Digital. Why Should Hospitality Companies Care?

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October 15, 2015
Digital Transformation
Amitava “Chats” Chatterjee

What is Digital?
In Hospitality Upgrade’s summer 2015 issue, R.P. Rama, VP and CTO/CIO of IHM Hotels, said, “The biggest impact arising from technology advancement that we have had to deal with can be attributed to the rise of millennials, centennials and the proliferation of digital technologies and channels. Given their deep adoption of mobile and digital technologies, millennials expect that we will interact with them in a manner of their choosing, via necessarily user-friendly applications.” 

We live in an amazing world. Information is coming at us from many directions. The gives, gets and handoffs across the multiple channels are truly offering new opportunities to transform how we live and conduct business. We have an explosion of information available to us, and just need to figure out what to do with it and who needs it and when, in order to do something remarkable. Translated into hospitality speak, how do we deliver nuggets of information about guests to employees so they can continue to delight them as the guests go about their journeys? These positive interactions help increase “stickiness” and enhance brand affinity.

Technology transformation has permeated many aspects of our personal and professional lives, and has changed how we interact with one another and run our businesses. Think about it – in the last several decades we have been through several fundamental shifts in technology starting with mainframes, distributed computing and punch cards in the ‘70s, which gave way to minis, spreadsheets, word processors and floppies in the ‘80s. I still have a luggable that boots via diskettes – swap one to launch another program. Advances in computing as well as networking, and the growing popularity of the Internet and browsers made the ‘90s about collaboration and exploring connectivity opportunities – and email. The first decade of the 21st century was about online presence and engagement; as technologies became more sophisticated, websites evolved from static “here’s who we are” pages to more dynamic sales and engagement channels. This decade is about the exponential growth in digital, mobile, social, the explosion of data, and the harnessing of it via analytics. Multiple stakeholder groups within a hospitality company (e.g., IT, business, human capital and other stakeholders) can use cloud-based analytics engines to more effectively attract, acquire, engage and serve guests in a personal manner. Wearables and the Internet of Things (IoT) can help to further transform our digital engagement opportunities. Fascinating times.

Digital is Woven into Everyday Life
Technology has become an enabler for this digital era. Digital adoption is becoming widespread due to the explosion of connectivity, proliferation of data, ease of use, growth in computing power, and availability of distributed computing platforms for specific applications, as well as increased accessibility. As a result, digital is becoming ubiquitous. In so many instances, our personal lives are held together via a digital lifeline that connects our mobile phones, social interactions, banking, shopping, travel research and buying, and so much more.

In the business world, digital is causing disruption. In fact, many businesses are truly becoming transformed as they harness new capabilities and evolve and adapt to ever-changing business and operating models.

Trends and Disruptors
Digital is transforming multiple aspects of hospitality operations. It is impacting the delivery of guest experiences, transforming employee engagement and efficiency, influencing online presence in social channels, as well as influencing how guest data and Big Data are processed and applied at appropriate interaction touch points to support service delivery. The growth in mobile devices has also influenced what guests do with their phones as well as what value-added services hotel companies can provide to their guests.
 
In addition, disruptive innovations such as social channels are often forcing a re-think of customer engagement strategies. Companies should continually seek one-on-one interaction with their guests, as well as look for opportunities to monetize interactions and drive additional revenue growth. Businesses that learn to integrate and leverage social capabilities are typically able to better plan their sales pipeline and provide more authentic customer support. They will likely also be able to respond promptly to any spikes in conversation that focus on competitors or the industry in general.

IoT is also offering the opportunity to help track and deliver tailored experiences to guests by harnessing what is known and how one-size-fits-all experiences can be tailored for individuals. IoT is a good example of the intersection of technology and strategy. By embedding sensors and connectivity throughout our physical space, the IoT can create an opportunity to transform inanimate objects into a connected Web of ambient computing power – seeing, understanding and reacting to the world. It rewrites the traditional view of data collection and computing, and can give leaders an ability to deploy sensing capabilities and take actions based on real-time information that may come from well beyond their own walls.

