This is the final article in our series exploring the themes and conversations of the roundtables from the 2019 Travel Disruption Summit. (You can read our first article on Aviation here and our second on Tourism here).
Next up is Hospitality:
The past year has been a memorable year for hospitality news: in its evolution to an end-to-end travel marketplace, Airbnb acquired HotelTonight. The company also invested heavily in companies like OYO and Lyric, aligning with the growing prominence of the “apartment hotel” model worldwide.
Large investments also extended to other emerging hospitality brands, such as Selina, which raised $100 million to expand it’s blended co-living brand targeted to digital nomads.
Underpinning these developments is a period of growth that’s lasted for the past decade, leading to sustained interest from investors.
While it’s certainly not guaranteed that the hospitality industry will maintain its decade-long period of growth, technology continues to be a vital part of the story — especially in the face of a potential coming recession.
Technology can help to preserve profitability, even as downturns impact revenue. As Deloitte’s 2019 Travel and Hospitality Outlook cautions, it’s all about proper preparation without drastic measures: "Hotel owners looking to cut costs will inevitably clash with operators looking to maintain service levels.
"But those able to weather any potential storm without drastic reductions in service quality and rates will be better positioned for profitability when a bull market returns.”
Even so, Deloitte reports that only 25% of hospitality submarkets for experiencing negative growth of ADR. So the picture isn't nearly as bleak as some may paint it.
Let’s explore what participants at this year’s Travel Disruption Summit had to say about the hospitality industry, as interpreted through our intrepid roundtable moderators!
Roundtable: Discovery and Inspiration
Moderator: Joseph Levin, director of product at Booking.com
Our table had one key takeaway: More and more, travelers are turning to travel influencers to find more tailored ideas. This is less of a trend and more of a permanent shift.
Part of this shift is rooted in history: Travelers used to go to offline travel agents, where the service was very personal, and the recommendations tailored, but the selection was limited. Then came online travel agents with massive selection. Everything was DIY and the crowd-sourced reviews were used in place of personal recommendations.
However, not all reviews are created equal. Different trips need different things and travelers are multifaceted. Sometimes you take a weekend city trip with friends and sometimes you go camping with the family. That requires different types of recommendations.
This is why we are seeing the elevation of the travel influencer -- their stories act as a tool for richer discovery. A niche influencer can offer more tailored and meaningful advice for a particular trip purpose and the internet can connect them to a wide enough audience.
It’s mimicking some of the human element from the offline service at scale. There are a few human behaviors behind this trend:
- Travelers want authentic experiences. To get a better sense of how they’ll feel and what the real experience will be like, travelers need richer, more engaging content.
- Travelers emulate others. Travelers step into the fantasy of a desired lifestyle when traveling; brands need to understand that desire -- and deliver on it.
- Travelers seek social value. Out of vanity, or simply the desire to share, travelers seek out locations that will get more reactions to their own travel posts.
Looking ahead, we see a few challenges for hospitality. The first is trip purpose: How do we help differentiate for the specific trip the traveller has in mind? The second is authenticity of content: How do we create feedback loops to so travelers know what to expect?
Finally, we feel that content needs to evolve to account for how discovery happens: How do we bring the stories alive?
Roundtable: Inventory/Distribution
Moderator: Chris Loeffler, director of strategy and planning at Expedia Group
The Hospitality Distribution table had representatives from Amadeus, Expedia Group, Fareportal, hotel investors, law firms, NextTravel Stream, Northstar Travel Media, travel insurance companies and startups. Our group had four clear takeaways on topics as diverse as experiences, China, personal data sharing, and the blurring of traditional travel labels.
Experiences are the most promising growth area in travel. Of course, it’s not news that experiences/activities/tours are booming today.
However, what is new is the increasing ability of travel players to present more activity content in front of travelers in a way that is more personalized to their interests than before. For travel intermediaries and activity operators this means higher conversion; for travelers this means more activity choices that may interest them.
China will be the fastest growth geography over the next 5 years. The growth of China’s domestic and outbound travel markets will impact the volume of worldwide flights and hotel occupancy rates.
This will happen first domestically, then regionally and finally in select popular worldwide markets that attract outbound Chinese travelers.
Data sharing continues to be top-of-mind, as legal and cultural adoption of personal data sharing varies so widely. We will see a divergence where some countries will allow companies to use customer data to deliver personalized services and other countries will restrict companies from doing so.
As a result of this, winning travel players in the “open data sharing” countries will develop more mature abilities to deliver personalized/targeted services than those companies in countries where use of personal data is restricted.
Finally, traditional travel industry labels will blur. As technology continues to lower barriers to customer adoption of online services to make travel more affordable and accessible, existing players will evolve and outside players will enter the industry.
Outside players will discover how complex and somewhat regulated our industry can be, as well as how important customer service is required to succeed in helping people go places.
