Mr. Heymann

Mobile Technology

Is the Implementation of Mobile Technology Commoditizing the Hotel Experience?

By Mark Heymann, Chairman and CEO, Unifocus

Mobile technology has pervaded virtually every aspect of our lives, and travel is no exception. As people turn to their mobile devices for assistance with an increasing number of daily activities, the hotel industry has responded with apps designed to streamline processes from checking in to accessing one's room. Starwood Hotels & Resorts pioneered mobile room keys with its SPG Keyless product in 2014 and since then several other major brands have followed suit. There are also apps today that enable SMS two-way communications between guests and hotel staff, facilitating a wide range of interactions, including late check-out requests, room service orders, and restaurant recommendations.

The efficiency factor is clear, with benefits to both the guest (convenience) and the hotel (lower labor costs). But with automation increasing, and a corresponding decrease in face-to-face interaction, is the hotel industry, like the airline industry before it, destined for commoditization? And if so, what, if anything will drive guest loyalty? At the lower end of the market, as long as a basic standard of cleanliness is met, a hotel room is a hotel room, and price is usually the key deciding purchase factor. As one moves up the scale, however, service becomes more of a differentiator. And as it does, technology that reduces staff interaction can be a potential detractor.

The Commoditization of Airlines

As hoteliers consider the effects of automation on the guest experience, they would do well to consider the example of the airline industry. Compare flying today to the early 1980s, when Jan Carlzon took the helm of the struggling SAS Group. Within a year, the CEO had turned around Scandinavian Airlines through a focus on customer service that centered on what he called "moments of truth." In fact, Carlzon has been famously quoted as leading his First Wave seminars with "We have 50,000 moments of truth every day," identifying those moments as every interaction airline staff had with a passenger, and what would have to happen in that moment to create a positive experience.

Fast forward to today, and those moments of truth are few and far between unless one is flying first or business class. Travelers book their flight online, sometimes via a third-party site, check in and get their boarding pass online as well. Once on the plane, an economy passenger is offered a drink at best. The opportunities to change the experience for that passenger, therefore, have become more limited. So with service removed as a differentiator, the key driver of airline repeat business has become the miles one gets to travel for free as part of a loyalty program.

Checking in with Guest Preferences

Once off the plane, are travelers prepared for similar changes when they arrive at their hotel? A recent study by Cornell University's Center for Hospitality Research explored U.S. travelers' inclinations toward using mobile technology to perform hotel-related activities. The December 2014 study ranked the activities travelers would most like to use their mobile devices to perform. Listed in descending order of interest, those tasks were: receive notifications when their room is ready, request hotel amenities, check in and out, and order room service.

Survey respondents also were asked what communication channel they preferred for various interactions with hotel staff. Options included going to the front desk, phoning the front desk, emailing, texting, or "other." Results revealed that despite the availability of technological alternatives, 65 percent of respondents would still favor going to the front desk to check in compared to only 20 percent who would prefer to check in via text, the second most popular option. Lodging a complaint was another task that respondents would rather take care of in person, with 77 percent reporting they would either visit or call the front desk.

Email was the preferred vehicle for respondents when confirming reservations (36 percent), receiving dining recommendations (42 percent), receiving special offers either for the hotel (73 percent) or for activities (67 percent), and providing feedback on their stay (65 percent). All of these are available on today's mobile devices. Texting though never fared better than first runner-up in the study rankings. It made its strongest showing at 31 percent for requesting an amenity, followed by requesting late check-out (28 percent), and confirming reservations (25 percent).

The results of the study indicate that while many travelers today embrace using mobile technology for certain activities at hotels, they prefer in-person interaction for others. Checking in, in particular, continues to be an important "moment of truth" for many guests.

