The Hotel Industry: Everything is Changing, But What Exactly is Changing?

By Sara Fedele Marketing Communications Manager , USI Università Della Svizzera Italiana | December 18, 2011

Co-authored by Sandro Formica, Associate Professor of Strategic Management, Florida International University

What will be changing the hospitality business? How can we create effective business strategies? We all agree that running a business today is more complicated and requires more resources (financial, human, technological, etc.) than in the past. Have we ever asked ourselves why and what exactly it is that has really changed? The feedback that we receive from senior managers of international hotel corporations during think tanks and interactive workshops is always the same: "Everything is changing!"But what are the elements representing this “change”?

We all agree that running a business today is more complicated and requires more resources (financial, human, technological, etc.) than in the past. Have we ever asked ourselves why and what exactly is that has really changed? The feedback that we receive from senior managers of international hotel corporations during think tanks and interactive workshops is always the same: "Everything is changing!"But what are the elements representing this “change”?

Perhaps the easiest way to understand what has changed is to take a look at the shift in roles and competencies of the new vice-presidents of multinational hotels over the years: for nearly a century, Vice Presidents were in charge of managing the so-called “functional areas” of a hotel such as marketing, human resources, finance, operations, administration, and, at times, research & development. These areas are essential to the smooth functioning of hotel operations; however, everything else happening outside the hotel facility was not relevant to hospitality managers, who devoted 100% of their resources internally. Even the curricula of graduate and undergraduate programs in hospitality management would emphasize exclusively the six functional areas, assuming that hotels operate in a vacuum and are resilient to anything happening in the external environment.

Let’s take a step forward and see what is happening today. Hilton has a Vice-President of Sustainability, Le Meridien has a Vice-President of Technology, while Intercontinental has a Vice-President of Social Responsibility. We could keep listing appointed top-management executives who deal with issues entirely unrelated to the traditional functional areas. So, what happened in the past ten years? What was the driving force behind the shift from internal to external focus?

A variety of value drivers have affected this change, however there is a common thread that links them all: a new awareness that a hotel’s success increasingly depends on external other than internal factors. An era of transformation has begun, which will lead to instability and profound management changes. Put it differently, we are currently facing a period of transition, coupled by a business identity crisis.

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.