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The Flux Factor

Technology and globalization have placed the world in a state of constant flux — a reality the hotel industry is not immune to. From social-media and alternative-accommodation platforms, to new hotel brands and concepts geared to travellers’
evolving tastes, disruption is reshaping the market.

Digital Experience
Recent research by InterContinental Hotels Group and Amadeus explored expected changes that will be driven by increasing guest insight, technology optimization and the ability to hyper-personalize. The study, Drivers of Change in Hospitality, which featured input from Foresight Factory, concluded the industry of the future will feature a service-model shift to “tech-augmented hospitality;” attribute-based booking driven by analytics and AI; and a focus on achieving “cult status at scale” through tech-optimized loyalty programs.

In short, the future of hospitality will depend on leveraging technology to create more personalized and engaging experiences. Although this is already the goal of most industry players, the key will be finding the most efficient way to leverage these technologies while maintaining the human element at the core of hospitality.

“The biggest [disruptor], which will then filter down into other areas — such as booking and customer service — is increasing data connection [and] creating a single customer view from customers’ own personal data,” explains Heather Corker, client partner & U.S. Relationship director, Foresight Factory. “The future view of this is being able to integrate this data across every consumer touch point.”

And, in turn, this data will enable greater personalization and engagement, allowing hospitality to “become more human” and focused on delivering on guest experience, Corker adds. “There’s going to be an overall increase in what consumers are expecting from hotels, both with regard to the seamlessness of the customer journey and in the elements of personalization they’re able to provide.”

The key is approaching it through the lens of “‘How do we leverage technology to know our customers better and know what they want from us?’ so we can deliver that [and] engender loyalty,” agrees Jeff Doane, SVP, Sales & Marketing, North & Central America at Accor.

However, the road to this future won’t be a straight line. “There’s always talk about data being creepy, [but] consumers don’t mind sharing their data, so long as they can see what that personal return is,” says Corker. But, she warns that it’ll be a balancing act — “people are probably going to get it wrong.”

The team at Foresight Factory foresees guests having control over exactly what information they’re willing to share. “Almost like you can flip switches on the data you want hotels to know — you can flip them all on or you can be picky,” says Corker. “A lot of the technology exists. It’s about breaking down the barriers between the connection of all the data and creating partnerships across the travel-and-hospitality space.”

This view is supported by Interbrand’s recent Best Global Brands study, which found the world’s fastest-growing brands are those “built around people’s needs.” This is part of a larger shift toward brands replacing sectors and business models focusing on demand (needs, attention and relationships) rather than supply.

This points to a major disruptor many in the industry have been keeping an eye on. “As soon as Amazon points its sights on our industry, that will be the biggest disruptive activity to ever occur within our industry,” says Doane.

The looming threat of mega tech brands — including Amazon, Facebook and Google — entering the travel space in earnest is a hot topic. “The Amazons and the Googles of the world already have context on the consumer because they’re already present in so many areas of the consumer’s life,” agrees Corker.

As Doane explains, most major companies are preparing for this shift by developing their own distribution platforms featuring cutting-edge tech and focusing on their loyalty programs “so you have that customer base in your arsenal when that change comes.” He notes that with its new ALL (Accor Live Limitless) program, Accor is focusing on delivering “incredibly engaging, memorable experiences, so [guests] are loyal to us.”

“Something we’ve seen some brands have a lot of success with in the hospitality space is marrying the entire travel ecosystem together,” Corker adds, pointing to Airbnb’s experiences offerings.

Part of creating that experience and connection is marketing, which is another moving target. “The amazing thing about marketing in this day and age is it changes so quickly,” says Doane, evoking the phrase “skate to where the puck is going to be, rather than where it is right now.”

A key trend in this realm — and one that made it onto Foresight Factory’s 2019 Trending Report — is brands (and influencers) positioning themselves as educators.

In these scenarios, brands “are providing you with information that can then influence your ultimate decision about your trip, not necessarily just pushing you to buy them,” explains Corker. “They’re providing additional context and information that [creates] trust.”

The Physical Realm
Looking beyond tech-driven change, modular construction is poised to reshape the hotel-construction process. Although not widely adopted within Canada at this point, the practice is gaining momentum as more major hotel companies embrace the model.

Perhaps the most obvious sign of the industry’s increasing confidence in this construction method is Marriott International’s AC Hotel New York NoMad, which is set to become the world’s tallest modular hotel when the 26-storey project is “stacked” this fall.

“The difficulty is the education. Local municipalities don’t understand it from an inspection-standards standpoint,” says Adrian Kurre, global head, Home2 Suites by Hilton. “Every time you do a modular deal, you have to educate the locals and lenders don’t understand it because you draw money differently. Every 10 to 15 units that are built, you’re writing a cheque and then they ship it out and you’re paying the trucking firm, then you’re paying the crane firm — lenders get very nervous about all that.”

But Kurre is confident as more modular projects are completed and industry players gain a greater understanding of the process, these challenges will lessen. “Fifteen years from now, this will be the standard way you’re going to build a Home2, a Tru or a Hampton,” he adds.
Another draw of modular construction is that it allows for a quicker ROI. Kurre points to Hilton’s first Home2 Suites by Hilton modular build — a hotel that opened in San Francisco earlier this year — which was originally expected to take two years to open, but “with modular construction, they did it in 16 months,” he explains. “The owner doesn’t make money until the hotel opens, so they’re looking at a very nice return on investment for those extra eight months.”

The concept is also gaining traction in Canada, particularly in more remote areas where labour and materials carry a hefty price tag.

“When you start getting into smaller northern markets, the trades are taking advantage of the situation, so there’s going to be cost savings, not just time,” adds Jeff Cury, senior director, Development, Canada at Hilton.

Recent examples include a yet-unnamed modular-build by Qikiqtaaluk Corp. underway in Nunavut — a project using units constructed in China and expected to open next spring. Hotel Equities and Calgary-based Horizon North Logistics Inc. have also broken ground on a fully modular Fairfield by Marriott in Kitimat, B.C.

“Owners and developers choose modular construction for its advantages in productivity and efficiency, without compromising quality,” says Rod Graham, president and Chief Executive Officer of Horizon North. “In addition, our hotels are structurally robust, with inherently quieter rooms as a result of the modular construction process, creating a better experience for the developer and the guests.”

Taking the idea of modular hotels one step farther, Foresight Factory predicts guestroom design will become increasingly modular to accommodate guests’ desire for personalization. “Rather than having a set format we’re used to, [we’ll be] able to take [elements] out to make more room for something else,” says Corker. “The two biggest things are providing control and convenience and marrying those two together.”

“The increase in overall expectations is going to disrupt the industry and people are going to be left out if they aren’t aware of what’s taking place and really trying to meet those customer needs,” Corker warns.

Written by Danielle Schalk

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