CHRS 2017: Opportunities in the era of disruption

I was in Ithaca, New York, last week for the 2017 Cornell Hospitality Research Summit(#CHRS2017), where a good mix of industry professionals and academic researchers shared their viewpoints on the outlooks of the hospitality business and findings of relevant research.

This year, the conference's theme was "opportunities in the era of disruption."

So, what are the disruptions?

In fact, the hospitality industry is constantly facing challenges from disruptions. In today's economy, the following appears to be more salient:

• The advance of technologies, such as virtual reality, artificial intelligence (AI), facial recognition and data analytics, has transformed customer experience and is making innovative disruptions to operations.
• Airbnb brought new experiences to travelers, but also a tremendous supply of available rooms to the market almost overnight. Hotels are facing a big threat from room-sharing services and need to improve their practices in revenue management and asset management.
• Sustainability is going to become even more important in service operations even though not all consumers are willing to make extra effort for green products (yet).
• As hotels are responding to the changing needs of today's travelers, new brands/products are introduced to the market, with many still in construction. Newer properties also create threats to the older ones in the market.
• Managers should pay special attention to generation differences, such as the preferences of millennials.
• Online reviews and social media are still important, but not all generations pay attention to the same content or platform.
• Because OTAs (online travel agents) now have the business intelligence of both hotel sales and residential rentals, they should remain as an important strategic partner of hotels, even though hotels are pushing travelers to book-direct on their websites.
• There is a need for business to revamp their strategies in talent management as the industry is constantly being disrupted.

Remain positive when facing the disruptions

Shall we worry about the future because of these disruptions? We could, but feeling worrisome would not help business. Positive thinking is perhaps the only remedy to deal with challenges.

"Disruptions create opportunities," suggested Arthur Adler, the managing director and chairman of the Americas division of Jones Lang LaSalle's (JLL) Hotels and Hospitality Group, in the keynote opening session at #CHRS2017.

By reviewing the history of how the hotel business has evolved over time, Adler concluded that disruptions brought innovations to the industry (e.g., making reservations on the phone vs. on the internet). Rather than feeling worried about the future, we should all react to the new opportunities identified in the era of disruption.

New opportunities in the era of disruption

All attendees in the conference seemed to hold positive attitudes toward the disruptions. Particularly, the industry is highly encouraged to look at the following areas:

• Rethink guest experience and be innovative in product offerings.
• Utilize space more efficiently. For example, can a hotel's lobby or meeting space be "shared" as what is in the room-sharing and ride-sharing business?
• How can technology be used in providing customized service? For example, use AI and machine learning to predict guest preference.
• How can technology be better utilized in daily operations (e.g., making improvements in revenue management and productivity among staff members)?
• What can we learn from the room-sharing business?
• How can blockchain technology be used in the hospitality industry?
• What proactive approaches can be taken in sustainability? A good example in case is that the Romantik Hotel Muottas Muragl is running a lodging business in a "plus energy building," meaning a building is so energy-efficient that it generates more energy than it consumes.

Do you agree that opportunities are often associated with risks, or disruptions in this case? What opportunities do you see in the era of disruption?

Note: This post is also available on MultiBrief.com; The picture was downloaded from the Twitter account of The Hotel School at Cornell University. 

7 technologies that will transform the hospitality industry by 2025

I was in Baltimore last week for the annual iCHRIE (International Council on Hotel, Restaurant and Institutional Education) Conference, where hospitality professors and graduate students got together to showcase their research work and network with one another. Additionally, selected executives in major hospitality firms were invited to share their perspectives about the industry and their views on the future trends.

For example, Mike Webster, the senior vice president and general manager at Oracle Retail & Oracle Hospitality, spoke in the opening general session at the conference. He believed that by 2025, the following technologies would make transformational changes to the hospitality industry:

1. Wearables

Smartwatch sales in the global market hit a record high in the last quarter of 2016, at 8.2 million for the quarter and 21.1 million for the calendar year. Experts predict wearable tech will make transformational changes in the sport and fitness sector. Will wearable tech also transform how we run business in the hospitality and tourism industry?

