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Article by Elisa Chan

Airbnb Pricing: What's the Reason for Discrepancies?

EHL 6 November 2018
Bloomberg recently released the latest edition of its index which ranks locations around the world - taking into consideration some 120 cities - according to rates charged by Airbnb. Among its main findings were that although Miami and Boston took the top two places for the second year running regarding Airbnb pricing, Middle East destinations are now some of the most expensive in the world, with locations such as Tel Aviv, Dubai, Jerusalem, Riyadh and Kuwait City among the top 15.But how reliable are the data?According to EHL assistant marketing professor Elisa Chan, there is a challenge in understanding how Airbnb sets its prices."From my understanding, Airbnb lets its owners freely set their prices but the website does offer a 'smart pricing' tool to facilitate dynamic pricing according to demand within the Airbnb supply environment. The owners though are at liberty to set prices as they wish."Chan continues: "The thing that I find most interesting is the discrepancy of ADRs (average daily rates) reported by Airbnb versus the Bloomberg index."Different methodologiesAccording to the Bloomberg article, Airbnb ADR figures for Tel Aviv ($87) and Jerusalem ($82) are far lower than Bloomberg's figures at $188 and $173 per night respectively. The article points out that Airbnb uses a different methodology to that of Bloomberg, as it includes the rates of units actually booked rather than advertised rates on the Airbnb site.The article cites industry analysts who suggest that Airbnb pricing in cities such as Dubai and Tel Aviv may be largely due to high hotel rates and the high cost of housing, with short-term rentals being pushed higher by owners wanting a premium over what they could earn renting out their properties for a year."For hotels, there are well established benchmarks and strategies to set prices that should more closely reflect willingness to pay by guests," Chan says. "But for P2P (peer-to-peer) accommodation, individual owners may be relying on a much wider range of factors when setting prices."She agrees that, for the most part, pricing is probably tied to housing costs and the market rate for long-term rentals, which "may not be the best indicator for willingness to pay by transient guests.""But for consumers, how prices are set may not matter much. You may have people who are adamant about staying at hotels and those who want to live like a local. But in between, there are people who would look at the two as viable accommodation options, not just limited to price comparisons but other factors that come into play in making that decision.""In my opinion, focusing on this group of people and on a single city like Paris, may yield more valuable insights as to how the two markets are influencing one and other."Related ArticleSeveral EHL researchers have been investigating how hotels in specific locations are coping with the threat posed by Airbnb.In a study focusing on San Francisco, EHL Executive Dean Ines Blal and her co-researchers Manisha Singal of Virginia Tech and Jonathan Templin of the University of Kansas examined Airbnb's impact on the sales growth of hotels in the city and found that Airbnb is disrupting the hotel business. They recommend that hotel managers are aware of the prices and services offered by Airbnb within their locality in order to map out their revenue management strategies.

The City Of Lausanne And EHL Group To Create The First Innovation Hub Dedicated To Hospitality In Europe

EHL 1 November 2018
The City of Lausanne and EHL Group sign a convention for the development and rehabilitation of the Lausanne neighborhood of Chalet-a-Gobet, to create the first Innovation Hub dedicated to hospitality in Europe.Signed for an initial period of 50 years by Natacha Litzistorf, Municipal Councilor and Director of Lodging, Environment and Architecture of the City of Lausanne, Andre Witschi, Chairman of the Board of Governors of EHL Foundation, Michel Rochat, CEO, and Maxime Medina, Chief Asset Management Officer of EHL Group, the agreement will allow EHL to extend its academic ecosystem to construct a hub dedicated to research and innovation, and in support of entrepreneurship.On the site of the old Chalet-a-Gobet farm, currently being rehabilitated following a fire in 2007, a hostel as well as other surrounding buildings, this new Innovation Hub will host an incubator and several research projects that combine academic research with the flexibility and audacity of young entrepreneurs. This pivotal meeting place, with a restaurant open to the public, reflects EHL's position as one of the global centers for technological research, innovation and competitiveness.Formerly a fragmented neighborhood that also included a post office, an equestrian center and a cafe, the project will be implemented in several phases over a period of two to three years to transform it into a coherent, stimulating and dynamic center. The Innovation Hub already includes six start-ups and will also host Lausanne Hospitality Consulting (LHC), the advisory branch of EHL Group. With an initial renovation investment of CHF 25 Mio over the first five years, many synergies are expected to make this hub the reference for innovation in the hospitality and wider services industries.<< Our vision of this new Innovation Hub is to build a place where researchers, entrepreneurs, investors, students, artists and visionaries will come together, exchange and create the future of hospitality. We are creating a new micro-culture that will mirror our University. Flexible and dynamic, this new hub will stimulate creativity." explained Remi Walbaum, Chief Innovation Officer of EHL Group.Michel Rochat, CEO of EHL Group, explained as well that "EHL Group, in addition to its University, has a responsibility to maintain open channels between the various actors that will forge the future of hospitality. Lausanne has a long history of interdisciplinary collaboration, breaking down the barriers that often divide academic institutions and economic actors. That is the spirit of the new Innovations Hub."The Lausanne Municipality looks forward to the development of EHL's Innovation Hub at the Chalet-a-Gobet site which will add a new component to the Research and Innovation performed at Ecole hoteliere de Lausanne.

Mobile Learning Technology Firm, Boost, Receives Significant Investment From Ecole Hoteliere De Lausanne

EHL 18 October 2018
"Since our founding in 1893, EHL have set the international standard for tertiary education in hospitality, with over 25,000 alumni going on to take leadership positions throughout the industry" says Remi Walbaum, Chief Innovation Officer, adding "Innovation is one of our core values, and today in 2018 we see technology as a key means of learning both in schools and universities, and in the workplace, that is why we have decided to invest in Boost.The needs of the industry are changing at an ever-greater pace, as are the language skills required by hotel employees, many of whom are more used to reading and learning from a screen than from a book. By developing our mobile learning capabilities we remain the forefront of hospitality, driving education, upskilling and learning, and helping talented students around the world build a successful and fulfilling hospitality career"EHL is the world's first hospitality management school and was founded in 1893 to meet demand for more professionalised hospitality employees who could cater to the growing sophistication of hotel guests at that time. The school pioneered hospitality education, mixing classroom-based teaching with hands-on learning in real hotels, all the while ensuring their curriculum met the demands of the industry at the time. The resulting graduates were thus able to leave the school equipped with the knowledge and skills to take leadership positions in the industry and drive innovation.EHL's presence in the mobile learning space will allow them to address many of the challenges faced by hotels today and in the future, namely the change in the way hospitality employees, many of whom are young, consume information and learn, and the need to meet the demands of guests whose expectations have risen in the age of social media and instant reviews."Boost's suite of mobile learning solutions are tailor made for the hospitality industry, not only allowing individual hotel employees to learn new languages and other skills, but enabling management to organise their teams, recruit new team members and communicate better" says Allan Taylor, Managing Director and Chief Commercial Officer (CCO) of Boost, adding "20,000 hotel employees are already using our mobile learning solutions, we have seen them learn Mandarin allowing them to communicate with their Chinese guests, we have seen them learn how to upsell improving hotel revenues, and we have seen them learn many more skills vital to improving service and thus their hotel's bottom line. Unlike traditional classroom-based teaching, mobile learning allows hotel employees to learn at a time and place of their choosing. Importantly, it is measurable and scalable, and available at an enterprise level allowing for group and team organisation, HR and recruitment functions and inter-team communication"The investment from EHL will allow Boost to continue developing its existing mobile learning solutions and develop new solutions to address the needs of the hospitality industry. Lastly, Boost will be able to tap the knowledge and expertise of some of the world's leading thinkers, thought leaders and academics in the hospitality field, ensuring their mobile solutions are tailored to the unique and ever-changing needs of the industry.
Article by Stuart Pallister

The Future of Work: Look on the Bright Side?

EHL 8 October 2018
In the view of futurist and 'recovering journalist,' Gary A. Bolles however, we shouldn't just focus on the negatives. We should look at these developments as an opportunity.Problem solving"Robots and software don't take jobs, they take tasks," he told Hospitality Insights following a keynote address to EHL's international advisory board. For humans, work means three things: solving problems, performing tasks, and using our skills.If we think differently about our skills and the kinds of problems we like to solve, we can continually look for the kinds of problems that robots and software can't perform. We actually can do more creative tasks that require more collaboration between people.As we transition to a digital work economy, educational institutes should be looking to provide lifelong learning rather than a chunk of education early in our lives. It will involve the 'unbundling' of work to provide dynamism and flexibility.Educational institutionsEducation "isn't this massive investment upfront and then very little as time goes along. It has to be a set of continual processes.""Some educational institutions see that as a threat because their model is so focused on early education. But instead I would encourage people to think of it as an opportunity. In the United States we always say: 'What business treats you for four years as a customer and for the rest of your life as a cash register, constantly donating back to your alma mater?'""Instead, if you're continually providing value to your customers, helping them with their lifelong working processes, that's a tremendous business opportunity for many educational institutions.""We're transitioning to what I call a digital work economy and it's happening in a blindlingly short period of time. But if we see this as a market transition, not just disruption, and the whole world of work is going to change, every school is going to change.""One of the biggest challenges of this transition to a digital work economy is that many of the analyses of what's happening to the world of work essentially look at the negative side of the ledger."As there's still a great deal of uncertainty as to the future which is somewhat murky, such analyses are speculative, Bolles says. (In his keynote address he refers to the 'fog on the highway' which is "so heavy we can't see 20 years down the road" and know exactly what skill sets are going to be needed.)People or Robots?On the positive side of the ledger, if we can use technology to make us better, "we can solver greater and greater problems" and that might lead to "an abundance of work". Otherwise, many will be left behind as they won't be able to acquire the new skills that are needed "and then it's going to be a rational act for many employers to say 'we can't find the people, so we'll have to automate those new tasks.'"With lifetime employment less and less likely, young people entering the workforce will need to be problem solvers who are able to adapt and are creative "because that's what will keep us ahead of robots and software." Plus they will need to be entrepreneurial in their mindset. "They need to go towards problems, solve new problems, as opposed to waiting for those problems to come to them."Gary A. Bolles is the Chair for the Future of Work for a think tank called Singularity University.Want to know more about the future of work? Check these additional resources out:Unbundling Work: Learning to Thrive in Disruptive Times - Gary A. BollesTechnology, jobs, and the future of work - McKinsey5 things to know about the future of jobs - World Economic Forum
Article by Giuliano Bianchi

The Need for Big Data and Quantitative Skills Training In Hospitality

EHL 2 October 2018
This is why, as economists, we believe hospitality business schools that teach subjects such as finance, need to develop their students' skills in these areas.Technology nowadays allows firms to collect and analyze huge amounts of so-called big data, but in order to leverage these opportunities, hotels will need technical abilities and know-how.However, the biggest challenge faced by teachers of maths and other quantitative skills is how to get the message across to undergraduate students how important such skills will be in their future careers.Overcoming 'math anxiety'"I've survived up to this point without solving equations, so why should I start now?" is the typical reaction of many students. Indeed, researcher and academic Mark H. Ashcraft has highlighted the phenomenon of 'math anxiety' which he defines as "a feeling of tension, apprehension, or fear that interferes with math performance". Students may be tempted to try to math-based subjects but how can they overcome this in practice?Based on our experience as economics professors we have developed a survival kit for beginners.First, at your very first meeting with students, we recommend that teachers highlight the fact that this topic will be somewhat technical and that, without a rigorous approach, they will not be able to have a deep understanding of the subject.Second, when explaining something technical, start from the solution. Clarify what the final point is that you are aiming for and then explain why and how you plan to get there.A common mistake we make is to try to create some suspense and then surprise the student with a final revelation. What may be 'suspense' for you, however, is likely to spell confusion for the student and what you consider to be a final revelation, probably means panic for the student.We recommend that teachers use plenty of examples from the onset as business school students need practical applications first.Indeed, they love to be active. They do not want to listen to you passively as you move from one abstract theory to the next. Instead, they need to feel challenged in class.This can range from doing exercises to case studies and other activities, but the main point is to allow them to play an active rather than passive role. The old fashioned idea that the professor outlines theory in class and that the student is there to absorb it like a sponge and follow up with exercises at home, may be valid only in our wildest dreams.We also recommend that teachers embrace technology. Give students a virtual portfolio to manage, with apps, surveys, online quizzes and other tools that may appeal to millennials.To concludeQuantitative subjects such as maths and statistics will be increasingly crucial for hoteliers, but when you're teaching these subjects, they may need to be sugar-coated - more so than other courses - in order to make them more palatable.

