L-R: Stuart Pallister, Arnaud and Junjun Chen Bertrand, Wilhelm K. Weber,  Zia Chishti, Jean-Marc Tassetto and Anderson Yang.

 

The hospitality industry has seen rapid change over the past decade, with new technologies, online platforms and markets ushering in new initiatives of all sorts to the sector, ranging from mobile check-in and robots providing room service to self-ordering restaurant menus. These initiatives are all starting to have an impact on the customer’s experience in the service sector.

New business models such as alternative accommodation (Airbnb, HouseTrip, etc.) and ride-sharing platforms (Uber) are also changing the public’s perceptions to traditional hospitality businesses. So how should hoteliers be approaching such activities and the potential disruption, although this tends to be incremental or evolutionary rather than revolutionary?

Disruption brings with it uncertainty through unexpected consequences. People are nowadays more prepared to check themselves in at the airport, use self-service cashier lines at the supermarket, or order food via a mobile app.

It may not be all about technology, but online initiatives are moving at break-neck speed. “Ninety per cent of all the data created by mankind … has been created in the last two years,” said Christian Simm, founder & CEO of Swissnex San Francisco in a keynote speech at EHL’s International Advisory Board (IAB) meeting on ‘Leading through Disruption’.  (Zia Chishti, chairman and CEO of Afiniti, later pointed out that some 70 per cent of all data had been created in just the last year alone.)

In hospitality, people’s expectations are also changing. Long queues to check in at the hotel become unacceptable; unresponsive or slow room service lead to negative hotel comments on TripAdvisor; and some expect 24 hours’ housekeeping even in a budget hotel.

"Leading through disruption" panel - EHL IAB 2017 (2)

L-R: Stuart Pallister, Arnaud and Junjun Chen Bertrand, Wilhelm K. Weber,  Zia Chishti, Jean-Marc Tassetto and Anderson Yang.

 

Finding the opportunity

Hotel managers may already be worrying about such trends – not so much in terms of the changes they will need to make to hotel services to satisfy customers’ needs, but rather about how customers will perceive such changes in the long term with regard to service convenience, entertaining, privacy, and so on.

As opposed to traditional hotels, some market players such as Citizen M, Starwood’s Aloft Hotels and IHG’s Even Hotels have tapped into niche markets and are meeting the changing demands. Not only millennials – the main target market – but also a section of business travellers are also turning to these hotels because of their convenient, quick services that deliver “hassle-free” experiences.

Technological disruption in the hotel industry is therefore challenging but it also brings with it significant opportunities. Due to the large numbers of internet users, including mobile, online review platforms attract lots of traffic which, in turn, means plenty of business potential for the OTAs in particular. 

Consider for example the Google Trip App, based on users’ reviews from different platforms and personal preference history. Virtual reality (VR) also allows users to get 360-degree views of a hotel’s facilities. In-room entertainment applications like split-screen TVs allow guests to enjoy their favourite Netflix series, while keeping an eye on a football game.

All of these make the guest experience more personalized and memorable. Another interesting example is HotelTonight. This platform targets people seeking to make last-minute hotel bookings and helps participating hotels maximize their occupancy rates. As opposed to traditional OTAs and online hotel reservation systems, HotelTonight gives a range of possible room rates only via its mobile app.

Like it or not, technology will always keep progressing and hotel brands could turn such tech challenges into their competitive advantages.

 

Finding the ‘human touch’

No matter how much technology has impacted on the hotel industry, hospitality – and the human touch – will always exist and should never be replaced by AI. Robots have been increasingly appearing in hotels, but one thing they cannot deliver is that human touch.

In his keynote address, Swissnex CEO Christian Simm told the IAB meeting that on the popular online dating site, Ashley Madison, surprisingly only 20 per cent of the female participants turned out to be real women. The remaining 80 per cent were AI-creations (“bots, lines of computer code, algorithms.”)

“They had a personality, they had a voice, they had an address, they had a face, they had stories, they had human behavior … and 23 million people fell for that … What is that going to mean for our society and for hospitality?”

