Judgment Day: The Time Has Come to Appraise Your Hotel Tech Investments

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Judgment Day: The Time Has Come to Appraise Your Hotel Tech Investments

By Mike Chuma, IDeaS Revenue Solutions - 08/27/2020

Hotel leaders have been told for decades now to keep up with the times and invest in novel technologies to stay ahead of their competition and survive in an ever-changing business landscape. The industry has made some great strides, removing barriers to innovation and implementing revolutionary systems.

Now, facing a historic downturn, many hoteliers are looking back at the tools purchased when times were good to see how they will help them navigate periods of economic uncertainty. The time has come to identify what is most valuable to sustaining business right now and reconsider the rest.

Some technologies, such as those that focus on data analytics, revenue management, and reputation management have fundamentally reshaped the entire business of running a hotel, altering how hoteliers find new guests, maximize room revenue, and consistently provide a better guest experience over time. These tools have proven their value time and again, but the report card on some other kinds of solutions has been more mixed.

Technology cannot always serve as a profit center in hotels. Instead, hoteliers should be considering the time and energy savings generated by modern technology, its ability to automate processes, reduce labor costs, attract guests, and improve the guest experience. Let’s take a closer look at some of the tools adopted by the hotel industry over the past decade and evaluate their role and worth in hospitality today.

Back-of-House Management Tools

Revenue Management

Revenue management’s impact on the industry is difficult to fully quantify, but it is possible to look beyond year-over-year performance comparisons at individual properties and see the degree to which the technology has impacted its revenue opportunity uplift (ROU). This calculation can be determined by using a sophisticated revenue management system (RMS) and measures the benefits of a fully automated revenue strategy against a carbon-copy version of your hotel without an RMS in place. Only by doing this can hoteliers understand the impact their RMS has had on their business and how to better tune these tools to create more favorable results.

Thanks to strides in revenue management, the hotel industry was able to maintain annual increases in revenue per available room of 3.2 percent, on average, peaking at an 8.2-percent increase in 2014. If anything, interest in revenue management is likely to escalate as operators collect more data and the push for internal system connectivity develops.

Clustered or multi-property revenue management is also on the rise, further necessitating the need to automate forecasting, pricing, distribution, and analytics processes. Be wary, however, of rules-based, manual pricing tools posing as true demand-based, data-driven RMS solutions.

Reputation Management

Online reviews become more and more valuable as time passes, and travelers’ fascination with online reviews, and the manner in which they are addressed, has amplified as COVID spreads. Hotels have grown to appreciate the value of online real estate, as well as the need to be available 24/7. Speed is more important than ever when responding to negative reviews, and guest expectations are at an all-time high. Reputation management tech is here to stay.

Operational Tools

Labor is often cited as the most expensive aspect of running a business, and it’s even more costly when a team is grappling with inefficiencies. Hotel team sizes have been squeezed as operators trim costs to keep their properties open, and mobile tools for organizing and communicating with a hotel’s workforce have become more valuable. Thanks to this technology, hotel leadership can understand the status of each of their team members as it provides greater oversight and information, such as who on staff is currently forced to quarantine due to COVID exposure. With much-needed developments in accurate operational forecasting and planning tools, operational technology is only growing in sophistication, and is likely to remain useful.

Guest-Facing Innovations

Voice Assistants

Voice assistants had to overcome a tumultuous introduction to the hospitality industry as guests expressed concerns about the security of the fledgling guest room technology. Now, in a market where sanitation is top of mind and guests want to keep their hands to themselves, voice is suddenly in a strong position to improve hotel operations and guest satisfaction.

Voice assistants can be installed in guest rooms and help provide easy answers to guest questions, freeing up valuable time for under-staffed hotels. There are even opportunities for this technology to be implemented in public areas, or to help guests operate elevators without physically touching buttons. While this technology is easy to use and guests are familiar with it, it is just now coming into its own in hospitality. It remains to be seen whether or not the technology will be accepted by the majority of guests now that its purpose in hotels is clearer.

Robots

Voice technology may not have had a clear ROI when it was first introduced to hospitality, but today it serves a defined purpose as a way to keep guests engaged with a hotel without directly devoting attention to them. Another similar example comes from the industry’s early experiments with robotics. Some hotels have invested in delivery robots capable of taking online orders from guests and bringing the requested items to the guest room.

These robots were introduced to hotels as a novelty, something guests can share on social media but nothing that would provide a significant competitive edge in the market. Today, they are helping hotels provide autonomous guest room deliveries amid a global pandemic.

Robots in hospitality don’t carry luggage, record reservations, or make guest room beds, but they can vacuum floors and provide room service. Their true value is realized through their ability to capture the guest’s attention while offering traditional hotel services without endangering employees. This is still a niche investment in hospitality, but it has the potential to become a differentiator for some hotels.

Direct Messaging/Digital Concierge

Communicating with travelers is complicated with limited staff. However, hotels are making use of mobile technology to create more efficient ways to speak with guests on their terms, while also offering more property information through digital channels.

Hotel brands have made a push to meet guests on their personal devices by establishing branded smartphone apps as the ideal platform to use when making bookings. They are starting to succeed, partly by gating select services behind direct bookings (such as free Wi-Fi or keyless check in), or simply by offering a better value in price comparisons.

If guests want to access keyless check-in or other similar services, they are likely already using a branded app, making these platforms the ideal way to communicate directly with travelers through messaging or push notifications. This growing segment for hotel technology is quickly gaining interest from operators, and whether or not guests take to text messaging amid current market conditions will likely decide its place in the hotel of tomorrow.

Keyless Check-In

Any technology that improves the level of control hotel guests have over their stay fared well over the past decade, with keyless check-in leading the charge. Guests have wanted the option to skip the front desk before they had to contend with a global pandemic. Today, the technology just makes sense.

Allowing travelers the option to head straight to the guest room, no strings attached, is one of the factors that allowed hotels to maintain an occupancy rate of 42.2 percent by this June. This technology is a natural step of most hotel companies’ mobile strategy and has already become standard practice for new builds across the industry for good reason.

Guest-Room Entertainment

One of the greatest shifts in hotels over the past decade has been the diminished importance of the guest room TV in favor of fast Wi-Fi and technology that interfaces directly with guest devices. The TV will likely always have a place in the guest room, but hotels are struggling to find a way to best activate that space. However, technology such as wireless casting of guest devices to the TV has taken off. Hotels will have to find better ways to interact with guests using their own devices going forward, as their attention is unlikely to return to on-property devices at the level it was before.

Innovation Is Still Imperative

Technology’s place in hospitality often reflects the intentions of the industry at its core: the desire to understand guests, grow profitability, improve efficiency, and elevate the hotel experience. With that in mind it makes sense that technology geared toward entertainment or external services doesn’t present as much immediate value as technology that optimizes revenue, improves operations, enables greater communication with guests, and manages your property’s reputation.

Hotels have been resourceful with the technology they have chosen, and technology’s importance within hospitality will only continue to grow. Operators know what works. Now is the time to embrace the tools most meaningful to your organization and take the necessary steps to remain innovative and competitive in an ever-changing business landscape.