EHL's new Institute of Business Creativity (IBC)

EHL 11 September 2018
Ecole hoteliere de Lausanne launches the Institute of Business Creativity, hosting the METRO Hospitality Lab for the development of novel training solutions in the hospitality industry.Launched in June 2018, the Institute of Business Creativity aims to build bridges between the business world and academia, and to produce relevant, highly impactful, practice-based research and solutions. Under the leadership of professors Marc Stierand, Institute Director, and Ian Millar, Institute Manager, this new structure will contribute to EHL's objective; to provide innovative educational models and to drive growth in the hospitality industry."I am very excited to have the opportunity to apply the research I have conducted on creativity over the past years. The Institute will allow us to leverage the unique industry knowledge of our key partners and our combined understanding of Hospitality technology, creativity and team management will truly give us the means to explore new ideas in a pragmatic and constructive manner", said Marc Stierand The Institute offers a wide spectrum of services, including dedicated research labs in partnership with international firms from the hospitality industry and beyond, tailor-made executive workshops and case studies to support business development and innovation. The Institute also provides an environment for developing and testing new concepts with the EHL community.Prominent experts from the hospitality industry and leading academic institutions from around the world have joined the Institute to contribute their expertise and collaborate on research projects. The Institute of Business Creativity will include several dedicated research labs, sponsored by international companies who will benefit from EHL's awarded research and faculty to develop innovative, leading-edge solutions to transform their industry.The METRO Hospitality Lab, sponsored by METRO AG and initiated by the two co-founders of Hospitality Digital GmbH (a Metro company) Kay Schwabedal (CEO) and Frederic Schumacher (Director Innovations), is the first research project within the Institute of Business Creativity. This lab will focus on the HoReCa industry (Hotels, Restaurants, Catering) and will be dedicated to the exploration and design of new HoReCa education and training solutions."This is a new and fascinating step in the growing relationship between EHL and METRO. We are all extremely enthusiastic to bring our respective strengths to the table and work towards a common goal", said Ian Millar about the new collaboration.The research will focus on the relationship between the digitalization of operational training and human interactions. The Master-Apprentice approach will be examined to determine how and where human interaction, such as mentor coaching or expert training, is combined most effectively with technological solutions."Our objective is nothing less than to make a significant contribution to the digitalisation of the HoReCa industry. We are convinced that this way there are considerable opportunities for small and mediumsized companies in particular to become even more successful", said Olaf Koch, Chairman of the Management Board of METRO AG. "EHL and METRO, we both share the same passion: Through our collaboration, we are combining our industry and technology knowledge to support together the digital transformation of our HoReCa customers. I am convinced that our customers will benefit even more from our strategic alliance in the future."METRO's goal is to help their clients -small and medium-sized businesses in the hospitality and food retail industries - succeed in their ventures. Based on previous studies by EHL, this success is closely correlated to enhanced training methods. Results from the research will be presented in 2019, allowing all industry professionals to benefit from the findings.
Article by Samuel Wich

The Origins Of The Hospitality Industry And What Lies Ahead

EHL 3 September 2018
Thousands of years ago, when road networks were scarce and traveling was cumbersome strangers arriving in a foreign land had to rely on either their camping skills or a local's kindness when looking for shelter. During the age of pilgrimage and the development of major trade routes throughout Europe, it was mostly inns and taverns offering primitive rooms to weary travelers. The idea of a hotel built for the sole purpose of hosting guests did not exist in Europe until the 18th century, when technological progress and the introduction of faster and more reliable modes of transport made long distance travel available to wider public. With the influx of large numbers of foreigners into major cities, the need for accommodation led to the opening of the first hotels in the modern sense. Since then, the sector has known a nearly unbroken run of growth and international expansion.Over the last two decades, international departures have more than doubled from around 600 million to more than 1.4 billion in 2016.Thanks to this immense potential a network of service providers has developed that caters to nearly every desire imaginable. Hospitality has gradually become one of the largest and most diverse industries, employing hundreds of millions spread over different sectors.Today, businesses in the industry can generally be divided into four categories:LodgingFood & BeverageRecreationTravel & TourismEvery category under the umbrella of the term "hospitality" further contains many different sub-sector and operators. The mere global scale of the industry makes it difficult to provide a conclusive overview without taking up hours of your time. Travel, for instance, encompasses all modes of transportation available to travelers, including coaches, airplanes, vessels, taxis etc. While all sectors are interconnected and reliant on each other, each one of them is facing unique challenges and opportunities in the future.The importance of innovation in hospitalityGoing forward, the key for companies looking to defend or expand their current position in the market will be to keep up with the pace of innovation.The emergence of new technologies such as artificial intelligence (AI) and the internet of things (IoT), means that providers are now faced with the challenge of moving their offer into the era of digitalization.The availability of extensive data on each individual guest will make it possible for companies to tailor their offers at a bespoke level, leading to closer and more immersive client interaction.Hotel rooms that automatically adjust the lighting and the temperature to each traveler's personal preferences can enhance guest experience and thus make it more likely for them to return. Traditional check-in and guest interaction procedures at hotels will likely see a fundamental overhaul.The introduction of voice recognition software, for instance, will enable hotels to automate tasks that would traditionally be performed by a human.This will result in more efficient processes at properties all around the world. While procedures are being streamlined, vehicles, amenities and buildings become smarter and more interactive.The challenge for providers will be to keep alive the human touch that has made hospitality establishments so successful. At the same time, adapting to and using these new technologies will be crucial in the fight for customers in one of the most competitive markets in the world.Need more resources on Hospitality Industry trends? Check these articles out:High-tech hotel wars: Sleeping in China just got more futuristic - CNN New Technologies Will Revolutionize The Hospitality Industry - Forbes

Preparing Independent Restaurateurs for the Digital Age

EHL 18 July 2018
Independent restaurateurs face increasing pressure from large chain operators, many of whom are adopting technology rapidly as part of their global growth strategies. Meanwhile, independent operators may not yet realize the competition they face for their own survival.This latest research focuses on restaurateurs' challenges and behaviors toward training, as well as innovations in education from other industries, to enable the creation of Learning Communities. The concept is an innovative approach to train independent restaurateurs, taking into account the perennial issue of lack of time and money they face, as well as their most significant business challenges, topics of interest, current level of digitalization and preferred training format. The study included interviews with more than 50 independent restaurateurs, academics, experts and restaurant associations. A survey of more than 2,300 restaurant owners, managers, chefs and METRO customers was also completed across France, Italy and Spain as they were selected to represent the European countries for the study. These interviews and survey data were then analyzed to help create a Learning Community concept.Survey results indicated that the main challenges for independent restaurateurs included offering home delivery service, doing administrative paperwork and managing their staff. Their main topics of interest for training, however, centered on managing food, beverage and other supply costs, mastering cooking techniques and forecasting demand. This gap between challenges identified and topics of interest helped inform the Learning Community concept, which offers a solution that trains restaurateurs on what they want to learn while gradually introducing more critical topics and more peer to peer interaction."The Learning Community concept not only provides targeted and pioneering training concept on relevant technologies, but also tackles all primary challenges that independent restaurateurs face in their daily operations," stated Dr. Christine Demen Meier, Chair Holder, METRO Chair of Innovation. As demonstrated by the research team composed of Dr. Christine Demen Meier, Caroline Guigou and Isabelle Vetterli, this innovative educational solution also uses gamification elements to enhance the learning experience, keep participants engaged in the process, and help them develop the ability to comprehend digital content."The first study with the METRO Chair of Innovation showed us how restaurateurs use technologies and if not, what the reasons behind are. Restaurateurs often avoid new technologies due to a lack of time, knowledge and resources. With this follow-up study, we dived deeper to find solutions that start exactly at this point: What learning concepts and support can we give restaurateurs so that they can keep their finger on the pulse of the times and integrate learning into their everyday life with little use of resources?", says Frederic Schumacher, Director of Innovation at Hospitality Digital, a company of METRO AG. "We strive to help restaurateurs to integrate digital tools that simplify their work processes, so that they have more time for the essential."This was the last research carried out by the Metro Chair of Innovation, while the partnership between METRO and EHL will continue to evolve and grow. An announcement will be made soon with further details. For more information on the METRO Chair of Innovation and to download the research results, click here: https://innovationchair.com.

Blockchain: opportunity or hype?