Take the MagicBands at Disney, for example. Not only do they enable guests to enter the theme parks, purchase food and merchandise, and enjoy the FastPass+ access, but travelers can also skip the check-in line and unlock their hotel rooms with the MagicBands at the Disney resorts.

Disney will even ship the MagicBands to their guests before their arrivals. When guests link their accounts with the MagicBands, Disney can store their activities and preferences in the database to build a stronger customer relationship over time, of which the information can also be used to develop customized sales and promotion packages to the guests.

2. Facial recognition

It is not a new idea for hotels to let guests use their mobile devices as room keys. With the advance of facial recognition technology, travelers can possibly skip the front desk without carrying any mobile devices; they can access their guestrooms by just showing up.

Certainly, the advance of facial recognition technology can also make it easier for restaurants, hotels and resorts to track and analyze travelers' activities inside the facility.

In addition to their potential of enhancing customer service, wearable and facial recognition technologies can be used to improve back-of-the-house operations as well. For example, employees may use wearable devices and facial recognition technology in clock-ins and clock-outs. The data that is recorded about employees' activities at work can also be used by the management in scheduling and job designs.

3. Voice activation

Aloft Hotels, a Marriott/Starwood brand, recently unveiled voice-activated hotel rooms in Boston and Santa Clara. In a voice-activated room, guests can control the room temperature, adjust the lighting, choose what type of music they want to play in the room, and explore local attractions by talking to the room.

4. 3-D printing

The idea of using 3-D printing in construction has been tested for years. It may not seem real for a 3-D printer to create a skyscraper at this point, but it is now possible to construct a hotel room or at least, part of a hotel room with a 3-D printer.

As a matter of fact, Marriott has adopted the modular construction method to support its need for rapid growth.

Modular construction allows Marriott to build parts of the guestroom, such as the bathroom, somewhere else other than on the construction site of the hotel. When building a hotel, Marriott only needs to ship the ready-to-install bathrooms and other necessary parts of the guestrooms to the construction site. All it takes to build a hotel is to assemble the parts onsite.

The modular construction method and 3-D printing technology can hence be combined to speed up the time of building a new hotel.

5. Automatic or robotic services

Today, more service jobs are performed by machines than ever before. We have seen restaurants with no hosts, no waiters and no tables; robots are cooking food in the kitchen; and restaurant food is delivered by robots.

In the hotel industry, robotic butler service has also been introduced. There are also hotels testing automatic drink dispenser in events and guestrooms.

6. Artificial intelligence

Artificial intelligence allows machines to "think" like a real human being. Artificial intelligence will then enable a service provider to anticipate customers' needs even in automatic or robotic services.

7. Virtual reality

A few years ago, Marriott was experimenting with VR technology in operations, such as in sales and marketing. The hotel chain allowed guests to use VR to experience the Marriott products in selected world destinations. Likewise, Disney is planning to use VR to enhance consumers' experience in the theme parks and in video games.

A concluding remark

There is no doubt that the advance of technology will transform the way we run a hospitality business. Some jobs will be replaced by machines, but additional opportunities can also be created for those who are well-prepared for the changes.

Moreover, while the seven technologies listed above were suggested by Webster in the opening session at the conference, I elaborated upon his key points with specific examples I have observed in service operations. Hence, this is not intended to be a summary of his speech. Rather, I am hoping to get your input based on my own interpretations of Webster's ideas.

Do you also believe these technologies will soon transform the hospitality industry? If so, in what way? Are there other technologies that would also make transformational impacts to the hospitality industry by 2025 but have not been discussed in this post?

Note: This article was also published at MultiBriefs.com - the leading source for targeted, industry-specific news briefs. The picture was also downloaded from MultiBriefs.com. 

Consumers' path of purchasing a travel product

Hotels have been working hard to win more travelers to "book direct" on their companies' websites, but are consumers listening?

