At World Travel Market this year, I ran a Summit called Future Digital Thinking. I split this into 2 two hour sessions, the first focusing on the hospitality sector and the second on innovative start-ups. I will write a future blog post on the latter but, for now, I would like to talk about hotels and their opportunity to adopt advanced digital technology.
I called this first session, ‘Digital Thinking in the Hospitality Sector.’ My three speakers were:
- Paul Mulcahy, Senior Vice President Commercial, Mövenpick Hotels and Resorts - Mövenpick is a substantial hotel chain with 83 properties across 24 countries and annual operating revenues of over $1bn.
- Daniel Wishnia, Digital Marketing Consultant, GCH Hotel Group GmbH - GCH has over 120 hotels in Europe. Daniel advises the Group on digital matters. For quite a few years he has embraced many of the latest developments in the digital world.
- Nuno Castro, Director, Data Science, Expedia Affiliate Network - Nuno is a data scientist with a PhD in Machine Learning. The business he works for, Expedia Affiliate Network, sells 350,000 properties around the world via Expedia businesses including Hotels.com and Expedia itself.
Each had a different take on digital technology in hospitality so, between the three of them, we had a good round-up of where hotels are heading.
The hospitality industry is hugely fragmented and heavily skewed. Compared to the hundreds of thousands of independent hotels, there are relatively few hotel chains. Combine this with the fact that running a hotel is not the easiest route to riches – profit margins are quite tight – and one might conclude that the hospitality industry would not be a ready adopter of new technology. However, the industry’s customers all carry smart phones and if those customers are Millennials, they will never have known a time when they were not constantly connected to the world. Thus, hotels need to move with the times whether they like it or not.
Just to reinforce the point, Daniel mentioned that more data was created in 2017 than the previous 5,000 years. He talked about a few leading edge technologies that are actually in use right now including Artificial Intelligence (AI) and Predictive Analytics. I see these two coming together to improve service offerings through all touch points along the customer’s journey. For example, if our booking systems can offer just the hotels that a customer prefers, if a customer can have his/her room preferences known in advance, if the additional services that might be offered have immediate appeal, then this has to be good for our customers and good for hotels’ businesses.
These are not future technologies. They are already here. Data Scientists such as Nuno from Expedia are putting AI and Predictive Analytics into practice. I see Expedia as being as much a technology organisation as a travel company. With its massive scale - $89bn in revenue - Expedia can afford to put considerable investment into developing its tech and is using these technologies to better predict what customers wish to purchase.
Nuno hypothesised that there are two ways to make money:
1. Make a few decisions worth billions of dollars
2. Make billions of micro decisions each worth a few cents.
He said that the latter is what Data Science is all about: providing the intelligent machine learning algorithms that enable data driven micro decisions at scale.
Interestingly, both Daniel and Nuno mentioned voice or VUI (Voice User Interfaces). I see voice as becoming increasingly popular. I make good use of an Amazon Echo at home and am happy to say “Hey Siri” to my phone when I need it to do something or other; much easier than prodding the screen. comScore reckons that by 2020, 50% of searches will be voice searches. Nuno mentioned that voice device accuracy now exceeds 95% which apparently is on par with listening capabilities of us humans.
Paul of Mövenpick gave us a most interesting take on positioning for the new digital world. His hotel chain has recently recruited a team of 10 talented Millennials from inside and outside the company. They are Mövenpick’s ExCom-Y team, helping the hotel chain to glean and put into practice fresh ideas on how to attract Millennial guests. Mövenpick has been moving all its hotels to a Cloud PMS and will become the first hotel chain in the world with full cloud to cloud integration, using this to drive a new guest recognition programme and launch a new CRM database sometime next year.
Hearing about the plans being put in place by Mövenpick, GCH and Expedia Affiliate Network may have you thinking that this is all beyond smaller businesses. It certainly is not. My advice to you if you operate an independent hotel or a smaller hotel chain is to take a real interest in technology. See what is affordable from the many technology vendors servicing the hospitality sector. Don’t get left behind. You may not have the budget to develop your own technology but you can certainly harness what is out there and is available off the shelf. Don’t wait. Now is the hour to move with the times.