The emergence of a ‘new’ hotel customer is forcing hotel operators to transform their business models, with many adopting new technologies to attract and retain guests.
This was a key finding from CBRE Hotel’s annual CheckIn report, which examined the impact of the digital age on hotel customer behaviour and how this is influencing larger hotel chains.
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Millennials and Generation Z, who now make up around 45% of the population, were found to be influential in driving industry change due to their expectations for constant connectedness; reliance on social media; demand for engaging experiences; preference to use smartphones for search and online purchases; faster service and self-service technology.
Today, the report cited, 85% of consumers trust online reviews as much as personal recommendations, 81% of people read reviews and check ratings before making a purchase decision, and Wi-Fi has become an essential consideration when booking hotels, coming in second only to cost.
However, despite the growing importance of technology and social media, CBRE Senior Research Manager Danny Lee said the hotels industry has been slow in its adoption of digital solutions compared to other industries, ranking well behind banks and financial institutions.
“When the internet came to prominence, the hotel industry was one of the earliest adopters and was quick to enable direct bookings on their websites. This was the extent to which they digitised, resulting in hotels falling behind other industries,” Mr Lee said.
“That being said, over the last five years the increased pace of digital transformation in hotels has been significant. Smartphone enabled check-ins, door entry and robotic services are all being adopted across the industry, with some operators offering full automation services to lure tech-savvy customers.”
Marriott was one of the first operators to roll out mobile check-in/check-out and room ready alerts and has since launched a mobile requests service, which enables guests to contact hotel staff and access Netflix and YouTube through their devices. Another key example is the development of an integrated social media listening platform by AccorHotels, to help it become more customer-centric at every stage of the customer journey.
Mr Lee added back-end operations also benefit from new technologies. Robots performing housekeeping functions have the potential to generate significant cost savings in an industry that is labour intensive. The CheckIn report found fixed labour accounts for 30-40% of a hotel’s operating cost.
“Investment in automating back end operations can ultimately free up hotels to focus on providing excellent service and an engaging customer experience,” Mr Lee concluded.
CBRE Hotels National Director, Wayne Bunz, said while digital technologies require significant capital expenditure, the investment is forward-facing and essential to operators wanting to maintain relevance in the market and mitigate the threat of distruptors.
“Hoteliers need to understand the value of digitisation and speed up their efforts, or risk becoming irrelevant in the mind of Gen Z and millennial travelers. Competition for customers is only going to intensify as online companies expand into the hospitality industry,” Mr Bunz said.
“Investment in mobile apps, loyalty programs and automation can all provide a seamless front-end experience, but we are now also seeing the adoption of Artificial Intelligence, Virtual Reality and facial recognition technologies globally. Hotels of the future will look and feel very different from present-day models; futuristic and experiential based,” Mr Bunz said.