EHL 2 July 2018
Now there are hopes that blockchain can be applied in diverse domains, including: medical records, luxury goods sales (to weed out counterfeits), as well as travel distribution.Blockchain networks have the advantage that they are decentralized and incorruptible, since transactions are managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks of data.Once recorded, data blocks cannot be modified retroactively without the alteration of all subsequent blocks, which requires the approbation of the network participants.But how realistic is it to believe that blockchain in its present state of development can be used for travel booking purposes?In fact, some travel companies, including the giant tour operator TUI, Air New Zealand and Nordic Choice Hotels, have already signed on as partners of a new blockchain travel distribution startup called Winding Tree.Winding Tree is a B2B platformZug, Switzerland-based Winding Tree is the first company to specifically target travel distribution using blockchain technology.The company completed its ICO (initial coin offering) over a two-week period ending on 15 February, selling US$14'418'196 worth of Lif tokens which exceeded the company's initial goal of US$10'000'000 by about 44%.Lif tokens provide the functionality required by travel companies to send information about transactions over the Winding Tree platform.The token holder is thus able to send value, data, and/or execute a function on those transfers.The number of Lif tokens sold via the ICO has been fixed forever.Contrary to some initial anticipation, however, Winding Tree's goal, at least initially, is not to disintermediate the big B2C global travel distribution players like Expedia and Booking.com.Rather company has been positioned as a B2B platform, which allows for mainstream adoption and incentivises suppliers to list their inventory.As noted above, there are already suppliers and resellers committed to the platform.Blockchain-savvy users are now able to book directly through the blockchain.However, it is not expected that the average retail customer will do so, since most don't have sufficient understanding of the TCP/IP (Transmission Control Protocol/Internet Protocol, a suite of communication protocols used to interconnect network devices on the internet) used to book their travel.TUI Air New Zealand explore uses of blockchainTUI, for instance, is currently using blockchain in its tour operator business to implement its "bed swap application", which aims to more efficiently allocate its hotel supply among its source markets in the UK, Germany and Nordic countries, notes Natascha Kreye, senior manager of corporate communications at TUI Group, who adds that, "It's an internal process to optimise yield across the group as well as to better learn how to use the technology. The plan is to use blockchain to generate smart contracts with hoteliers and improve the company's hotel inventory".It can, nevertheless, be noted that this is essentially an internal supply side use of blockchain - not a high-volume customer-facing one.Meanwhile, according to Air New Zealand chief digital officer Avi Golan, the airline is looking at a number of potential blockchain uses such as cargo and baggage tracking, retail, distribution and loyalty programme opportunities.Nordic Choice Hotels on boardIn what is being heralded as a hotel industry first, Nordic Choice Hotels has stated that they will "explore new ways of distributing inventory" using an open-source blockchain distribution platform developed by Winding Tree.Hobo, the chain's brand new hotel in the centre of Stockholm, is the first to take advantage of what Christian Lunden, director of future business for Nordic Choice Hotels, has termed "a totally new opportunity for our industry".With 30'000 rooms across Scandinavia, Nordic Choice has allowed Winding Tree to test usability on various levels: from the individual property to regionally and even across the entire hotel chain.The Scandinavian chain has been working with Winding Tree on a so-called 'testnet,' where teams gather qualitative data on transaction throughput and latency of the network.Given some doubts about the future scalability of blockchain platforms, it is argued that this will be vital in shaping core parts of the smart-contract before migrating to the 'mainnet', where transactions will have economic value.Hurdles still to be overcomeAs can be seen from the discussion above, the use of blockchain in travel, for the time being, looks to be essentially limited to internal and B2B transactions.In addition to integration challenges, the biggest problem facing blockchain currently is speed.Requiring proof of work to participate intentionally slows down the process, but replicating blocks across many distributed systems means that the top speed is only about seven transactions per second, according to Robert Cole, founder of RockCheetah, whereas traditional reservation systems can handle 250'000 transactions per second.There will be new forms of blockchain-related technologies emerging, according to him, which may challenge even current internet standards and cloud communication protocols.In a discussion I had with Winding Tree's CEO, Maksim Izmaylov, at the recent HOTCO conference in Budapest, held on 29-30 January, he admitted that more widespread use of blockchain in a high-transaction environment awaits further development of the technology.This article first appeared on the SSTH blog.
Article by Scott Dahl

The Integrated Revenue Generation Team - Coming Soon to Your Hotel!

EHL 4 June 2018
One of these trends is related to net room revenue - that is, revenue that remains with the hotel after accounting for distribution costs (online and traditional agency commissions and other expenses).Net room revenue has been declining steadily over the past several years. For instance, US hotels earned roughly $155.2 billion in guest-paid revenue in 2017 but paid an estimated $25.2 billion to acquire guests in the form of OTA commissions and other distribution costs, retaining significantly lower net room revenue of $130 billion (Kalibri Labs).The overall growth in occupancy and revenue per available room (RevPAR) that many hoteliers have been enjoying for some time now cannot possibly compensate for 'the loss of wealth' through steadily increasing OTA distribution costs. Obviously, hoteliers need to increase direct bookings, which come at a much lower cost, and improve the overall direct vs OTA distribution ratio.Integrated strategy: The missing piece of the puzzleOne of the main reasons for the troubling trend of decreased revenue capture and profitability, despite stellar economic performance is the lack of integration, coordination, and singular focus and purpose among the core revenue generation teams at the property or hotel management company: namely, the revenue management (RM), sales and marketing (S&M), marketing, and customer relationship management (CRM) teams.Quite often these teams function in a rather disjointed fashion, leading to missed revenue opportunities, over-dependency on the OTAs, alienated loyalty members, and lower profitability.Often the RM, S&M and CRM teams in a property operate in isolation from one another, without close coordination. In some cases, they even compete with one another to sell the same rooms. In other words, the left hand - one team - does not know what the right hand - the other teams - is doing, to the detriment of marketing efficiency and price integrity, and ultimately overall revenue generation, profitability, and the owner's return on investment (ROI).The reality: highly fragmented hospitalityTraditionally, RM, S&M and CRM operate as separate teams with their own goals, technology tools, databases, vendors, and more.One glaring example of this highly fragmented approach is keeping past guest engagement efforts (CRM) in a silo from new customer acquisition and marketing efforts.For example, looking at independent hotels, less than a third of hotel guests on any given night are repeat guests, while two-thirds are first-time guests.This means that the reality general managers and directors of sales and marketing (DOSMs) face every day is having to fill about 70 percent of their rooms on any given night with brand new guests that they know very little about, while trying to ensure they have a pleasant and meaningful stay.Furthermore, once the property has acquired these new guests, when they walk out the door, if they're not engaged with marketing automation and guest retention initiatives, there is no guarantee they will ever stay at the property again. This results in a vicious cycle that affects the bottom line.Dr. Cindy Heo, an associate professor of revenue management at Ecole hoteliere de Lausanne (EHL), describes the current siloed approach in revenue management and the existing fragmented customer data situation in the industry:Revenue management used to focus primarily on setting room prices and optimizing room inventory. Revenue managers should not just crunch RMS numbers but need to understand guests' selection behavior, consumer psychology, and their competitors' strategies by analyzing various pieces of information. RMS cannot, therefore, be the only toolkit for a revenue manager, because customer data reside in different hotel systems.Tying RM, S&M and CRM together with a 360-degree approach that engages, retains, and acquires guests throughout the customer journey is not only more efficient and more effective at driving direct bookings, but it is critical in growing the bond with your customers and their lifetime value.Obviously there is a need to break down silosToday's travel consumer's hotel planning and booking journey has become increasingly complex in this multi-device, multi-channel, and multi-touch point digital landscape.As consumers remain digitally-connected throughout these micro-moments before making a booking, each touchpoint presents an opportunity for a hotel to build a brand connection, influence intent, win the booking, and be there for every step of the journey.In light of this complex digital landscape, hotel marketers should engage online travel consumers throughout their complex digital journey and can no longer afford to have a fragmented customer engagement and acquisition approach.To summarize, here are the main reasons prompting the convergence of RM, SM and CRM into one cohesive team:The overwhelming shift to online distribution and online customer engagementsExploding mobile channels and the need for lightning-fast pricing and marketing decisionsThe ever-increasing complexity of the customer lifecycle and the emergence of the digitally-savvy travel consumer.The need to lessen overdependence on the OTAs.The solution: The integrated revenue generation teamThere should be a single-minded team at the property: the revenue generation team, consisting of RM, S&M and CRM specialists working together to acquire, engage, and retain guests; optimize performance; and increase revenues, especially direct bookings.What then should hoteliers do to accelerate the switch to an integrated revenue generation team? Here are just a few of the changes and action steps needed:#1 - Hotel management and franchise contracts:Management and franchise contracts should use total gross operating profit (after OTA commissions, traditional agency commissions, and other distribution expenses) and not gross room revenues to calculate management and franchise fees.In this way, every revenue-generating employee and team at the property would be evaluated based on net room revenues collected by the property (gross room revenue minus agency/OTA commissions).#2 - Organizational changes:A new role is needed at the property or hotel management company: that of revenue officer or revenue optimization officer, overseeing the integrated revenue generation department at the property, small or midsize chain, or hotel management company. The revenue optimization officer is not an accounting or finance major position, but a role for a cross-functional leader, versed in all three disciplines: RM, S&M and CRM.#3 - Education and professional development:The whole hospitality educational and professional development system needs to be re-thought and adjusted to create cross-functional experts who are intimately familiar with all three disciplines: RM, S&M and CRM. Existing RM, S&M and CRM employees should be incentivized to get certifications and attend professional development courses in the other disciplines as a prerequisite for their career advancement.#4 - Technology investments:Hotels need to invest in technology that allows alignment of, and cooperation among, the RM, S&M and CRM specialists from the revenue generation team. This is a call to action for the hotel tech community: new technology tools and platforms, especially platforms utilizing AI to crunch big data, are urgently needed to enable the cross-functional, cross-data alignment among RM, S&M and CRM.The independent property, small or mid-size hotel brand can start small by working with existing vendors on cross-functional connectivity, or when considering new technology solutions, to evaluate the cross-functional capabilities of the vendors. Hoteliers should ask themselves, "How can we incorporate our digital marketing and CRM data into our pricing decisions? How can we use revenue management analytics to sharpen the focus and ROI of our digital marketing campaigns? How can we utilize our knowledge from our RFM data into our new guest acquisition efforts?"#5 - Revenue optimization ideationThe revenue generation team and its RM, SM and CRM specialists, under the guidance of the revenue officer, should map out an annual revenue strategy, outlining major markets that need focus or improvement, sales, and marketing (seasonal, multichannel, ad hoc) campaigns needed to achieve the revenue goals, etc.Each quarter, the team should brainstorm and come up with an updated action plan for the next three quarters. Every week the team should meet to discuss current property performance - including occupancy, ADR (average daily rate), RevPAR, and revenue needs - and set out concrete tactics to optimize revenue.#6 - Optimization of the marketing mix:An integrated revenue generation team can finally achieve the elusive optimization of the property's marketing mix of price, product, promotion, and place. Only by working together can the team devise the optimum pricing, product offering, and distribution channel strategy that can bring the best results.There should be collaboration when answering questions such as: should we offer the spring multi-channel marketing promotion to the OTAs? How do we tackle next month's occupancy needs due to group cancelation? How do we improve weekend occupancy? Through this collaboration, action plans can be implemented across all revenue-generating channels.#7 - Personalization:Personalization is not only proven to increase bookings and other key performance indicators, consumers now expect hotel offerings, pricing, and content (textual and visual) to be personalized to their needs and preferences. A recent survey by eMarketer showed that 85 percent of internet users expect personalization, and 75 percent of consumers get frustrated when it's clear that companies are not personalizing content (Janrain).The revenue generation team can devise a robust personalization strategy that includes all aspects of the guest journey: from marketing and website engagements, pricing and channel management, personalized offering and pricing based on RFM and customer lifetime or LTV values, to product offerings and CRM retention and loyalty marketing initiatives.#8 - Multi-channel marketingThe revenue generation team should coordinate marketing efforts using a multi-channel marketing approach. With one cohesive marketing campaign, and the same cohesive marketing message (read: promotion) pushed across all potential touch points with online travel consumers (hotel website, SEO, SEM, GDN and online media, social media, PR and email marketing), hoteliers can build stickiness and traction across channels and devices and dramatically increase revenue.Today's complex multi-touch consumer behavior is what makes multi-channel marketing campaigns the most effective way to address concrete business needs, increase reach, and boost bookings and revenue for the slow season or need period.These campaigns can be structured around the property's seasonality as well as specific business-needs (i.e., need to fill weekdays vs. weekends, occupancy needs, group cancelations, seasonal slowdowns, etc.), and also target specific high-value segments.ConclusionThere is no doubt that today's complex travel customer journey requires an integrated strategy to engage, acquire, service, and retain travel consumers across multiple digital touch points and across all digital channels and devices. This necessitates a single-minded team at the property: the revenue generation team, consisting of the RM, S&M and CRM specialists, working together to acquire, engage, and retain guests; optimize performance; and increase revenue, especially direct bookings.There are no perfect solutions in existence today, therefore hoteliers should start with contractual and organizational changes, with close collaboration and alignment of business objectives and marketing plans across revenue generation teams, as well as make use of cross-functional technology solutions available today and invest in new and emerging solutions as they become available.
Article by Stuart Pallister

