Nordic Choice Hotels
Nordic Choice Hotels, one of the largest hotel groups in Scandinavia, views innovation as a way to optimize service delivery across its diverse portfolio of hotel brands. It has investigated everything from space travel to blockchain to food nanotechnology, all with the goal of improving the customer experience.
In this Q&A, ALICE co-founder and president Alex Shashou sat down with Nordic Choice head of business Christian Lundén to discuss innovation at Nordic Choice properties and how the influence of other industries spurs the company’s own innovation.
Shashou: Can you elaborate on Nordic Choice's innovation team?
Lundén: People see Nordic Choice as being a very innovative company when it comes to their travel. We monitor and develop what kind of areas we should develop in the future, so that we are not only making money on hotel rooms, but also creating extraordinary experiences.
For example, I’ve met with NASA about space tourism, to find out how our popular world of hospitality can be a really big player in space. It’s about trying to see how our innovation team can learn from different industries to bring back ideas to make our own industry more attractive.
Is there anything you think hotels can take from other industries rather than from their competition?
I’m not interested in what our competitors are doing - because if they are doing it, then we are already too late. I’m more interested in how companies like Netflix, Apple, Tesla and others outside our industry are crafting totally new experiences or expectations for guests.
I’m not interested in what our competitors are doing - because if they are doing it, then we are already too late.
Christian Lundén - Nordic Choice Hotels
It’s interesting to study consumer behavior, because that informs guests’ expectations when they come to our hotels. So, hoteliers need to understand the behavior and the excitements guests as consumers have in different areas.
I agree with you that if you look at other industries, you find out more about your own. In the past you have mentioned looking at nanotechnology. What were you referring to?
We work with nanotechnology in several different areas - one of them is food. We are always trying to develop ways to make food better: Chocolate that doesn’t melt, meat with less fat, milkshakes that taste really sweet but have no sugar in them. We work directly with scientists to see life-improving achievements with this kind of technology.
So, let me ask you the obvious question: Why don’t you let the food companies work on food? You’re a hotel company...
Nordic Choice is Scandinavia's biggest food and beverage provider because of all of the restaurants we have in our hotels! It’s very much at our core.
We work together with the food and technology companies to understand them better and try to get their knowledge and understand what’s happening, so we can be much better prepared in the future for the next restaurant we need to focus on.
Let’s move on to blockchain - why blockchain?
There are many reasons why we are exploring and starting to experiment with blockchain. The most obvious is the cost of distribution, because we do pay a lot of money to the online travel agencies. We like to have a strategic relationship with the OTAs, but want to capture repeat bookings ourselves - guests don’t realize that, although repeat booking through OTAs is convenient for them, it actually costs us a lot of money, and we like to have better contact with our guests.
The second reason is that blockchain is a decentralized, open-source API, meaning no one owns it and anyone can benefit, even the short-term OTAs. No one can take money from the middleman, and we can have one interface for them to work with us.
If we put our rooms onto a blockchain, anyone can access it and sell our rooms. So many good travel companies and startups are begging for an easier way to access our inventory, and blockchain gives it to them.
Let’s assume the OTAs aren’t going anywhere. What would you like the future OTA to do? What would you like the relationship to be? Can you see any industries where the middleman is a true partner of the services that are provided?
If we have a strategic relationship with the OTAs, and we can see where they are good and we are good, then that is the perfect match. As long as they don’t take too much advantage of their position, then it’s fine.
When you say “good,” do you just mean dropping commissions?
We are happy to pay commissions; it’s valuable to get reservations from the OTAs. If we could, we would even be selling rooms from Instagram or third-party startups, and for this we want to pay them.
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If someone is making business for us, we want to honor that. This is why we are excited about the potential of blockchain. It would allow us to free our distribution onto any channels, small and big.
But we need to keep it reasonable, meaning we should get information and know who the guest is so we can give them the perfect experience and the benefits they would have as if they were a returning guest.
Is it fair to say blockchain might allow an even playing field?
