Using innovation to transform hospitality

Alex Shashou By Alex Shashou
Uploaded 17 July 2018

Nordic Choice Hotels, one of the largest hotel groups in Scandinavia, has pioneered innovation in multiple fields as a way to optimise service delivery across its diverse portfolio of hotel brands. With investigations into everything from space travel to food nanotechnology, Nordic Choice Hotels is one of Norway's top 10 most innovative companies. In 2017, Nordic Choice Hotel adopted ALICE's hotel operations platform to help elevate its guest satisfaction and operational excellence.

ALICE's co-founder and president Alex Shashou sat down with Nordic Choice Hotels' head of business Christian Lundén to discuss innovation at the company's properties and how the influence of other industries spurs the company's own innovation.

• How would you characterise the Nordic Choice properties?
"Nordic Choice is the Scandinavian franchise of Choice Hotels International. We are one of the biggest chains in the Nordics and Baltic regions, with around 200 hotels. We have a broad spectrum of different brands, and we believe in owning a diverse portfolio of options for our guests to choose from. For example, Quality Hotels is like a big, conference hotel chain, while our Comfort Hotels is a cool, urban hotel chain - much like what you would find in the US. On the other hand, we have really upscale hotels, like The Thief, which is one of the most luxurious hotels in Norway."

• Can you tell me about your approach to innovation at Nordic Choice?
"People see us as being a very innovative company when it comes to their travel. We monitor and develop what kind of areas we should develop in the future, so that we are not only making money on hotel rooms but also creating extraordinary experiences. For example, I've met with NASA about space tourism, to find out how our popular world of hospitality can be a really big player in space. It's about trying to see how our innovation team can learn from different industries to bring back ideas to make our own industry more attractive. "

• Is there anything you think that hotels can take from other industries rather than from their competition?
"I'm not interested in what our competitors are doing - because if they are doing it then we are already too late. I'm more interested in how companies like Netflix, Apple, Tesla, and others outside our industry are crafting totally new experiences or expectations for guests. It's interesting to study consumer behaviour, because that informs guests' expectations when they come to our hotels. So, hoteliers need to understand the behaviour and the excitements guests as consumers have in different areas."

• I agree with you that if you look at other industries you find out more about your own. In the past you have mentioned looking at nanotechnology. What were you referring to?
"We work with nanotechnology in several different areas - one of them is food. We are always trying to develop ways to make food better: chocolate that doesn't melt, meat with less fat, milkshakes that taste really sweet but have no sugar in them We work directly with scientists to see life-improving achievements with this kind of technology."

• So, let me ask you the obvious question: Why don't you let the food companies work on food? You're a hotel company?
"Nordic Choice is Scandinavia's biggest F&B provider because of all of the restaurants we have in our hotels! It's very much at our core. We work together with the food and technology companies to understand them better and try to get their knowledge and understand what's happening, so we can be much better prepared in the future for the next restaurant we need to focus on."

• Let's move on to blockchain - why blockchain?
"There are many reasons why we are exploring and starting to experiment with blockchain. The most obvious is the cost of distribution, because we do pay a lot of money to the OTAs. We like to have a strategic relationship with the OTAs, but want to capture repeat bookings ourselves  - guests don't realise that although repeat booking through OTAs is convenient for them, it actually costs us a lot of money, and we like to have better contact with our guests."

"The second reason is that blockchain is a decentralized, open source API, meaning no one owns it and anyone can benefit, even the short term OTAs. No one can take money from the middleman and we can have one interface for them to work with us. If we put our rooms onto a blockchain, anyone can access it and sell our rooms. So many good travel companies and startups are begging for an easier way to access our inventory, and blockchain gives it to them."

• Let's assume the OTAs aren't going anywhere - what would you like the future OTA to do? What would you like the relationship to be? Can you see any industries where the middleman is a true partner of the services that are provided?
"If we have a strategic relationship with the OTAs and we can see where they are good and we are good then that is the perfect match. As long as they don't take too much advantage of their position then it's fine."

• When you say "good", do you just mean dropping commissions?
"We are happy to pay commissions, it's valuable to get reservations from the OTAs. If we could, we would even be selling rooms from Instagram or third party startups, and for this we want to pay them. If someone is making business for us, we want to honour that. This is why we are excited about the potential of blockchain. It would allow us to free our distribution onto any channels, small and big. But we need to keep it reasonable, meaning we should get information and know who the guest is so we can give them the perfect experience and the benefits they would have as if they were a returning guest."

• So is it fair to say blockchain might allow an even playing field?
"I would more or less agree. The bigger players will always have more advantage, but yes, I think it will equal it out."

• As the hotel world evolves through technology, where do you think you will make money from in the future?
"In the next five or more years, we will no longer get most of our income from selling hotel rooms, but instead from other services, such as cleaning, catering, and laundry that are more important or as important as the hotel rooms. The rise of the homeshare industry has given us the opportunity to leverage the level of hospitality we provide in our hotels to homeshare operations."

"In November, we bought the biggest serviced apartment company in Sweden, so we have 3,000 apartments now around Scandinavia for extended-stay or for company stays. We are moving quite fast and are now the biggest apartment owners in Scandinavia."

• Interesting, are you offering your hotel services to these apartments?
"Not yet. But we tested how this might work with a pilot we ran in Copenhagen last year, in which we met with Airbnb apartment owners close by to one of our luxury hotels and offered owners our services to make sure these apartments all met the same high standards as our hotels. The idea was to remove the fear that some business people have while renting an Airbnb, by giving the apartments the Nordic Choice stamp of approval and the 24-hour service and reassurance that provides. We provided the apartments with our hotel towels, linens, toiletries, and everything you can find in a hotel. We also got some apartments discount coupons so you can go down to our hotel and get a discount on different hotel amenities or services."

"Our vision is to eventually make all of the apartments we own part of the 'world's best digital guest journey' and provide owners with a hotel experience in their own home. Longer term, I see of course also F&B, co-working, retail playing a big role for us as well. It is important that we understand that our business will look very different in the future from what it is today."

• What's next for Nordic Choice?
"At the moment, we are doing very small projects. We are working quite a lot with startups to extend ourselves from AI, to VR, to AR, to wireless charging. Many of the things we are working on might not add to the company for one to two years. We are testing further innovation to see how we can continue to improve our operations throughout the organisation."

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