GDPR: Why Hoteliers Should Take the new EU Regulations Very Seriously

EHL 31 May 2018
New EU rules on data protection - or GDPR - , seven years in the making, come/came into effect on May 25. The advice from IT experts to hoteliers is: take the new rules very seriously or risk heavy fines of up to 20 million euros or four percent of the company's global turnover, whichever is higher.At the recent Young Hoteliers Summit, staged at Ecole hoteliere de Lausanne, Nick Price, CEO of NetSys Technology and CIO of citizenM Hotels, touched on the challenges posed in a keynote address.He said the new General Data Protection Regulation or GDPR was significant as the hospitality industry holds a lot of data which are spread over many different operational systems.In a panel discussion on the future of technology in hospitality after the keynote, he cautioned young hoteliers that their careers in the hospitality industry could end abruptly if they were responsible for a breach.It's criminal law. You can be fined significantly. Understand that the brand will be impacted, not you, the hotel. If your hotel loses some data, you've most likely given access to all your company's data, given how things are interconnected today. Be aware, this is very real.Another panelist, entrepreneur Uli Pillau, founder of tech firm Apaleo, said GDPR wasn't taken seriously enough, as had happened with Payment Card Industry (PCI) compliance. "This is a new topic for the industry and very few people understand what it means. There are big risks with that, but the earlier people take it seriously, the better. And I don't see too many hotel groups and hotels which are really taking it very seriously at this point""Europe has a very different perspective on individual citizens' data than the United States, for example, and these laws are a response to that," Price said during the panel discussion. "You can expect some fairly significant case law established from May when this law becomes enacted Europe-wide and some companies lose this information. With GDPR, European laws will apply and they will fine these companies serious, big money."And his advice to the young hoteliers: "Just sit back and think where customer information is actually held, in which systems in the hotel and how many systems duplicate that information. Imagine how you would collate that knowledge and protect that information in those operational systems, some of which are decades old."Pillau pointed out that legacy systems represent a 'high risk factor'. "The safest way to go is to use token technology which encrypts it entirely, (so that) at the PMS (property management system) or at the hotel level no data is kept which could get outside the systems. I think there are intelligent ways of doing that today."Suzanne Ward, Director of Digital Solutions at Movenpick Hotels & Resorts, noted that not only the data of customers should be protected, but also employee data such as payroll or HR information. "We need to be extremely careful with that sort of data too."Price told Hospitality Insights on the sidelines of the YHS forum that the new rules were 'serious' but would also be beneficial. "This is a good thing as it protects fundamental information about human beings from misuse. We have customers who stay with us and because of the nature of our business as hoteliers, we have to capture information."We have a trusted relationship with these people. They trust us with their safety when they're in our hotels. In order to have that trusted relationship, we have to be able to demonstrate we can protect the information they voluntarily give us and that's quite challenging. But frankly speaking, (the GDPR) should be welcomed by the hotel industry and it's here for a good reason.European governments have recognized, he said, that many companies nowadays are "deriving a lot of value" from the use of customer information."We, as hoteliers, also need to derive value from that information. We need to be part of that same business model," noting that Google and Amazon make money out of personal information and their valuations are 'significant.'Hotel companies should also be able to make money out of the information but in order to do that, they have to be trusted with the information in the first place and they have to give a net beneficial return to the customer that stays with them, which they can do. They're uniquely positioned to do that."But it begins with trust and you can't be trusted as a hotelier by your customer base, if you don't protect really what is in many senses the most valuable data you have, which is the information (you hold) about that customer. So yes, it's a good thing."
Article by Reza Etemad-Sajadi

Restaurant Revenue Management Practices: Altering Customer Perceptions

EHL 8 May 2018
Based on our research, we found that the majority of revenue management practices in the restaurant business are perceived as unfair (see Table 1). Customers though seem to accept price variations between lunch and dinner, as well as cancellations due to late arrivals.The practice which is perceived to be most unfair is the policy based on time spent at the table. Customers seem to completely reject this practice and most of the other practices.Table 1Our findings also showed that the perceived fairness of practices related to lunch/dinner, weekend/weekday and time of day price variations does influence whether customers intend to return to the restaurant in the future.The booking policy of a restaurant also has an impact on customer patronage intention. However, table management and control duration policies do not impact customer patronage intention, even if these practices are perceived unfair.Figure 1As it has taken some time for revenue management practices to become acceptable in the hotel industry, it might take more time for such policies to become acceptable to customers in the restaurant industry. At present it seems they are not yet ready for these practices.Restaurant managers, who want to apply revenue management practices, should be aware of the above findings and seek to 'educate' their clients about the advantages of such practices for themselves. This must be the priority for the company before applying these practices.Restaurateurs should communicate to clients the benefits of these practices via their employees. Indeed, when we talk about service companies, employees who are dealing with customers face-to-face are effectively our best channel of communication. So what are the specific benefits for customers? For example, price variations based on the date of booking can be very useful for clients.Nevertheless, it is the responsibility of the restaurant to make sure that this kind of practice is well understood by clients to create positive word-of-mouth.Another important issue is the profile of restaurant customers.Indeed, we discovered that young people accept better practices related to booking policy and table management than older people. The reason for that stems from the fact that they are more aware of such practices and try to keep a rein on their spending. So, they can see financial benefits for themselves from these practices.Restaurants wanting to adopt revenue management practices should also take into account the profiles of their clients.The bottom line is: applying these practices can only work if they create value for your customers, even before creating value for your restaurant.Access the full study:Are customers ready to accept revenue management practices in the restaurant industry. International Journal of Quality & Reliability Management. Reza Etemad-Sajadi (2018)
Article by Sherif Mamdouh

HITEC Amsterdam 2018: Why I Will Definitely Be Back

EHL 27 April 2018
While I prepared for the conference, I read up on the latest technological innovations, and on startups trying to overthrow OTAs. I read about revenue management and machine learning. Stepping off the plane in Amsterdam, I was confident I had done my homework and was ready to keep up with all the technical conversations I was going to have.Things didn't exactly go as I had planned.After attending the E20X pitch competition, going to dinner with a dozen CIOs and CFOs, and covering a panel discussion on AI and voice recognition, I realized I was not at a geeky tech conference. I was at an international gathering of highly skilled professionals, versed in a myriad of disciplines that directly or indirectly add value to the hospitality industry. This was a place where the common denominators were passion for service, love for human interactions and a genuine openness to the world.It wasn't about tech. It never has been. It was about people.Hospitality is the ultimate people business. This statement is not only valid because hotels have to satisfy their guests. Many of the exhibitors of HITEC Amsterdam expressed concern for the well-being of hotel staff, the environment and the economic welfare of the populations at the destinations. No one was competing. Burgeoning entrepreneurs, young graduates and seasoned businessmen all coalesced with a single wish: to raise the bar of how technology can better serve the hospitality industry.Although I feel women are somewhat underrepresented in the industry, I am hopeful as I see this trend decreasing when we look at the new generation of hospitality managers. For instance, Ecole hoteliere de Lausanne's student base has a slight female majority, and we will definitely see more and more of them taking leading roles in the many exciting changes to come. This was perfectly illustrated by KITRO -- the food waste company that uses AI, created by two female EHL graduates, and ultimately won the Judge's Choice Award at the E20X pitch competition.I will be looking back at the three days I've spent quite fondly. I have met so many interesting people, each with their own past, interests and aspirations and each one has helped me gain insight into the future of hospitality.As long as this spirit lives on, I will be coming back to HITEC in Europe.Sherif Mamdouh is the external communications manager at Ecole hoteliere de Lausanne (EHL) and an official guest blogger for HITEC Amsterdam 2018, which took place 11-13 April 2018 at the RAI Amsterdam Convention Centre in Amsterdam, The Netherlands.
Article by Sherif Mamdouh

AI and Voice Recognition Explored at HITEC Amsterdam

EHL 24 April 2018
I have had the pleasure of a front row seat at a very special panel discussion. The hospitality industry's top tech executives got together at HITEC Amsterdam today to discuss artificial intelligence (AI) and voice recognition. The challenge: to make sense of all of the changes happening in information technology and articulate value-adding solutions for the hospitality industry. How do we turn a land of confusion into a land of opportunity? The panelists had a few secrets to share.The panelists:Jorge Carmona, co-founder, VeovoxGwendolyn Graman, global proposition lead conversational commerce, CapgeminiKees Jacobs, digital proposition lead, CapgeminiHampus Ljunggren, head of strategy, Travel AppealFrank Reeves, co-founder and CEO, AvvioThe Moderator:Ian Millar, senior lecturer, Ecole hoteliere de Lausanne (EHL)Each panelist, through his own experience and colorful storytelling, perfectly exemplified the tremendous potential for an enhanced overall customer journey through technological innovation.Exploring future usages of these promising, yet still untapped, technologies is something that entices a growing number of companies. The required investment (time, training, expenditure) remains however, a major roadblock in the quick adoption of the many tools, products and services being developed.Communication is changing, expectations are changing too, and immediacy has become expected of anyone under the age of 35. If you have a question, you want an answer NOW. If you need room service to bring a toothbrush up to your room, an unanswered call by reception will kill your customer satisfaction.From a conversational point of view, chat bots offer the possibility to cater to this (slightly capricious) expectation that everything must be delivered at the very moment we have an enquiry. Voice recognition is said to greatly enhance the in-room experience. But let's put all the technical stuff to the side for a moment...One of the most interesting ideas, on which all the panelists seemed to agree, was that you can have all the tech in the world, but if you don't reach your customer at an emotional level, you won't make a difference. This statement takes on a whole new dimension when it is made by people who make a living from interacting with emotionless machines."Rational drivers are still too predominant. Emotional drivers need to be further explored and leveraged," said panelist Kees Jacobs of Capgemini. Only then will innovations such as voice recognition make an impact. And when it happens, it will definitely be disruptive.Who cares if we can control our room with our voice, you ask? Well... humans are lazy (yes, you too). Convenience and ease of use have been the root of much of the world's innovation -- ever since that one guy got tired of pulling on raw meat with his teeth, and decided to smash a rock and use its cutting edge (see what I did there?) to cut through those annoying nerves.It's not only about using voice commands for single actions, such as "switch on TV." Yes, you could probably spend fewer calories just pressing the little red button on the remote. Where it gets interesting is when several actions can be initiated by a single voice command. Imagine the command: "computer, I will go and cook now." The oven turns on, the kitchen lights turn on and your favorite cooking music starts playing on the speaker located in the kitchen.Frank Reeves, whose company Avvio uses AI to offer a unique booking journey, agreed and explained that when it comes to booking engines, they all "serve up same experience to everyone." AI effectively allows a company to individually and proactively engage the user, personalize the experience and incorporate said emotional triggers. This is done, he says, by building up users' digital footprints.Overdependence on OTAs can be upset by using AI to directly reach customers with that missing emotional element. It often equates to basically having an online brochure that offers the same experience to a 21-year-old American spring-breaker and a 76-year-old Turkish grandmother. Why cross-sell car rental services to someone who doesn't have a driver's license, for instance? Good use of technology allows you to make the journey more relevant, more engaging. Show your customers you know them and you've thought of how to make their experience unique.Jorge Carmona's voice recognition company Veovox also recognizes the emotional implications of a seamless voice command experience. Preliminary feedback has shown a tenfold decrease in customer complaints. This is not only good for the sake of increasing customer satisfaction. Getting back to the psychology of it all, we can see that bad voice recognition increases frustration. Frustration raises anxiety, and anxiety is a big deterrent when it comes to spending. So bye-bye to cross-selling and up-selling. Gwendolyn Graman of Capgemini echoed this strong customer-centricity as well. "Focus on the customer. IoT and conversational interfaces must be used to better understand the customer's wishes and offer concrete assistance," she said.It turns out AI and machine learning isn't only good to "stalk" your customers. It's also good for "self-stalking." Hampus Ljunggren, head of strategy for Travel Appeal explained how he uses big data to help hotels adapt to risks and opportunities almost in real-time by "scrapping all available public data relevant to the hotel and its surroundings, identifying patterns and making them actionable through daily recommendations to the hotels." This can help with things such as pricing, cultural specificities of certain guests, or any other touchpoint where a potential improvement has been identified."Voice is also an interesting way to identify someone. Recognizing the speaker offers the possibility of tailoring the answers given by the voice recognition device.None of the panelists seemed too worried about data privacy issues and agreed that people have become used to sharing their personal information, especially younger generations. In fact, millennials expect to have their personal data used to improve their experience. The underlying tacit agreement is therefore, "I give you my personal info, and you make my life easier."AI could create a far better, overall human experience. As a hotelier, if you know what flight your guest is arriving on, send him a WhatsApp message asking if he would like an early check-in (we all hate those 15:00 check-ins!) or if he would rather book a massage while he waits for his room to become available.Exceeding the customer's expectation is when you really start tapping into the emotional side of things. And it's a win-win: you gain legitimacy for cross-selling or up-selling, and the customer is proactively provided with solutions to problems he didn't even know had a solution.Sherif Mamdouh is the external communications manager at Ecole hoteliere de Lausanne (EHL) and an official guest blogger for HITEC Amsterdam 2018, which took place 11-13 April 2018 at the RAI Amsterdam Convention Centre in Amsterdam, The Netherlands.
Article by David Gabriele