In fact, hotels are not alone. All service providers in the hospitality and tourism industry want their customers to make purchases directly on their websites, but consumers want to search and compare various options before making a decision.

So, to convince customers to purchase directly on the service providers' websites, companies must understand where their customers "hang out" in the cyber marketplace before they make the purchasing decision, as well as where they end up buying their services.

The white paper "Understanding the Travel Consumer's Path to Purchase" by Eye for Travel provides some business intelligence in that regard. The report combined a large panel consumer data of online transactions and surveys into the analysis, revealing the following results:

The places where customers purchase a travel product

With an analysis of about 200,000 bookings in the U.K. and the U.S., online travel agents (OTAs) such as Expedia and Priceline are winning big in the competition.

In the U.S. market, 42 percent of purchases came from OTAs, leaving 39 percent for airline brands and 19 percent for hotel brands. In the U.K. market, 73 percent of purchases came from OTAs, 23 percent from airline brands and only 4 percent from hotel brands.

The devices used for buying the travel product

Devices being used for hotel reservations:

• Desktop or laptop (49.9 percent from the U.K. sample / 62.1 percent from the German sample)
• Face-to-face (6.1 percent / 11 percent)
• Tablet browser (17.3 percent / 5.5 percent)

Devices being used for flight bookings:

• Desktop or laptop (51 percent from the U.K. sample / 56.1 percent from the German sample)
• Face-to-face (9.3 percent / 20.1 percent)
• Tablet browser (15.2 percent / 4.4 percent)

Desktops or laptops remain the most-used devices for making a purchase, and desktops have higher conversion rates for all OTAs, all airline brands and all hotel brands than mobile devices. But before consumers make a purchase, let's also check out ...

The devices used for browsing before making a purchase

• 80.7 percent of those who used desktops or laptops to search also used the same device to book.
• 63.8 percent of those who used tablets to search also used tablets to book; 21.3 percent of those who used tablets to search ended up using desktops or laptops to book.
• 36.2 percent of those who used smartphones to search would use desktops or laptops to book; about the same percentage, 35.1 percent, of those who used smartphones to search also used smartphones to book.

The websites visited before making a purchase

For a purchase on OTAs, about 90 percent used search engines, about 75 percent visited the OTA site prior to conversion, and about 25 percent visited the competitor OTA sites prior to conversion.

For a purchase on an airline website: about 90 percent visited search engines, between 69 and 84 percent visited the airline website prior to conversion (across three samples of the U.S., the U.K., and Germany). Depending on the regions of where the customers came from, over 20 percent also visited a social media site such as Facebook or Twitter (U.S.), a meta-search site such as Kayak or Trivago (U.K.), or an OTA site (U.K. and Germany).

For a purchase on a hotel website: about 90 percent used search engines, about 70 percent visited the hotel website prior to conversion, and about 20 percent visited an OTA site.

Where do smartphones fit in?

It seems smartphones played a more significant role in both the researching and purchasing processes for consumers in less developed countries than those in developed countries. For example, 66 percent of Indians accessed travel websites with mobile devices, but only 34 percent of them used desktops. In the U.S., such percentages changed to 54 percent for using mobile devices and 46 percent for using desktops.

Not surprisingly, a large percentage of consumers aged between 18 and 34 owned at least one smartphone. For example, 85 percent of Chinese aged between 18 and 34 owned at least one smartphone, but only 43 percent of Chinese aged 35 or above used smartphones.

Another good example came from the U.K. consumers aged between 18 and 35. When asked if they researched and/or booked air travel on a smartphone in the past, over 90 percent of participants said so. Specifically,

• 23.4 percent always booked flights on a smartphone.
• 22.9 percent regularly booked flights on a smartphone.
• 21.8 percent occasionally booked flights on a smartphone.
• 22.1 percent researched flight information using a smartphone even though they did not book with a smartphone.

What are the next big things?

