Technology

Hotels shift from transactional to experiential paradigm predicted within five years

Posted by Lee Hayhurst on
Hotels shift from transactional to experiential paradigm predicted within five years

A new report from Amadeus and hospitality giant IHG suggests travellers are primed for hotels to grasp the promise of cloud-based Customer Reservation Systems to provide a more bespoke, personalised experience

Replacing legacy technology with cloud-based system will enable the hotel sector to transitioning from a transactional to an experiential relationship with its customers.

That’s the conclusion from the authors of new research into what consumers are looking for in the future from accommodation providers.

The Amadeus report, compiled by analyst Foresight Factory in partnership with global hospitality giant IHG and Cornell University, makes the following three key predictions:

• We are seeing the beginning of the end of room types – in the future rooms will be sold based on much more granular attributes, services and personalised customer requirements;
• Technology will be used to augment the way humans interact with guests rather than replacing the need for people to provide services;
• Properties of all kinds will achieve the sort of “cult status” that luxury or boutique hotels have at scale using technology to deliver memorable guest experiences on and off property.

The conclusions in the Drivers of Change in Hospitality report come from a global survey of 7,500 travellers in 12 markets and insight from industry professionals including start-ups and alternative accommodation providers.

Joe Youseff, Amadeus worldwide hospitality executive vice president of marketing, conceded there remain significant technological challenges in hospitality that makes delivering change complex.

But he said just as Amadeus has been moving core technologies to more flexible platforms, it can bring partners like IHG with it on the road to adopting cloud-based Customer Reservation Systems and a more experiential future.

Youseff predicted this shift will take place “incrementally” as consumers and tech providers drive change and that it will become a reality “over the next five years”.

“It’s a combination of cloud API and micro-service enabled product that can talk to other system providers to provide a complete view of the guest and the business.

“We are looking at this as a transformation of the industry. It’s a paradigm shift from how the industry was very brand focused to become guest-centric.

“The hotel needs to look at the traveller every step of the way. How can it understand the traveller in terms of the context of what they are travelling for?”

Youseff said the sector has to “overcome data fragmentation” to appreciate the needs of the travellers at every touchpoint.

“That’s another paradigm shift. In the past every technology provider jealously guarded their data, the concept of providing data to each other never existed,” he said.

“In the world of open APIs, data flow between different providers has to be seamless. This is what we mean by experiential travel versus the old way of doing things transactional travel.

“The findings of our research and the numbers behind it shows that the travelling public wants this and they want it now.”

The battle over who owns the guest has changed, added Youseff, so that today the travellers is considered to be the owner of their data and they will decide who to give it to.

“They will share that if they believe they will get a significant benefit in exchange. If they get that experiential benefit they will share that data. They want to be understood.

“It becomes the art of personalisation versus the “spray and pray” marketing strategies of the past.”

High turnover of hotel staff – which means properties effectively replace their entire workforce every year – means technologies have to be developed collaboratively and be intuitive to ensure adoption.

Youseff said legacy Property Management Systems tend to reside on property and offer limited ability to integrate with other third-party solutions.

“You have to have the ability to integrate with other providers to deliver a seamless experience,” Youseff said. “It’s about having an open mindset, being API friendly.

“At Amadeus we want to remove that friction so our solutions had to be moved to the cloud, which is what we did.”

IHG is the launch partner working with Amadeus on version one of its new cloud-based hospitality technology. In the fourth quarter of last year 5,600 hotels were migrated over.

Clodagh Brennan, senior trend analyst at Foresight Factory, said: “There is a balance between overwhelming guests with choice and making sure hotels can deliver on their promise.

“It is a challenge to offer this amount of choice and then to actually execute it. Rather than replacing people technology is actually going to augment them and give them increased potential.

“It will enhance the service by removing unnecessary administration and allow them to be more heads up and focus on the guest.

“It will also take the data the hotels are capturing and allow staff to respond proactively by giving them actionable insights.

“Because the human is still going to be important, the hotel industry needs to ask itself when it needs to innovate and when it should not.

“It’s not just about replacing people to make the experience more seamless. What does it add to the guest experience?

“If technology is going to enhance front line staff, then interfaces need to become really great and really intuitive. And it needs to integrate with other hotel systems and work in really flexible ways.”

Brennan said this approach will allow all hotels to deliver the sort of memorable experiences at scale that today are considered the preserve of small luxury and boutique properties.

“Rather than relying on price and loyalty schemes to get people back it’s creating a really great experience instead. It’s an emotional mindset rather than a transactional mindset.”

The hospitality needs to carefully handle the data it collects and collaborate with partners like airlines, but aim for a “Kaleidoscopic view of the guest”, added Brennan.

Although Airbnb has had a major impact on the hospitality sector and customer experiences, Brannan said she believed the bigger change has been driven by social media and the web.

“Social media and being able to research your trip more in advanced has changed expectations more than Airbnb. People today are used to seeing images and videos before they go.

“That’s the biggest shift in moving the bar up. Travellers now have expectations before they turn up. They know if they are getting a standard room or a personalised service.”

 

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