As technologists, we’re constantly tracking emerging trends while also monitoring the progress of trends maturing into the mainstream.
NB: This is an article from OTAInsight
We take stock of the past year to shape the technology priorities for the year ahead. This “future casting” exercise stems from a fundamental truth in this industry: trends come and go but true hospitality remains the same. It’s all about the guest, and using whichever technologies, designs, and processes improve the guest experience.
If we were pressed to identify an underlying theme, it would be “let’s get practical”. Hoteliers will look through the buzz in 2019 and find actual solutions to real problems. After years of hype, virtual reality and augmented reality nibble at the edges of the mainstream but haven’t broken through as must-have technology for most hotels. Artificial intelligence continues to permeate technologies across the board but are too all-encompassing to distill into a single trend on which to make a specific prediction. And blockchain, arguably the most-hyped trend of 2018, remains at the fringe without that “killer app” solution.
One of the most practical, pressing challenges for hotels is connectivity across systems, channels and departments. Complex systems require interoperability to achieve full potential. After years of investing in promising tech, hotels will spend a lot of energy ensuring that various technologies and systems play well with one another. Through this lens of practicality, here are the most promising tech trends for 2019.
Open source and API fuels flexibility
With IBM’s recent headline-grabbing acquisition of Red Hat for a reported $34 billion, open-source technology is here to stay. As business complexity increases, the challenges of integrating a variety of technology solutions too. So the utility of open systems grows more each year, as open source eases the pain of integration while also allowing businesses to customise their tech stacks more fully.
To leapfrog the limitations of legacy technology, more companies are turning to open source technology. It provides the flexibility and agility that future-proofs a company and reduces reliance on a single vendor or tech solution.
Many hotel technologists value their own tech flexibility, prioritising the ability to build a customised stack of technologies for hotel operations, rate parity, and revenue management. By deploying an open source backbone, a hotel future-proofs its tech stack and reduces reliance on only a few technology partners.
Robots, no; drones, yes
In 2015, a Japanese ‘robotel’ staffed with robot dinosaurs opened to enormous global interest. The brand behind the hotels is Henn na Hotels, which literally translates to “Weird Hotel”. With that name, even the hotel’s owners recognise how odd it is to have a hotel staffed by robots; and even though the company plans 100 new hotels, for now, robotels remain niche. There’s plenty of entertainment and PR value but less practicality within the whole hospitality experience.
While we may not be convinced of the complete robot takeover of hotels, we do see a continued trend towards robots supplementing human labour for specific tasks. For example, more Savioke robots delivering room service items and task-oriented robots deployed in washing windows, folding laundry, cooking food, delivering luggage, and other back-of-house tasks. Re-deploying human workers from these tasks gives hotels an upper-hand on delivering a more focused and human-centric guest experience.
On the outside of the hotel, drones will continue to provide new perspectives of a property. Drone footage is a mainstream marketing move; more hotels will feel compelled to compete by including their own drone footage on websites and marketing materials.
The mainstreaming of drones for hotel operations will also be consolidated in 2019. Larger resorts and properties with extensive acreage can benefit immensely from the efficiency of drone monitoring for security, tracking landscape issues, inspecting exteriors, and generally tracking potential maintenance issues from the sky.
The evolving OTA-hotel relationship
Airbnb’s growth has permanently altered the distribution landscape, as has Google’s evolving efforts in flight and hotel search. Short-term rentals are now a fixture in accommodation search, while Google has built a new channel for travellers to search and book travel; not quite an OTA, as bookings go to a third-party, but a strong enough effort to shift how demand flows into bookings.
According to Peter Tengstrom, partner and managing director at Midstar, in attendance at the Hotel Distribution Event in London, “OTAs are more friends now than foes”. This is because OTAs provide a view into performance. OTAs can be useful because you can see how well certain promotions and offers perform using the OTA ranking and other metrics, he says:
“You have to manage the brand on the OTA’s website. That’s your window to promote the product. The OTAs help show the naked picture if you can’t perform.”
