Companies Like Google Or Amazon Ran A Hospitality Business?

Research alerted us years ago that high-touch can have detrimental effects on our culture. How hospitality businesses can be a powerful guardian of culture by promoting the ‘real’ high-touch.

By Laura Zizka - Assistant Professor at Ecole hôteliere de Lausanne (EHL)

20 August 2019
  • Companies Like Google Or Amazon Ran A Hospitality Business?

Zizka

Creating authentic and captivating experiences is crucial for the competitiveness of hospitality businesses because it can increase value for consumers ([1]; [6]). Experiences are, by definition, co-created in hospitality, meaning they result from "the joint creation of value by the company and the customer" ([7]), regardless whether in high-touch or high-tech contexts ([3]). Today, exploiting technology for enabling and managing these experiences has become commonplace in many industries, but experts who can co-create through technology to produce authentic and captivating experiences in the hospitality industry are desperately lacking. The Global Center for Digital Business Transformation suggests that the hospitality industry is moving closer to the centre of the 'digital vortex' where the velocity and magnitude of change are highest ([8]).

So, what would happen if companies like Google or Amazon ran a hospitality business?

Past perspective: technology meant cost saving rather than experience creation

The hospitality industry has missed strategically anchoring technology in the operational design of its service settings ([5]). That is, money was spent on technology to save more money, not to enhance the consumer experience. Examples are the first hotel reservation system in 1947; the first automated electronic reservation system in 1958; and the first ice and vending machines in guest corridors in 1966 ([1]). Other examples merely answered to basic consumer demands such as the first free in-room movies offered in 1973; the optical electronic key card introduced in 1983; the first hotel chain websites launched in 1994; and the provision of Wi-Fi in hotels in 2003 ([1]).

These examples paint a rather devastating picture of the technological maturity of an industry that is perceived as the foundation of the experience economy. However, this label stems from the industry's high-touch culture. A sommelier engaging guests in a storytelling tasting of Pinot Noir from Burgundy, France, versus Pinot Noir from Baden, Germany, to figure out which one the guests prefer with the saddle of venison was considered outstanding service. Today, you can try in almost any decent pub the different types of ale on draught before choosing your favourite and, while this bespoke service may still be considered excellent, it will no longer be perceived as authentic and captivating. While other industries, from banking to high-value manufacturing, often substantially more advanced in their technological solutions, recognise the value of high-touch hospitality, the hospitality industry itself has not yet fully realized the potential value of technology. Admittedly, we have seen the world's first robot hotel opening in Japan in 2016 ([1]), but is this enough?

In the last few decades, technology has been developing at an unprecedented pace, making an impact in previously untouched areas of life. Social media, artificial intelligence, the Internet of things, augmented reality, various robots, and softbots affect our lives in ways we wouldn't have expected even five years ago. Today, these technologies have led to the emergence of new types of companies that put some of these technologies, particularly social media, at the centre of their business. These companies have taken over areas in the hospitality industry that were left uninhabited, as traditional hospitality businesses still just put pictures and menus on their websites.

Future perspective: technology will mean instantaneous adaptation and response

The future of technology in the hospitality industry is impossible to foresee. How do we prepare for something we cannot predict? We need to practice adapting and responding. We will need to be able to create new roles, new types of hospitality staff, quickly.

An immediate, but conservative step towards this future is the creation of two new roles: technology-for-service experts (TSEs) and experience-space experts (ESEs).

TSEs need to have the technical knowledge to create and maintain the technology, but also be able to communicate with clients/users and organize operational processes.

ESEs, in contrast, need to be more creative and imagine innovative experience spaces in which they try out new ideas and concepts in vivo while maintaining viable experiences for the clients and other co-creators.

But, what's next if these two new roles are conservative predictions for the very near future? Both the TSEs and ESEs need to be chameleons, adapt to cutting edge technologies, rapidly changing social processes, and fickle customer mind-sets, and help to identify and create new and upcoming roles. The biggest question that perhaps awaits is how AI, machine learning, and robots will affect the high-touch hospitality industry.

Promoting the real "high-touch"

How will we feel if instead of a concierge organizing a table for us through personal contacts in a fully booked restaurant, the table is organized by AI? Or, what would happen if Google started matching hotel preferences via keyword searches and data collected about our usage of smart devices, to find a better 'personalized' fit with location, price, and desired experience to blend service spaces together? It is relatively easy to imagine that through a new Amazon hospitality experience space we would not only get recommendations based on our previous searches and purchases but also based on purchase patterns of buyers deemed to be similar to us. In a few more years, Samsung will probably introduce super-cheap holiday and restaurant experiences, using augmented reality combined with AI, which will be advertised along the lines of 'why would you go anywhere when you can experience all this from the comfort of your home'?

But, Naisbitt, Naisbitt, and Philips (2001) alerted us years ago that high-touch can have detrimental effects on our culture. We strongly believe that hospitality can be a powerful guardian of culture, promoting 'real' high-touch and making sure that DeepMind will not go on a holiday instead of us.

References

[1]Intelity. (2016). A Brief Look at the History of Hotel Technology Retrieved 12 June 2019, from https://intelity.com/blog/2016/a-brief-look-at-the-history-of-hotel-technology/

[2]Ketter, E. (2018). It's all about you: destination marketing campaigns in the experience economy era. Tourism Review, 73(3), 331-343.

[3]Naisbitt, J. (1982). Megatrends: Ten New Directions Transforming Our Lives. New York, NY: Random House.

[4]Naisbitt, J., Naisbitt, N., & Philips, D. (2001). High Tech High Touch: Technology and Our Accelerated Search for Meaning. Naperville, IL: Nicholas Brealey Publishing.

[5]Neuhofer, B., Buhalis, D., & Ladkin, A. (2015). Smart technologies for personalized experiences: a case study in the hospitality domain. Electronic Markets, 25(3), 1-12.

[6]Pine, J., & Gilmore, J. (1999). The Experience Economy - Work is theatre & every business is a stage. Cambridge, MA: Harvard Business School Press.

[7]Prahalad, C., & Ramaswamy, V. (2004). Co-creation experiences: The next practice in value creation. Journal of Interactive Marketing, 18(3), 5-14.

[8]Yokoi, T., Shan, J., Wade, M., & Macaulay, J. (2019). Digital Vortex 2019: Continuous and Connected Change. https://www.imd.org/digitalvortex/.

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Ecole hôtelière de Lausanne (EHL)

Route de Cojonnex, 18
Lausanne, 1000
Switzerland
Phone: 41 21 785 1111
www.ehl.edu

Laura Zizka

With more than 20 years of international teaching experience (Czech Republic, USA, and Switzerland), Laura Zizka, PhD, has been a faculty member at EHL since 2002. As an Assistant Professor, she teaches Business Communication and Academic Writing to undergraduate and graduate students as well as coaching Student Business Projects and undergraduate theses. In 2017, Dr. Zizka prepared her first digital course on Academic Integrity and is currently preparing a digital course on Academic Writing and a traditional course on strategic/crisis communication, for the online MBA cohort. Since completing her PhD in Management in 2014, Dr. Zizka has been presenting at conferences and publishing papers on various communications topics both in higher education and the workplace. One of her main areas of interest lies in the link between CSR/sustainability reporting and communication and its link to corporate reputation. She is also interested in the gaps between higher education and the workplace.

Ecole hôtelière de Lausanne

Communications Department
Phone: +41 21 785 1354
communication@ehl.ch