to leaves) and unique experiences continue to be the rage but make sure to still have some mass appeal options for the wary traveler just in need of a good burger. Look for the confinements of a traditional restaurant to disappear being replaced by open social areas that can be utilized for multiple purposes. Specific menus for room and pool service will be replaced by either a full menu or unique delivery services as the open-eating concept expands to all areas of the hotel.
Company Culture has become extremely important in retaining good talent. Jumping ship is easy to do unless employees are truly engaged and supportive of the mission. While job benefits are always a positive, they are now so common place that they cannot stand alone when it comes to employee retention. Take a note from how we treat our guests and create an environment where your team feels valued, cared for and respected. Then watch as your service scores reflect the work of a satisfied team. With minimum wage increasing throughout the country and a workforce more health conscious than ever, this trend of defining a positive company culture can be seen everywhere.
Design, Brands and New Markets are blended together here because the pace of change is enormous and some changes meet right here. Minimalist design has certainly played a large role in some of the new soft brands as well as independent boutique hotels. Further, while it is likely not good business to focus design on one market segment, the growth of the millennial market, coupled with the growth of the Chinese market leaves us two very rapidly growing segments. Millennials became the largest generation in April of 2016 and will represent over 80 million Americans within 20 years. The Chinese outbound travel market is number one in the world and will likely hit 200 million by 2020.
Next month, we will begin updating our forecast to reflect some of the political changes that might be impacting demand in our lodging sector. In the meantime, may you and your families enjoy a festive holiday season and an exciting New Year!
Robert A. Rauch, CHA
Robert Rauch, CHA, is a nationally recognized hotelier and President of R. A. Rauch & Associates, Inc., a leading hospitality management and consulting firm. Rauch has over 35 years of hospitality- related management experience in all facets of the industry. Widely recognized as the 'hotel guru', Mr.More from Robert A. Rauch, CHA