The hotel industry will need to take up arms in the ‘digital talent war’ to develop innovative digital offerings to attract and retain customers and personalise their experience in the near term, research by Grant Thornton shows. The consulting firm states that especially the increased use of mobile devices will change the way in which customers engage with hotels, providing both opportunities and challenges for the industry.
In its ‘Hotels 2020: Welcoming tomorrow’s guests’, consulting firm Grant Thornton highlights that the hotel industry is doing well*, with the industry reaching half a trillion dollar in revenue by 2016. However, certain long term business trends and the way in which Millennials expects to interact with the areas into which they travel are set to change the industry by 2020. The report identifies a number of the expected changes and the challenges they bring with them, finding that “the industry is increasingly consumer-led and guests are calling the shots.”
Among other trends, the report finds that the increased use of smartphones and mobile devices by consumers is changing the way customers engage with hotels, especially among the Millennial generation, the ‘digital natives’. This trend will, according to the report, allow hotels to provide an increased amount of highly personalised services through digital channels. Including both the way in which potential customers approach hotels and the channels through which hotels engage with customers. One example of this is an app that allows customers to check in and out. Of the Millennials, 46% say that this would motivate them to return to the hotel. Catering to different customer groups, in a variety of languages, will also be a way for hotels to differentiate themselves from the competition. So far, hotels have been slow to capitalise on this customer demand relative to other industries.
“The biggest hotel brands may have announced mobile strategies, but they are doing so far later than leaders in consumer packaged goods, personal banking and transport. Many are still focused on developing their websites, whereas the guests of 2020 will search, price-compare, book, and check-in through apps on their mobiles,’ explains Steven Perkins, Global Leader of Technology at Grant Thornton.
Further advantages of going digital include data analytics on customers, to be able to better understand customers and meet individual needs when they are needed. By improving sources of information and leveraging them through various channels, further improvements to customer relations can be built and the customer may choose to come or return. “Hoteliers that can drive their businesses based on properly interpreting and acting on the data will be the winners in 2020,” says Erik Janse, Information Technology Services Partner at ConQuaestor Grant Thornton.
Going digital has a number of advantages for client engagement; however, it also comes with risks. These risks include a contradictory ‘de-personalisation’ as the increase in digital functionality decreases the human element of contact between hotel staff and customers. Especially hotels that provide ‘care’ services – by which they differentiate themselves – may lose their advantages if the contact points with customers decreases. Another issue highlighted by the firm is that the transition to digital services comes with a need to invest in the development of those services. For this, hotels need to invest in both infrastructure as well as key talent. This means that the sector is about to enter into the ‘digital talent war’ for people with tech skills, from strategic digital planning through to data scientists and programmers.
“In our view, most hotels are simply not geared-up for the digital business era. And, of those that are showing interest, far too many are taking a too-slow, too-conservative approach. Over the next few years, hotels must prioritise investment in the new talent and technology they will need while reshaping their organisational structure to fit a new business model. The battle for talent is fierce, and may require creative thinking – such as working more closely with strategic external partners,” elucidates Janse.
Another area of concern is bridging the gap between understanding customers through analytics and engaging them with that understanding through staff or other channels. Thus, while insights can be gained from the data, the front line staff needs to be up-skilled to be able to use that information in a way that improves customer relations. Investing in this bridging and developing of staff capacities is another area that will need to be addressed, according to the consultancy.
* PwC also released research on the hotel industry, stating that the European hoteliers are expected to see higher growth in 2015 and 2016 as a result of higher average daily rates combined with higher occupancy rates.