Today's decisions for tomorrow's hospitality12 April 2021
Technology is more important than ever: not only for the optimisation of a hotel’s daily processes, but also for its overall financial bottom line. It has become increasingly apparent that the proper implementation and integration of technology is vital to the future of the hospitality industry. HFTP’s Europe Hangout events seek to understand today’s hotel technology landscape, as well as where it is heading in the future, by opening up discussions with key decision makers and executives at major hospitality brands.
HFTP's Hangouts are live virtual networking events that offer an opportunity for people working in the hospitality sector around the world to discuss new ideas and solutions.
In HFTP's Europe Hangout held in February, Florian Montag, co-founder and managing director at Hotelhero, shared key findings from his company's recently published report on the German hotel technology landscape in 2020. Some significant trends and challenges emerged from a series of interviews held with 15 German hotel executives. These were conducted in October and November 2020, reflecting the profound impact the Covid-19 pandemic has had on the country's hotel technology space.
The hotel mindset
Hotels do not consider themselves tech companies. Hoteliers tend to view their business as primarily guest or people-centric, when instead they should view it as a hybrid business model that is focused on the guest and on the technological solutions that are invaluable to meeting visitors' evolving expectations. Technology should be used throughout the business model, as most rooms are now being sold online and hotels must increasingly compete with online travel agencies.
Process automation is on the rise across all hotel segments. However, hotels also need to develop an overall digital strategy that aligns with their business model: is not just about changing one process or implementing a new piece of technology that happens to be popular. This is the only way that hotels can become successful and ensure they are not wasting money on the wrong initiatives.
Most executives see the future of hotel tech as an open-platform philosophy with REST APIs. The connectivity of multiple third-party systems would allow hotel businesses to be more agile and responsive to new trends, adopting new technologies more easily as they become available. This is often impossible, given a lack of data standardisation and integration – two of the biggest hurdles that still exist today.
When asked if they would prefer an all-in-one or best-of-breed tech stack, the opinions differed. However, many executives indicated that the all-in-one stack would be a better option, as integration and transfer of data between systems are still major issues.
The incorporation of middleware or a data warehouse could be a potential solution. This has benefits for both forecasting and data analytics. However, affordability remains an issue, especially for smaller hotel groups, which may struggle to make the investment required for this type of infrastructure.
Breaking the status quo is another key challenge, especially for existing hotel chains. Many hotels are still working with legacy solutions, which may have vast functionality and customisation already in place, but are not set up for the plug-and-play or open-platform method. As a result, consolidating different database structures and data standardisation remain problems for most businesses.
When changing one system, all of the other systems that may be interconnected must also be evaluated. This can result in the endeavour to update one system becoming a massive undertaking – leading many hotels to just stick with the solutions they have already.
Digitalising the customer journey
Many hotel executives were optimistic that a massive, fast-paced digital transformation would take place across the industry in 2020. There are many reasons why this did not happen, and much of it came down to financial uncertainty. Many employees were furloughed as hotels needed to cut expenses, and hotels could not project their revenues. A second lockdown was taking place in Germany around the time Hotelhero’s interviews were held and the government’s financial assistance was delayed.
However, executives predicted that 2021 will result in a major digitalisation push, as a new generation of more tech-focused hoteliers and investors emerge, government funding is paid out, vaccinations are rolled out and markets begin to open up again. This will all result in less uncertainty surrounding revenue.
Hotels executives were clear that the digitalisation of guest check-in and check-out was the biggest trend to emerge in the past year. There has been a wide acceptance of this technology across all hotel segments. Process automation is vital to fully automate this journey and all key systems must be completely integrated, including online payment, digital keys and PMS. However, integration remains a hindering force, as many of these processes are still handled manually.
In another Europe Hangout sponsored by Intel held in February, a presentation was given by Group 38, a student business project group from Swiss hospitality school EHL. This session focused on research and interview data gathered from discussions with decision makers at major hotel brands, leading industry consultants and experts within the school.
The research identified several key trends emerging for the hotel industry. Again, digitalisation and personalisation of the customer journey were major themes. The study found that more than 78% of consumers surveyed would only engage with offers that have been tailored specifically for them. This proportion is only likely to increase as personalisation becomes more important for the next generation of hotel guests.
Younger generations, which tend to be more digitalsavvy and influenced by modern technology and social media, account for a large and rapidly growing share of the market. Millennials are expected to represent 40% of the global working-age population by the end of this decade, making it vital that hotels cater their offering to young people.
Although hospitality may not be at the forefront of sustainability, this is also becoming increasingly important around the world. Hotels are expected to demonstrate their engagement with corporate social responsibility initiatives: 70% of global travellers are more likely to book at an environmentally friendly property. What’s more, 83% of millennials indicated they would be more loyal to socially and economically conscious brands.
Continue the conversation
HFTP’s Hangouts offer an opportunity for hospitality professionals in Europe and across the globe to navigate both the trajectory of hotel technology and the lasting impact of the international pandemic on the industry. Both of the Hangout sessions discussed in this article can be viewed in their entirety by accessing the HFTP Virtual Education 2021 Archive Library on the organisation’s website.
In order to continue the valuable conversations that have already taken place, HFTP will be hosting HITEC Europe Sessions 2021, a five-week virtual education series focused on hospitality technology and operating in a post-pandemic world.
Centring on the theme of business resilience, this series is designed to inspire clear, creative solutions, building connections and continuous learning among hospitality industry professionals in Europe and around the world. It aims to inspire debate and discussions in four different languages: English, Spanish, French and German. The sessions will take place every Wednesday from 26 May until 23 June 2021.