Earlier this month we had the pleasure to host a roundtable breakfast with key decision makers in the luxury hospitality and travel industries. The objective of this breakfast was to identify which are the key challenges currently happening in these sectors and how technology can help to overcome them. With this in mind, we are drafting the programme for the upcoming TREND: Luxury Hospitality Digital Transformation that will take place on Wednesday 12th of September at the Century Club in Soho, London. What are the key innovations happening and how is the luxury consumer evolving in the way they book and consume luxury hospitality?
When we look at how luxury hospitality performed at a global scale, the industry kept growing at an impressive 4% year on year. Luxury experiences are clearly very attractive to consumers as illustrated by sales growth of both fine wines & spirits and high-end food (both grew at 6% from previous year). Sales of luxury cruises increased by an outstanding 14%, which was driven by a strong interest towards adventure and expeditions.
Source: Bain & Company. Luxury Good Worldwide Market Study, Fall-Winter 2017
Despite seeing a healthy industry growth, luxury hospitality brands are finding increasingly more challenges in digitalisation, with more and more competitors arising as well as having a much more demanding profile of guest who expects the ‘unexpected’.
1. Adding a digital personal touch
From a customer-centric approach, keeping up with today’s digital pace is one of the main challenges in luxury hospitality and travel. Hospitality as an industry adopted technology much later than fashion and retail which is strongly noticeable.
The question is, will digital technology replace the human personal touch? There is a common fear that digital would take away luxury personalisation since it would reduce guest interaction with hotel staff. However, all invited hoteliers agreed that a generational gap currently exists and that technology, when implemented well and having accurate data, can result in a more effective, seamless communication with the luxury guest, no matter which age gap the target lies. Despite this fact, It is needless to say that personal touch will always be relevant in luxury hospitality.
In order to achieve that, PMS (property management systems) play a huge role in integrating both the operational side of hotels with the client communications strategy.
“The cost of changing a hotel’s PMS is too big and agile systems rarely talk to each other. Only recently have hotels started to use a cloud-based system with open API’s that make this integration easier. However, we still have a lot to learn and do until all of these tools are seamlessly integrated”
Like in the fashion industry, innovation needs to come from inside out. All hoteliers agreed that this is a major challenge today and that it stops hospitality from making a step forward in better communicating with their guests. On a positive note, embracing technology behind the scenes and empowering front of house to be able to use that data to communicate directly with the consumer would give that extra bit of connection between the hotel and guest, bringing the online information to offline experiences.
“You can do the surprising delight if you know it’s someone’s Birthday but at the same time, it’s very easy to fail and then, how do you recover from that? At the moment, there is so much data stored on so many platforms that it is hard to be sure how accurate that data is.”
“That should be the first step for bringing digital to luxury hospitality and travel, then we can include guest interaction functionalities like social media and chatbots.”
With regards to facing consumers, luxury hospitality brands differentiate from the rest by offering an exceptional and memorable experience when staying with them. Being digitally savvy will allow these brands to keep a one on one personal approach, mastering all touchpoints throughout the customer’s lifetime.
Hospitality brands should understand which platforms are key for travel. Instagram, for example, plays a huge role for luxury travellers therefore hotels need to carefully draw up a strategy for Instagram that can attract and inspire their target audience. Do not ignore the importance of social media and allocate the necessary budget in the same way that the fashion industry does. Instagram eventually will have the same importance as the hotel’s website. The future generations only want to go to places that are Instagrammable.
2. Achieving brand loyalty
The next topic discussed was loyalty. How can luxury hotels achieve better return rates? Airlines and OTA’s have very good loyalty programmes. Luxury hotels, however, have to think of innovative techniques that can be convincing enough for their guests to return and accumulating points on a loyalty card may not be enough for them.
The previous generation was all about standardisation which allowed certain hotel chains to succeed amongst travellers. Today, instead, the customer expects to ‘travel like a local’ and experience the ‘unexpected’ independently of which generation they belong to. This is what is commonly known as a “millennial state of mind” which is a shift in the luxury consumer mindset that pushes luxury brands to redefine their offering. Personalised local experiences are what will create a memorable experience in the luxury guest’s mind that will probably make them return.
