Industry Update
Opinion Article16 February 2018

Essential capabilities for future-facing hotels

By Tim Davis, CEO of PACE Dimensions

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Emerging technologies are enabling constant changes in hotel marketing, customer engagement and service delivery. But competing in today's digital environment isn't simply about adding new skills; it demands a revaluation of organisation and operating models.

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As incumbent hospitality businesses compete with "born-digital" enterprises they shouldn't look to replicate these ventures. Instead, hotel companies should focus on their core strengths, on adapting for the digital economy, and on exemplary execution.

Based on our experience with both travel technology and hospitality clients, hotels should look to focus their efforts under two key areas: organisational readiness and business capabilities.

Organisational readiness:

1. Customer-centricity

This is the foundation for success. Hotels must develop a deep understanding of customer value and propensity to buy, including guests' attitudes and behaviours and foremost priorities. This knowledge should inform all other parts of the business. Customer needs and behaviours are changing ever faster and new technologies are raising expectations. What sets the leaders apart is a continual process of reviewing and updating these insights.

2. Iterative learning

The rapid change of consumer attitudes and expectations necessitates a continual learning process. Beyond this, an iterative approach to learning is necessary for refining existing insights and developing a deeper understanding of customer needs.

The goal is to create a process of sustained evolution and improvement.

3. Agile development

Being able to rapidly respond to change is a key part of adapting for the digital economy. Agile development allows requirements and solutions to evolve in response to customer needs with frequent delivery of updates and improvements. This process delivers constantly evolving products and services. An agile approach requires a corresponding organisational and operational model. Do not expect to implement an agile approach in business that is not structured for swift responses to change.

4. Data-readiness and smart business intelligence

'Big data' is useless if there's no means to translate it to big insights that inform meaningful change. To be data-ready is to implement end-to-end processes for gathering and converting data into actionable intelligence. Providing these insights to front-line staff enables in-the-moment tailored service. Smart business intelligence is about enabling access to key insights in order to measure, understand and improve performance.

Business capabilities:

1. Dynamic distribution and marketing management

Hotels need to be able to segment costs and revenues by channel, by customer group and by market in order to accurately assess and manage profit contribution. Attributing value to marketing actions enables smarter optimisation and profit-driven decision-making. Implementing systems to optimise distribution in real time will rapidly improve future performance, allowing the coordination of pricing and availability based on direct profit contribution.

2. Revenue productivity

Dynamic pricing, revenue forecasting and yield management, are well understood capabilities increasingly employed by hotel companies. With rising digital maturity, new opportunities to improve revenue productivity are quickly gaining momentum. Automating the end-to-end process and leveraging artificial intelligence is helping companies respond more quickly and precisely to market changes. Customer intelligence and improved understanding of the customer journey allows targeting of individual customers with highly relevant offers, creating greater opportunities to upsell, cross sell and stimulate repeat sales.

3. Customer experience

Customers are becoming much more discerning. The customer experience is no longer all about the room or the hotel itself, but how guests feel during the entire journey: from discovery to booking to checkout. Coupling customer insights with data-readiness and automation enables recognition of valuable guests and opportunities for smart personalisation. Being able to recognise and respond to particular guest profiles across all brand touch points is set to become a key differentiator.

4. Motivating advocacy

Great customer experience creates fans, and nurturing fans into active advocates can be very powerful in building a positive reputation with wide market reach. In this context, harnessing customer support and motivating advocacy through social media and peer reviews is now a crucial part of brand building. True loyalty can be enhanced by rewards, but it is created by the quality and relevance of the customer experience.

Tim Davis

Tim Davis is the CEO of PACE Dimensions, a research and management consultancy firm specialising in travel and hospitality. Prior to founding PACE Tim Davis was Senior Vice President at Hilton Hotels Corporation.

    More from Tim Davis

    About PACE Dimensions

    PACE Dimensions is a strategic management consulting company with expertise in travel and hospitality.

    Tim Davis, previously a board level executive with over 20+ years experience leading hospitality, travel and technology companies, founded PACE Dimensions in 2010. Today PACE Dimensions specialises in turning market insight into competitive advantage for major travel and hospitality brands, technology services and investors.

    Prior to founding PACE, Tim Davis led departments in mar keting, distribution and ecommerce, commercial development and IT at Hilton Hotels Corporation. His achievements include the integration of two mergers unifying the company"s business processes and technology, and the building of Hilton"s ecommerce capabilities generating multi $BN in direct sales. Today Tim Davis works with a close team of travel and hospitality experts at PACE, including senior partners Fiona Robson and Jo Hill.

    PACE Dimensions helps businesses achieve their growth goals through corporate strategy and advising senior management. This approach covers corporate development, improving brand and commercial performance and designing and managing for digital change.

    www.pacedimensions.com

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    CEO - PACE Dimensions
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