3 themes in the hospitality industry and what they mean for your business
There is no question that we are living in exciting times, especially with regard to some of the innovations happening in the world of hospitality. For those of us who travel regularly, or anyone who enjoys staying in hotels, dining out, or partaking in the other numerous offerings provided by the hospitality industry, frequent changes to the customer experience may seem the norm. In fact, they are practically an expectation these days. But for operators and people who follow the industry, it can be overwhelming to keep up with all of the latest trends. And even more complicated to determine how those trends may impact you and your business. One approach for this type of challenge, is to boil things down to common themes and determine is most relevant to your business. In this case, I focus on current hospitality trends that are most relevant to the concepts of enhancing customer experiences and increasing operational efficiencies, which reflect the core fundamentals of our business. These are three trending themes that I see emerging in the Hospitality Industry and what they mean for your business. I look forward to hearing input from other perspectives as well.
Broadening of the hospitality experience
The first theme is the broadening of the hospitality experience. Customer expectations are changing dramatically. Not only the reason they travel or eat out, but what they expect from their providers is much different than it was 10 years, or even 5 years ago. Consumers are looking for memorable and unique experiences. One that is tailored for them and different than what their peers experience. And sometimes a hotel or restaurant that is likely to earn “likes” on social media can be just as important as the bed or food that is served. Largely driven by the shifting market demographics, there is no denying that the rules for engagement between guest and operator are changing. We’ve seen the impact that the experiential traveling has had on the Lodging Industry, for example. The proliferation of the home-share model, the continued disruption that Online Travel Agenda (OTAs) cause in the distribution landscape, and even the influence of Social Media on guests’ purchase behaviors are all indications that expectations of a different type of hotel experience are driving changes in the industry. We are even seeing many hotels, restaurants and common spaces being redesigned to better accommodate these expectations. The good news is that accommodating these experiential expectations can actually result in some unique opportunities for the operators, both in terms of expanding and diversifying revenue channels, and increasing brand loyalty by foreseeing and meeting dynamic expectations. And most importantly, personalizing those experiences in order to ensure that the differentiation is uniquely relevant.
Automation at scale
The second theme is all about automation at scale. Most hospitality interactions these days; whether taking a business trip, dining out, or just a weekend away, can be completed almost entirely without direct human interaction, if desired. But automation of guest interactions such as mobile self-services like check-in/out, room keys, online ordering, etc… have long been well established table stakes. Automation is quickly extending to many of other touchpoints throughout the customer journey, as well as many of the intelligent decisioning processes and analytics to support data driven guest interactions and other business processes. For example; travel bots and chat bots that are able to optimize booking or call center experiences, for both the operator and the traveler, kitchen robotics being leveraged in ghost kitchen concepts to maximize delivery and throughput during peak meal periods, or the analytics of personalization using artificial intelligence and machine learning (AIML) to accomplish the scale required to ensure the personalized interactions that provide those uniquely relevant experiences referenced in the first theme. Intelligent automation is the lynchpin to accomplishing these basic fundamentals at scale. With all this in mind, hospitality companies need to find a way balance automation with delivering a personal and human touch that differentiates themselves.
Leveraging transformative technology as a competitive advantage
The third theme, is leveraging transformative technology as a competitive advantage. This is a catch-all category for many of the drivers of change, but also the mechanisms that are evolving to accommodate many of the other trends categorized in the first two themes. Just a few examples, we are seeing Augmented Reality and Virtual Reality (AR/VR) being used to enhance the booking or staying experiences in Lodging. Voice and/or video input is being used with smart check-out technology and computer visioning to allow operators to maximize efficiency during peak demand periods. We are seeing the use of blockchain technology to provide an enhanced method for managing loyalty programs, booking transactions across decentralized distribution channels, inventory management, and providing better visibility to supply chains. Not to be overlooked, is all of the advancements happening with in-room and other experiential technologies that are digitizing the entire customer journey, pre, during, and post experience. Orchestrating an appropriate balance of these technologies through a thoughtful and intentional strategy is a great differentiator in the overall guest experience.
Putting this into practice
Each of the individual trends within these key themes are intriguing on their own. But to develop an approach to be prepared, respond to, and drive value from these trends, it may be helpful to identify what’s common across them, and what that means for your business. The reality is that many of the specifics within these trends are constantly changing and will likely be different in 6 months, but the common element that stands out to me, which does remain constant, is the rapid evolution and the pace of innovation required to keep up with them, let alone to proactively influence them.
Adapting to an environment of constant and rapid change may seem like a basic approach. But the pace of change that we are seeing across these three themes in Hospitality, which will likely increase over the next decade, are bound to provide challenges to many of the foundational components of many traditional organizations. This requires operators to rethink how they go about their daily business. Perhaps, instead of focusing on the changing elements of your business, the focus should be on identifying those things within our industry that have not changed at the pace of these trending themes, and that may be potential inhibitors to innovation.
I don’t pretend to have the prescription to all of these, nor is this an exhaustive list, but I do believe that there are components of the typical business model within the Hospitality Industry that seem to inhibit the pace of innovation. By asking some of these hard questions, organizations may identify innovative ways to keep up with the pace of these trends. For example: Does the organization still struggle with “silos” that run along departmental lines? Does the departmental organization structure still effectively reflect the model of the business? We’ve made great strides in integrating channels and touchpoints for your guests, so they experience the cohesive omni-channel experience, but what about the efficiencies of the internal experience? Can the same be said for how we allocate budgets or P&L’s by channel? Are departments or channels competing with each other for marketing spend, if so, how does that benefit the customer? Would an alternative budgeting process yield better results; zero-based vs “use it or lose it”? Do the incentive programs accurately reflect and encourage an agile approach to innovation? Can legacy franchise agreements be improved to increase nimbleness in a mutually beneficial way? Have your customer segmentation and loyalty program strategies evolved along with the shifting guests’ behaviors? How do we ensure that your technology innovation remains in alignment with your strategic business objectives and remains customer or operations focused? Have we adjusted our recruiting, hiring, and development programs to address the knowledge, skills, and abilities suited for a culture of innovation?
Often, the biggest inhibitors to innovation may actually have little to do with people or technology. It seems logical that the business processes and organizations should evolve at the pace, if not ahead of the pace, that your business models change. Operators who are willing to apply innovation to their internal processes, organization, and culture and are willing to answer some of these tough questions will rise to the top.
In summary, the three key themes happening in the Hospitality Industry; a broadening hospitality experience, automation at scale, and transformative technologies, all contribute to an environment requiring a rapid pace of innovation. The operators who will be successful at differentiating their experiences will be those who not only embrace and lead with these innovations, but those who are willing to take a hard look at many of their traditional practices. They must be willing to take non-conventional approach to foster a culture and pace of innovation to keep them ahead of the trends, while relentlessly aligning to the organizations strategic business outcomes. I am excited to see the continuing wave of changing trends, but even more anxious to watch how innovation will foster change to the industry around some of these, and probably many other traditional ideas that weren’t mentioned here. I’m also curious to hear input from others, so please feel free to share your perspectives about these, or other themes that you are seeing.