The top two "game-changing" factors in the industry were mentioned:

• Data-driven personalization (78 percent of participants being surveyed)
• API-led (application programming interface) distribution partnership (14 percent)

The top three areas for future opportunities include:

• Mobile (79 percent from European respondents / 74.7 percent from North American respondents)
• Content and digital marketing (58.8 percent / 65.3 percent)
• Social media (35.3 percent / 50 percent)

Other possibilities or opportunities may include:

• Will search engines become the next big player in selling travel products? Many consumers have already been using search engines to research products, so why can't Google Travel or Bing Travel become the next big thing?
• Can Facebook get into the game, too? Facebook has tried to let its users make purchases on a business's page, rate a business or service and make recommendations of purchases for their friends. Most of all, the hospitality and tourism industry is too big to be ignored.
• Will Apple try Apple Travel, too? At least, Apple can easily reach all the Apple users.
• Will WeChat dominate the Chinese marketing in selling travel products? I tried to make hotel reservations on WeChat because I could not find good internet connections when I was traveling in mainland China, and WeChat became very handy.

Now, do you have a better idea of where travel or hospitality companies can reach their target customers in the cyber marketplace? Tell us what else you want to know. Your voice could inspire the next big research project.

This post was also published on MultiBriefs Exclusive, the leading source for targeted, industry-specific news briefs.  

Can hotels stop the growth of Airbnb?

As a substitute for the traditional lodging facilities, including hotels, hostels and short-term rentals, the increasing supply of Airbnb properties is no doubt making an impact on hotels' bottom lines. So, can hotels stop the growth of Airbnb? 

Hotels' strategies for fighting against Airbnb

#Airbnb #Hotels #Competition - http://bit.ly/kwok051117 

Hotels are working hard to fight against the competition from Airbnb, other room-sharing websites and online travel agents (OTAs). For example:

• Hotels are encouraging travelers to search and make reservations directly on the hotels' websites by offering special discounts if they book directly, even though this strategy might possibly push Airbnb and OTAs to work closely together against hotels.
• Hotels are reinventing loyalty programs to win more new travelers and, at the same time, keep their repeat customers.
• More hotels are adding local flavors to lure travelers. If travelers choose Airbnb over hotels because they want to gain some unique experience as a local resident, this strategy may work particularly well.
• Hotels are responding to the shifting needs of customers by introducing new brands and through acquisitions. The merger of Marriott and Starwood is a good example.
• Most recently, hotels are planning for a lobbying push over the Priceline-Expedia "monopoly," in addition to the legislation push toward Airbnb. Hotels want to play a "fair" game in the competition with Airbnb and OTAs. So far, hotels have successfully convinced legislators to impose stricter regulations on room-sharing operators in several locations, including San Francisco, Vancouver, Amsterdam, and London.

Challenges that Airbnb faces

Despite Airbnb's phenomenal growth since its inception in August 2008, the company is facing more challenges lately.

On one hand, hotels are gaining more success in combating Airbnb. For example, New York City just passed a new regulation, charging steep fines to those Airbnb hosts who break local housing rules, resulting in fewer qualified listings in the market. Airbnb is also more willing to work with local governments to collect taxes on room-sharing rentals, now at the same rate as the one for hotels. On the other hand, Airbnb is facing allegations for the hosts' racial discrimination against renters.

The question is: Will those challenges slow down Airbnb's growth?

Airbnb's strategies for growth

Airbnb wants to become more than just a leading room-sharing platform in the market, as suggested in the following moves taken by Airbnb recently:

• Airbnb acquired a couple of travel service companies, including Luxury Retreats and Tilt, as the company is getting ready to become a full-service travel company.
• Airbnb wants business travelers, too. Not only has the company launched a website that tailors to business travelers, but they also work closely with the hosts to ensure the listings meet business travelers' needs. The most recent move Airbnb took was to introduce new booking tools that were specifically designed for business travelers.
• Airbnb is working on a gadget that will provide travelers with reliable internet connections during their trip. For business travelers as well as those young leisure travelers, stable WiFi connections have become a must-have amenity for their stays.

Competition between Airbnb and hotels

It is unlikely that anyone can stop the growth of Airbnb. The competition between Airbnb and hotels is only going to get tougher.

