The Future of the Hotel Industry in 2020: A session with Peter O’Connor

This week, we tuned in to a fascinating webinar held by Revinate, Siteminder and IdeaS. In this webinar, Peter O’Connor, Professor at ESSEC Business School looked at what the future of the Hotel Industry will look like in 2020. In order to research this, he did two things: 1) conducted a written survey with a group of hoteliers; 2) held a think-tank session with consultants and senior operational managers from hotels.

When doing so, he asked the two groups two questions: who is the guest of 2020 and what technology based systems will be used by hoteliers in 2020?

We’ve outlined the discussion points surrounding these key points.

Who is the Guest of 2020?

Both the survey respondents and the think tank session gave similar responses when posed this question - and the answer was quite predictable. Both groups understood that guests are becoming increasingly tech-savvy and sophisticated travellers. They all expect personalisation, want unique experiences and have higher expectations. However the real question they all had was: how do hotels achieve this? It was very quickly identified that truly understanding your guest is the key to success. Without a deep understanding of guests and website visitors, hoteliers will quickly fall behind the emerging trends in the industry.

What technology based systems will be used by hoteliers in 2020?

With this in mind, the results were quite surprising. The respondents in the written survey gave very conservative answers: all the systems they suggested (Revenue Management Systems, CRM Systems etc.) are already being widely used in hotels. So much so that the results for this question were very similar to the results of the same question asked back in 1990. It became evident that it’s actually quite difficult to describe something that doesn’t yet exist.

As such, the question was re-phrased: What technology systems would you want implemented in your hotel by 2020?

In order to break down the answers, Peter organised these into two buckets: Data Focused Systems and Customer Focused Systems.

  1. a) Data Focused systems

– “Big data” is a term that is talked about a lot, but rarely used in the hotel industry. Data is currently not being leveraged in the right way. There are four main systems which he identified based on the responses:

1) AI and Machine Learning based systems (widely used in other sectors i.e. retail) but barely used in the hotel sector.

2) Predictive Analytics - Leveraging data sets to predict the future

3) Management Dashboard - Better communicating that data internally

4) Middleware - introducing software that acts as a bridge between data and systems

When asking the experts which of these systems were the most urgent and important to put in place, they responded: AI and Machine Learning based systems. Their belief was that once these are in place, everything else could stem from that.

  1. b) Customer Focused systems
  • Peter identified three key systems here:

1) Integrated Message – having a single view of the guest. Guests are being asked for the same data multiple times during their booking process as well as when they are in-stay, despite them being frequent visitors. Hotels want an almost ‘apple like’ view of the guest, so that they can be identified across any distribution channel. Without this, none of the predictive analytics can work.

2) Customer Profiler – in order to better understand the needs of the guest so they can better target their marketing efforts online. Email has become passé and is now a foreign concept to most travellers. Hotels must adapt to new forms of communication – such as instant messaging.

3) Beacons of communication – systems that allow you to push the right messages to the right guests at the right time. I.e. if you know someone practices yoga – alerting them to a session the following day only once they arrive back in their room the night before.

Again, when asking the experts – they responded: Integrated Messaging system.

So the question is: if there is so much potential to improve the technology systems, why were the original respondents suggesting software that was developed 20 years ago? The problem here is that there are roadblocks in getting new technology live within hotels.

Peter identified the four main roadblocks to getting this new technology in place:

1) Siloed Data: hotel data on customers is held in siloes. Few hotel systems integrate with each other meaning that there is no singular profile of the guest. Improving and getting all the systems talking to one another is not happening fast enough and is one of the biggest barriers to progress.

2) Data Protection / Privacy – linked to this lack of integration is data protection and privacy. Hotels have been a prime target for hackers and therefore there are severe limitations in place with regards to what can be stored on the guest. This limits any guest-centric, data focused development.

3) Difficulty in making the business case – it is increasingly difficult to clearly demonstrate the cost of new technology. When vendors come to hotels with new systems, they need to clearly and effectively show how they anticipate their system will add to both the top and bottom line of a hotel’s revenue.

4) Pioneering spirit (or lack thereof) – few hotels want to push the barriers; they are more comfortable sticking with what they know. No one seems to be willing to lead the innovation. The hotel industry needs a new breed of manager with different skill sets and competencies, and an open mind.

In summary, we need to reflect the growth of peer-to-peer markets such as AirBnB. They adapt to user needs and deliver experiences in a highly personalised and flexible manner. Hoteliers need to leverage their assets, the understanding of their guests. Hotels have a huge wealth of knowledge on consumers at hand – when they book, what they book, whether they’re alone or with family, even what they watch on TV and eat for breakfast. Hotels need to use all this data in order to keep up with other industries.

The webinar concluded with a Q&A. Below we’ve listed the questions and Peter’s answers:

What are the Direct Booking Systems of the future?

  • Direct bookings are more expensive to obtain than ever before. Why? Hotels are simply not getting enough direct business to water down the costs of driving the traffic, developing websites and converting the customer. The challenge here is one of volume.

  • So how do you get this volume? It all comes down to conversion rate. Hotels need to invest in making a higher percentage of their website visitors actually convert and buy..

  • How can they improve the conversion rate? Personalisation – it’s all about understanding the customer. Amazon know everything their customers have bought and searched for and use this data to customise their messages accordingly. Hotels tend to communicate more generic messages, proposing a single room even if your history shows you’ve always travelled with family. By presenting people with the right message, clearly adapted especially for them is a very simple way to increase your conversion rate.

  • All hotels need to make sure they have some form of analytics software to understand where their guests are coming from and what the conversion rate of each channel is.

How do you profile a visitor for the first time on the website?

  • It’s more difficult to do on the first visit, but there are simple changes you can make. For example, you can track the country they are in and automatically change the language.

  • Allow users to login with Facebook / Google etc., where you can get more information on the customer.

  • A returning website visitor gives a hotel the ability to personalise the message.

  • A big challenge will be the data privacy issue – how much data do you share of the customer? How far can you go without being intrusive? This largely comes down to cultural preferences. Some people prefer more recognition whereas others are more modest.

Do you see future generations pushing away from data mining companies?

  • This is quite interesting: Millenials / Generation Z offer contrasting views. In one breath they say that they want to be anonymous, they use VPNs etc.; in the next breath they talk about how they want things personalised. They want to have their cake and eat it.

  • For younger people there is some pushback but at the same time they want the benefit of being tracked and analysed. Simple fact in the future is that they won’t have the choice and it’ll just happen.

About The Author

Triptease empowers hotels to recapture guest relationships and increase direct bookings. Follow our blog for the latest insights and trends in the Direct Booking Movement.