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Chinmai Sharma, President – Americas, RateGain, HSMAI Revenue Optimization Advisory Board Member
It’s no secret that hospitality technology is often behind the curve. Rapid digitalization has forced many businesses to update their practices and procedures, but hotels have been notoriously slow to change. Recently the HSMAI Revenue Optimization Advisory Board discussed why hospitality technology is failing to drive brand loyalty.
4 Key Reasons:
- Rapidly changing consumer behavior and digitization of experiences outside Hospitality (auto, retail etc.) leading to high expectation from hospitality brands
- Hoteliers rely on legacy systems that are difficult to update. CFO point of view is different than commercial or operations teams.
- The three layers of the hospitality industry (digital, physical, and phygital + service) are often disconnected, which makes it difficult to provide a cohesive experience for guests.
- Data points that could be used to improve the onsite and post-experience are often not collected or utilized.
As a result of these issues, hospitality technology is failing to drive brand loyalty. There is also a vicious cycle of who is going to pay for technology upgrades. In the case of large hotel chains, the brands or the hotels need to pick up the cost, which means lower EBITDA margin or higher franchise fees. Someone eventually has to bite the bullet and absorb the cost. The hard question is: How to break the status quo?
Sometimes larger chains and brands are at a disadvantage in this situation because of legacy technology and fragmented solutions at the PMS/POS level. This makes it difficult to get a holistic view of the guest journey, their preferences and spending habits. On the other hand, smaller, new age hospitality companies have the upper hand in this situation because they are not weighed down by legacy systems. They are able to think about their tech stack keeping the guest in mind and are also more agile and able to adapt to changes in the market quickly.
Without investment, hotels will continue to lag behind and lose market share to those who use technology effectively. The loss of hotel room night demand to alternate lodging is partly due to technology and ease of consumer journey at newer companies. If you can move fast in the technology space, you will surely have a competitive edge.
Discuss this topic inside your own organization.
Recommended Reading:
- The Great Uncertainty: US consumer confidence and behavior during inflationary times | McKinsey
- US consumer spending: 2022 survey results | McKinsey
- Post-pandemic consumer behavior and habits – Think with Google APAC
- What Will Post-Pandemic Digital Consumer Behavior Look Like? (forrester.com)
Questions to Ponder
- Why is the existing tech stack failing hotels?
- Which parts need to be fixed first vs. later?
- What is the ideal guest experience / travel journey and which industry, and we emulate?