Can you predict what the next moves for hotels or Airbnb might be? What suggestions would you make to hotels or Airbnb to win the battle?

* This discussion was first published at Multibriefs.com.

Let's imagine how hotels and restaurants are run in smart cities

We have seen more robots and machines are replacing humans in the service sector. This trend is irreversible, but the good news is there are ways to cope with such changes at work.

What if these changes also take place in the macro level? Then, what can businesses do to embrace this wave of innovations?

Indeed, the cities where we live have also become "smarter" than ever. According to The Wall Street Journal, more cities are now using different types of data to make people's living safer and healthier and the cities' operations more efficient.

The rise of smart cities

Boston

The city works with Waze, a navigation app from Google, to improve traffic conditions. Officials are able to respond to traffic problems, such as a double-parked truck or a fender-bender more quickly.

Chicago

The Department of Innovation and Technology developed an algorithm to predict the risk of a restaurant for spreading food-borne illnesses. The algorithm uses 11 variables in prediction, including a restaurant's past record of violations, length of operations, the weather condition, nearby burglaries, etc.

The data was used to inform the Department of Public Health for restaurant health inspections. The results? Since the program's initiation in 2015, it takes seven fewer days before inspectors visit restaurants with possible critical violations; 15 percent more critical violations are also reported.

Los Angeles

Mobile data is used to help clean up the city's 22,000 miles of streets and alleyways. The city uses video and smartphones to collect data about illegal dumping, abandoned bulky items and other trash problems. The streets are labeled with three categories: being clean, somewhat clean and not clean. This program has resulted in an 80 percent reduction in the number of streets categorized as "not clean."

New Orleans

The city of New Orleans put three data sets together to help prevent deaths in fires, including:

• homes without smoke detectors (from Census Bureau surveys)
• homes at the greatest risk for fire fatalities, such as those with elderly and young children (from Census Bureau surveys)
• neighborhoods with a history of house fires

With the aid of machine-learning technique, the city analyzed the data and identified the blocks where fire deaths were most likely to occur. Then, the fire department was able to target high-risk neighborhoods when distributing smoke detectors. Since early 2015, the department has installed 18,000 smoke detectors, as compared to installing 800 detectors per year under the old program.

How effective is it? A few months after the program began, three families (11 people in total) were alerted by the recently installed smoke detectors about a fire, and the firefighters were able to quickly respond to the incident.

#SmartCity #Technology #Trend #Trends #Hospitality #Hotel #Restaurant

Let's imagine how restaurants and hotels can be run inside a smart city

Here are my thoughts: 

• Restaurants and hotels can share their availability with the city, allowing people to easily locate the restaurants or hotels with empty seats or rooms.
• Historic data of traffic, including foot traffic, can be used to predict sales, allowing restaurants and hotels to better manage employees' work schedules.
• Restaurants and hotels will be able to get extra help even in the last minute when the city suddenly observes increasing traffic, possibly through the standby part-timers in the city's database.
• Restaurants using automated services, such as coffee shops with robot baristas and self-service facilities with no hosts, no servers and no tables, can be built on the street with fast foot traffic.
• New lodging products can be invented, where customer service will be provided in a remote mobile service center. Travelers can reserve and check into a hotel room with their mobile device, use their mobile device as a room key to get into the hotel room, have items delivered to their room with a robot, and check out with their mobile device. These hotels only need to hire staff to clean the rooms after the guests check out, in addition to the staff members working in the mobile service center.
• Restaurants and hotels that provide customer service with humans can still be found inside the city, but possibly limited to some specific areas, with slower foot traffic and/or a lower turnaround rate.

What are your thoughts? 

*The original and full-length of this discussion was firstly published on MultiBriefs.com. 