Advanced technology can make life easier, but it cannot replace human beings. A machine can cook dishes exactly to order, but it cannot experience how the guest feels; a robot might be able to deliver a pot of hot water to a hotel room, but it is unable to tell whether the guest is feeling unwell; an advanced voice control system could make it easier to order room service, but it cannot tell whether the guest enjoys the meal.

Combine all the current technological processing ability – whether in smartphones, mainframe computers or PCs – and compare that computing power with the human brain and technology is still some years behind, maintains Chishti.  AI is just a tool which can help businesses grow, but for hotels to remain successful, they must continue to enhance the “human touch”, which is at the core of hospitality.  

“It is about real human care, communication, thinking and feelings,” said Hans Wiedemann, Managing Director of Badrutt’s Palace Hotel in the Swiss ski resort of St Moritz, on the sidelines of the IAB meeting.

Citizen M, a lifestyle brand, has invested in technology but is also making sure that guests experience that human touch. As Wilhelm K. Weber of Swiss Hospitality Solutions outlined during a panel discussion, the hotel chain has self-check-in kiosks which allow travelers to access their room keys. However, service ambassadors are also on hand. Weber recounted the story of an exhausted business traveler who arrived late at a Citizen M hotel due to a delayed flight. Upon checking in at the kiosk, a service ambassador offered the guest a complimentary beer to help the guest feel more relaxed.

"Leading through disruption" panel - EHL IAB 2017 (3)

L-R: Wilhelm K. Weber and  Zia Chishti.

 

Finding the right way

Technology helps make the world connected and transparent. People are able to express their opinions in a variety of different ways. In the hotel business, well-known review platforms, such as TripAdvisor and social media channels such as Facebook, largely strengthen customers’ bargaining power. People can easily leave comments online which, in turn, require a great deal of effort on the part of hotels if they are going to respond to each and every one of these.

These online technologies are also disrupting the hotel business – they are changing the way in which people communicate. Many hotels have hired a designated team to respond to selected online reviews with personalized messages because they know the reviews represent ‘real feedback’, not the type of comments which effectively ‘threaten’ hotels with a bad review in a bid to get something for nothing. However, many hotel managers are afraid of getting bad reviews and either choose to ignore them or give a refund. There are many ways to handle this ‘disruption’ and run the business; the key is to find the right way.

For industry leaders and future hoteliers, this is the time to cultivate the mindset of being confident in your service standards. That means being able to appraise those standards honestly. For example, a hotel property manager should know how long, on average, a room service order for a family of four will take; a sales person should know the sizes of different room types; the bar staff should be able to remember the recipes of personalized cocktails for regular guests, etc.

If guests then complain about room service delays or the size of the room, the hotel manager would be able to respond more appropriately. Online, hotel brands could also respond to unfavorable reviews in a less standardized, impersonal way, which lacks an emotional connection. Instead of merely apologizing to a business traveller, who has made a serious complaint about noise, the hotel manager could perhaps offer the guest a complimentary stay. In short, it’s all about the amount of effort hoteliers are prepared to make to keep their service commitments to their guests.

So, what is the right way? It is knowing who you are, what you have, and what you will do. 

All in all, disruptive innovation is undoubtedly resulting in challenges for the hotel industry. At the same time, it is also a ‘wake-up’ call for hoteliers to turn these challenges into opportunities and competitive advantages. Given the relentless march of technology, this scenario is likely to continue for many years to come, particularly due to changing market needs. With disruption, come risks and opportunities. Hoteliers should be prepared to seize those opportunities, while looking to improve their services and enhance their hospitality offerings.

 

Ray Zhang is currently a student on EHL’s Executive MBA program.

 

A roundtable discussion on ‘Leading through disruption’ was staged as part of EHL’s International Advisory Board (IAB) meeting held at Ecole hôteliere de Lausanne on April 24th, 2017.

Speakers included Jean-Marc Tassetto, Co-founder of Coorpacademy; Wilhelm K. Weber of Swiss Hospitality Solutions; Zia Chishti, Chairman and CEO of Afiniti; plus EHL alumni and entrepreneurs Arnaud and Junjun Chen Bertrand, as well as current EHL student Anderson Yang. The session was moderated by EHL Hospitality Insights Editor-in-Chief, Stuart Pallister.

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