The Evolution of the Booking Journey

EHL 22 March 2018
We've all done it...We've all stayed at a beautiful hotel, visited an amazing destination, or eaten delicious food at a first-class restaurant. We've also taken great pleasure in telling our friends and family about our experiences. That is to say, we have become influencers or trusted brand ambassadors.hConversely, we've also asked for, and received, recommendations from our friends and family, and acted upon these recommendations. In other words, we have been influenced by people we regard as trusted influencers.This, as we know, is word-of-mouth, however it is offline and unscalable.Every hospitality business seeks this positive feedback as it enables them to grow organically.Nowadays, word-of-mouth is digital via social media and scalable, giving hoteliers a huge opportunity to showcase their properties in an authentic way and reach hundreds of thousands of potential customers via their mobiles.InterContinental Hotels Group stated recently that "mobile will account for 40 percent of online travel sales by 2020". According to McKinsey, one in every four consumers also uses social media to make purchasing decisions.What we're seeing is the evolution of three key pillars. Firstly, consumer behavior related to the purchase journey. Secondly, the way consumers interact with hospitality businesses through mobiles and, thirdly, customer loyalty dynamics. Hoteliers must now sit up and take note, or ignore this at their peril.If we take the issue of loyalty, some hotels are under the illusion that loyalty starts when the customer checks in. This is no longer the case, given the changing dynamics of the three pillars mentioned above. By using digital influencers, hoteliers have the opportunity to build loyalty before guests even come to stay. You can do this because the images shared by influencers evoke emotion and desire, so at the point when the potential customer starts looking for a hotel, your property should be the first they go to.The key takeaway is simple. Hoteliers can begin building loyalty even when guests are planning their next trip and so can potentially negate the influence of the competition before the booking stage.So, what exactly is a travel influencer?Travel influencers are highly engaged, trusted individuals, who travel around the world showcasing their adventures and experiences via social media. This includes promoting the properties they stay in and where they eat.Their posts normally tag the property's social media accounts (the most important for hotels now being Instagram), so their followers can easily find your hotel's page, which would include direct links to your property's website.Why is Instagram the most important platform for hoteliers?Instagram is the fastest-growing social media platform to date, with over 800 million active monthly users and it's growing by 100 million new users every six months.Some 60 percent of online adults have an Instagram account. Around 32 percent of teenagers consider Instagram to be their most important social media network. These are our future customers.These statistics speak for themselves. However, there is one in particular that is most compelling, and stands above all others. That is, how many of those 800 million users use Instagram in their purchasing journeys. In March 2017, more than 120 million Instagram users visited a website, got directions, called, emailed, or sent a direct message to learn about a product or service.Leisure travel purchase decisions are based on emotion. Beautiful images evoke emotion and the human brain processes them 60,000 times faster than text.Benefits to hotelsConsumers are looking to have everything at their fingertips and, as we all know, online travel agencies or OTAs have capitalized on this. Now a potential customer is just a few clicks away from making a booking via an app.It's another room sold, but the OTAs take 15-20 percent in commission and that affects the hotel's bottom line.The loss in revenue doesn't stop there as it is very difficult for the reception team then to upsell and cross-sell, reducing potential revenue still further.Our clients tell us that a direct booking increases profitability by 18 percent on average, hence the need to by-pass the OTAs.That said, OTAs are here to stay. However that doesn't mean hoteliers can't use consumer behavior and technology to their own advantage. By building online relationships with potential customers through the use of influencers and then keeping those prospective customers engaged can pay dividends.We must stress though, it is enormously important to communicate regularly with your new followers to maintain loyalty and maximize return on investment (ROI). By doing this, hotels can enjoy the benefit of the long-tail effect. This means that as long as the prospective customer keeps following the hotel's social media and online accounts, the hotel can market to them indefinitely for free.In terms of timescale, this is a marathon, not a sprint. So consistent engagement with the most relevant influencers in order to embrace the power of recall marketing is fundamental.This is what the Marriott's former Vice President of Global Creative and Content Marketing, David Beebe, has to say on the subject. "Influencer Marketing is here to stay and it should play a central role in your strategy to win the hearts, minds, and wallets of consumers."
Article by Meng-Mei Chen

Marketing Trends in Hospitality: from Technology to Niches

EHL 13 February 2018
Certainly, Google's footprint in the travel ecosystem is expanding. Depending on hoteliers' digital marketing competencies and budgets, some hoteliers will leverage Google to increase brand awareness and gain bookings. Nevertheless, Google is not free and serves as another paid channel for hoteliers. Given the dominance in the market of Google and the major OTAs, hoteliers will find it even more expensive and difficult to reach travellers. Discussions about the cost of customer acquisition may switch from 'between OTAs and hotels' to 'between hotel brands and hotel owners'.In the past, such discussions focused on the commission charged by OTAs and hotels sought to lure customers with discounts to book with them directly. The logic of offering member discounts is simple. As long as the cost of such discounts is less than the OTA commission, it's better to encourage customers to book directly. Yet, recently, there have been discussions about the potential conflicts of interest between the hotel owner and the hotel brand. For example, whether a room is sold via an OTA website or the brand's own website, the owner will be charged royalty fees by the hotel brand, along with marketing fees, reservation and transaction fees.As hotel brands provide technology infrastructure and services to facilitate bookings, they should be compensated. On the other hand, the costs associated with offering member or loyalty discounts and marketing campaigns to encourage customers to book direct may be a different story.Do these marketing campaigns benefit hotel owners to the same extent as hotel brands? Could hotel owners and brands find better use for this money? This will be a key talking point in 2018.Special purpose hotels, anyone?Competing for customers and luring them from one distribution channel to another (from indirect channels to direct ones, or from an expensive channel to a cheaper one) will become even harder. Maybe hoteliers should invest their resources on identifying and developing niche markets.In the coming years, the hotel industry will continue to develop 'special purpose hotels' and niche markets. For example, I Hotel in Taiwan has become the hotel of choice for gamers as it offers a variety of bed combinations (such as four beds to a room) and stations for teams to compete, with the possibility of projecting games onto a large screen. In Japan, the Hotel Cycle is aiming for cyclists, as it has on-site bike shops for repairs and offers cyclists grab and go food options so they don't have to get off their bikes. I can imagine yoga hotels offering a range of options for yoga lovers to improve their skills and meet other yoga devotees. An art hotel could host different artists as speaker and provide lessons to improve artistic ability or art appreciation sessions. The possibilities may only be limited by our imagination.Certainly hotels are already offering yoga lessons and art exhibitions, but treat them as complementary services rather than major attractions. In future, these services, if properly planned and managed, could become the main reason why travelers and local residents choose to visit a particular hotel.To gain a competitive advantage, hoteliers will need to identify niche markets, develop their competencies and transform themselves into special purpose hotels. Going one step beyond targeting niche segments, hotels could increasingly focus on hobbies and interests to differentiate themselves, as these become key selection criteria for travelers.

