New Hospitality Insights, Opportunities, and Optimism
By Scott Dahl, Program Director, Master’s Degree in Hospitality Strategy and Digital Transformation at Les Roches Global Hospitality Education
It is interesting to notice how every economic downturn generates tremendous opportunities for growth. You need only to look at the downturn following 9/11, SARS and the 2008 market crash to see how "survival of the fittest" conditions lead to immense innovation supported by technology.
There are differences in the recovery rates for hospitality "post-COVID", with a stronger rebound in leisure than in corporate travel. The frequency of business trips is likely to be more strictly controlled and assessed against bottom line cost, carbon footprint and how well tech platforms can be substituted.
McKinsey has identified four key segments in the return to corporate travel: The "never left", "never returning", "fear of missing out" (FOMO) and "wait and see" segments. The purpose and distance of trips also affects the recovery rates within each segment, with domestic travel recovering more quickly than international travel. The FOMO segment, which is responsible for more than half of business travel, will likely be the key contributor to a rebound.
From an enforced "health and sanitary" market, we are eagerly shifting back to an experience economy. The leisure travel market has seen both an increase in close to home "staycations" as well as "revenge travel", with consumers who have saved up for many home-bound months ready to splurge to make-up for their lost travels. Another market segment, coined the "bleisure" market, is a cross-over between business and leisure travel.
The pandemic-driven trend to work remotely facilitates the growth of this segment that combines business and pleasure travel. In fact, this tendency has also extended to include the entire family, with travels that are usually longer in duration and split between work and leisure. To address this need, thefamilyworkation.com had on offer this past summer a 15-day trip to Portugal with supervised activities for children and quiet, Wi-Fi-guaranteed co-working spaces for parents.
Hotels are reconfiguring their meeting rooms to allow for shared workspaces and to ensure that they are technologically "hybrid-ready". Accor launched their "All Connect" program this past April around Microsoft Teams and Surface Hub 2S solutions and they announced their goal of having all of the hotels in their portfolio, from luxury to economy, fully "hybrid-ready" by 2022. Hotels may also want to reconsider their pricing structures in order to make longer-term stays more attractive.
According to the American consulting firm, Oliver Wyman, the shift to workplace flexibility and portability necessitated by COVID-19 has lasting implications for employers as well as the for the hospitality industry. Two days working from home, with two days at the office and then one day as a nomad working from a shared workspace could very well become the new norm.
Advances in Technology
Since the start of Covid-19, technology has taken huge strides forward. Facial recognition and augmented reality, for example, are set to increase efficiency within the hospitality industry. On the other hand, attempts at personalizing the guest experience can be at odds with issues of confidentiality, which if not handled well can undermine trust with your customers.
Technology for technology's sake is not the goal, but rather it is about solving problems, enhancing the guest experience and being disruptive by introducing products and services that leverage technology.
Facial recognition is a good example of what could be an excellent solution for access control in the industry, assuming anonymity can be preserved. After all, who has more keys than a hotel? But imagine being able to measure the level of customer satisfaction through facial recognition technology in every single transaction with our customers to know how we are doing each step of the client experience and to improve on service.
New technologies can be used to enhance the customer experience. Virtual reality (VR) uses a headset to replace what you see with another reality. Augmented reality (AR) uses glasses to project images over what you are actually seeing whether that is something simple like the time or more complicated, such as a hologram. To give just one small example, imagine the fun and memorable impact of using VR goggles to "present" the children's menu at a family vacation meal.
Technology can also play an important role in addressing pandemic-related fears by helping to create safe socially distanced spaces, provide assurances of safety and hygiene and offer more touchless interactions, for example at check-in or for room access. Technology can also be used to personalize service, whether that might be deciding when your room will be cleaned or having access to wellbeing activities such as virtual meditation or virtual trainers.
As it becomes more accessible cost-wise, technology is becoming democratized. One new application under development allows you to take ordinary 2D photos and then simply drag-and-drop them to simulate an immersive VR experience. This a significant step up from a panoramic photo taken with a mobile phone and does not need coding skills or high production costs.
Changes to Marketing Dynamics
One of the key areas where hotels can leverage technology is by improving their storytelling. Customers' research and book hotels most of the time before they visit a property, so it is important to get the right message across at every stage of their planning process.
The role of social media has shifted during the pandemic as people spent more time online searching for a getaway and dreaming about the experience. In fact, although bookings tumbled, social media activity focusing on the travel theme soared to an all-time high. In a period where personal connections were forcibly kept to a minimum because of the various lockdowns taking place, it was natural for people to shift to social media. This new reality offers many different opportunities for engaging with, converting, and retaining customers. By adopting a dynamic marketing approach that leverages social media, unaffiliated hotels can highlight their uniqueness in a way that people can almost touch and feel.
For social media, the question is "who is going to tell my story better on Instagram?" Me, travelers who are 'crowd-sourcing' their own experiences, or some distant marketer working for a B2C platform? If you can tell me a local, authentic story and if you can sell me a future memory, you do not have to worry about selling me a bed and a room; hotel rooms have become commodities. When people book a vacation, they are looking for experiences that will become engraved in their minds. If we were able to digitalize previews of those experiences, we could literally change where the point of sale is. In other words, the winners will focus on selling a future memory and no longer a room.
In my opinion, the point of sale is shifting away from the online travel agencies and their expensive B2C marketing platforms to the individual hotel channels. Who knows more about the cute little wine festival in your town than you? Who is going to be able to negotiate good ticket rates with that festival? The local hotel or the Airbnb marketer?
There is a niche for the authentic personal touch right now, as well as for curated memories. There has never been such a good time for leveraging technology to connect directly with people and show them what they are going to get, up close and personal. In order to do this, we need technologists who can balance creativity and analytics.
The hotels that will recover most quickly are those that do not forgot that the customer is reachable in a different place than 18 months ago. By reaching out to customers directly, you can dispense with the commission charged on top. By adding an artificial intelligence module to predict the profile of customers, you could customize their bookings. The game changer here is what happens before people show up, not once they arrive at the hotel with their luggage.
Following 10 years of smooth sailing, we still don't know what the industry outcomes of COVID-19 will be. We are sitting on the edge, with just about anything possible. If we look at all of the positive outcomes and opportunities during this most recent crisis though, we can see that there is reason to be optimistic.
Reprinted from the Hotel Business Review with permission from http://www.hotelexecutive.com/