Digital “SWOT” of Hospitality Industry

To understand the impact of “Digital Transfoirmation”, we will need to find answers to the below questions, namely:

1.???? What disruptive threats do the incumbents face from digital technology?

2.???? What new opportunities from digital technology are now available to this industry?

3.???? Is the industry having trouble adapting its digital strategy in one of the five domains?

4.???? Is the industry moving quickly and adapting its digital strategy in one of the five domains?

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?Hospitality Industry has followed the Digital transformation.? We can see the impact of Digital Transformation in various processes, including Customers’ “Path of Purchase”, enhancing Customer’ Experience, running loyalty programs and increasing hotel revenues and reducing costs through taking control of their distribution channels and prices.?

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Strengths: Strategic Domains include Customers, Data and Innovation

Customers – Consumer Empowerment.

One of the first key changers in the industry has been Consumer Empowerment.? Customer’s access to data, prices, reviews, unlimited choices, alternative accommodation styles, experiences sharing has been extremely fluid and has caused a big disruption to the traditional players.? Hotels used to have to give up “control” of their room inventories and pricing strategy to travel agents. With the new breed of Online Travel Agents “OTA” and digital influencers like Trip Advisors, customers’ decisions are now more based on peers’ opinions, scores rating by bloggers and experience sharing.? Hotels are able to utilize these resources to influence the Customer’s decision making process, uploading photos both from previous customers and bloggers, posting the latest customer’s comments and in turn driving bookings to their own branded website.

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Data - Hotels have started to rethink their online digital strategy by placing content at the heart of their strategies.? They have created data platforms to consolidate data on what their customers are saying about them online. Departments have been set up to scrutinize reviews and customer complaints or comments, listen to what has been mentioned on the social networks including Facebook and Twitter. These valuable data are then used to improve on their processes, learn more about their guests through their social media profile and predicting their needs or wants.

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Data – Another adaption by the hotel industry is tracking its competitor’s prices on the OTA websites or any available online platform and cross-referencing that with the special events taking place in the area, weather forecast and predicting or suggesting the best rates to charge customers using supply, demand and other factors.? Yield Management is another tool utilized by the Hotel Industry to increase their room revenues sometimes by more than 20%.

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Innovation – One of the most visible and touchable impact that Digital Transformation has on the hospitality industry is through the use of latest technology to transform the guests’ experiences. It is predicted that IoT or Internet of Things will be a $14.4 billion market in the next decade and will grow to around 25 billion by 2020. Hotels have already implemented Self Check-in through mobile devices, using wrist watch as keycards to open doors and control thermostats, television channels and volumes, motorized curtains, room lights through Ipads, and offering digital newspapers or send out and receive instant comments and feedbacks through any mobile devices.? Some hotels have already begun to experiment with Virtual Reality to bring the actual hotel experiences to guests as part of their purchase decision process.

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Weakness: Value

For hotels, the cost of Digital Transformation is immense and is now only adopted by big chain hotels.? The smaller and more independent hotels are on the losing end of the game. The question of “What Business Am I In?” has not been properly analyzed and thought through.? It is almost impossible for these independent hotels to adapt using minimal investment.? Emerging actors like Airbnb has created a disruption but not enough.? Are we in the business of providing beds, experience, increasing real estate value or is there something more? Until we can redefine our roles or values, we will be caught in the game of who has the most investment budget will survive.

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Opportunities

On the flip side, there are much more tools available for hotels both huge chains and small independent hotels to succeed in this Digital Transformation Age.?

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Using minimal investment, small hotels can share customer profiles and data to create a network.? They are no longer competitors but partners.? Loyalty Programs can be created among these independent hotels turning guests into repeat customers.? For an independent hotel, frequent travelers are hard to identify, however, when data are shared across many different hotels, these guests can be identified. Rewards can be tailored according to individual customer preferences. Customers that stayed in hotel B uses Spa facilities thus when she checks into hotel A, spa package discount could be introduced as part of a loyalty reward program.?

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The use of Ubers, online restaurant delivery services have allowed independent hotels to provide same services to customers without actually having to operate their own cars and restaurants.? This in turns allows the rovision of these services at a much more affordable price when compared to other chain hotels or larger hotels.

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Threats

The most obvious threats that hotels are facing is from new-comers like Airbnb.? Within a short period, Airbnb is able to grow to rival that of hotel chains, replacing the need for intermediaries like travel agents and OTAs. The threat from Airbnb is so strong that earlier there has been a concerted effort by the hotel industry to use regulators to stop Airbnb.? One of the largest chain hotel brand, Marriott has about 1.2 million rooms with about 200,000 rooms in development.? Airbnb now has nearly 2.5 million listings with much less investments.? Hotel brands are now going up against competitors with much more favorable cost structures and economies.? The digital transformation of depending on IoTs and connectivity will not be enough.

?Combined and prepared by Lily Udomkunnatum - BURASARI GROUP Managing Director

Sources:? Without Digital Transformation, Hotels’ Lobbying is Shortsighted, Deloitte CIO Insights and Analysis