Disruption: Driving Change for the Hotel Industry
The hotel industry is still predicted to face disruption in 2018 due to the rise in popularity for Airbnb as well as growing competition in the food and beverage space.
However, Chairman of JLL’s Hotels & Hospitality Group – Americas, Arthur Adler, argues that this disruption shouldn’t be seen as a bad thing. He feels that disruption is a key factor driving innovation throughout the whole hospitality sector. Now hotel brands and operators are looking for ways to introduce new ideas and concepts to their businesses in order to improve their services, attract new guests and give them a real reason to return.
“The two things driving innovation in the hotel industry are the guest experience and profitability,” says Arthur. “The hospitality industry needs to adapt their offerings to ensure they are meeting the needs of their guests’ ever-changing preferences for their ideal lodging space.”
It should come as no surprise that alternative accommodation providers are causing a great deal of disruption throughout the hospitality industry, however they are not alone. “The lodging industry is also having to adapt to in the increase of workplace transformation, such as co-working spaces, and innovations in food and beverage services,” says Adler.
Though home rental and alternative accommodation providers account for just 3% of room nights in terms of total market share, this number is predicted - by JLL - to increase to 5% by 2025. In October 2017, Airbnb revealed their plan to work with developers to create branded apartment buildings across the US. They want to design and create contemporary properties which contain everyone’s favourite hotel amenities and residential facilities.
It’s because of plans like this that hotel brands have had to pay attention to the growing popularity of the sharing economy. Therefore these brands have had to adapt their offerings to this economic change. Whilst some hotels are designing and installing co-working spaces in their properties, others have decided to introduce more shared spaces and communal areas, creating more opportunities for guests to meet new people and socialise with other guests.
Some hotels are taking this transformation one step further, by launching niche brands with unique services in order to attract different types of guests, including those who are looking for a similar experience offered by Airbnb.
Disruption is also forcing hotels to look for new services to add to their properties in order to increase their value. Room service and other unprofitable food and beverage offerings are being replaced by innovative options such as “grab and go” services and partnerships with local brands which provide their products in-house.
“It’s a win, win situation for all those involved,” says Arthur. “Hotels can now provide food delivery at a much lower cost and guests can enjoy a local food experience.” Some of the world’s leading hotel brands are taking the idea of “guest benefits” to a whole new level. For example, InterContinental Hotels Group members are able to gain valuable loyalty points by ordering food via Grubhub or making dinner reservations through OpenTable.
One other factor that is helping hotels operate more efficiently is technology. A large number of hotels are deciding to use chatbots in order to improve certain stages of the customer journey, including the reservation stage and on-resort interactions.
A growing number of hotel brands are also looking for new ways to incorporate technology into their business model to strengthen their digital presence and improve guest loyalty. Ways in which brands are doing this is by encouraging direct bookings and offering exclusive, members-only experiences.
And though the rapid growth of the digital age continues to evolve and bring with it new challenges for the hotel sector, the hospitality industry still needs to provide a touch of personalisation. “Staying in a hotel is all about the actual experience. You can’t virtually stay in a hotel, go to a resort, go on a safari without actually going and doing it,” Arthur says. “Now more than ever, guests treasure these experiences, and the hotel industry needs to find ways to meet their guests’ expectations, and even exceed them.”
This need for a personalised guest experience is predicted be a part of the hotel industry for years to come. “Hotels will always be in demand, so brands will have the chance to innovate and transform their business in the future,” says Arthur. “Hotels looked very different 50 years ago, and the next 50 years will bring about even more change.”