Study: 31 Percent Of Restaurateurs Use Digital Technologies - A High Potential

EHL 13 September 2017
LAUSANNE, Switzerland --- A study by the METRO Chair of Innovation at the Ecole hoteliere de Lausanne (EHL) analyses use of digital solutions in the hospitality industry.- Currently about one third of the restaurant operators in Germany, France, Italy and Spain use digital technologies to facilitate their business processes.- The hospitality sector thus offers a high potential for digital solutions. 46 percent of the respondents rate technology as important or very important, 15 percent plan investments.- METRO AG supports its HoReCa customers in growing their success through digital innovations.The first study of the METRO Chair of Innovation takes a look behind the scenes of the hospitality sector and offers new insights on the use of technology in the restaurant industry in Germany, France, Italy and Spain. How do restaurants use digital solutions - or why do they refrain from using them, what are their demands? And why is it worth to drive digitization in an industry that is still largely operating in the analogue world? Now we have the answers.What does a steak on the menu have to do with digitization? Much more than one would expect, i.e. when the restaurant operator can focus on his core business, e.g. on preparing and serving a good steak, while state-of-the-art technologies facilitate or even completely take over other tasks related to his business. But, do restaurant owners in Europe actually want to be assisted by digital solutions? How are restaurateurs using technologies, which barriers need to be overcome and which processes in restaurants can be improved by means of digital solutions?The new study by METRO AG and the Swiss hotel management school EHL provides useful information. They joined forces under the METRO Chair of Innovation to investigate the digital future of the restaurant industry. "We conducted a quantitative survey in order to analyze the level of digitization in the restaurant industry. Indeed, it is essential to understand the situation before being able to identify solutions. This is why the METRO Chair of Innovation at EHL has undertaken this study which brings concrete recommendations to restaurant owners, with the intent to help them face their three main challenges: attract new customers, meet their clients' needs and manage their costs", says Professor Christine Demen Meier, head of the METRO Chair of Innovation.Great potential for technological supportIn the first study conducted by the METRO Chair of Innovation, 2,746 independent restaurateurs in Germany, France, Italy and Spain were surveyed. The result: 31 percent of the restaurant owners already use technologies at an intermediate and high level. 46 percent - that is almost half of the respondents - are open to the use of digital technologies, 15 percent are even planning concrete investments. The main reasons for the four countries which keep the restaurant operators from investing into digital support are lack of priority, high costs and development strategy.More success for METRO customers from the hospitality industryOlaf Koch, Chairman of the Management Board of METRO AG, explains why his company wants to support the European restaurant industry. "Our goal is nothing less than the digitization of the hospitality industry. We are convinced that especially for small and medium-sized businesses, this will create substantial opportunities to become even more successful. We are talking about two million businesses in Europe generating around EUR400 billion in sales. If we help to digitize ten percent of these companies in the long-term perspective, we can make a substantial contribution to transforming the industry".If its customers are successful, this will also benefit METRO AG. "By building up digital competence, we want to further consolidate our position as a strong and trustful partner in the hospitality sector", says Koch.A wealth of ideas for digital innovationsA vast number of innovations to enhance productivity, service and competitiveness in the hospitality sector and intensify customer relationships are already available today. METRO AG has taken on the task of supporting the digitization of restaurant businesses, which constitute one of the key customer groups of this B2B company as their partner. To this end, the wholesale and food specialist created a new business unit and launched an accelerator program promoting start-ups for the third consecutive year in 2017.The business unit HoReCa Digital brings innovative technologies that improve the business processes and customer relations management of small and medium-sized hotels, restaurants and catering businesses to market maturity. The METRO Accelerator for Hospitality supports the matching innovations by leading selected start-ups from all over the world to success.The new study - and those that will follow - creates the foundation for achieving this goal as fast and purposeful as possible. Going forward will enable European restaurant owners to focus on what is really important to them: their core business.METRO is a leading international specialist in wholesale and food retail. The company operates in 35 countries and employs more than 150,000 people worldwide. In financial year 2015/16, METRO generated sales of around EUR37 billion. The company provides custom solutions to meet the regional and international needs of its wholesale and retail customers. With its sales brands METRO/MAKRO Cash & Carry and Real as well as delivery services and digitization initiatives METRO sets the standards for tomorrow: for customer focus, digital solutions and sustainable business models. More information at www.metroag.de.
Article by Cindy Heo

Revenue management: Using data integration to move from tactics to strategy

EHL 20 July 2017
As the practice of revenue management continues to evolve, industry professionals should increasingly look to use their RM systems and processes strategically and move away from tactical operations. Integrating data from the various systems and resources is an important first step.Revenue management used to focus primarily on setting room prices and optimizing room inventory. The revenue manager's main job was to analyze data to recognize trends and make pricing and inventory management decisions. Over the last ten years, due to technological advances, the scope of RM has expanded as traditional hotel revenue management practice became much more complex, while offering new approaches to enhance hotel revenue. Today, revenue management strategy goes beyond pricing and inventory management, and revenue managers should look for new ways to optimize revenue growth and profitability. Although more advanced revenue management systems (RMS) have been developed over the years, with the aim of analyzing performance and forecasting demand, demand patterns have become much more unpredictable, while increasingly dependent on numerous external factors. Successful revenue management strategy starts with a clear understanding of the guests and market demand dynamics. Revenue managers should not just crunch RMS numbers but need to understand guests' selection behavior, consumer psychology and their competitors' strategies by analyzing various pieces of information.RMS cannot, therefore, be the only toolkit for a revenue manager, because customer data reside in different hotel systems. RMS should be integrated first with the property management system (PMS) to take into account the entire booking information, analytics, and reporting functions, as well as with other internal systems such as the central reservation system (CRS), point of sale (POS), the customer relationship management (CRM) system, competitive rate shopping software, channel management tools, the hotel's own website, and various social media channels.User-generated content is one way of learning about the guests' needs and wants. By analyzing such content, revenue managers can identify their competitive advantage from the guest's perspective and update their rate fence structure accordingly.Moreover, external resources can help revenue managers in their decision-making. It is essential for revenue managers to broaden their view of their market by incorporating external market data in their planning to make sure their RM strategies correspond with market demand. Data supply services like STR and HotStats offer reports on hotel performance metrics and trends, as well as supply and demand analysis, market segmentation, and supply pipeline reports.Some distribution partners also offer useful tools for revenue managers. For example, Expedia's Rev+ helps hotels gauge their rates against competitors over the course of 90 days and alerts hotels to changes to rates over the course of the last 24 hours. Hotels can keep track of up to 20 competitors operating in their area and averages for the lowest rates are displayed in calendar form. Further, a forecasting tool helps hotels view demand for markets based on data captured across the portfolio of Expedia brand. These external systems and resources provide valuable data analytics that offer visibility into a specific area of a hotel's positioning or market performance, relative to their competitors or even the entire market.Effective revenue management strategy depends on integrated information to ensure revenue managers can react quickly when they need to. Thus, combining data from various systems and sources is an important issue, because RMS cannot exist as a standalone application. However, the different systems used by hotels do not always share all the transactional data because hotels typically acquire different systems at different times from different vendors.Data integration is the process of identifying ways to bring data from disparate sources and combine them in a unified way to produce meaningful insights. This task, in itself, is not at all easy. It is the first challenge revenue managers face in connecting their different systems so that they work together and allow for seamless data transfer. Vivek Bhogaraju, director of global strategic alliances and initiatives at IDeaS Revenue Solutions, says "without better systems integration, companies may be missing opportunities to mine customer data for insights they can use to target guests with customized offers."Another challenge is turning all data into valuable, new insights. Information is powerful only if you can access and analyze it properly. Competent revenue managers should be able to pose the right questions and find answers through the careful interpretation of data and by providing actionable recommendations to all departments. To this end, revenue managers should be capable of communicating their analysis and strategy to all stakeholders in their hotels and then adjust their strategy based on feedback from the stakeholders.Without capable revenue management professionals, sophisticated systems and data are no longer useful. Organizational structures also need to be reformed to promote teamwork and collaboration across departments and the revenue management director should report directly to the hotel's general manager. Mike Chuma, vice president of product strategy for IDeaS, says too many revenue management teams still remain siloed and calls for RM teams to work closely with sales, marketing, F&B, and event teams.From a revenue management perspective, not all guests are equal. Some guests may only make use of the hotel rooms but not the other facilities, while others may spend hundreds of dollars on F&B, leisure facilities, and spa treatments. Identifying those guests with a higher value to a hotel in the long run is extremely important in today's market. In order to maximize long-term profits, hotels need to increase guests' spending by satisfying their expectations and encouraging repeat visits. An increased amount of data does not automatically lead to better revenue management decisions but it should lead to more opportunities.
Article by Stuart Pallister

Disruptive innovation? What disruptive innovation?

EHL 2 June 2017
The hotel room of the future is likely to be a combination of the high-tech and high-touch. EHL's YU Virtual video highlights the former, with virtual reality creating the ambiance we want in our hotel room. And what then of artificial intelligence (AI) and robots? What role will they play in hospitality?EHL's prestigious International Advisory Board (IAB) met recently in Lausanne to discuss disruptive innovation in hospitality and education. In a panel discussion on the topic 'Leading through disruption', Wilhelm Konrad Weber, a partner at Swiss Hospitality Solutions, said technology is definitely driving the hospitality industry but it also poses a threat "because hoteliers are not necessarily early adopters." The internet came along, he said, but hotels failed to build the best online booking engines. The online travel agencies or OTAs moved into the space, leaving hoteliers lagging behind.The industry has become fragmented, he continued, with customers having far more choice than they had previously. Consequently, there's "a lot less loyalty.""Most of the guests using our properties are much more savvy in the use of technology ... than us actually providing it. So that's probably going to keep us challenged."Disruption in hospitality has, by and large, come from outside the industry - whether in terms of the OTAs and alternative accommodation platforms - although, one rental site, HouseTrip was set up by two EHL alumni, Arnaud and Junjun Chen Bertrand (AEHL, 2008) who were both panelists at the IAB session. (The digital platform was sold to TripAdvisor in April 2016 after raising some $60 million in funding).Arnaud Bertrand candidly stated during the panel discussion that he would have preferred to have taken the start-up to an IPO (initial public offering) but admitted they had made many mistakes along the way ("probably every mistake we could make, we made")."I don't have any regrets," says Arnaud Bertrand, adding that they had learnt "an enormous amount" from the HouseTrip experience. "Were I to do it again, I would do everything differently and that's why we're creating a new start-up (the virtual reality dating platform, LovInVR) to try to be even better this time."Weber says that although Accor has been "bold", listed hotel companies are having to meet the expectations of analysts, investors and journalists, so innovation in hospitality tends to be evolutionary ("something that everyone expects you to do") rather than revolutionary and disruptive ("something nobody expected you to do.")"What we're lacking in these big companies is this revolutionary thinking, this radical change," he says, adding that "the reason we're lacking it is because it's very tough at the C-level' and few are prepared to risk "doing something crazy."Artificial intelligence is at the core of tech firm Afiniti, whose chairman and CEO is Zia Chishti. Afiniti sifts through publicly-available data, using AI, to pair customers with call center agents to maximize sales. "The AI-ness of what we do is around behavioral prediction for both customers as well as for internal agents. And then the construction of a prediction of behavior between the two. So that's at the heart of what we do."The venture is on course for an IPO ("this one will probably go out somewhere between $5-10 billion into the public market ... having said that, I've been incorrect in my prediction evaluation every time I've made such a prediction") but Chishti calls himself a disruption and AI cynic."I think disruptions have actually slowed, if not completely stopped over the last 10 years." The internet as an 'information retrieval and exchange system' and the smartphone have been "somewhat derivative" and have not made us any healthier or happier, he says, whereas antibiotics and motorways have had a profound effect on "human lifespans, levels of income and how societies function.""There's a perception that AI will change everything but it's not like that. AI is just a set of statistical tools and various incarnations of this have existed for the last 40 or 50 years. It's just that the machines in which these tools run have become somewhat more advanced and more powerful over the years, but this is not a seismic shift. There's no dramatic and disruptive event happening here. It's just the slow and steady emergence of a technology that's been around for quite a while."Robots have already appeared in some hotels, particularly in Japan. Suggest to Chishti, however, that robots may end up having a major impact on society as fewer people would be working anymore, and his response is "that's not going to happen.""If you take all of the computational capacity that exists in the whole world today - every single smartphone, mainframe, supercomputer, every single PC and you put it all together - it's approximately equal to the brain power of a dog. That's an extraordinary figure if you think about it. The best estimate for the entire computational capacity in the whole world, approaching that of a human brain is five to seven years out. The best estimate for a single machine approaching human level intelligence is north of 30 years out. And the cynical view ... I bet, it's north of 50 years out.""What is more likely to happen is a re-distribution of work. So in many cases AI actually enhances human labor productivity and should increase labor demand. There are some areas where the increasing power of computational systems in AI will absorb labor capacity but it'll do so in a manner that enables rather than destroys.""Symbolic systems are maybe 100 years out to compete. And between here and there - and the hospitality industry is part of it - we create a magical experience that borders on art and borders on beauty that enable our customers to come back. That just doesn't get replicated by machines. The twinkle in the eye that a waiter has when they serve a particularly delightful meal will not be replicated by machines in the next 30-50 years, so I wouldn't worry about it."Weber of Swiss Hospitality Solutions says he gets somewhat nervous "if somebody is talking down AI." Citing the MIT online experiment, Moral Machine, he adds that artificial intelligence, built into self-driving cars, may have to make life and death decisions on the roads. "It's not like the big hype that ... there will be no doctors anymore, but I think it's going to impact us a little bit more than revealed."For an entrepreneur like Arnaud Bertrand, self-driving cars could have a massive impact on the hospitality industry if the automobile becomes a de-facto mobile hotel room. "If you don't drive the car anymore, what do you do inside it? You entertain yourself, you work, you sleep, when you travel. Sounds familiar? Where do you normally do that? In a hotel room, right?"Should AI have a bigger impact as we move towards a leisure society, we would likely have more time to engage in continuous learning activities. For Jean-Marc Tasseto, the co-founder of Coorpacademy and a former senior Google executive in France, there will be a shift from professors reading out research articles in a lecture theatre to a 'blended' learning approach which integrates digital teaching elements. Tasseto, who sees himself more as a 'marketing guy' than a disruptor, says the continuous learning market may be worth some 150 billion dollars, with e-learning possibly worth around 15 billion dollars. Education, he says, has still to be disrupted, perhaps with the emergence of a major tech firm like Google, but this time with an education focus. The potential is huge; so Tasseto's advice is, "invest in education."
Article by Carlos Martin-Rios

