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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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.