The hotel in the clouds. PATHS TO INNOVATION IN HOSPITALITY.

September 2017 Martin Jordan

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How the smart hotel can

transform the customer

experience.

UK hoteliers have always been innovators. It’s more important

now than ever to maintain that innovative edge as the pace of

technological change steps up a gear. Embrace the

technology and revolutionise customer experience. This paper

contains valuable insights covering mobile, AI and seamless

integration between technologies that can benefit the savvy

hotelier and focus budget on genuine ROI-driving technology.

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CONTENT.

NOW’S THE TIME 3.

TOWARDS A BROADER ECOSYSTEM 4.

A BETTER RESPONSE TO MOBILE 7.

OWNING THE RELATIONSHIP ON MOBILE 9.

FROM MOBILE TO MACHINE 13.

TO A MORE CONNECTED WORLD 17.

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Now’s the time.

UK hotels have long been innovators and early adopters of technology, unafraid to throw

out their once new and expensive technologies for modern, intelligent and open systems.

In today’s world of AI and smart technology, it’s time for hotel groups to once again lead

the way in embracing innovation. Never has so much technological capability been

available to the hotelier at such low cost and with so much potential, helping to build

consumer brand loyalty and counter increasing commercial pressure from OTAs.

Here we explore the efficiency and intelligence of cloud-based property management

systems, owning the customer relationship on mobile, harnessing the power of good data

and connecting systems intelligently to help hoteliers create multiple new paths to revenue

generation and deepening loyalty.

As our machine learning capabilities expand, we also highlight how adopting AI-driven

chatbot technology and smart UX can help bring a more personalised and meaningful

service for customers and enhance margins.

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Towards a broader ecosystem.

In The Cloud.

As more hotel systems become cloud driven, we are now witnessing a shift towards a more

customer-centric view and away from obese legacy desktop and server based systems.

This new cloud-based approach is opening the hotel tech ecosystem to multiple new

players such as Guestline, Hetras and Hotelogix, bringing new capabilities for hoteliers

large and small.

CLOUD PMS NEW TECHNOLOGY

CRM

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What used to be an expensive and cumbersome purchase can now be affordably bought

from multiple vendors for a single property, as it is for a 100+ hotel chain.

With open systems powered by customer data, machine learning and analytics capabilities,

hoteliers can exercise their customer data with more flexibility than ever before.

This brings a host of benefits:

• Smarter front-of-house, capable of personalising the customer experience.

• More intuitive web experience that tailors itself to the users’ preferences

and behaviours, driven by the CRM database.

• Better marketing function that promotes less but ultimately drives more

revenue and deeper loyalty.

• Unique and individual offerings through an enhanced on-premise experience

in a world being commoditised by the OTA.

At Equator, we’re spending an increasing amount of our time intelligently connecting

these systems. Whilst technology standards like HTNG go a long way to help ensure the

interoperability of systems, the technological space in hotels moves very fast and every

brand has their own unique needs.

There is now huge potential to deliver new forms of service through automation and

machine learning – achieved through the connectivity offered by contemporary systems.

Examples include:

• Linking a hotel’s Wi-Fi system to their CRM platform to personalise the on-site

internet experience and give loyal customers super speedy broadband.

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• Developing the ability to reward loyalty without a complex and expensive

loyalty scheme or the need to involve senior staff in approval of discounts or

up-grades.

• Taking the typical lobby screen and allowing it to serve real-time offers based

on actual availability, demand curves, current weather and more as well as

pushing distressed inventory without effort.

It’s this very path to innovation that has the potential to finally free the hotelier’s reliance

on the OTA and bring their market share down more in alignment with the airline industry,

where direct brand purchases still make up almost 60% of sales. And to suggest that the

transition from desktop to mobile could throw this all into jeopardy is to tell just one side

of the story.

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A better response to mobile.

Exploiting Mobile.

It goes without saying that if you are a hotelier in 2017 and your website is not mobile

friendly, then consider your digital strategy dead. You won’t rank in Google, you won’t

convert traffic and your brand will be slowly dying (at least online). Any traffic you do

receive from mobile will be research traffic alone – and likely traffic with high bounce

rates and low dwell time.

Thankfully the UK market is mature, has always innovated and most brands will at least

have a site that is adaptive or responsive to mobile. That said, there is still a lot of evolution

required in the hotel web space that actually starts to exploit mobile as a device, rather

than just as another browsing platform. Many brands are still staring down low conversion

rates and lots of traffic that looks like “research” traffic due to poorly thought out

mobile experiences.

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Today as we see many hotel brand sites pass the 50% mark for mobile traffic, we are

developing sites with a completely different approach to the user - one that is actually less

about mobile and more about the user.

