Welcome to the battle for disruptive models and technology in hotelsNews / Distribution | TechnologyBy Viewpoints | March 10, 2014Share This article was originally published on The global hotel industry is sitting at a crossroads of three dimensions that will unquestionably experience significant disruption in the coming years.NB: This is an analysis by Robert Cole, founder of hospitality and destination consultancy RockCheetah.Changes to the business models and technologies will impact travelers, lodging providers (with the sharing economy, the term "hoteliers" is now too limiting) and distribution channels to create significant challenges for those clinging to their beloved "good ‘ole days".As Charles Darwin said: “It is not the strongest or the most intelligent who will survive but those who can best manage change."Share this quote The hotel industry needs to seriously consider those words.So what areas show the greatest potential for disruption?The hotel product itself is under assaultThere have never been more alternatives to staying in a hotel, and perhaps more importantly, access to these options has never been easier.As hotel brands go "asset light" (selling the underlying real estate), or outsource food and beverage operations, close room service and let OTAs operate the concierge desk, the ability to control standards and execute consistent service delivery gets more complex when more parties get involved.On the other hand, an Airbnb host may be making breakfast for their guests, recommending great off-the-beaten-track highlights of the city, or providing introductions to friend who can get them into the hottest clubs in town.A preponderance of hosts in the sharing economy have high speed internet and Netflix for their own use, so those benefits automatically get included in the price. And the price is often considerably less than a hotel – especially during peak demand periods.Travelers seek valueThe sharing economy is currently able to create some novel value propositions. While renting apartments, or even vacation rentals, may not be for everyone, with a huge, and growing amount of inventory available, some compelling options will arise, and that will induce trial from more mainstream travelers.A senior vice president of a large global hotel group lamented in a call with me last week that his company still can’t manage to confirm adjoining rooms for a family – only make requests. The hotel industry has a long way to go if it is serious about personalizing experiences and increasing satisfaction by exceeding guest expectations.Another excellent example of an area of the hotel industry that is already being disrupted is bypassing the registration desk and proceeding directly to an assigned guest room.Here is how each constituency is being impacted:1. TravelersThey don’t want to be required to stop at a front desk to check-in and typically would prefer not to carry around a room key that can be easily misplaced.Existing technologies enable the use of smartphones as room keys – with exceptional security, tracking and convenience. Again, a private residence within the sharing economy, using a Kwikset Kevo lock can provide this experience today.2. HoteliersProperties are faced with considerable obstacles when changing the check-in process. New software must be securely interfaced with the hotel property management system – often a costly or delay-ridden process depending on the degree of complexity, or prioritization of the PMS supplier’s enhancement queue.There is then the question of universal access – what happens if a guest lacks a smartphone?Implementing an new door lock technology can also get expensive – most legacy door locks are not modular and may even require a complete changing of the guest room door to install a new locking mechanism.Hotels are even resisting changing from Mag-stripe to touchless RFID locks (that do not require a phone.) However, the RFID card keys cost more than Mag-stripe cards and require the guest to physically pick up the card upon arrival.Managing multiple locking methods, for example by guest room floor, adds unnecessary operational complexity to an industry with high staff turnover rates – especially when life safety scenarios arise.3. ChannelsAnyone in the ecosystem needs to understand that opportunities for personalization extend far beyond registration and room entry.Smartphone apps capable of providing relevance throughout a guest’s stay in a destination (by offering room access) also provide unparalleled opportunities for enhancing the travel experience – from personalized concierge services to customized geo-centric offers from partners.If properly executed, a destination app can both add value for travelers and enhance marketing for suppliers and channels. The only question is whether it will be a lock manufacturer, the hoteliers (coming up with some quality specifications), a major technology player (like Apple leveraging its iTravel patents), an OTA, or a startup like Checkmate that will gain first mover advantage.Since door lock is an elemental aspect of hotel security, I am hoping the hoteliers take control over their own destiny. It would be a shame for the industry to have a third party structurally positioned between itself and the occupants of the guest room.Bigger pictureBut the greatest disruptor may lie in the channel space. The UK/EU moratorium on resale price maintenance practices (at least for repeat guests) will potentially wreak havoc on hotel pricing and revenue management practices.With rate parity providing the foundation for the enforcement of best price guarantees, hoteliers, attempting to support a logical retail pricing structure, run the risk of wholesalers undercutting rates on merchant model bookings, while commission rebates from sellers of travel under the agency model could become just as prevalent.For those that argue such practices will be contained within the European theater alone, I would argue that meta-search sites easily cross borders and travelers will flock to sellers that are able to offer a discounted best rate guarantee.Hotels thinking of cutting off intermediaries that offer such discounts should consider that such actions would be deemed anti-competitive under the new law. Hotels matching the rates under a best rate guarantee will experience margin erosion that drops straight to their bottom line.The solution is for hoteliers to not only focus on meeting guest needs, but understanding the purpose of each specific traveler’s itinerary and developing processes to exceed guest expectations. Hotels can’t simply rent rooms – they need to become a relevant focal point for destination experiences.They need to give the traveler a better reason to book directly.Ellsworth Statler, the father of the modern hotel industry, famously based his business philosophy on two simple concepts: "Life is service"Share this quote and: "The guest is always right."Share this quote Hoteliers need to embrace the opportunities presented by new business models and technologies to provide enriching experiences that reflect true hospitality.The ugly alternative, is for hotels to myopically focus solely on internal operations, and to suffer the same fate as the airline industry, which has largely transformed itself over the years from an exhilarating travel experience, to a generic means of transport.Disruption is not an "if" for the hotel industry, it a "when".Hoteliers need to assume their guests, competitors and distribution channels will all be changing dramatically over the coming years. If they have not started preparing yet, there is a chance they may already be too late.NB: This is an analysis by Robert Cole, founder of hospitality and destination consultancy RockCheetah. The article supports a presentation made by Cole at the HTNG North American Conference in California on March 5 2014.Here are the slides:The Battle of Disruptive Lodging Models and Technologies from Robert ColeNB2: Hotel laptop image via Shutterstock.