Disruptive innovation in hospitality: Are we there yet?

EHL 1 June 2017
The term 'disruption' is widely used by the media to denote a form of breakthrough that takes place in rapidly-changing markets. It can mean different things to different people, along a continuum from incremental change to radical transformation. According to conventional wisdom, a provocative marketing campaign may be seen as 'disruptive' as an affordable-luxury hotel concept with shared bathrooms.What disruption means to academics - and some business leaders who have been influenced by the theories of Harvard professor Clayton Christensen - is somewhat different. According to Christensen's well-known (and oftentimes misused) theory, disruption describes a process whereby relatively small companies with few resources are able to successfully challenge, often to the point of up-ending, incumbent businesses. Disruptive innovations are however differentiated from sustaining innovations. The former originate either in low-end markets or new-market footholds, whereas the latter make good products better. As such, there are few innovations that can truly be labelled 'disruptive'. Yet, few terms have so affected the collective psyche that companies in virtually every industry now seem to face constant disruptive innovation.But the fear or hope of emerging disruption is exaggerated and misleading. For example, Christensen argues that Uber does not qualify as a genuinely disruptive company as it didn't originate either as a low-end opportunity or in a new market, primarily targeting non-consumers. In an article published a year ago, I made a similar claim about Airbnb. Yes, Airbnb's sustaining innovation effectively capitalizes on improving the efficiency of the system -- in a dishonest way, some would argue -- but it will not break the established industry's rules anytime soon. Rather, as my colleague, Professor Cindy Heo contends, Airbnb will develop into another major player in the industry.Self-driving cars will be truly disruptive for the automobile industry if they are aligned with their developers' ultimate goal: that consumers will no longer need to have their own personal car anymore.What is then a potential disruptive innovation in hospitality? No one has a crystal ball and is able to predict the future with any accuracy, so we must rely on intuition to forecast possible ways in which the hospitality sector may open up or see a fundamental change in the way hospitality is delivered to customers. Consider these two examples:3-D printers: Hotels 'printed' using concrete will open up a new field for hotel/temporary housing development, valuation and real estate. Using the currently-available technology, a San Francisco-based start-up, Apis Cor, can 3-D print a hotel in one day. 3-D printing of buildings will allow accommodation hosting opportunities to develop and disappear very quickly in new areas, according to changing destination popularity, or to extend capacity following a surge of visitors, for example.Virtual reality: headsets or physical spaces will change the very notion of tourism. We will virtually travel not only to places, but in time as well. As another colleague, senior lecturer Remy Rein, commented to me recently: why would we physically travel to 21st century Rome, if we can 'virtually' visit Rome in the 1stcentury BC and experience 'real-time' how the Colosseum was built?
Article by Stuart Pallister

The hotel room of the future

EHL 30 May 2017
Nowadays, we have wi-fi, a telephone and probably a flat-screen TV. But as hotel guests become increasingly tech-savvy, they are likely to expect to have the latest technology on hand.According to EHL strategy professor Achim Schmitt, hotel rooms all seem pretty similar these days: they have a bed, a bathroom, a TV and a small desk. However, he says, "hotel rooms are back as a source of strategic capability. Equipped with high-tech features and devices, hotel rooms slowly define the way we enjoy our stay.""Under increasing cost pressures and the need for differentiation, hotel operators explore how technology cannot only help them streamline operations but also deliver a highly personalized and experience-driven environment."For Cindy Heo, an assistant professor in revenue management at EHL, technology is critical for attracting hotel guests and building brand loyalty. "My research has found that specific room amenities affect guests' willingness to pay for rooms, which shows that hotels should use such room amenities to generate revenue, rather than these being given away as complementary elements.""Since flat-screen TVs and wi-fi are now standard in most properties, hotels must try to differentiate themselves by focusing on outstanding service and unique amenities," she says. "Gesture-controlled interactive walls, the internet of things (IoT), and virtual reality are only a few examples. Your hotel rooms should embrace the future to surprise and delight your guests."However, she points out that hoteliers also have to take into consideration the return on investment from new technologies and whether these can really enhance the customers' experience, as well as improve operational efficiency. "So hotels need to think whether it's really the right technology for them. And as for simplicity, the hotel room may look simpler, but it doesn't mean the hotel service will be simpler."Heo is somewhat skeptical about the prospect of VR becoming reality in hotel rooms, even though it might make sense in spas which may not enjoy great views or a soothing ambience. "When we talk about tourists, they're already outside their routine life. They're already in the place they like to stay, so I feel that virtual reality doesn't really enhance the customers' experience. However (as for) artificial intelligence, it depends on how it's used, but currently I don't think there's such a system which is able to respond to customers' demands."Technology has to be aligned with the overall hotel's strategic positioning in order to allow hotel rooms to deliver user-friendly and customer-centric service solutions, says Schmitt, adding that these in turn will then support the hotel's overall market performance."If a hotel room supports a certain type of positioning of a hotel in the market, then this is a good hotel room. So whether or not it should be high-touch or high-tech, I think it should be both in supporting the service positioning and service delivery of the hotel room."EHL assistant professor Prashant Das writes:The traditional form of hospitality will change, for sure. The only question is, how drastically? While traditional, brick-and-mortar hotel rooms are likely to continue to play an important role in the hospitality sector, their market share may dwindle over time, given the emergence of alternative accommodation.In my imagination, the hotel room of 2033 is somewhat "fantastic", but who says we won't go "Back to the Future?" Companies are experimenting with cars that can drive themselves, robots to keep us entertained, and taxis which may soon be able to fly. An alumnus from my college in India is now running a company which plans to offer return-trips to the moon. Fantasy is now getting real.I personally see the hotel of the future as a portable device rather than a static, brick-and-mortar asset. For personnel who are too busy to travel or for the physically-disabled, the hotel room of the future could serve as simulated real estate that provides sensory experiences almost comparable to any remote location.If a surgeon can operate on a patient remotely, why can't business partners shake hands like that? Virtual touch has been a topic of research at MIT and Stanford for a while now. People at some Japanese universities are working on virtual smell and even virtual taste. As these technologies develop and become more accessible for commercial use, the virtual hotel of the future will become an enabler. It could offer a comprehensive sensory experience to those who cannot imagine enjoying them today. Yet, the core success-drivers will stay broadly unaltered: service, quality, ambience and infrastructure.Dr Achim Schmitt is Associate Dean of Graduate Programs at EHL and is an Associate Professor of Strategy. He will also teach on the school's new online MBA in Hospitality program.Dr Cindy (Yoonjoung) Heo is an Assistant Professor in Revenue Management at EHL. She will also be teaching on the MBA in Hospitality program.Dr Prashant Das is an Assistant Professor of Real Estate Finance at EHL.

Does the Guest of the Future want High Tech or High Touch?

EHL 19 April 2017
By 2030, multiple changes will occur and will influence the hospitality industry due to globalisation, one of them being a shift of market power. In the fourth thesis of the Lausanne Report, EHL - in cooperation with hospitality experts - discuss this trend that will disrupt the industry depending on the economic stages of a market and its geographical position.#4 THE EMOTIONAL EXPERIENCEThe main challenge of hospitality managers of the future is to improve guest experience, which involves perceptions and emotions. Customers may react in many different ways and the experience must therefore be carefully thought of and created. In a high tech world, people are longing for balance. The answer to high tech is high touch - that is emotions.SCENARIO A: HIGH TECH SHAPES GUEST EXPERIENCEThe age of intelligent interaction between humans and machines started due to technology. This convergence is also known as the "second economy" or "third wave". It is expected that high tech will take control over the next 20 years to come.Here are some key High Tech rationales:The "second economy", which is based on the Internet of Things (IoT), is the key element to enable the digitalisation of the overall economyA higher vertical and horizontal integration of the supply chain will be possible as a result of the "second economy"IoT will create physical devices, sensors and processors "intelligent", which will be based on CIBPs - Customer Integrated Business ProcessesSCENARIO B: HIGH TOUCH DEFINES EMOTIONSIt is a fact that technology is taking a big part in our lives, but guests still search for authencity and human interaction. High Tech might not fully satisfy visitors without a touch of emotions.Here are some key High Touch rationales:The ability of tracking and predicting emotions will be the key success factor for a hospitality businessThe way people act, live, and behave is significantly influenced by their emotionsHumans are not rational decision-makers, but are instead influenced by their emotions, which can constantly changeBeing holistically appreciated is part of a guest experience, as customers feel the need to see that hoteliers know their desiresand moodsStaff need to be "Stage directors" in order to provide their guests an unforgettable experienceAre you impatient to discover the full report? Order it now!LET'S CO-EXISTIn guest relations, dealing with emotions is more problematic and challenging than not being able to offer the lowest price. A hotel's ability to stimulate emotions puts it into a position of power and therefore of responsibility. To fulfill their promise, brands have to offer their guests authenticity ,and sustainable and consistent services. New technology-enabled services have to be used in a reasonable and non-manipulative manner to deliver a real added value. The new <<emotional transparency>> based on big data will also provide sensitive data that guests do not want to be disclosed and used for analytics as they touch privacy. The selection of data will be a challenge. Even if today it is widely accepted that privacy is no longer an issue, there will be a counter trend. Guests will change their minds during their different stages of life and insist on the protection of their privacy.
Article by Jonathan Humphries

