It’s an exciting time to be in the hospitality business. Indeed, new technologies have given rise to a number of trends that are transforming the industry. But with new opportunities comes new challenges, and there are 4 prominent challenges that hotels must overcome in the coming years if they’re going to remain competitive and relevant.

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Credit: Kai Pilger

1. Competition from Hotel Alternatives (like Airbnb)

It’s impossible to discuss challenges facing the hospitality industry without talking about the elephant in the room — ahem, Airbnb (and similar companies). Indeed, the rise of Airbnb and other vacation rental platforms means not only increased competition for bookings, but changing guest expectations which pose an entirely separate set of challenges for hotels.

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Solution: Better Amenities & Local Experiences

While Airbnb (and similar companies) can offer guests savings that most hotels can’t compete with due to their overhead, hotels boast a slew of facilities they can leverage to out-compete Airbnb hosts on two distinct levels.

First off, hotels are invested in a level of infrastructure that the average Airbnb host can simply not compete with. While dedicated staff (housekeeping service, room service, concierge service, etc.) that can provide guests with niche services on-demand, onsite facilities (pools, spas, saunas, fitness centers, etc.) can offer guests convenient access to activities without having to leave the property. By emphasizing these services and amenities, hotels can guarantee their guests a level of comfort and consistency that’s often unattainable with an Airbnb or other vacation rental.

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Furthermore, hotels can leverage their infrastructure and local presence to offer guests precisely the kind of localized experiences they are looking for when booking through Airbnb. As Eric Johnson of FeedbackWrench put it when quoted by SiteVisibility:

In 2018, hoteliers have to equip themselves to provide an “experience” not just a “stay.” With Airbnb introducing these “experiences” as part of their arsenal of services, travellers will soon be conditioned to expect reasonably priced and entertaining outings as part of their trip.

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The best way to combat Airbnb on this is to strengthen existing relationships with surrounding local businesses. Many hoteliers have already partnered with those around them to create these fairly priced entertainment opportunities, but these opportunities should be moved into the limelight in terms of a marketing strategy. A great marketing effort should portray a hotel as a destination, not a functional necessity.

So while new technology has meant new competition for the hotel industry, it also means new marketing opportunities. While their infrastructure and dedicated staff can offer guests added-value with each stay, their physical business presence allows them to partner with other local businesses to provide guests with an unparalleled local experience.

 

2. Increasing Energy Costs

As the global demand for energy rises across most sectors, hotels can expect to feel the pinch. Indeed, the 2015 edition of Trends® in the Hotel Industry found that electricity can account for 60% of all utility expenditures.

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So as energy costs rise, if hotels want to remain profitable, they will have to find new ways of minimizing their consumption without compromising on guest experience. Fortunately for hotel owners, there are a variety of energy management technologies available that can help reduce energy consumption across a hotel’s operations.

Solution: Energy Management Systems

Despite the rising demand and cost for energy, hotels have a number of options that can help optimize their energy consumption. Indeed, some of these solutions can not only reduce energy costs, but actually increase hotel property value.

For starters, smart thermostats and occupancy sensors can now monitor and respond to fluctuations in occupancy in real-time. Smart energy management systems (like Verdant EI) can then analyze historical thermodynamics and local weather patterns to optimize energy consumption all year round.

Indeed, using smart energy management systems to monitor and optimize energy consumption can reduce hotel energy costs by up to 20%, and generate some of the fastest payback periods in the industry (between 12-24 months). The ROI is so significant, in fact, that it will increase hotel resale value.

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Furthermore, smart lighting technology is also helping hotels to better understand their energy needs, modulate their consumption, and adapt to real-time changes in occupancy. Essentially, just as occupancy sensors and smart energy management systems use machine learning algorithms to continuously analyze demand load patterns and optimize HVAC energy consumption, smart lighting systems similarly allow hotels to set preferred lighting times, track occupancy patterns, and improve overall lighting energy consumption throughout the year.

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Credit: Evan Smogor

Indeed, while some companies have cut energy costs by up to 75% by converting to a smart LED lighting system, some hotels have seen even greater savings. For instance, when the Chatwal Hotel in New York City retrofitted approximately 1,300 lamps, in the hallways, common areas, and 80 rooms, it saved more than 410,000 annual kilowatt-hours, equating to a 90% reduction in lighting energy consumption. Indeed, the Chatwal Hotel saved around $124,255 in the first year alone.

 

3. Data Security

As smart tech and Internet of Things (IoT) continues to revolutionize the hotel industry, property owners must face the challenge of which solutions to adopt and rely on. Indeed, from energy management to booking platforms, there are no shortage of smart tech solutions available to hotels. But there’s more to choosing the right platform than just features or price-point.

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Essentially, the cost-saving potential of smart tech lies is how it aggregates data and makes it actionable. But with big data comes big responsibility. As Cloudbeds puts it:

[T]he biggest concern around big data and the necessary data harboring is the safety around it. Every data harborer’s goal is to keep their customers’ data safe, but that’s easier said than done. In recent years, we’ve seen massive data breaches that have literally put hundreds of millions of consumers at risk – like Equifax and Target.

As the price-point of smart technology makes it more accessible to medium-sized segments of the hotel market, more and more property owners will be adopting and investing in it to remain competitive and profitable. Choosing the right (i.e. secure) tech for keeping their data secure, however, will remain a challenge. After all, data breaches are becoming increasingly sophisticated, and many incumbent technologies have not yet been fully tested against hackers’ latest tactics.

 

4. Personalizing Guest Experience

As smart tech and IoT surpasses critical mass and transitions from emergent to mainstream, consumers (i.e. guests) are exposed to more and more personalized experiences. And as they enjoy more personalized experiences, they will also come to expect it as hotel guests. Indeed, doing so will not only help with repeat bookings and targeted upsells, but it will also provide hotels with an additional competitive advantage over peer-to-peer vacation rental services, such as Airbnb.

 

Solution: Mobile Integration

Beyond ensuring that guest data is secure, however, hotels are in a unique position to leverage that data to create highly personalized guest experiences. In other words, smart tech will continue to make it possible for hotels to predict and personalize a number of guest services based on both previous visits and aggregated guest data. Some of these personalized services might include:

  • Smart Reserved Parking: by using smart sensors and mobile apps to allow guests to reserve parking spots in advance of their visit and to their space assigned upon arrival, hotels can offer guests a smoother experience from the moment they pull-in.
  • Remote Check-In: allowing guests to check-in remotely through their mobile device will not only enable hotels to better predict/manage their staffing needs, but also alert staff when guests arrive, greet them by name, and offer appropriate upgrades/upsells — even on their first visit.
  • Smart Room Service: occupancy sensors will also help hotels push personalized menu notifications to guests are actually in their room, including personalized suggestions based on past orders.
  • Remote Check-Out: finally, mobile tech will allow hotels to offer guests a seamless and personalized check-out experience that includes their preferred transportation method (whether it be taxi, airport shuttle, or popular ride-sharing service such as Uber or Lyft).

Indeed, some of the biggest business intelligence advantages of big data is its potential to be used to streamline and personalize customer (or guest) experiences. And the properties that invest in the right (and secure) smart technology will be able to offer guests and experience that transcends their expectations.

 

Preparation Meets Opportunity

In business as in life, there are always challenges. It’s important to remember, though, that every challenge represents an opportunity — an opportunity to adapt, an opportunity to overcome, an opportunity to learn and grow.

For the hotel industry, many of the most immediate challenges/opportunities lie with smart technology. Embracing and adopting the right tech will help them optimize their existing infrastructure, achieve new operational efficiencies, and expand their guest services to meet the evolving expectations of the modern consumer.