As the number of air travelers continues to swell (IATA forecasts the number of air travelers will double to 8.2 billion by 2037), hospitality companies need to adapt to the ever-demanding hotel guest of the future.
Consumers are increasingly expecting seamless, personalized and experiential travel experiences, and hotel brands need to rise to the challenge by investing in technology solutions to meet travelers’ evolving needs.
According to the new Drivers of Change in Hospitality report, produced by Amadeus in collaboration with InterContinental Hotels Group, Foresight Factory and Cornell University, there are three key trends shaping what the booking process, loyalty and service will look like in the future.
The three themes - The Beginning of the End for Room Types, Achieving Cult Status at Scale and The Rise of Tech-Augmented Hospitality - emerged from a survey of more than 7,500 consumers across 12 markets as well as from interviews with industry experts.
They indicate where hospitality companies need to innovate to accommodate guests, but the path to get there isn’t without its challenges.
The Beginning of the End for Room Types
Hotels looking to overhaul the customer experience can look to eliminating traditional room types as a logical starting point, says Chris K. Anderson, director of the Center for Hospitality Research at Cornell University.
“Step one is you go to attribute-based booking [because] you’re collecting more information on why people are traveling and what they want and don’t want,” he says.
“That allows [hotels] to use technology to remove friction and how they can augment the stay and experience … while still providing that personalized touch, because customers still want that personalized touch.”
With an attribute-based booking model, travelers will be able to select rooms based on amenities and configurations they’re seeking - such as in-room smart technology, fitness equipment or a specific room floor - as opposed to traditional single, double, family, etc., room type.
According to the report, 56% of consumers in Europe, 67% of consumers in the Americas and 75% of Asian consumers say they have customized or are interested in customizing a room to their needs.
Some 61% of global travelers say they prefer hotels be priced in a way that allows for add-on options, which can bring hotels incremental revenue growth from room features.
“The Beginning of the End for Room Types is really about changing the way the hospitality industry and also guests book and view properties because it’s moving to a way that can allow guests to book by trip purpose and give them what they want and sometimes only what they want,” says Clodagh Brennan, senior trend analyst for Foresight Factory.
“But to do that, you need to overhaul the whole booking architecture and also the way the hospitality industry views their property and their assets. This could be enabled by attribute-based booking.”
Brennan continues there are, unsurprisingly, barriers to changing the model, including changing how the hospitality industry thinks about its assets to align with guest purpose as well as how guests consider room types.
“There’s going to be a challenge there in balancing how you show that customization to guests in a way that doesn’t overwhelm them. Initially, that could be working with different types of bundles, but also, we think that in the future, predictive analytics will play a really big role in understanding guest purpose before they even arrive.”
Achieving cult status allows hotels to really move away from the two dominant factors people look at when booking - price and location, that really transactional mindset - and move them into the experiential mindset.
Clodagh Brennan - Foresight Factory
Another challenge for hotels using an attribute-based model is making sure they can deliver on the promises they make in the booking process, she says. “Hotels need to know not that they have it and guests want it, but that they know their systems can cope with it and staff can cope with it and that they have the amenities in the room they’re selling.
“It’s going to be a big change to make sure the labor force is there, and a big challenge.”
Francisco Pérez‐Lozao Rüter, president of hospitality at Amadeus, adds, “From the tech point of view, it’s a very radical shift, and I don’t think we can expect [change] to happen overnight. The world of hotels is very property-centric. Essentially, what they’re trying to turn around 90 degrees is what does the platform really mean?
“On the one side, the inventory or classic inventory will evolve to be able to deal with the abstract concept of room inventory. … The other element that needs to come out is, how do I better understand my guest as an individual? How can I pair that capability to decomposing and recomposing [the stay] into what actually the guest wants?”
The evolution of the platform needs to happen in increments, he continues, and cloud hosting allows hotel brands to experiment and scale by freeing them from clunky local infrastructure.
Achieving Cult Status at Scale
Reaching cult status is the new way to build loyalty, the report states.
According to the survey, 73% of global travelers consider having a unique experience as the most important part of a vacation, and 59% of global travelers say they prefer hotels that feel unique.
Traditionally, luxury and boutique properties have been the best suited to establish a memorable connection with guests, but technology can help larger hospitality brands attain cult status at scale by extrapolating emotionally sensitive data.
“Achieving Cult Status at Scale is really about how technology can enable staff to push the experience to the next level to such an extent that you’re recreating the kind of amazing experience you might have with a boutique brand that knows you really well but actually at scale,” Brennan says.
