Creatively Adapting to Innovations in the Lodging Industry

By Lynn K. Cadwalader Partner, DLA Piper | December 17, 2017

Hospitality is a dynamic industry, constantly changing to meet guest expectations.  As a result, a premium is put on innovation, and hotel owners and operators are always on the lookout for new products which can meet, and even anticipate the evolving needs of guests. 

Due to changes in guest desires and preferences, the advent of new technologies, the rise of millennials as a significant segment in the travel and leisure market, changing travel patterns and the entrepreneurial nature of the hospitality industry, the physical and service standards of what defines a “hotel”, at its most basic level, has expanded beyond the notion of the traditional “bricks and sticks” concept. 

Catalysts for Change

A number of factors have triggered recent innovations in hospitality, and how we define and choose hotels.

  • Digital Innovation Technology (Rise of the Smart Hotel)

Digital innovations, such as mobile booking, check-in, payment and in-room service, have become more popular with busy travelers, particularly the younger generation. Easy anywhere/anytime online access has become the expected standard for many, which has changed the concept and necessity of the “front desk” and other service aspects of the hospitality industry. Other cutting-edge technology innovators include the artificial intelligence of robotic butlers, and guest management software that works using a personal profile which anticipates guest needs before they arrive. Scent technology is another modern device which scents a hotel with a brand-identifying smell that elicits a feeling in guests connecting directly to memory.

  • Impact of Internet Marketing and Distribution

The availability of Internet marketing has led to increased competition and has created pressure on room rates. In addition, the delivery cost for getting customers into hotels has changed significantly by the emergence of online travel agencies or booking websites (OTAs), which can charge hefty commissions. OTAs do more than just sell hotel and vacation packages; they have significant influence over consumers' behavior, not only by informing them about travel destinations and hotel brands, but by perpetuating a belief that guests will receive the best price if they book through third parties. Only about 30% of all bookings go through hotel websites vs. 70% made through OTAs.

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Coming up in March 2018...

Human Resources: Value Creation

Businesses must evolve to stay competitive and this is also true of employment positions within those organizations. In the hotel industry, for example, the role that HR professionals perform continues to broaden and expand. Today, they are generally responsible for five key areas - government compliance; payroll and benefits; employee acquisition and retention; training and development; and organizational structure and culture. In this enlarged capacity, HR professionals are no longer seen as part of an administrative cost center, but rather as a member of the leadership team that creates strategic value within their organization. HR professionals help to define company policies and plans; enact and enforce systems of accountability; and utilize definable metrics to measure and justify outcomes. Of course, there are always new issues for HR professionals to address. Though seemingly safe for the moment, will the Affordable Care Act ultimately be repealed and replaced and, if so, what will the ramifications be? There are issues pertaining to Millennials in the workforce and women in leadership roles, as well as determining the appropriate use of social media within the organization. There are new onboarding processes and e-learning training platforms to evaluate, in addition to keeping abreast of political issues like the minimum wage hike movement, or the re-evaluation of overtime rules. Finally, there are genuine immigration and deportation issues that affect HR professionals, especially if they are located in Dreamer Cities, or employ a workforce that could be adversely impacted by federal government policies. The March Hotel Business Review will take a look at some of the issues, strategies and techniques that HR professionals are employing to create and sustain value in their organization.