Internet of Things in Hospitality – An Emerging Force

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October 25, 2016
Internet of Things
Amitava "Chats" Chatterjee
SriMyneni
FrankO'Connor

Deloitte recently published an article about the connected hotel which discussed the trends emerging in the hospitality industry. These trends represent the obvious wins in this environment and not surprisingly there are already examples of large-scale rollout as well as spot implementations of pilot systems. These current initiatives represent only a small portion of the benefits that can be derived from the Internet of Things (IoT). However, real benefits are not realized the same for all participants in this industry, and in practice, this is where brands can start to differentiate themselves.

The IoT and what it entails is still uncertain and can be unsettling for hospitality technology professionals tasked with building and maintaining technology infrastructures, and for the hoteliers that rely on them to provide more services and capabilities for their organizations.  Hospitality organizations that can build services and capabilities by leveraging IoT may become disrupters in their industry and potentially gain a competitive edge over others.

The clear implication of this lack of big picture focus is the need for hospitality organizations to be nimble and at the same time bold.  While this may sound contradictory, the truth is, those looking to lead and capitalize on the adoption should be able to be broad in the collection of information, innovative in the use of this data to determine and seek trends, and bold in making bets on evolutionary uses of the data to enhance services, experiences and revenue for their organizations.  This evolution will certainly have its failures, in fact likely more failures then successes, but the leaders in this space will place bets, fail fast and achieve faster success by learning from those failures.

Creating a strategy around the IoT implies that there is a need to build the infrastructure to collect the data, determine what data (IoT endpoints) needs to be captured initially, and have an idea on ways to mine the data to get valuable insights.  We all need one hypothesis and need to make the best most educated bet to get started.  Next, you setup a culture/practice where the results are trended, analyzed and questioned.  The benefit of the big data lake created might not yet be apparent.  So be bold, draw new connections in the data and draw new assumptions based on that science.  Be aware of what other data you could use, how could you combine the data from other sources to create value for your operation.  The IoT Information Value Loop is illustrated below.

Many hotel organizations can get slowed down by the need to over analyze the potential benefits.  There is a compelling reason to embrace IoT, be it keyless entry or global payment networks usage that will justify some of the investment. However, picking an initiative to help your organization start to understand the deployment requirements is the first step.  Be bold, but be nimble, and be prepared to add on to your initial project, or even abandon it if no value is seen. Your organization is now collecting more information which can be used to understand all manner of activities on your property.  Start small, try different things, but track what you try.

Once your organization has a collection of data, take the time to review it, and add all manner of other data (e.g., weather, time of the year, sporting events, and items you can use to provide additional levels of depth to your analysis). The last part of all of this is converting your trends and data to value for your property.  This is where results and expectations from one organization can vastly differ from the other.  If you are not able to see value in a particular initiative, determine if it has incremental cost to continue, or if you can collect just as a way to add depth.  Remember, the goal of any initiative in this area is to create value, either for the enterprise or your guest, or ideally, both.

So the question turns to how does this work in different environments? A select-service hotel vs. a full-service luxury hotel or a boutique destination resort could have similar value to gain from some baseline IoT capabilities, payment modules or room keys, but start to diverge quickly thereafter.  These challenges are not just around the implementation and use of technology, but extend to your organizational capability – the focus on change and risk appetite, from traditional governance model to more data-driven decision-making that extend all of the way through operations and investment decisions.  These changes may also affect the hotel organizations’ relevant public policy changes in areas such as privacy, security and intellectual property.  So while there are technical considerations that cannot be ignored, the operational aspects of IoT are equally important to consider.

The benefit of an IoT implementation rests in the intrinsic ability to leverage mobile devices and wearables that guests already have with them and to connect them into processes ranging from reservations, check-in, during the course of stay, checkout and others.

Most hotels provide exercise facilities and many contain equipment with capabilities to capture and store exercise and usage information.  It is not far-fetched to assume that usage data can be captured and used to implement proactive equipment maintenance and servicing schedules. This can help save costly repairs and extend equipment life, leading to potentially improved returns on investment.

Boutique hotels, by their nature, have unique elements that might include food, ambience, location and/or services.  The ability to offer these services to guests, track interest and provide incentives can allow the hotel operator to better focus efforts to expand and enhance the guest experience.

While there are significant benefits to be realized, hotel organizations should to be more vigilant about the nature of the information collected.  There is scope for significant personally identifiable information (PII) or financial information collection that warrants adoption of stringent processes and controls to ensure the safety of that information.  An information breach directly impacts the brand value of the organization.  As part of the strategy to implement IoT, organizations also should evaluate and design security and privacy controls around capture, retention and usage of this information.

The shift that should be embraced by properties at all levels is around the potential to turn a device, owned and managed by the guest, into a portal that supports value-added interactions pre-, during, and post-stay.  By creating a flexible framework and foundation to create services, a hotel operator can experiment with services that can be easily delivered.  If you consider our mobiledriven banking interactions which provide a less personal service compared to hoteliers, we are already using technology to enhance our experiences.  Further, mobile platforms can be used to push offers to guests, thereby creating an opportunity to upsell.  Mobile devices can be used to determine guest geolocation which can then be used to drive alert to hotel staff.  In addition, data can be aggregated over time, augmented with additional data points such as season, day of week, holidays, weather, economic trends, all of which can be used to understand the overall guest experience.  IoT-enabled devices provide the ability to capture interactions and leverage usage patterns at a granular level.

IoT-enabled devices and services will lead the next technology revolution.  This impact will most likely be felt across all aspects of our lives.  Leaders who take bold steps to be at the forefront of this revolution can reap enormous benefits and stay ahead of their competition.  Hospitality is an industry which is primarily driven by the user experience.  Hotels that leverage IoT-driven information and design and offer services to provide their guests a better stay experience will be significantly ahead of their competition.
 

IoT for hospitality brands to implement

A luxury hotel may also want to include access to additional on-site and room-based services:

  • Spa and Restaurant Reservations
  • Room Service
  • Bluetooth Audio Services
  • Voice commands for in-room services
  • Wireless streaming to your in-room video

FRANK O’CONNOR, SRI MYNENI, AMITAVA “CHATS” CHATTERJEE AND SIVA KANTAMNENI ARE LEADERS IN DELOITTE CONSULTING LLP’S TRAVEL, HOSPITALITY AND LEISURE PRACTICE.

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