Intelligent Mobile.

This is what we call “Responsive Plus” - a site that not only adapts to the user’s device

but thinks intelligently about the content it is going to show them by looking at where the

user is, what time of day it is, whether they are logged in, whether they have a booking

and whether they are in the middle of the booking process.

After all, a website connected to a smart CRM system and with visibility of its location can

tell you that User X is at your hotel, making use of their booked stay. In this environment,

the website should look to cross and up sell services on-premise, not try and get another

booking there and then.

You then begin to understand that much of that “research” traffic is people in your

property consuming your product and not “wasted” traffic.

This again underlines the power of the connected world and how a responsive mobile web

experience can deliver services at all stages of the purchase and consumption journey,

and beyond.

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Owning the relationship on mobile.

Before: A one-way street with PMS dominating.

After: CRM as the beating heart.

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Deepening loyalty through mobile.

By comprehensively owning the conversation with your customer from the point of

booking to the point of consumption, you can begin to create multiple new paths to

revenue generation and deepening loyalty.

The 15-20% you hand over to the OTA as commission starts to pale into insignificance

when you compare what the loss of relationship management is worth to your business in

terms of cross and up-sell opportunities, brand building and repeat purchase behaviour.

Now, customers are arriving at the hotel with the same device they made their booking on.

There is a device that has the potential to finally give you greater insight into the look-to-

book-to-stay journey in a way simply previously unavailable.

A smart hotelier must own the customer relationship at every stage.

If the customer journey started on an OTA, the relationship will likely continue with the

OTA. Persuading the consumer that the value of your brand experience is worthy of their

attention becomes much harder when they’re simply booking a room.

Consider also that returns are diminishing from the “traditional” digital channels (SEO,

PPC, affiliates and so on). Natural search on mobile has but a few front-page positions

battling with increasingly dominant ads. Additionally, paid search budgets are finding the

cost of generic terms too high with budgets being increasingly restricted to brand and

Hotel ads – and now we find OTAs relentlessly in that space too!

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These market pressures once again underline the need for the smart hotelier to create and

exhaust their ability to own a customer relationship at every possible stage.

Tracking a customer’s moves online is critical to understanding the value of your

marketing efforts, as well as helping improve and redefine your service proposition.

Of course, in a mobile world it’s not about one device, it’s typically about multiple devices

and about devices that ‘roam’. Thankfully technology is on hand to help the hotelier

navigate these challenging waters despite the decrease in search visibility and the increase

in data protection.

The Power Of Good Data.

Cross Device Tracking (CDT) is a growing technology set that helps to augment the

hotelier’s view on their investment. CDT can be achieved through apps, wireless gateways,

beacons, facial recognition, biometrics, and several other methods. Capabilities vary

depending on the user’s device, the apps installed and what the user has enabled.

However, if you assume the full capabilities are at the hotelier’s disposal, it starts to bring

back the level of ROI and behavioural tracking we were used to on the web of three years

ago. The benefits are strongly in the marketer’s favour and swing only to the user’s favour

when the capabilities are used to deliver better service and not pervasive marketing.

And again, with a service and marketing proposition journey that starts at the point of

purchase, the argument for ownership of that journey directly becomes far stronger.

The value in being able to learn more about the customer before they’ve consumed your

product gives the hotelier the ability to be more relevant and deliver an even more

personalised experience.

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But, we have to be good citizens with this data. Within Equator, we’ve been adding to our

data and insights skillset massively over the last few years because we recognise these

benefits. We spend more and more hours consulting with clients on their customers’ data,

we advise on systems and platforms to help collect and manage that data and we’re

constantly creating intelligent pieces of “management layers” that interrogate and help

surface that data in ways that make it more accessible.

But we’re also increasingly investing our time in ensuring that we all work hard to exploit

these tools and techniques for good. As these capabilities grow and as our Machine

Learning capabilities expand to make even more of this data actionable, the temptation is

strong to get out there and just to sell, sell, sell instead of to deliver a better, more

personalised service.

Hoteliers must use data to personalise the experience, rather than just sell, sell, sell.

A quick buck today is very tempting and there’s certainly lots of examples of campaigns

that drove large chunks of short term revenue. This is not an effective long-term strategy.

Relentlessly selling to the consumer, haunting them across devices and chasing their

money will ultimately lead to disenfranchisement, no matter how personalised you

make it.

There has to be a value exchange. Consumers recognise that the things that make their

digital experience great are typically delivered by them surrendering elements of their

privacy. So far, this relationship has been mutually beneficial but as AI becomes

mainstream and our ability to target to an individual level with complete automation

becomes the norm, we must continue to observe this value exchange. If we don’t, we risk

losing that relationship altogether or, worse, having legislation come in and remove our

right to try and own it completely.

