Digital technology has transformed the landscape of the hotel industry in a variety of ways. One obvious opportunity is that hoteliers are now able to track, collect, and analyze guest data to customize the guest experience. Another advantage is that hotels can engage customers using social media platforms such as Facebook and Twitter during the whole process. On the other hand, one prevalent challenge for the industry is commoditization due changing demographics, globalization, and guests’ access of massive amounts of info from their smartphones. Consequently, industry competition is fiercer, and personalized guest services and standardized operations seem to be the best options for hotels going forward .
Hilton Worldwide is a global hospitality company, with more than 4,700 hotels, resorts and timeshare properties . Given its value proposition of delivering outstanding hotel stay experiences, Hilton levered digital technology to collect and analyze guest feedback data from surveys, social media and review sites, and glean insight into changing consumer preferences. As a result, Hilton altered its operating model to cater to its key stakeholders’ (“hotel guests”) evolving needs. Specifically, one of its surveys revealed that over 80% of its business traveler guests sought the ability to select their room . In response, Hilton took proactive steps and made over $500 million in technology investments to roll out mobile services on a large scale and build out its digital platform . One major output was the development of a software application for digital check-in, which took advantage of widespread adoption of smartphones and tablets. Once booking is complete, Hilton’s digital check-in process works as follows :
- Room selection: guests can use their Internet connected devices to check-in and choose a room. Room inventory is updated real-time and photos are available.
- Special requests:After choosing a room, guests can further customize their stay by purchasing upgrades and requesting specific amenities to be delivered to their room before arrival.
- Room key:In 2015, the company began adding the technology for doors to be unlocked with guests’ smartphones, enabling guests to go straight to their rooms upon arrival.
- Check-out: Guests can skip the front desk upon departure and their bill is automatically sent to their email address.
Overall, the new streamlined process results provides guests with a variety of additional benefits including less idle time waiting in queues during check-in, and greater choice and control over their hotel stay experience. Hilton is also happy as it leads to increased guest satisfaction, increased utilization and higher operational efficiencies.
Although digital technology affords opportunities for Hilton to better execute on its mission to provide exceptional guest service, there are also significant challenges the company faces going forward in part due to innovative technologies and changing demographics. In the US for example, millennials, who are now the largest living generation , are increasingly embracing sharing economy companies such as Airbnb. Consequently, the lodging industry in general is in the midst of disruption. Hence, it is clear that Hilton hotels will need to make further adjustments to its business and operating models. The digital check-in technology was a great innovation, however, it is unclear whether this will be sufficient for Hilton to sustain its competitive position relative to current competitors (e.g. Starwood Hotels, Marriott International) and up-and-coming competitors (e.g. Airbnb, HomeAway).
Looking forward, Hilton hotels should cater more to the millennials population and should perhaps consider the “staffless hotel” model that was apparently implemented by Germany’s Cocoon Hotels. In 2015, Cocoon Hotels operated a 75-room cloud technology-based, completely staffless, retro-inspired budget hotel, Hotel Buddy, in downtown Munich and achieved a 90% occupancy rate . This model allows guests complete control over their stay: booking, check-in through a tablet, among other activities. Moreover, guests are provided a keycard through a machine, which is then inserted in the elevator, and are automatically taken to the correct floor.
One of the benefits of the aforementioned model is that it seems to align with millennials need for greater control, personalization, and fast service at a more affordable price. No staff also reduces operating costs, specifically labor costs, although some staff may prove critical for Hilton hotels given its scale and for regulatory reasons. A big potential concern for Hilton resulting from this model is safety issues – security at the local level, and digitally via cyber security threats and potential increased fraud due to heavy reliance on technology.
Longer-term, it seems that the impact of staffless hotels on legacy hotels could be similar to the expected impact of driverless cars on the automotive industry. Can Hilton implement the model in a cost-effective, safe, reliable manner? Also from a social perspective, will the displaced employees find other ways to contribute meaningfully to the economy and maintain a good standard of living? If so, Hilton should definitely give “staffless hotels” a chance.
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Note: Images sourced from Google Images.