Striking a Balance

It's clear that some degree of automation can add a level of convenience that positively impacts a guest's stay. But relying too much on technology can commoditize the experience and, in certain markets, create less loyalty. Part of this is driven by guest expectations. The key for hoteliers, then, is to identify all of the opportunities that exist at their property for moments of truth. Each of these moments (opportunities) adds to the security of the hotel's relationship with a guest, and the more of these points of interaction there are, the more cautious the hotelier should be about replacing them with automated processes.

If the level of service at a hotel is such that arriving guests are recognized and greeted by name, the front desk experience is a valuable moment of truth that would be lost by automating the process. On the other hand, if the hotel can't deliver that kind of personalized service and the check-in experience is more impersonal, technology that enables the guest to bypass the line at the front desk, pick up a hot cookie (already bagged) in the lobby, and go straight to the room he or she has pre-selected can be a welcome convenience. The same would be true at a hotel whose typical guest arrives late, leaves early, and spends little time on property. In those environments, as with airlines, earning points towards a free night is more likely to engender loyalty, coupled with the convenience noted above.

Creating Guest Benefits

It's unlikely that guests will benefit in the form of lower room rates from the cost savings hotels realize through automation. But as a hotel introduces technology that reduces moments of truth, one way it can create incentives for guests is by rewarding more loyalty points per stay to those who are willing to use the technology. Keep in mind that this does somewhat offset the cost savings of technology by increasing the number of free room nights awarded - rooms that still have to be cleaned - or by lost top-line revenue.

In addition, where they can, hoteliers should invest the dollars they save by automating certain processes into enhancing the hotel experience in other ways. For example, if guests are given the option to check in with a mobile app and a large enough percentage choose to do so, the hotel has an opportunity to create a better in-person experience for those who prefer to check in at the front desk. In this way, the front desk can become a service center instead of a processing center.

A little food for thought: In the airline industry, one benefit of technology is that passengers can make their own seat selection. Since most flyers have distinct preferences for a seat on the aisle or window and at the front or back of the plane, the ability to select a seat in this way has a positive impact on the flight experience. Would the same be true if hotel guests were able to pre-select their room when they book online? That option could be more important in a resort environment where, if the rate is the same, many guests would prefer an ocean view (or, if only lower floors are available, a room facing away from the ocean to reduce the noise factor).

At many hotels, however, there might not be enough differentiation between rooms for it to be perceived as a benefit. And if a hotel does give guests the ability to pre-select their room, do they run the risk of irritating those who book late and aren't able to get the accommodations of their choice? One way to address this risk would be for the hotel to hold back a certain number of rooms for its better customers. A challenge, though, with this tactic could be the impact on yield processes and offering better rooms to customers paying lower rates. This might lead to an outcome in which hotels adopt the airlines practice of charging additional fees for more "premium" seats.

No matter what the ultimate impact on service levels and loyalty, consumers' growing reliance on mobile devices combined with the cost-saving potential of guest-facing automation means the use of mobile technology in hotels will only continue to expand. The question is whether hotels will follow their airline counterparts down the road to commoditization, with point accumulation as the chief driver of bookings, or if they will find a way to navigate a balance, creating tech-enabled processes where mobile-savvy travelers desire them while preserving the "moments of truth" that personalize the experience and inspire loyalty.

Mark Heymann is a founding partner and the chairman and CEO of UniFocus. He has more than 40 years of expertise in the industry, particularly in hospitality. Mr. Heymann previously was founder and president of the Heymann Group, Inc. (HGI), a consulting, software and asset advisory company that was a forerunner in relating labor management to service quality in the hotel industry. For 15 years, HGI delivered significant bottom-line results to clients including Xanterra Resorts, Omni Hotels, Orient Express Hotels and Loews Hotels. Under Heymann’s leadership, HGI pioneered the development of labor management system technology, and in 1991, it introduced the resource and labor management software program Watson R.M.™ Mr. Heymann can be contacted at 972-512-5105 or mheymann@unifocus.com Please visit http.www.UniFocus.com for more information. Extended Bio...

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