There’s no denying the long-lasting and dramatic effects COVID-19 and the subsequent travel lockdown have had on the lodging industry.
Of course, the most prominent result was significant drops in demand, occupancy and revenue, which operators will be recovering from for years.
But one interesting trend that has come from the global downturn is an acceleration of the industry’s digital adoption.
It’s widely known that, for a multitude of reasons, the hospitality industry has long been a laggard in adopting technology and digital tools to increase guest satisfaction and run their businesses more effectively.
However, during the pandemic, both owners and operators turned to technology for a number of operational efficiencies, including reducing physical interaction between staff and guests and automating manual tasks that traditionally required a larger on-property staff.
These digital implementations are not short-term fixes to help hoteliers get back on their feet; rather, they are long-term innovations that will provide the framework for a prolonged industry recovery.
The smartest hotel owners and operators will emerge from the COVID-19 pandemic with new digital strategies that will prepare their businesses for the future.
The following are four areas where hotel owners and operators are adopting technology to both meet new consumer expectations and run their businesses more efficiently.
1. Reducing operational costs
Hotel operators have always run on razor-thin margins with labor and cost of real estate being their biggest expense. Therefore, even the smallest decreases in demand and revenue can push profitability into the red.
This conundrum has been highlighted by COVID and the subsequent pandemic, during which hotel owners and operators were forced by significant drops in demand to dramatically reduce staff sizes.
Compounding the issue, today’s workers are demanding higher wages. A recent study by Boston Consulting Group found that 7-10% wage growth leads to a 70-300 basis-point direct impact on a company’s earnings.
So, as hotel businesses recover, they will be best served to keep staff sizes as small as possible in order to remain profitable.
Today, more hoteliers are leaning on technology to handle the mundane tasks – from back-of-house functions like manual data entry, collecting and reporting data, to guest-facing jobs such as checking in guests, sending marketing communications, and responding to sales RFPs.
In a global survey by McKinsey & Company of 800 senior executives in July 2020, two-thirds said they were stepping up investment in automation and AI either somewhat or significantly.
Today, many hotel operating processes can be handled by machine-learned automation so that teams can be freed up to multitask and focus on ensuring guests have a personal and quality experience.
2. Centralizing and normalizing data
Due to innovative advances in the ability to collect and store traveler data, hoteliers today have more opportunities than ever before to learn more about their guests, their business mix, how to price their rooms, the most effective marketing strategies, and much more.
But often the data is locked in siloed systems and not communicated across software or departments.
With more strategies being implemented above property at the corporate level today, data must be extracted from single systems and centralized in databases that can be accessed safely by the right teams. Cleaning, de-duping and normalizing the data so there is a single source of truth is of utmost importance.
Technology suppliers today are increasingly making their system data available through open APIs, and the hosts and hotels that take advantage of this will be able to build better connections with their guests throughout the entire guest journey and provide exceptional personalized experiences.
It goes beyond just understanding your business retroactively. Rather, it’s about being able to understand your data in real-time to make proactive decisions and identify new opportunities to unlock revenue.
The airline industry has grasped this much faster than the lodging industry. For example, Dubai Airports is able to identify potential new incoming markets via ticketing data from an automated Tableau dashboard, allowing them to generate proposals in a matter of hours, where it previously would take days of manual analytics work.
3. Moving from revenue to profit management
While driving revenue is what keeps the lights on, more hoteliers are understanding that technology can be used to optimize the bottom line as well.
Armed with the right tools to measure new KPIs like Total RevPAR and Net Revenue, hoteliers can make smart business decisions that reduce costs and keep the right balance between revenue and expenses.
For example, driving more traffic to a hotel’s website and converting lookers into bookers at a higher rate will help hoteliers reduce their dependence on OTAs and instead implement a healthy distribution channel mix.
When the cost of acquiring your customers is reduced, this means more revenue can be kept in-house and more cash can be taken to the bank at the end of the day.
Additionally, a focus on premiumization—or making your product appeal to guests by emphasizing quality as a means to a higher rate—can play a big role. It’s especially timely, as the pandemic has caused pent-up travel demand.
McKinsey research shows travelers now have more savings and want to splurge, and American Express reports that 61% of travelers plan to spend more on a trip this year than they normally would. Using tools to automate upselling can help to drive ancillary revenue prior to their arrival as well as during their stay.
4. Understanding tomorrow’s traveler
According to the 2021 Travel Trends Report by Expedia Group, millennials will be the demographic spending most on travel moving forward.
Weekend getaways are a staple, and this group seeks frequent, diverse experiences. During the pandemic, Airbnb reservations soared as millennials sought new locations to blend remote work and personal time. They were seeking unique experiences that integrate personal and work lives.
Millennials are also the first generation to grow up entirely with digital technology. They have grown up in a connected world and expect to be connected digitally 24/7 to navigate their lives.
For independent hoteliers, this means more than just WiFi or SmartTVs in the room. It means they must fully participate in a digital ecosystem to attract and retain millennials as guests, which means providing a 360° digital experience across marketing, booking, room access, guest communications, payments, and more.
For this group, digital conveniences like keyless entry, mobile messaging, and contactless payment are paramount.
Technology as a catalyst
It’s clear that the future is digital, and unfortunately it took a global pandemic and dramatic slowdown in demand for hoteliers to wake up and take action.
It’s no longer acceptable for hoteliers to rest on their laurels, providing only a room for guests to lay their heads.
Hoteliers who don’t turn to technology to help run their businesses more efficiently and provide seamless digital experiences for their guests will struggle to remain relevant.