Hospitality: Embrace Imminent Disruption

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Hospitality: Embrace Imminent Disruption

By John D. Westfield, Partner & Americas Practice Leader for the Travel, Transportation and Hospitality advisory group at ISG - 01/23/2020

Three things are inevitable – death, taxes and change – with the last of these heavily impacting business models today. Hospitality organizations that openly embrace and plan for change, disruption, re-imagination, and re-engineering will succeed. Those that don’t will flounder and ultimately fail.

Dramatic disruption has swiftly impacted almost every industry on the planet. The examples are well-known. Ride sharing has remade both the taxi and rental car spaces. Amazon has re-shaped the world’s retail experience. Streaming media is ousting broadcast TV. Social media has impacted newspapers. In some cases, the disruption results from the emergence of new technologies within an industry. In many cases, disruption is the dramatic, intentional re-engineering of a business model itself in an effort to drive new outcomes for the consumer.

Significant disruption continues to impact the hospitality industry – often in complex ways. What used to define and differentiate an iconic brand (other than size) is now much more fluid and complicated. Hoteliers must strategically focus on what will keep them as agile as possible so they can intentionally, proactively, and quickly adapt to new, innovative and more effective ways of conducting business.

Continued disruption of hospitality

The concept of hospitality was born more than a thousand years ago as the first known hotel in Japan – and the industry has been rapidly evolving ever since. Staging posts and innkeepers’ quarters popped up across Europe and the Middle East during the Middle Ages. By the 1800s, hotels emerged in towns, cities and destination mid-points across Europe and the Americas and grew rapidly as rail travel also blossomed. In the early twentieth century, hotels popped up everywhere – especially with the supporting advent of automobile and air travel. Rail, automobile and air travel were tangential industry disruptions that significantly impacted the hospitality sector.

Motels came on the scene in the mid-1920s and hotel franchises became popular in the mid-1950s – Howard Johnson’s was the first. Mega resorts and city-sized casinos started opening their doors in the late 1980s, and in the 1990s, micro hotels re-emerged.

Modern hospitality embraces intentional disruption

Today, the hospitality industry is booming and creativity in customer service marks the efforts of many leading industry players. They have embraced disruption with a renewed focus on ultra-lux and curated experiential properties. Sophisticated loyalty programs, “smart” and connected rooms, increased personalization, pop ups, and Airbnb are all powerful forces at work in the market vying for customers’ attention and dollars.

Hospitality businesses must not only expect disruption. They must embrace, plan for, actively engage in, and institutionalize disruptive thinking if they want to be successful over the long term. Here are top four moves to make to stay ahead:

  1. Plan for the future and plan for disruption. Proactively enable and institutionalize innovation and ideation by re-engineering IT, automation, tech support, and cognitive systems so you can take advantage of streamlined platforms for swift adaptability and enterprise agility. Balance ownership models – independent vs. franchised vs. corporate – so you are better insulated from changes in the economy and well positioned to adapt to future trends. Consider creating a dedicated Chief Disruption Officer role to relentlessly prioritize and provide focused, directional organizational thought leadership in this space.
  2. Create a clear and intentional focus on your product. Articulate your service differentiators for both the leisure and business traveler, and make your messaging relevant at the local and international levels. Optimize the way you manage distribution channels and leverage guest data as a strategic asset for increasing loyalty and personalization.
  3. Enhance and simplify the guest experience. Your guest experiences should be considered in both the physical and digital realms, with an emphasis on physical safety and digital security. Operationally tie-in with associated travel industry sub sectors (i.e. airlines, rental cars, destination experiences) to provide a connected, holistic approach to the entire travel experience for your guests.
  4. Recruit and retain the best customer-facing employees. Underscore their role as an ambassador of the brand. Review hiring processes, training, tools, and decision-making matrices so frontline employees can truly take care of guests.

No industry can accurately predict and fully prepare for the future, but they can certainly be better prepared by planning, prioritizing and acting intentionally. For enterprises in the hospitality industry, looking forward also should include strengthening the basic tenet upon which the industry was originally founded: taking care of your guest.

John D. Westfield is Partner & Americas Practice Leader for the Travel, Transportation and Hospitality advisory group at ISG, a technology research and advisory firm.

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