While preparing my contribution on promoting a culture of innovation in hospitality for my session at the International Hotel Investment Forum (IHIF) taking place on Wednesday 8 March, it struck me afresh how the factors used by hotels to deliver value have changed so little over hundreds of years.
The basic organisational structure has hardly changed since the 1800s!
Hotels will essentially continue to deliver core value in the same way they always have done, with a room, a bed, and a meal. What will increasingly matter, however, is how they connect with guests, before, during and after the stay – and how they use specific content to make all elements of this truly an experience that builds loyalty.
In my view, too many hotels are not being bold enough in developing a service offering that differentiates them or engages their customers for the long term.
As companies like Tesla Motors and Salesforce.com constantly scan the horizon for the investment and innovation opportunities that will be driving their businesses in five, 10 or even 20 years’ time, the hotel industry has been slow to grasp opportunities for change.
Personalisation powered by data analytics
Some things have changed around the fringes, of course. Large hotel groups have launched sub-brands to slice their markets into more profitable segments, with varying degrees of success. Analytics strategies aimed at personalising the guest experience are appearing. New online content strategies and deliberate efforts to do away with the conventional are increasingly common. And, of course, loyalty programmes still feature strongly.
But little has happened to properly complement and refresh that timeworn formula: a room, a bed, and a meal. It’s highly questionable whether this is enough on its own for hotels to prosper in the face of powerful forces like the online travel agent (OTA), TripAdvisor, Booking.com and Airbnb, all of which are changing the face of the hospitality industry at enormous speed.
Something far more deep-rooted will be needed to protect hotels against the challenges of an increasingly disrupted present and a highly unpredictable future.
Competing in the midst of digital disruption
Radical thought is required by many hotels in how they attract customers, how they build loyalty, how they meet the varying guests’ needs (business, leisure, family, special event) and how they encourage ‘evangelising’ word-of-mouth; in short, how they rise to the new competitive challenges they are increasingly going to face.
When I say ‘radical’, I don’t necessarily mean brand new or unprecedented. There are already many great solutions out there, most of which have not as yet been implemented in the hotel industry. So hotels do not have to be leaders in innovation. Instead they can partner with proven innovators.
Partnerships in the digitalised world
So the good news is that opportunities already exist to identify and implement radical solutions. Those companies I’ve already mentioned – the Teslas and Salesforce.coms of this world – really understand the value of partnership in the digitalised world.
And there are plenty of prospective partners out there with the innovative capability to help hoteliers positively differentiate the experience of their guests from those of their competitors.
Partners, for example, who can help hotels generate and exploit greater customer knowledge from social media. Who can even (with customers’ permission) enable arrivals to be tracked via smartphone so that guests can be greeted by name. Who can help hotels extend their service offering beyond the confines of the building itself – for example, by collecting luggage from an airport carrousel while guests make their way, unencumbered, to their hotel where their bags are waiting for them in their room.
Looking beyond the industry boundaries
A further challenge that hoteliers face lies in ensuring they are being radical enough, not merely to recognise the right partner but also to recognise the right solution – those that are radical but not ill-advised or laden with reputational risk. They’ll need help. They will almost certainly need to engage with different types of people, from outside the traditional boundaries of the hotel industry, who can teach them to see their business in different ways and develop compelling new service offerings and communications.
And they’ll have to be courageous. Not everything they try will succeed. But in today’s environment, doing nothing is far more dangerous than a certain amount of considered risk-taking. After all, we’re not talking about re-engineering the business model. We’re merely seeking to set it in a new digital context.
And that brings me on to the other good news: having a concept as simple and powerful as ‘a room, a bed, and a meal’ at the heart of your business model is a highly compelling proposition. It has lasted for hundreds of years. And, with the right understanding and the right solutions for the digital age, there is every reason why it should survive for hundreds of years more.
So get radical!
Gillian Saunders is Grant Thornton International’s global leader for the travel, tourism and leisure industry and head of advisory services for Grant Thornton South Africa. She will be speaking on Wednesday 8 March (12.15pm) at the International Hotel Investment Forum on the topic: “Promoting a culture of innovation in hospitality” (session 25).