2020 vision of the hospitality industry: big data and AI

Phan Le By Phan Le
Uploaded 18 December 2019

Following the demise of Thomas Cook and recent reports of a drop in flights and holiday searches around the world, this piece looks at what the new year holds for hoteliers. Phan Le, CEO of VLeisure, believes that there are tremendous opportunities, and he explains why below.

Hoteliers around the world have been hit by a seismic shock wave this year. Recent reports of  hotels facing closure in Spain, popular destinations such as Turkey and Tunisia announcing a 22 per cent drop in flight searches from the UK (according to a recent report by TravelDailyNews), and other destinations such as Egypt also suffering a fall in tourism, not to mention the demise of Thomas Cook, have dominated the media this year.

For some hotels, news such as this will have a catastrophic effect on their operations and they may be forced to close or sell out. However, for many this is the start of something new and it could just be the wake-up call they've been waiting for. 

Many hotels are now diversifying their business mix, and better more lucrative days will lie ahead if they are more strategic with their channel distribution. As as hotelier, think about your property types and how you brand them. By physically upgrading your assets, from a three-star to a five-star property, your distribution becomes yieldable. In some cases, upgrading can be achieved through better staff training, improved reception or even soft cotton sheets in all the rooms. Instead of being exclusive to say tour operators, an upgrade gives you the opportunity to cast your net much further. 

Hotel distribution has been very much a duopoly, with the two big online travel agents (OTAs) dominating well over 70 per cent of the market share. This is now facing major disruption and an OTA battle is in the making. For hoteliers, this news couldn't be better because, apart from anything else, it means that commission rates are likely to fall.  

Combine this with emergence of technologies and changes to consumer requirements and it's clear that 2020 will be the year of opportunity.  

Big data and Artificial Intelligence  

Recent reports predict that the global Wi-Fi market will be worth in the region of $33.6 billion dollars by 2020. Mobile connectivity is becoming the lifeblood of the industry and consumers' semantic search will be based on interests and priorities. This means that creating the perfect experience and choosing the right destination will become much easier.

By introducing platforms such as property management systems (PMS) and revenue management systems (RMS), conversions and pricing will become more automated. This technology can be expensive, however, and is considered out of reach by many smaller hotels. Hoteliers still believe that automated systems such as chatbots and revenue management tools are a luxury that only larger hotels and chains, with big spending power, can afford.

Companies like ours are developing products that are designed for smaller budgets. In fact, we recently developed a new ecosystem for small, two to three-star hotels with 40 rooms or less. This new suite of products provides opportunities for every hotelier to use property management systems, rate distribution technology, and more. What this means it that companies are developing products to make hospitality an even playing field with access to game changing technology for all, and not just those with big budgets.  

Artificial intelligence has also been making great advances in hospitality. Service robots will soon be produced at scale - delivering items, answering questions and vacuuming floors. Machine-learning is bringing with it greater levels of consumer engagement.   

Consumers are tech-savvy. Regardless of their generation, there are now degrees of technical sophistication, so travellers are able to increase their travel expectations. A recent study by Qubit found the biggest challenges in implementing an effective personalisation programme revolved around a lack of necessary data (42 per cent), and a lack of tools and technology (31 per cent). The study showed that brands which create personalised experiences, by integrating data and advanced technologies, are currently achieving revenue increases of between six and 10 per cent. Furthermore, acquisition costs can be reduced by as much as 50 per cent.  

By gathering data from your channel manager and online booking engine, you have invaluable resources to build your most valuable tool at your disposal - your guest profile. This will enable you to discover everything you need to know about your customers. In 2020 hotels will create experiences that are both highly personalised and flexible.  

Change isn't easy, but we are at the point where hoteliers need to go beyond their comfort zone. Without deep knowledge of technology and trends, hotels will either stand still or sink. 2020 will be an exciting year for change. Hoteliers should embrace this and explore the opportunities that the new year brings.

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