Factor Technology into Your 2023 Hotel Budgets
The hospitality industry has faced unprecedented challenges over the last two years. Between COVID-19 restrictions, inflation, and the ongoing labor shortage, many businesses have been forced to close their doors, change their operations, or look for alternative solutions, such as increased investment in technology. Come 2023, hospitality businesses need to factor technology into their budgets for two reasons: guests want it, and staff need it.
Recent employment stats from the hospitality industry paint a grim picture. According to a survey from the American Hotel & Lodging Association, 97% of hotel operators said that they are experiencing a staffing shortage, with half of participants reporting that they are “severely understaffed.”
Data from the Bureau of Labor Statistics (BLS) Job Openings and Labor Turnover report (JOLTS) shows that the hospitality industry has the highest turnover rates of any sector at a staggering 86.3%. And while that number may be down from the 2020 pandemic high of 130%, it is still well above the national average of 47.2%. All this and there are still more than 130,000 open hospitality positions nationwide.
For many of these businesses, finding labor has been expensive and challenging, if not impossible. Nevertheless, demand for hospitality services has surged post-pandemic as travel restrictions ease and consumers are able to return to their regular travel plans. Companies like United Airlines are posting record numbers and beating earnings expectations as demand for travel continues to rise. This time, however, consumers expect personalized, frictionless travel experiences.
The pandemic saw a boom in contactless experiences: curbside pickup, mobile ordering, self-ordering kiosks, QR code menus – all of these solutions not only streamline operations, but also give consumers more control over their experience and thus contribute to higher satisfaction levels. Now, consumers have come to expect this type of technology, and businesses that refuse to embrace it will be left behind.
Hospitality businesses can take advantage of several different types of technology to improve the customer experience and reduce the burden on staff. For instance, hotels can use self-service kiosks as a way for guests to check in and out, purchase items in the mini-mart, speak to the concierge, or request other services like room service and housekeeping. According to research from Deloitte, 70% of consumers prefer to order digitally.
Kiosks utilize smart upsell technology to recommend targeted products or upgrades that prompt consumers to spend more, thereby increasing revenue for the hotel. On average, consumers spend 12-22% more when ordering online than when ordering from a person.
Kiosks also allow businesses to implement integrations such as loyalty programs that reward consumers for their business. These loyalty integrations enable businesses to capture data intelligence about consumer history, including most recent orders, to execute suggestive selling and communicate more efficiently with the consumer. Using kiosk technology, hospitality operators add value back to the customer experience and encourage repeat visits.
Embassy Suites by Hilton is using self-ordering kiosks at their omelet breakfast station, and the results have been astounding. According to franchise operator Joseph Steiskal, “Customers enjoy the intuitive, easy-to-use interface and photos. Using the kiosk, customers can take their time and explore all options free of judgment. Orders are always accurate because the customer input it themselves, and the process is quick, seamless, and efficient.”
Before, the omelet station was fulfilling around 40 orders per day. Now, 100% of orders are placed at the kiosk. According to Steiskal, “we used to hand write the tickets and now the ordering is done using the kiosk which guests seem to enjoy. The cooks are still guest-facing so they can interact with the guests but eliminating the need to stop and grab a pad of paper to take an order makes us so much more efficient. We are able to do over 100 orders now during our busiest days.”
Kiosks reduce the burden of staffing and allow businesses to redeploy their labor to more value-add functions of the business, such as customer service, order fulfillment, or property management. In some cases, self-ordering kiosks have been shown to save businesses over $6,750 dollars/month for each position they automate. In this labor environment, kiosks are not taking jobs but rather filling positions that many operators haven’t been able to staff for months. In addition, kiosks always show up, always upsell, don’t call in sick, and are ready to work 24/7.
Moving forward, hospitality businesses should factor technology into their 2023 budgets not only to reduce their dependency on labor and improve the guest experience, but also to generate more revenue and future-proof their operations. Technology will continue to play a more important role in the hospitality industry, and the businesses that take advantage of this will be sure to reap the benefits.