Roundtable: Operations
Moderator: Alex Shashou, co-founder at ALICE
The Operations Table with many thanks to Andrew Benioff (Independent Lodging Congress), Mike Carr (HelloGbye), Matthew Lerner (Makomi), Selin Sonmez (Knock Knock City), Jonathan Fabio (Futurestay), Jaclyn Fidler (Trinet) Eddy Kaljic (HotelsByDay)
This seems obvious but people have changed. We have changed. We no longer view travel as just staying in a hotel. It is truly becoming the accommodations industry.
The issue with this on the operations side is that while the concept of a hotel is becoming flexible, the standards of service are often not and these new businesses are lacking in this experience: “Hotelier skills."
Most alternative accommodations businesses are realizing this and are starting to hire those with service and operations experience.
The future traveller is going to want everything to be self service. All preferences saved and used to create an authentic and personalized experience. They might also want to get away from their phones and disconnect, so while they will want to control it, they will also want it seamless on both the guest and the staff side.
An integration between all the phases of a traveller journey...perhaps one where our profile follows us and is not collected and stored (and wrong and old).
Where our hotel journey starts before we sit on the plane, not when we enter the lobby. We see a “global entry” type profile, where we take it with us as we book and stay at a hotel and then it leaves with us as we go too (data privacy).
On the technology side, we want to start seeing technology to improve, not simply replace. There is such a lack of business intelligence in hospitality operations.
Most of the industry is not working on metrics. So putting personalization aside, they aren’t even optimizing what is out there.
Technologies can and will help all hospitality businesses build SOPs into their operations (think checklists) which will not only bridge the skills gap somewhat painted above (the tech will tell you what to do), but also help mitigate the effect of staff turnover and the challenges of training.
On the hotel side, we can and are learning from the Airbnbs of this world. Look at how many hotels are now investing in their culture as a big part of their competitive advantage going forward.
Looking even further, perhaps they have been so successful because people are weird. And that weirdness can be celebrated with the diversity of apartment types.
Right now hotels are built for what we are (ie: a business traveller, a family...) not who we are (ie: a recluse, an innovator…). Will they be in the future…
Bonus takeaway regarding selecting (and managing short-term rental units), from Matthew Lerner at Makomi: Separate Takeaway that I thought was interesting but not at all relevant to the above: “For those looking to supply the travel community and get into the home rental business, the most attractive apartments to travelers are two bedroom apartments.
"Inside the apartment, we are advising our customers that water pressure in the shower, great beds and soft sheets are the most important qualities to focus on. Wi-Fi is table stakes.”
Roundtable: Guest Experiences
Moderator: Beth Santos, founder at Wanderful
The Guest Experience track had a lively discussion about the future of guest needs, leaving us with more questions than answers!
We discussed trends such as hyper-personalization versus fast-tracking user experience (would you rather interact with a person who knows all of your needs or check into a hotel without talking to anyone?) and how to collect data to reflect and address those needs accurately.
We also discussed if some of these trends were ephemeral or more lasting. For example, is there is such a thing as too much personalization? Especially as guests' preferences may change over time or with different types of trips or travel partners...
The fact that there is no one collective set of data that hotels can use makes it difficult for hotels to make a custom experience without asking too many questions of their guests.
We discussed innovations for the future, including voice activation tools, a need for a head of innovation at every hospitality company, and how large-scale hospitality brands can better integrate with small, quick-moving startups.
All in all, it was a valuable conversation with some exciting angles that tell us that there will always be more to discuss on this topic!
Roundtable: Loyalty
Moderator: Dwayne Ingram, operating partner at Morgan Hill Partners
I was fortunate to host a roundtable discussion with some outstanding leaders from the hospitality industry. The discussion topic was loyalty, and it was a lively discussion! There were some interesting take-aways.
First, the future hospitality loyalty program should be personalized to the guest. "I want what I want when I want it" was the general feeling. This makes me feel like a guest, not a loyalty number.
Given that, the program must be data-driven in order to know what the guest experience should be.
Maybe some people love their points, but like many regular travelers, I have them sitting around for years. Those points sitting around aren't good for the hospitality company either! They sit as a liability to the company until used.
So the ideal program we discussed isn't necessarily transactional. I stay at places regularly where I get no points! For example, Airbnb doesn't have points - but it's a personalized experience, that is of my choosing.
Isn't that what loyalty is all about anyway: the guest having a wonderful experience!
The other point the team made is that there must be a seamless guest journey across all platforms that are used. There is so much new technology out there.
I've seen great technology recently for having a marketing platform for the hotels to use that could also help the hotel or condo with concierge services or even operational improvements. What's its goal, to improve the experience.
But it also improves the bottom line. They don't have to be mutually exclusive.
Loyalty of the future in hospitality will/should be:
- Very personalized to the guest -- which means it must be data driven.
- Should be both tech-enabled and tech-integrated (seamless across devices).
- Not necessarily transactional (i.e. points based), but part of a connected experience or journey.