How not to get replaced by machines

I was not exaggerating in my previous article when I discussed how "machines will soon perform more service jobs than humans." If it is still difficult to convince you, here is an additional example: "Meet Sally, the robot who makes perfect salads." This machine specializes in only one menu item — salad — yet it can do a better job than most chefs. For example:

• It can make salads within 60 seconds.
• It makes salad with perfect proportions, even with accurate calorie counts.
• It can create more than 1,000 salads from the 21 ingredients stored inside the machine.
• Those 21 ingredients can be changed over time, making it possible for the machine to create even more salads.
• It weighs 350 pounds.
• It has a price tag of $30,000, but can also be leased for $500 a month.

"What? A machine that costs over $10,000? That is too expensive, especially when we consider the high maintenance fees associated with the machines. There is no way that restaurants would use such expensive machines to replace real humans at work." — That was one comment I received from my previous discussion.

Actually, $30,000 is not that expensive if we do the math.

Let's say a restaurant pays a cook $15 an hour ($15 an hour will soon become the minimum wage). Let's also assume the restaurant does not pay any benefits for this cook, even though an employer would usually pay over 30 percent on top of a staff person's base salary as benefits.

Thus, $30,000 is equivalent to 2,000 working hours for this chef ($15 x 2,000 = $30,000). If a full-time cook works eight hours a day or 40 hours a week, those 2,000 working hours are equivalent of 50 weeks of work for one cook (40 x 50 = 2,000).

Because a machine can work 16 hours a day without a break (two shifts), as compared to eight hours a day for a cook, those 50 weeks of work for one cook are now shortened into 25 weeks (if two cooks are replaced by the machine) (80 x 25 = 2,000).

In fact, a machine can work seven days a week without any holiday pay, meaning it can work for 112 hours a week (16 x 7 = 112). Then, it will only take 17.86 weeks, or 4.5 months for the restaurant to get the initial investment back (2,000 / 112 = 17.86; 17.86 / 4 = 4.46).

What do you think now? Does $30,000 still sound expensive to you? Most of all, when machines are put to work, there involves no recruiting or training cost, and machines will never call in sick or want to quit.

So, what can we do if we do not want to get replaced by machines?

If you are with me and convinced that most manual labor will be replaced soon, it is now time for us to make plans for the future. My suggestions include:

Strive to be a leader in the field

People can demonstrate their leadership potentials with a progressive career path on their resumes or through the leadership responsibilities they take in professional or student organizations.

Leaders are visionaries and focus on the big things in life. Leaders set good examples for others, but at the same time, they understand the art of delegation. Leaders inspire others and grow with their team. No matter how good they are, leaders never stop learning.

Focus on transferable skills

We need to develop transferable skills, such as leadership, critical thinking and analytical skills, as well as effective communication skills, in addition to the technical skills taught in class or learned at work. The content we learn in class or the ways people do business may change or get updated quickly, but those transferable skills will stay with us throughout our career.

Do whatever it takes to be irreplaceable

The attributes for being irreplaceable may include:

• Being an advocate for our organization and ourselves both online and in person.
• Being a good presenter or public speaker, with or without visual aids.
• Being able to tell stories with pictures, which can be used in business communications, presentations, and public speaking.
• Being approachable and being able to anticipate others' needs.
• Being a critical thinker who can make informed, rational decisions, sometimes through an analysis of a data set or a complex situation.

What else can we do so that we will not be replaced by machines at work? Any suggestions?

Machines are now replacing humans in service jobs

I am not joking. Machine serving people has now become the new reality, as I suggested in my recent discussion on Multibriefs.com .

Here are just some examples:

• A restaurant with no hosts, no waiters, and no tables
• Burger-flipping robots
• Robot baristas 
• Robot that makes salads
• Self-ordering service - Domino's Pizza, McDonald's, Starbucks, and Wendy's. 
• Food delivery robots
• The robotic butler service in hotels
• The automatic drink dispenser
• Personal assistants
• Self-driving cars

Does it become obvious that the new era of machines serving people has already arrived? I think it is now the time for those who are feeling the panic of being replaced by machines or robots at work to reconsider their career paths. Manual labor will certainly be replaced, and the only way for us to survive in this competition is to become the leaders in the field.