Until virtual reality becomes sophisticated enough that you can beam yourself to a beach in Bali or a business meeting in London, we will need hotels. They are places to gather. Places to experience and connect with local culture. Places to eat, sleep, meet, celebrate, relax and be entertained.
To deliver what guests need, hotels must have both solid physical and technological infrastructures. While the industry is ablaze with catchwords, the truth is that hospitality is experiencing a technology gap and the pace of innovation adoption remains limited. Even the technology that is widespread (guest self-check-in desks, RFID hotel key cards, and mobile bookings are not radically changing the guest experience or marking a significant technology breakthrough.
The hospitality industry faces inherent challenges that slow down innovation and technology adoption, including low margins and high technology deployment costs, a franchise model that does not facilitate technology rollout and antiquated legacy technology systems. Hotel brands are finding themselves playing “catch up” with other industries.
Yet, challenges present opportunities: thoughtful adoption of technology can improve guest experiences and keep pace with a changing culture and business environment. At JLL, we see great potential in three key areas.
Designing Intelligent Buildings
Hotel buildings are becoming smarter. The process starts during design and construction, through the choice of technology-ready and green building systems and features. It continues with the integration of the building’s operating systems, which ensures that property management, point-of-sale, computerized reservation systems, labor management tools, maintenance work order systems and accounting software all run together.
In a fully integrated smart hotel, task-management systems will optimize all activities, prioritize maintenance and housekeeping activities, layer guest check-ins and check-outs to maximize revenue and labor productivity, enable guest customization choices and automate reporting and accounting. These two phases of design and integration are well underway, particularly for new hotel developments and large-scale renovation where properties have prioritized technology updates as part of their business strategy.
The next phase is the integration of business intelligence and analytics that analyze guest online activity before and after the stay. This can help understand guest behavior, especially when used in conjunction with data about what the guests did during their stay. Hotels could track where guests go out for dinner to gain perspective on why they didn’t select the hotel’s restaurant, the flow of people in a convention hotel to optimize retail locations in the building, or the habits of repeat guests to offer the right room temperature and amenities on their next stay in a hotel of the brand. Privacy and cybersecurity matters remain important considerations, however, that have slowed down wider-spread deployment of these kinds of tracking technologies.
Employing Artificial Intelligence and Big Data
The use of artificial intelligence (AI) in the industry today is mainly focused on consumer services, through recommendation engines and chatbots. This is only one of infinite possible applications. AI is not a unified technology that applies to one specific area of the hospitality industry. We envision this technology being increasingly deployed in several ways.
Revenue management can become an ever more strategic part of hotel operations. The ability to analyze data sets on factors like guest segmentation and behavior, event information and even weather patterns will help inform predictive yield management systems. Additionally, data from digital interactions and on-property behavior will boost the utilization of customer relationship management (CRM) and loyalty tools, and allow hospitality firms to nurture loyalty, maximize brand advocacy and deliver an understanding of the travelers’ needs and aspirations.
We see potential for new AI-powered identification systems and face recognition softwareto create more secure check-in/check-out process and authorize access to rooms and restricted areas. We also believe that hospitality will increasingly benefit from AI-powered interactive tests to filter and recruit candidates, as significant productivity improvement given the labor-intensive nature of the industry and significant turnover issue.
Look for chatbots and virtual travel assistants to become more visible, delivering beyond tasks such as ordering room service or getting information on your flight. This technology is evolving to become a true virtual assistants and concierge service across the guest’s journey, such as ordering tickets to a show or recommending the hottest restaurant in town based on liked-minded fellow travelers’ reviews.
Depending on the segments and markets hotels operate in, our analysis of extensive proprietary data shows that payroll and benefits represent 15-40% of total hotel revenue. With increasing labor costs nationally and jobs that are mostly impossible to outsource or move to cheaper labor markets overseas, hospitality is facing a significant labor issue that could be alleviated by automation.
The same way warehouses and factories are being automated and more households are using service robots to perform household chores, hotels can be further automated from front desk to housekeeping. Technology is poised to transform hotel labor with self-check-in kiosks, robot room-service delivery, automated kitchen prep, automated room and public area cleaning devices and optimized preventive maintenance plans that reduce the need for human intervention.
With automation comes the need to proactively engage with the employees and hotel unions. Hospitality firms must initiate stronger cooperation with the unions, giving them a seat at the table and making sure the interest of the employees is front and center in the process.
Being Hospitable in an Automated World
At its core, hospitality is the business of being hospitable. Technology in the hospitality industry is meant to make hotels more environmentally friendly, safer and more profitable while also enhancing the human experience, not replacing it. Technology deployment should only free up hotel associates from the most mundane tasks, so they can focus on value-add actions. If hotels run themselves regarding smart, energy efficient design, thoughtful use of AI and data analysis to drive operations, to name a few, employees will be relieved from repetitive tasks and able to focus on guest-facing interactions and creating memorable guest experiences.
Technology needs to be viewed as a complimentary operational strategy and social human interaction needs to remain the very center and underlying foundation of a business driven by providing excellent service and delivering unique and customized experiences.