The sharing economy is upending traditional business models across the world. The proliferation of Uber has caused a painful, sometimes violent disruption in the transportation industry.
The hospitality industry is experiencing a similar disruption at the hands of lodging apps like CouchSwipe and Airbnb, the latter of which started only seven years ago and is already valued at $US25 billion.
A report assessing the impact of the sharing economy released this year by accounting firm PricewaterhouseCoopers (PwC) estimates that Airbnb received 155 million guest stays in 2014, nearly 22% more than Hilton Worldwide, which had 127 million guest stays in 2014. This rapid and threatening growth demands a unique and intelligent response, and the major accounting firm has some recommendations on how hotels should adapt.
In a PwC report released Wednesday spotlighting the hospitality industry, PwC surveyed asset-managers representing some 3,500 hotels and resorts across the globe about how they will remain competitive in the sharing economy and then prepared a list of recommendations based on their knowledge of the hospitality industry.
The PwC consensus? Digital connectivity.
“Technology is changing so quickly and is relevant to so many different aspects of our business,” Marriott International, Inc. President and CEO Arne M. Sorenson told PwC.
“Increasingly, it is how we use that technology to communicate with our guests when they’re in the hotel,” Sorenson said. “How do we use the technology to service them, whether it’s ordering room service, special pillows for their beds, getting something delivered by the pool, marketing to them, resolving their complaints before they have left the hotel.
“All of those things create a need for technology, which is much more significant than what we’ve had in the past. We want to give you an experience so that when you leave, you remember something about it.”
In the not too distant future, PwC says you should be able to use your smartphone to: pick your room, arrange your check-in time, unlock the door, preset your room temperature, order extra pillows and blankets, gain access to the parking garage, stream music and video through the in-room TV, check menus at the hotel’s restaurants and make reservations, reserve and purchase preferred services from local retailers, order drinks poolside, book a spa treatment, reserve car service to the airport, and, eventually, check out.
Most hotel operators told PwC that mobile check-ins will the norm by 2017, and many are making large investments in digital connectivity right now, including Christopher Nassetta, CEO of Hilton Worldwide, Inc.
“We’re a business of people serving people. It is a human business that involves a lot of human interaction and we don’t want to take that out,” Nassetta told PwC. “What we want to do is take the elements that are simpler, and where we can be more efficient, we want to make those very easy and comfortable and fun for people, to allow for the people in the hotels to interact in a way that is driving a customised experience while they are staying with us.”
Nassetta says Hilton has already made “huge” investments in digital connectivity, adding that next year Hilton will offer a feature called “straight to room,” where you can check-in via your smartphone, bypass the front desk, and use your smartphone as your room key.
“The conversion rate is huge from those that get an email saying check-in is available digitally,” Nassetta said. “Satisfaction is off the charts.”
The report also touts personalisation as a way for hotels to increase revenue by tracking customer preferences during their stay to make their future visits more enjoyable.
“By translating their deeper knowledge of and connection with each guest into personalised offers, hotels can boost “stickiness” and cement customer loyalty as switching costs become more prohibitive,” the report says. “Thus, digital connectivity can foster long-term loyalty — which drives increased revenue.”
PwC imagines a future where returning guests already have a customer profile with the hotel showing their personal preferences such has drink and linen choice, what they plan on doing during their stay, and any special requests and comments. Any requests the guest makes during their stay can be added to their profile to help form a deeper knowledge of the customer.
With guest permission, PwC says hotel staff should also track customers through their smartphones while on hotel grounds to be able to service their needs faster. Hotel operators say that 75% of consumers are willing to share some personal information if they get something in return, such as personalised, location specific information on restaurants, theatres, shops, and cultural events.
“We’ll be able to talk to you real-time about your preferences and customise your experience while you’re with us,” Nassetta told PwC. “You’ll be able to essentially interact with us in a way that is consistent with the way you’re managing a lot of the rest of your life.”