“It allows hotels to really move away from the two dominant factors people look at when booking - price and location, that really transactional mindset - and move them into the experiential mindset.”
The concept of loyalty thus changes in some ways and introduces “things that go beyond the status quo to inspire loyalty. This doesn’t have to be part of a traditional loyalty system,” she says.
Hotels therefore needs to think about the data sources it has available and their ability to scale them. Open APIs into things such as a guest’s social media account, Brennan says, can help a hotel intelligently interpret relevant options for a specific traveler.
“Data is such an enabler here, but it’s also a block, especially in Europe with GDPR. The industry is going to have to find a robust way of dealing with this.”
Guests are more likely to share data if they get something in return, the report finds. Some 47% of respondents say they would be likely to share data in exchange for exclusive discounts, 33% say they would share data for loyalty rewards points and 30% say they would share data for personalized trip advice.
In fact, 70% of global travelers want hotels to provide more advice and tips for unique things to do on trips, and only 20% say they currently get activity ideas from hotels.
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The open API aspect also lends itself to cross-selling across industries such as airline, car rental and experiences.
“Historically, the travel space has been pretty insular. If you think back to old property management systems, there was massive costs associated with integration, and no one wanted to integrate because that was their barrier to entry. So they kept doors closed from data sharing to limit competition,” Anderson says.
“Going forward, it’s going to be the complete opposite. Doors are going to be open, [a better job will be done around] sharing information, whether its hotels to airlines to rental cars to shared services such that we can have a customized experience and sell that experience in-room and monetize it. It adds value to everyone.”
Partnerships with online retailers such as Amazon could also change how hotels and guests view loyalty. “If you think about a giant online retailer … they have content, they have movies, they have music, they have their own rewards program. What if through a partnership, those points could be used as currency together? What if they happened to own a grocery store chain and you could order a prepackaged meal to a hotel? That’s the sort of partnership we like to think about: travel-services related,” says Jeff Edwards, senior vice president of global hotel and owner solutions at IHG.
“Also from a loyalty point of view … [we could] drive value at the point of sale in the hotel or it could be at home. We love the idea of personalization engagement with that person even if they’re not sleeping in our hotel room. We love that stickiness of how those partnerships could work, especially relative to our loyalty programs.”
The Rise of Tech-Augmented Hospitality
Brennan says she was surprised to learn from the report that guests aren’t quite ready to say goodbye to the human element in hospitality.
“All over the travel industry, you see automation as replacing people. But when it comes to staying somewhere, we found people value the staff in hospitality,” she says.
“Rather than replacing people, we see service as something that’s delivered by humans, but those humans are augmented [by technology].”
Nearly two-thirds (63%) of those surveyed say they prefer interacting with hotel staff over self-service technology, and 67% of respondents say the prefer talking to staff for “emotional interactions,” such as making a complaint.
However, consumers are more comfortable going the self-service route to do things such as ordering a taxi (42%), paying a bill (40%) and ordering room service (37%).
Asian hotel guests are more likely than their European or American counterparts to favor self-service options, with 53% preferring self-service bill payment, 39% preferring self-service check-in and 35% preferring it to ask for recommendations.
Young people are aware of things that make them happy, and they have a lot of questions about it. It’s not always a straightforward, automated transaction.
Jeff Edwards - IHG
Younger travelers, aged 16 to 24, are among the most interested in interacting with humans, Brennan says.
Anderson says this is because younger generations, while tech-savvy, are also more experience-focused. “Now the human element becomes critical in the co-creation of the experience,” he says.
“There’s an emotional element to a hotel room stay,” adds Edwards. “It’s not just a commodity. Young people are aware of things that make them happy, and they have a lot of questions about it. It’s not always a straightforward, automated transaction.”
Globally, there is high interest in smart hospitality solutions, with 75% of travelers saying they’re interested in staying in a hotel room with smart devices and in using chat to ask booking questions. Some 72% of respondents say they’re interested in using augmented reality to see a hotel room, and 70% say they’d like to use their phone as a room key.
Brennan says it’s important for hospitality brands to understand when it’s appropriate to innovate and to make sure an innovation is adding to the guest experience.
It’s also important that technology is integrated into the systems staff are currently using and that it’s easy for them, too. “You don’t want to distract them with new technology and new training,” she says.
“It’s confusing for them when they’re supposed to be focusing on the guest experience. It really needs to be an enabler and not a distraction for those interactions.”
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