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Who will win the bright future of AI in hospitality?

Posted By Nick Vivion, Wednesday, January 9, 2019

There’s a high-stakes game afoot in the hospitality industry. From robots to software, vendors, brands, and platforms are all vying for a piece of the data-drenched future of artificial intelligence in hospitality.


Thanks to plummeting costs of data storage and processing, it's now possible to both capture and process large amounts of data at a reasonable cost. Nearly every hotel uses data to make decisions, streamline operations, and improve performance.  The growing importance of data puts pressure on hotel brands to optimize performance better than their competitors.


In order to achieve peak performance, hotels have a few options. They can turn to vendors for off-the-shelf software, outsource innovation to third-party booking channels, and/or invest in bespoke solutions. As technology reaches across all parts of hotel operations, most choose a blend of these approaches when building a tech stack.


So, as the tapestry of hospitality technology weaves wider, who wins the future? Is it the vendors that become the inseparable backbone of hotels? Or the third-party platforms that invest much of their commission income into innovation? Is it the major hotel brands that can afford to build technology as a competitive moat? Or perhaps it's the independents who aren’t beholden to parent brand’s technology prescriptions? Let's explore.


Vendors


Choosing a vendor is akin to a marriage -- an intertwining of fortunes that’s difficult to unravel should things go sour. This is especially true of mission-critical systems like the PMS and CRS. Once implemented, it can be a nightmare to switch vendors.


This means that vendors are in a strong position to own the future of AI in hospitality. These are the systems that sit at the center of the hotel operation, pulling in disparate data sources into one centralized channel. The access to data places power in the hands of those who control the mechanisms for making sense of that data.


Why they win: Given the stickiness of these deep integrations, vendors are well-positioned. If hotels rely too heavily on vendors, with no internal capabilities, vendors could take advantage of this dependence. Vendors also have data from across customers that can be anonymized to uncover behaviors that individual brands or other platforms might not be able to.


Platforms


The major OTAs, as well as alternative accommodations platforms like Airbnb and metasearch players like Google, position themselves as innovation leaders in hospitality. The standard brand position from most of these players is that hoteliers pay commissions to fund innovations that increase bookings. The alignment incentives are there: platforms make money when a customer books a room. The greater the value of the booking, the higher the commission.


The narrative of innovation is powerful. Many consumers actually start their searches on OTA and metasearch platforms; most believe that these channels provide the best deals, per the AHLA:


“An overwhelming majority (79 percent) of consumers believe these “digital middlemen” will yield better deals – a belief fueled by misleading marketing practices such as extreme discount pricing that is not based on an actual room rate set by the hotel.”

The verbiage from the AHLA shows how contentious the battle for the guest can be. Many hotel brands were at a data disadvantage, as the platforms took advantage of their massive data sets to improve conversions, optimize marketing, and incentivize end-to-end travel bookings.

 

Graphic from Expedia's 2018 Generations on the Move research.


Many OTAs are even bridging the gap between channel and vendor, offering software services that reflect a desire to be both a booking engine and technology partner for hotels. Expedia’s “tech platform for hotels” is perhaps the most direct example of how booking platforms are positioning themselves for the future.


Why they win: Platforms have far more data on consumer browsing and booking patterns than any one vendor or hotel brand. The valuable insights within this data can be leveraged to convert lookers-to-bookers more effectively than other channels. The focus on conversion delivers guests to hotels, and the data on both consumer behavior and marketing optimization keep consumers coming back. And a “one-stop travel shop” has great appeal with many travelers.


The majors


The guest experience is in the hands of the hoteliers. When it comes to affecting how a guest flows through a property, and which technology a guest interfaces with, the hotelier controls all of the levers.


There are fruitful opportunities to use sensors and algorithms to optimize hotel operations, understand the dynamics of a guest’s stay, and to experiment with emerging technologies (like robots). By customizing existing solutions, such as IBM Watson for Hospitality, major hotel brands leverage sophisticated knowledge into customized solutions without ceding complete control to an external vendor.


The majors also have a huge loyalty advantage: keeping guests within its closed ecosystem lowers customer acquisition costs and furthers guest relationships.


Why they win: Hotels have something vendors and platforms don’t have: control over the actual guest experience. Technology investments can be far more integrated into the hotel, meaning that hotels have a chance to complete circumvent vendors and platforms. It would be costly, but major hotels could focus on direct booking, building proprietary technologies, and using loyalty incentives to keep guests in a closed loop. Then the data is all theirs, as is the ownership of the future.


The independents


Last -- but definitely not least -- are the independent hotels. These brands, which range from smaller budget operations to single property luxury boutique hotels, do not come with larger tech budgets or the support of a global organization.


What they do have is a focus on the guest experience that benefits from being far closer to the guest. Smaller properties can deploy new technologies more quickly, so independents have a speed advantage when it comes to experimenting with new technologies. If done at a rapid pace, independents might learn faster than the majors when it comes to if new technologies belong in their hotel, and how best to implement them.


Why they win: Cover your ears, technologists: Technology might not be the right answer for all problems. The independents might actually win the future by focusing less on artificial intelligence and data, and more on direct experience with guests.


It’s all about the blend


The truth of travel is that everyone needs one another. The blend is the answer. A smart GM approaches distribution and guest experience technologies with a cohesive mindset that mixes and matches the best solutions for a given property. Continuously tinkering with the blend is really the way to win the future of data-driven artificial intelligence in travel.