As OTAs continue to evolve their value proposition to hotel partners by releasing more robust software and analytics tools, hotels still push direct bookings to reduce commissions paid.
One potential solution to the consistent commission friction is dynamic commissions, where commissions adjust to reflect the value received by hotels. Dynamic pricing exists for rates, which allow hotels to upload daily rates into an OTA rather than a fixed price. Moving to a dynamic commission model could also allow hotels to incentivise certain behaviours and feel less beholden to OTAs for demand by better matching commissions to customer acquisition costs on other channels. With the proper rate intelligence tools, dynamic pricing could create more equitable industry dynamics.
Another part of shifting relationship with OTAs is how loyalty drives direct bookings. In 2019, hotels will get more aggressive with the tactic of “gated perks” to discourage their most loyal guests from booking externally. For example, Hyatt Place recently announced that loyalty members must book direct to qualify for the free breakfast. Barring any pushback from high-value guests, this trend will only accelerate.
New markets and business models
Part of the shifting relationship with OTAs comes from the evolution of hospitality as an industry. Innovation in hospitality now extends beyond product, pricing, and process: it also encompasses business models that create entirely new markets. The most visible example of this is, of course, Airbnb. The company’s initial innovation was to unlock supply that had never existed before and then to build a business model around connecting that supply to demand.
In 2019, we will see expansions of markets and business models. In pursuit of growth in a challenging macroeconomic environment of tariffs and stricter border controls, companies will test new ideas internally and pursue acquisitions that accelerate the innovation pipeline.
These decisions will be fuelled by next-generation rate intelligence tools that paint detailed pictures of the competition’s positioning and pricing. Decisions will rely on more data than ever before, aggregated from multiple sources and analysed to rate potential acquisition targets.
We will also see a new wave of “alternative” accommodations providers that combine short-term rentals, hostels, and traditional hotels into a new category that appeals to millennial and Gen Z travellers. These are “Airbnb hotels,” such as Lyric and Sonder, or “hostel hotels,” such as Selina. Each brand shares a similar worldview: as humans blend work and life with remote-work digital nomadism, hospitality must blend similarly. These emerging behemoths are creating new categories in hospitality, which will influence how other categories engage with guests before, during and after a stay.
Data struggles
The data struggle is real. Brands will continue to wrangle with unwieldy data sets, looking to vendors, consultants, and internal experts to build a sustainable framework for managing data flow. The objective is to enlist data as a consistent ally in delivering the personalised guest experience and smarter revenue management that increases profitability. This includes using “fractional data,” or the smallest pieces of data such as flight delays or restaurant preferences, that can inform how a hotel engages with the guest.
For example, Journera’s experience management system matches data across brands into a single flow that provides real-time automation to travellers. These types of real-time, data-driven systems can improve the traveller experience by automatically adjusting to the changing realities for a given trip, say a flight delay, which would automatically trigger changes to a traveller’s hotel and transportation. Think of it as a cross-brand collaborative effort to make data flow across branded silos, all for the benefit of the traveller.
Even as more vendors offer strategic data management solutions that defuse potential data-related disasters, the issue will continue to challenge hoteliers in 2019. Questions such as which data to capture, how to store data, and how to deploy data in a personalised but non-invasive way will be regularly revisited in 2019. Threaded throughout each of these discussions are privacy concerns, GDPR, encryption, and the 2020 arrival of California’s privacy regulation for any companies based in that US state.
Practicality first
A practical vision for 2019 is one of a hotel that smartly connects data with the technologies a hotel uses to manage its business and the channels it uses to sell its inventory. To successfully achieve this, connectivity must flow in both directions and in as near-time a way as possible. It’s not practical to rely on manual data entry, inaccurate demand forecasts or only partially connected systems.
That’s how we think the year will play out, at least in part. What do you think are the most promising tech trends in 2019?