“At Aman, we do not have many standardised processes but there is something that guests always get, which is the Aman welcome and Aman departure whereby all the resort staff line up for a farewell to the guests in the ‘Aman way’. When you arrive at an Aman resort you feel so welcomed that it immediately transforms your mindset and you have an instant feeling of relaxation and disconnection. This incredible local welcome is a unique experience that makes our guests fall in love with the brand. We forge loyalty in different ways such as the #amanjunkies for instance, which is what fans of the brand fans call themselves”
Personal connection is key in luxury hospitality and it’s what really makes a difference from other accommodation options. In order to understand a guest’s level of loyalty, it is important to get feedback before the guests even leave the hotel, whether through an informal one on one conversation or through some sort of form that pops up on their phone or devices before they check out.
“Loyalty comes from personalisation, personalisation comes from insights, insights come from accurate data”
Understanding who exactly your guest is, what they are looking for when staying at the hotel, who they are coming with and the purpose of their trip. These are some relevant pieces of information that will allow the hotel to bring personalisation at its best.
“Mistakes such as expecting someone to arrive with their wife when that person is gay cannot be done nor accepted”. It’s essential that these small details are communicated throughout the hotel, from check-in to room service to the restaurant.
3. Revising your operational strategy
From an operational point of view, technology can massively improve internal processes that can lead to a better communication inside out.
All hoteliers agreed that one of the key problems comes from entering wrong data or having too many data entry points which all contain different information. How do you know which is the right one? That’s why the GM would rely much more on personal connections instead of a CMS. However, what happens when the GM leaves the company and it has to start from scratch again?
In order to attract guests to book with your site directly, conditions of use should be as straightforward as possible. Having easy cancellation policies and free wifi should be a given. Technology should have a role PRE trip to attract customers at research stage (69% of travel bookers will use a digital device to book their trip – Forecasted 2019) and post trip to accurately evaluate their stay. During the trip, technology should run in the background instead.
Another concern that arose amongst everyone at the table was how to capitalise on other spaces from the venue such as restaurants and spas. Chris Donnelly, founder and managing director at Verb stated that giving a personality and a brand to the hotel’s restaurants can be a good strategy to highlight everything it has to offer, in addition to attracting customers who are not staying at the hotel and will identify that brand separately.
“Small details such as ensuring that you can access the restaurant without going through the lobby can help your restaurant brand to be more visible to potential clients who may not know the hotel just yet.”
Having a powerful restaurant brand helps to build a reputation around the hotel and vice versa. On top of that, creating a sense of community is also key – that’s why hotels that become membership clubs have succeeded in their strategies.
Last but not least, adopting a sustainable approach is now a must for most luxury hospitality brands. It shouldn’t be a nice thing to have, but instead a strategic decision that will improve the industry as a whole.
threat opportunity of sharing platforms
The challenge of protecting your brand identity from sharing platforms and OTA’s such as Airbnb is a common issue for luxury hotels.
Why is it often so hard to book a room? Many luxury hotels find themselves using too many platforms or services which take their guests through a hard and cumbersome process. Luxury should be felt at all touchpoints and throughout all the customer journey, from research and booking to review and feedback.
This ease of use is what makes OTA’s and sharing platforms even more competitive for hotels, but attractive for the guest. The guest knows what they’re doing, how the platform works and there are fewer steps to complete a booking than on a luxury hotel’s website. One of the biggest challenges is the ease for guests to cancel their booking last minute, but how can this be controlled?
“How do you communicate the uniqueness of your brand above all these massive OTA’s that are taking your most valued asset from you, which is your USP as a hotel? How do you educate the consumer to understand how much your brand means?” This is a topic that will be widely discussed at the event in September.
In addition to Airbnb requesting luxury hotels to add their rooms on their platform, they have added additional competition by adding luxury serviced apartments where the level of service is almost up to the one of a hotel, with the added value of a deeper ‘local’ experience of someone staying in a flat or a house. Design hotels are reacting to this by modelling themselves around a local community in order to bridge the gap between the guests and the community.
Today, Airbnb is to hotels what Amazon is to fashion brands. The question is, will luxury hotels enter this game? Do luxury guests expect these hotels to be there?
Even with industry threats like this, luxury hospitality is growing at a faster rate than ever and the experience of quality is what makes this sector unique. With the potential of the market, luxury hospitality has more to win than to lose and all players should embrace the growth of the industry by finding new opportunities and challenging themselves.
We will discuss this and much more at the upcoming TREND Luxury Hospitality event that will take place at the Century Club on Wednesday 12th of September. Early bird tickets are available until the end of June!
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