I would more or less agree. The bigger players will always have more advantage, but yes, I think it will equal it out.
Customer behavior is such a big, heavy word - everyone has a different interpretation. A recent Sabre report highlighted the difference between guest centricity and guest experience. Today, some of the best brands don’t worry just about selling things, they focus on the end-to-end experience and the emotion their customers feel at each stage. You touched on this before, but how do you look at customer behavior: Where do you start, and where do you think it's going, and how do you look at it at Nordic Choice?
I can give you an example. … When we started with mobile check-in five or six years ago, the staff really hesitated to adapt because they were scared about losing their jobs. So it was important for us to explain to our staff and the hotels why this is happening and the benefits of using it.
Can you elaborate on what you mean?
Staff realized there could be long lines to check in and that they often had to field repetitive questions. At the same time, staff recognized guests might not want to wait in line and receive all the information typically offered at check-in.
So, if we can give guests the ability control all of this, through apps and technology, we can give them their preferred way to check in. Just like how guests choose when and how to consume online, adopting technology into the check-in process gives guests the ability to choose and thereby lets us deliver a better emotional experience to our guests.
Take me, I am two different people when traveling. Sometimes I like to be the guest that sneaks up to the room on the business trip because I don’t like to talk to anyone. But sometimes, I like to interact with staff and get help. Technology allows hotels to accommodate to both of these types of travelers.
Can you give me an example of where you have explored this?
An example of this would be a bar app we looked into. Such an app would give the opportunity for a guest to sit where they are and order their drink and just pick it up from the bar instead of ordering it directly from the bartender.
In the next five or more years, we will no longer get most of our income from selling hotel rooms, but instead from other services, such as cleaning, catering and laundry.
Christian Lundén - Nordic Choice Hotels
However, the bartenders were very against this. They love making their elaborate drinks, and this is how they build a relationship with their customers and make their tips.
What we realized by looking at the experience of both the guest and the staff here was that there can be a hybrid model where everyone wins. By building only the simple drinks into the app, a few beers and red and white wine, then the person who orders through the app can order the most common drinks quickly, while the guest who wants more elaborate drinks that a great bartender is proud of can go to the bartender.
Both types of travelers have mutual benefits, and the bartenders get to focus more of their time on their expertise.
As the hotel world evolves through technology, where do you think you will make money from in the future?
In the next five or more years, we will no longer get most of our income from selling hotel rooms, but instead from other services, such as cleaning, catering and laundry that are more important or as important as the hotel rooms.
The rise of the home share industry has given us the opportunity to leverage the level of hospitality we provide in our hotels to home share operations.
In November, we bought the biggest service department in Sweden, so we have 3,000 apartments now around Scandinavia for extended-stay or for company stays. We are moving quite fast and are now the biggest apartment owners in Scandinavia.
Are you offering your hotel services to these apartments?
Not yet. But we tested how this might work with a pilot we ran in Copenhagen last year, in which we met with Airbnb apartment owners close by to one of our luxury hotels and offered owners our services to make sure these apartments all met the same high standards as our hotels.
The idea was to remove the fear that some business people have while renting an Airbnb, by giving the apartments the Nordic Choice stamp of approval and the 24-hour service and reassurance that provides. We provided the apartments with our hotel towels, linens, toiletries and everything you can find in a hotel. We also got some apartments discount coupons, so you can go down to our hotel and get a discount on different hotel amenities or services.
Our vision is to eventually make all of the apartments we own part of the “world’s best digital guest journey,” and provide owners with a hotel experience in their own home.
Longer term, I see of course also F&B, co-working, retail playing a big role for us as well. It is important that we understand that our business will look very different in the future from what it is today.
What’s next for Nordic Choice?
At the moment, we are doing very small projects. We are working quite a lot with startups to extend ourselves from artificial intelligence, to virtual reality, to augmented reality, to wireless charging.
Many of the things we are working on might not add to the company for one to two years. We are testing further innovation to see how we can continue to improve our operations throughout the organization.