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From mobile to machine.

Modern Machine Learning.

As hoteliers work to bring to life a mobile-focused hotel, the next big innovation on the

horizon is machine learning and artificial intelligence technologies.

With the mainstreaming of cloud computing and the efforts of internet goliaths like

Google, Amazon and Microsoft, what was once the preserve of the few is increasingly in

the hands of the many. The consumer is already feeling the benefit of this technology and

they’re barely aware of it.

Similarly, the modern hotelier will be reaping the benefits of machine learning when they

purchase modern programmatic display advertising or use some of the latest revenue

management platforms.

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This is an everyday technology and getting access to it is often free. Google’s Cloud

computing platform can be tested for free, Microsoft will let you use its natural language

processing technology for free and Facebook is more than happy for you to use its voice

recognition technology.

Connected Environments.

Again, each of these platforms offers great potential, but their power is only realised when

in a connected environment. An Amazon Echo is a friendly, music playing helper on its

own. However, plug it into a hotel’s system, connect it to the technology in a room and

teach it about your world and it becomes an all-powerful helper that brings service-driven

marketing to life in a way not previously available. This is perfectly in the reach of

all brands.

We’ve already delivered an Alexa-based solution for Village Hotels which does all of this

and more. From controlling the television to booking a spa treatment. From check-out

times to checking out upcoming on-premise events.

Smart assistants can augment the job of a human and help deliver a better service.

From a wakeup call to cooling the room, we took a number of technology stacks and

connected them to this smart, AI world and made it accessible for the client and consumer.

It was not just Amazon’s Alexa technology that made this possible. It was a hotelier with

a set of contemporary, open technology platforms, our expertise in understanding and

connecting those open systems together and, importantly, a client with an open mind –

one that is innovative and ready to embrace the next level of technological development.

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Similarly, we are exploring, but most importantly further expanding, their service-based

marketing proposition through the use of smart assistants, commonly known as chatbots.

These portable, lightweight solutions are demonstrating clearly that, in the right

environment, smart assistants can augment the job of a human and, in some cases, deliver

a better service.

We cannot pretend that in a hospitality environment, smart assistants can replace human

service. When the customer demands hospital corners on their sheets or soya milk in their

coffee, machines cannot yet understand many of the subtleties of good service.

However, when we are clear about what they can do and then we make them do those tasks

swiftly, efficiently, and gracefully, they come alive.

A 24-Hour Service.

Smart assistants with a clear purpose make sense, are inexpensive and deliver positive

outcomes. Every hospitality business is full of linear processes that are customer facing,

whether it be taking a simple room booking to informing the user of check-out times or

requesting a wakeup call.

Embracing AI-driven chatbot technology can transform a two-star offering.

When you offer the ability to undertake certain tasks commonly undertaken by call centre

or front of house staff, this leaves them more able to deal with the more nuanced enquiries,

deliver a better service or even allow them to do some proactive service or marketing.

In addition, these assistants can deliver service relentlessly 24-hours a day. There are few

hospitality businesses that can offer consistent service every hour of the day, at least

not inexpensively.

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With a clever embracing of AI-driven chatbot technology, a two-star offering can begin to

offer four-star service without the added cost. And just as many strains of AI technology

have crept into the lives of the consumer without their realising, so too will this.

In a business with wafer thin margins and only service left as a differentiator, the modern

hotelier will have little choice but to embrace AI and use it to service their customer better,

manage their rates with more intelligence and promote them online with less waste.

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To a more connected world.

With so many expert systems and technologies available at prices that no longer cripple,

hoteliers are increasingly building a technology-driven hotel business. And as these

systems are connected and made accessible, the opportunities to drive greater revenue,

improve efficiencies, deliver better service and change the entire marketing proposition

are tangible and excitingly achievable.

Any fear of change needs to be swapped for the fear of being left behind. Technology

continues to evolve ever faster. If you can’t keep up, find a technology partner who

understands your world to help you stay ahead.

In the future, when everybody’s lives are in the cloud, the savvy hotelier will be using tech

to make their hotel feel like home. The in-room entertainment will be what the customer

likes and their dietary requirements will be understood - all without adding mountains of

cost or complexity. The future is not far away. But it starts with a more connected

hotel world.

MARTIN JORDAN INNOVATION DIRECTOR

EQUATOR, 58 ELLIOT STREET, GLASGOW, G3 8DZ

MARTIN.JORDAN@EQTR.COM

EQTR.COM