Smart Hotels - How Far Are We From Technology's Vision?

Abhineet Kaul, Consulting Director, Public Sector & Government Practice, Frost & Sullivan

Abhineet Kaul, Consulting Director, Public Sector & Government Practice, Frost & Sullivan

Tourism, as an Industry, is a major driver of the global economy, contributing to approximately 10 percent of GDP across the globe, and 1 in every 11 jobs directly and indirectly. International tourist arrivals up 4 percent reached a record 1.2 billion in 2015 the 6th consecutive year of increasing growth rate. Apart from Aviation, the other major driver of global Tourism Industry is the Hospitality sector. The boom in tourism has contributed to a rise in demand for accommodation across the world. How ever, this boom has also created two pressure points for the hospitality sector, as indicated in the figure below. “As compared to other industries, the hospitality sector is behind the curve in the adoption of technology to its full potential”

Changes in foreign workforce policy affecting citizens, as well as industry’s difficulty in attracting and retaining talent have contributed to workforce constraints within the hotel industry. This constraint has disrupted productivity owing to industry’s historical reliance on humans.

The Reason for this Low Adoption is Multi-Pronged:

• Varying Industry Structure – The industry is dominated by chain hotels in terms of revenue; however, in terms of numbers, it is dominated by single property budget outlets. As a result, even adoption of basic Property Management System (e.g. Opera PMS) is low – just 31 percent of hotels in Europe.

• Complicated Ownership Structure – For most hotels, the operator and owner are different entities with different business objectives.

Any technology adoption decisions are made by multiple stakeholders with conflicting interests , and lack of incentives for adopting technology also beset companies from incorporating technology in their organizations Lack of Awareness –Typically, information flows through the department heads or IT manager, who are the best-placed personnel to understand the operational needs and available IT solutions respectively. Hence, lack of opportunities for these personnels in keeping abreast with the market becomes another majorconcern for the industry.

• Lack of Infrastructure – In some instances, Wi-Fi dark spots , and other reservation systems are not being implemented for providing personalized services .

• Non-availability/Suitability of Technology – This translates into one of four possibilities: a) technology has not been developed; b) technology is only available overseas; or c) technology is only available in other industries, d) Technology does not address the core challenges. For example, the hotel Managers that I have interacted believe that the current robotic housekeeping attendants available in the market are not ready for deployment at large scale, despite the needs reflected by the House keeping departments in hotels.

• Low Receptiveness - This point refers to the current paradigm of hospitality amongst staff and owners of the hotel on the topic of service versus automation. Managers, especially from luxury properties are resistant to replace customer touch points with technology. Some processes are believed to be irreplaceable with technology as it is the hallmark of their property’s brand.The hospitality sector is expected to be the next frontier of industrial technology adoption. The adoption, though,will be evolutionary over the next 5-10 years, before it becomes revolutionary.The focus in the short-term will be on digitizing the processes and communication amongst departments and will be primarily at the back-end. Some examples of technology becoming inevitable are:

The use of mobile apps on smart phones for leveraging integrated services for room key, concierge, room service and guest feedback; the use of work-allocation tools to dynamically allocate resources to departments for serving consumers at peak hours or to restaurants during dinner time, and the rise of robotic assistants to reduce the intensity of work for room attendants and bell boys in the guest rooms/ luggage room.

Hotels Need to Consider the Following to be at the Front of the Technology Race:

Understand their value proposition and conduct needs assessment of technology solutions based on the value; develop a criteria for technology adoption in short term and long term to ensure owner buy in and budget allocations; partner and work with technology providers and system integrators, and measure and determine the return on technology investment. The hotels which follow these practices will continue to lead in the age of hyper competitiveness in the hospitality sector. Those which do not will fall behind and lose the race. It isn’t a choice any more!