Implications for the Hospitality Industry
Digital transformation is manifesting itself in multiple areas, but some of the important ones for hospitality include mobile, social, analytics and IoT.

Mobile: The growth of mobile is making new demands on hotel companies, especially in the case of their information technology assets. Deep adoption by millennials coupled with the growth of mobile usage in general increases the expectation that hotels will engage with their guests via this channel. Most guests also want applications that are engaging, intuitive and designed to take advantage of new mobile platform capabilities. Given the frequent updates and introduction of new mobile technologies and capabilities, hospitality companies should keep their mobile apps refreshed and continually enhanced. In terms of opportunities to leverage mobile, there are apps that offer mobile bookings, room service ordering and the fulfillment of guest requests. In the future, we are likely to see enhancements that take advantage of guest data and geolocation capabilities to help deliver targeted marketing and offers aimed at adding more revenue to the bottom line. However, this should not be an one-size-fits-all approach. Rather, the offers should be tailored, relevant and take the theoretical net worth of the guest into account prior to delivery.

Social: The growth of social media channels that are assisting the proliferation of user-generated content is pushing many hotel companies to rethink how to engage with their customers, many of whom use social media as a preferred medium to engage with customer service. Looking across multiple industries, not only those in travel, a 2013 study conducted by the MIT Sloan Management Review and Deloitte Consulting LLP found that 58 percent of companies surveyed have appointed an individual to oversee their organizations’ social business initiatives. Customer service is a given, and hotel companies typically need strategies for dealing with their guests who choose to interact via social media. Companies may have an opportunity to truly use social media to drive business. Social media typically falls within the realm of a marketing lead – and can be used for PR – but, it can span so much more and digital tools can drive branding, e-commerce, CRM, media and public relations.

Analytics: The hospitality industry is blessed in that it has access to a large amount of guest data. Many hotels know about their guests even before they have arrived on property. It is important to be able to take these insights and convert them into meaningful results. Analytics can be used to harness the awareness of customers. The application of Big Data helps hotels to create precisely targeted marketing campaigns, deliver them, measure success and learn from the outcomes. Next-best-course-of-action engines can analyze guests’ clickstream, location, social interaction platform, customer profile, transactions and voice-of-the-customer data to enhance and optimize their journeys and interactions at various touch points. “Where was I” reporting is often giving way to forward-looking, predictive “Where will I be” analytics and scenario-driven what-if analyses. These collectively enable hospitality companies to empower employees with insights they can use to deliver compelling experiences across touch points using customer profiles and preferences, social listening, location and contextual awareness and predictive analytics. Further, interactions across digital channels are able to be transformed as a result of these insights.

IoT: IoT is becoming a reality with the advent of connected devices, embedded intelligence and the ability to help deliver meaningful information to the embedded sensors that can be used to transform interactions. As hospitality companies consider how to employ IoT, it may behoove them to consider that the most compelling use cases will very likely require cross-organizational collaboration. Also, the desire to play with the next shiny object will likely be strong – therefore it is important to avoid distractions from exciting new technologies by starting with concrete business outcomes in mind. Usability is another important consideration, even if the solution is automated. Given the need to connect sensors, it is important to bear the bandwidth demands in mind. Lastly, standards for IoT will continue to evolve, but it is important to not wait – rather, hospitality companies should help shape standards.

What Does this Mean for the Hospitality Industry?
Digital capabilities are giving many hospitality companies the abilities to transform their business models, guest engagement and employee enablement and create opportunities to deliver rich and compelling experiences. Taking advantage of these typically requires investments not only in security and privacy to help maintain sanctity of sensitive personal information and personally identifiable information, but also to factor in the additional bandwidth needs. A judicious weighing of potential business benefits against investment requirements should occur prior to taking advantage of capabilities.

Amitava “Chats” Chatterjee is a director with Deloitte Digital, Deloitte Consulting LLP, based in McLean, Virginia.

This article contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. As used in this article, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/ for more information.
 
 
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