Improved Hotel Technology Seen as Big Draw
Hotels planning to grow their business in the next year are looking at more than comfier beds or putting in a pool. Instead, they’re looking at improving hotel technology, both to provide better services to guests and to run their business more effectively.
That’s according to Hospitality Technology’s 2016 Lodging Technology Study, produced in partnership with the University of Nevada Las Vegas (UNLV). “Technology, and in particular a strong digital engagement portfolio, has become a must-have for driving hotel revenue,” write Abigail Lorden and Mehmet Erdem in the study. “The traveler’s journey starts with convenient booking channels that provide ubiquitous access to reservations, it continues with an on-property experience that enables seamless connectivity, and it ends with post-stay communication that recognizes the guest in a personal way to build loyalty and encourage return visits. The guest lifecycle is powered by technology, and technology will be handsomely funded in 2016.”
Overall, the study found that 54 percent of hotels plan to invest more in technology in 2016 than they did in previous years, while 41 percent said they would spend the same and only 5 percent said they would spend less. Moreover, the average hotel technology budget will top six percent of revenue—up from 4.9% of revenue in 2014 and 2.6% of revenue in 2013, according to the study.
In fact, depending on the market segment, this figure could be even higher, the study finds. In midscale hotels, which compete for tech-savvy business travelers, IT budgets are estimated at 7.3 percent of revenue in 2016. In contrast, upscale hotels will invest 6.1 percent of revenue on IT, followed by luxury at 5.6 percent, and economy at 5.3 percent.
Investments tend to be in one of two areas, the study finds. “Hotel CIOs today find themselves caught between two high-flying objectives — strengthen the business via innovative technologies that engage the customer, and cut costs via systems and processes that lead to greater efficiency,” the authors write. That’s not to say the two objectives are mutually exclusive. “In some cases, one technology stone can take out both birds,” such as mobile check-in, which streamlines the front desk while also giving guests control over the check-in process.
“Keeping pace with rapidly escalating guest expectations” is the primary challenge facing hotel technology teams, even more so than limited IT budgets, the study has found for the past four years. Guestroom technology projects that are most popular include:
- mobile key technology, also called keyless entry, characterized by guest room access via a guest’s mobile device
- room control devices
- energy management systems
In addition, even the technologies that many hotel guest rooms already enjoy—bandwidth, wireless Internet access, flat screen TVs, and HD content—are likely to be upgraded this year, the study finds. For example, for in-room Internet access, 44 percent of hotels report moving to tiered access, where lower-speed Internet is free and higher speed costs money.
Hotel managers still don’t use big data as much as they could, but it has improved. While only 13 percent of hotels report that big data has a high level of maturity in their organization, that’s quite an improvement over the 0 percent who said so in 2014. In addition, the 49 percent who said they had little to no maturity in 2014 has decreased to 41 percent now.
With big data, the study notes, hotels can perform functions such as:
- Monitor whether a guest is in the room and reduce energy consumption
- Use revenue management data to optimize room pricing and fill more rooms at higher rates
- Leverage data-driven marketing to increase bookings
Another way to improve efficiency at hotels is to streamline records management. From organizing hundreds of timeshares to coordinating audit trails, enterprise content management (ECM) can revitalize the administration of hotels and other segments of the tourism industry. It can even go beyond general HR and financial duties and process more specialized requirements, like coordinating tours for clients who are traveling to the destination on separate trains, or assist with price quotes.
As with guest room technology, many of the technologies that hotel management already uses are slated to be upgraded, such as payment technology (46 percent), compliance monitoring solutions (33 percent), and property management systems (33 percent). In particular, hotels are looking to add security to payment management through means such as end-to-end encryption for cardholder data, implementing managed security as a service, and supporting chip-based credit cards.
Other technologies hotel operators said they plan to implement include
- Location-based technology
- Tablets at the front desk
- Mobile apps for customers
- Interactive digital signs
- Smart TV
What gets really interesting is when hotel operators started talking about more futuristic technologies that could be implemented. “What if a robotic concierge were to greet guests upon arrival? 22 percent see this as likely,” the study finds. “What if holograms could be used as a personal guide to each hotel guest? 14 percent think they’ll see this one play out. Other futuristic technologies include interactive walls, where the wall surface is a gesture-controlled monitor, or in bathrooms, where the mirror itself functions as an interactive display.
The lesson? When you attend your next technology conference, pay as much attention to where you stay as the conference itself. You might be catching a glimpse of the future.