Influence your own opinions on who will win the future of hospitality technology at our upcoming conference in Los Angeles. Register here!


Tags:  AI  emerging tech 

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How to engage with tomorrow's customer with Kate Ancketill

Posted By HEDNA News team, Wednesday, December 5, 2018

During her keynote at HEDNA Lisbon, GDR Creative Intelligence’s Kate Ancketill set the scene for the fundamental contradiction facing hospitality today: reconciling guests’ dueling desires to stay connected with their lives and escape from those very same lives.


Below are some highlights and key takeaways from Kate’s presentation, which was rich with examples of how brands from inside and outside of travel address this modern conundrum. We’ve embedded the relevant clip in each section below; the full keynote can be found at the end of the article and on YouTube.


The continuity/escape conundrum


One of the most revealing topics was the impact of 24/7 connectivity on how workers vacation. There’s actually a correlation between internet adoption and the drop in vacation usage. As the internet expanded, says Ancketill, “your availability was a measure of your employability, and you needed to be on all the time.”


 

The shift to always-on work blurred the lines between work and play, creating a new work/life permeability that changed how people vacation -- and thus how hospitality brands engage with their guests.



When polled during the live session in Lisbon, there was a similar divide: 51% of the audience checked into the office daily, 35% connected only a few times, and 14% did not check in at all.


The permeability between work and play continues to have implications for hospitality. Hotels must consider how to best serve these different ways of working, offering both a space to get work done and a haven away from the pressures of work. This is an inherent contradiction that challenges hospitality to provide products that address this fundamental tension in guests’ lives.


 

Continuity: Understanding “contextual desires and needs”


Successful navigation of modern guest preferences requires understanding of contextual desires. A brand requires a thorough understanding of its customers lives to truly solve their problems. Brands reach this understanding through a firm grasp on contextual desires, needs and problems, says Ancketill:


“For us, owning the customer problem means considering the full context of the rest of their lives when we’re delivering our service or product.”


The following examples highlight how other brands have used contextual understanding of customer interests, desires and needs to solve customer problems:


  • IKEA. Using augmented reality (AR) to help customers visualize furniture placement in their home. Rather than force inaccurate measurements, the app simplifies the process of measuring and placing furniture.

  • Martine Jalgaard. The fashion brand logs each step in its manufacturing process on a blockchain, so customers can see a garment’s complete provenance -- down to the individual animal a wool garment came from, for example.

  • Buzzfeed’s Tasty. The recipe arm of the global publisher created an induction cooker that ties into a recipe library to streamline food preparation. Solves a key problem for the outlet’s main demographic: those learning to cook.

  • Virgin America app. Transitions from informational and fun in the weeks leading up to the trip to purely trip-focused in the 24 hours prior to the trip. Adjusts to the changing needs of the traveler as they prepare to travel.

  • Alibaba Supermarket. Massive food operation targets a variety of customers needs with seven different purchase paths, each targeting a specific type of food need.



Escape: Making it immersive


Next-gen retail appeals to a sense of immersivity that’s been magnified by social media. The popularity of crafting personas online, from Instagram to Snapchat, leaves many users searching for media fodder to populate their profiles.


“Instagram ready” and “Instagram bait” have become qualities of the retail experience, which itself has morphed into less of a functional industry that sells things and more of a destination-based industry that sells experiences (alongside things).


“We are seeing [retail-as-destination] filter through to all kinds of retail and hospitality spaces: the need to have extraordinary backdrop for the taking of selfies. These are fully facilitated and highly sophisticated with perfect lighting.”


Hotels are joining the retail revolution, curating pop-up experiences to attract locals and give guests a unique experience that they can’t get at other hotels. These exclusive and/or temporary events drive interest and engagement in ways far beyond what a traditional hotel space could accomplish. To be immersive, these experiences stand apart by helping participants escape from the sameness of day-to-day life.


Some examples of contextual escape to provide extraordinary experiences:


  • Castorama Magic Wallpaper. The DIY chain created wallpaper that has an interactive AR app that creates stories for children. It’s an example of a home improvement company leaning on its core -- helping people build spaces to create memories in -- and then creating media to expand this further into consumers’ lives. Not to mention building a new potential recurring revenue stream by releasing new stories and new wallpapers.

  • Mr. Simon. Secret bar that requires guests to find the entrance -- and only after being invited through a PIN code. The bar has its own fictitious founder, Mr. Simon, who has traveled the world to find the best cocktail tinctures.

  • Zhongshuge Bookstore. A whimsical approach to experiential retail. The bookstore chain takes consumers on a journey through multiple spaces. Each space has its own atmosphere, and the recommended books are placed according to the themed areas. Each store is unique with a singular standalone design.

  • Corinthia Hotel. A neuroscientist on staff optimizes both the hotel staff’s performance and VIP guests that purchase a wellness-focused package. Read more here.

  • Zanadu Travel Agency. The Shanghai-based agency receives 10,000 visitors per month, who explore potential destinations through virtual reality.

The welcome desk at Zanadu, where visitors use QR codes to try out destinations in VR.

 

How to resolve the continuity/escape conundrum


In her session wrap-up, Ancketill shared a final slide that outlines concrete steps for hoteliers to resolve the tension between guest desires for continuity and escape. It really comes down to understanding the target demographics and delivering the experience they seek.



Watch Kate Ancketill’s full keynote:




Tags:  emerging tech  events  keynote  video 

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