Seeking solutions to increase hotel profitability

EHL 30 March 2017
Those are some of the questions we posed at a hotel ROI breakout session at the International Hotel Investment Forum (IHIF) in Berlin earlier this month, with the aim of drawing out solutions from the panelists taking part.Recent trends show RevPAR (revenue per available room) has been on the rise despite terror attacks and the global financial crisis, while global gross operating profit performance has declined across many markets. Since 2000, according to data from HotStats, improvements in gross operating profit per available room (GOPPAR) across a significant sample of hotels in the UK, have dramatically lagged behind gains in TrevPAR (total revenue per available room).Putting this into context, Jonathan Langston, co-founder of Hotstats, said this showed "how driven we are to focus on profit conversion as a key performance measure of the hotel industry. RevPAR tends to flatter to deceive because it doesn't tend to take into account rises in OTA costs.""Looking forward I suppose where we don't see much yield compression coming through to increase values, the only way to enhance value for owners and create more of an alignment between operators and owners is to extract more profit out of the business, to drive the bottom line, absent any yield compression and rising capital values."The reasons for the declining gross profits are many, ranging from the OTAs increasing their share of the business to wage increases, and ultimately a more complex and competitive operating landscape. In the lively session, we discussed what could be done to reverse the trend. The panelists identified the following possible solutions:Michael McCartan, Managing Director (EMEA) of Duetto, proposed creating customized pricing packages for every single guest, for every single stay. ("Undifferentiated discounts are not driving loyalty, they're diluting revenue in my opinion. What hotels need to do is understand their guests better ... [and offer] a price that's unique to them.")Max Luscher, Managing Director of B&B Hotels Germany, suggested selective outsourcing where service, quality and also costs could be maintained. ("We're very reluctant to outsource ... Partners let you down and quality is not where it needs to be.")Jonathan Langston of HotStats recommended the use of benchmarking and key performance indicators (KPIs) to identify positive operating trends to communicate best practices for improvement. ("Where I think the industry has dropped the ball a bit ... is to recognize that the data technology is there, the data exists. Open your minds to what exits and use it in proper benchmarking techniques as - dare I say - more sophisticated industries have [done] in order to improve your margins.")Stephen Cassidy, Senior Vice President and Managing Director of Hilton Worldwide for the UK and Ireland, suggested creating centers of excellence, in areas such as revenue management, collaborating in offsite, shared locations. ("Attracting and retaining talent is critical. The point of differentiation with the OTAs and some of the other disruptors is that we're a people business serving people. And therefore talent has to be at the front and center of everything we do in attracting and retaining it").Ken McLaren, Executive Vice President, International Operations at Interstate Hotels and Resorts, proposed instilling a culture of owner profit-driven focus on the business with every operational employee. ("It's all about expertise. I think if we're going to counter some of these trends, some of these challenges in our margins and ROI, it's all about expertise and where you focus that expertise."]Carl Oldsberg, Vice President, International Operations with Choice Hotels, suggested that owners' interests should be balanced through transparent distribution costs and the selective use of performance measures. ("I would hate to be an independent hotel today to have to manage distribution, technology and the loyalty program. There's no way you can keep up with that environment.")Overall there should be a focus on creating solutions to maximize profitability, therefore alignment with the interests of owners is absolutely key.As an industry, it was agreed we need to stay relevant. Given the challenges we face today, we have two choices: 1) do nothing; or 2) do something different. If we do nothing, we will be unable to reverse the trends; however if we do something different, we have a chance to be more profitable, survive as an industry and of success.
Article by Cindy Heo

Revenue management: Capturing untapped potential

EHL 27 February 2017
Industry practitioners and revenue management (RM) educators, meeting recently in Orlando in the U.S., are in agreement: there is a great shortage of well-qualified revenue managers. Competent revenue managers should be not only able to use data analytics to predict customer behavior and proactively formulate RM and pricing strategy, but they should also possess the necessary communication, decision-making and leadership skills required to help companies to maximize revenue.The list of corporates taking part in the Orlando RevMe workshop was impressive: Disney; SeaWorld Parks; IDeaS Revenue Solutions; Delaware North; STR; and Hard Rock International. Among the items on the agenda: dynamic pricing; bridging the gap between technology and people; and education, skills and behavioral traits that make great revenue managers.Today's RM practice is evolving from the traditional rooms-revenue model towards a total revenue management approach. Under the traditional model, hotel revenue management has focused largely on rooms. However, revenue management principles can be applied to operational areas beyond just rooms. At its core, total hotel revenue management brings together and optimizes all revenue streams, as opposed to thinking of each department separately. Thus, a more holistic approach to revenue management is needed to identify revenue-generating opportunities, and optimize revenue and profit generation.The move to total revenue management involves a shift from a tactical, short-term focus to a more strategic, long-term view. Total revenue management relates to capturing mostly untapped revenue and profit potential, associated with hotels' non-room revenue-generating centers. Some hotel chains are already expanding revenue management practices to F&B outlets and/or the function rooms.As for 'integrated' hotel resorts, the casino industry also offers specialized hotel room rates, based on the guests' 'value', by analyzing their gaming and spending behavior.While the evolution of revenue management presents many opportunities for today's revenue leaders, it will also bring many challenges. Industry practitioners recognize the importance of utilizing a total revenue management approach and conclude that talented personnel, combined with the right technology are the keys to success for total revenue management strategies.Technology providers have also begun to deliver solutions that address these areas as well, from robust F&B reports that transform point-of-sale or POS data into actionable insights, or into forecasting and optimization solutions for alternative revenue sources such as meeting space.However, technology is still one of the key barriers to practicing total revenue management. The data and technology required to support the successful implementation of total revenue management is not readily available to most companies. When different departments collaborate, they typically operate on multiple software applications. Companies, however, more often than not acquire different systems at different times from different vendors, but the systems need to be interconnected. Therefore, it is a challenge for companies to interlink their different systems, so that they can work together and allow for the seamless transfer of data.For total revenue management to become a reality, the revenue manager should be able to manage demand and profitability for every revenue stream in the hotel. One of the core components of a total revenue management program is increased involvement by the revenue manager in optimizing all revenue streams, and so have both tactical and strategic influence on other revenue centers.In addition, one of the keys to successful total revenue management is to have it embedded in the organization's culture and an integrated approach is needed to analyze the decisions of sales departments so that they can be aligned with the revenue and profit objectives of all the revenue centers.Therefore, a key quality of effective revenue leaders is that they must not only be good with analytics, they must also be effective influencers in sales, marketing and operations. With automated revenue management systems in place, revenue managers can reduce their workload in terms of 'number-crunching' and spend more time on analyzing data and making better and more strategic decisions for the hotel.Revenue managers should be corporate leaders who guide sales and marketing teams in the most effective positioning of their selling strategies and campaigns, and lead the overall strategic direction of a property.Future revenue managers will have to develop far beyond the current, stereotypical number-crunching, often believed to the revenue management role, as the key competency of revenue maximization is becoming more strategic.Every decision a revenue manager makes affects a company's profitability and, because of this, the role requires a professional competent in their abilities to manage both people as well as revenue. Top revenue managers should be visionaries and corporate change agents who rely on innovative thinking to develop and build a total revenue strategy to increase a company's profitability for both the short and long term.Revenue managers in future should not only be tactical, but also have the right skill sets to be the strategic revenue leaders that companies need.Dr. Cindy (Yoonjoung) Heo is an assistant professor in revenue management at EHL. Dr. Heo will be one of the team of professors on the school's new MBA in Hospitality program which is scheduled to start in September 2017.Discover EHL's online module Driving Hotel Revenues.
Article by Hilary Murphy

Hoteliers face up to tech challenges

EHL 23 December 2016
Technology spending has been relatively low in the hospitality industry compared with sectors such as financial services and telecoms, and certainly IT spending in Europe, Africa and the Middle East (EAME) falls short of what is spent in the United States. The discrepancy between the U.S. and EAME regions may be due to the nature of the hotel industry in these markets, with EAME having smaller, independent properties, which do not enjoy large tech budgets.So why does the wider hospitality sector spend so little on IT compared to other sectors such as retail and finance? As guests in hotels are unaware of the level of tech spending, it could be that the investment in the furniture and fittings takes priority ... that is, until the Wi-Fi fails. Or perhaps IT managers, who are competing with other departmental managers for their share of the budget, are less successful at internal marketing and are forced to do more with less. Further, the hotel industry is a high-touch, rather than high-tech industry and upscale properties are more likely to employ extra staff than additional technology, particularly in markets where labor is cheaper than technology.In addition, IT budget decisions are frequently taken by owners rather than operators or managers, and technology is viewed as a cost rather than an investment.What do hotel properties spend on technology?According to research from the IT Benchmark survey (EHL, 2014), hotels in the EAME markets only allocated a relatively small percentage of revenue (1.5 per cent) for technology expenditure. Additionally, they spent on average 726 euros per year per room, amounting to some 182,327 euros per property, with the highest spending in the Middle East market and the lowest spending in Central Europe.An unattractive market for IT suppliers?In the past, property management system (PMS) software has been the biggest single tech investment by hotels and this market has been dominated by one supplier, MICROS. The PMS serves as the main decision support system, linking point of sales, automation of all front desk activities, financial systems, client information, room allocation and distribution networks and is key to ensuring the smooth operational running of the hotel. The domination of this major player in the PMS market and the low budget allocation for IT spend makes technology development for the sector less attractive for IT suppliers and developers. Consequently, there has not been any recent, dramatic or new innovation in technology for hotels since the advent of the PMS, and much of the technology used in hotels has been adapted from retail or the home technology market. With the migration of the PMS and other operational software to cloud-based systems and remote servers, this will reduce costs for hotel and reduce capital expenditure even further.Future spending will be focused on customer-facing technologiesMany analysts forecast an increase in tech spending in 2017. As for the U.S. market, the Hotel Technology (HT) 2016 Lodging Technology Study states that 54 per cent of U.S. hotels will increase their tech spending, with an average technology budget of 4.9 per cent of total revenue. Much of this spending with be on customer-facing technology, payment security, guest room technology, bandwidth, and mobile engagement. Similarly in the EAME markets, many of the major hotel groups will focus on customer engagement and enabling technologies, mostly faster bandwidth, to serve their customer.In the EAME market, the priorities recently have been on internet provision (18.6 per cent), software (11.4 per cent) and server (10.0 per cent) upgrades, which is in line with the increased demand for greater speed and availability of internet bandwidth so that customers can use their own devices and apps services at hotels.The technology challenges ahead focus on data security, particularly compliance requirements for payment cards and, in the widest sense, preventing data breaches, particularly in a mobile environment. The challenge is also in meeting the escalating expectations of customers, whose homes are wired with high-speed internet, interactive television and location-based devices. As the 'Internet of Things' (IoT) becomes more prevalent, then this bandwidth will have to be ramped up dramatically to support customers who are controlling their home environment, chatting with their children via FaceTime and catching up on their online gaming activities. The main technology challenge for hoteliers will be keeping up with the increasing needs of customers, while maintaining the integrity of their tech environment.

My approach to revolutionizing the hospitality industry

EHL By Ian Millar
Maintaining a high level of innovation is crucial for the well-being of the entire HoReCa sector, writes Ian Millar of the Ecole hoteliere de Lausanne. One way to foster this innovation is through mentorships, he explains: By providing our professional expertise to young innovators, we can help them become competitive - and this ultimately enables them to contribute to the future of all of us in the industry.

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