Actionable Insights From APT's Retail Practice

Balancing Hospitality with Technology

April 3rd, 2017 | Posted by APT in Hospitality & Travel

From mobile check-in apps to beacon technology and virtual reality (VR) headsets, hotels are pushing the envelope with cutting-edge innovations every day. With guest expectations for unique and personalized experiences steadily rising, introducing new gadgets is a key strategy to maintain guest loyalty and drive new business. But as exciting as these new tech tools may be, delivering service with a human touch is critical to overall guest satisfaction and financial growth in the hospitality industry.

When it comes to innovation, the risk goes beyond the upfront cost of new programs themselves. Rolling out technologies that are not the right fit may also compromise brand loyalty among some guest segments. Additionally, staying ahead of the technology curve means that the guest experience becomes more frictionless – and with fewer face-to-face touchpoints, some guests may be less satisfied with their overall experience.

As hotels consider which new technologies to implement and how best to balance these tools with human interaction, there are many questions they must answer, including:

  1. Will the program actually drive new business?
  2. Could it negatively impact existing guest loyalty?
  3. How much value will the program truly add in the long-term, in the form of repeat bookings and impact on lifetime guest value?

Leveraging in-market experimentation is the most reliable way for organizations to pinpoint the overall impact of each new technology introduction. More specifically, hotels should test each new technology initiative in a subset of locations, and compare their performance to that of a group of similar locations that did not receive that technology. This “test vs. control” analysis can also help organizations identify the guest segments that will respond best to the program, and understand how to improve the program for maximum ROI.

Consider a hotel that wanted to launch a robot room delivery program. While developing this program requires a high initial investment, the company believes the increased efficiency resulting from automating certain components of hotel operations will justify the cost. However, when testing the initiative, the hotel may actually find that some guests are disappointed by interacting with a robot rather than face-to-face with a human, reflected in lower overall satisfaction and fewer repeat bookings. Leveraging test vs. control analysis, the hotel could then isolate the key characteristics of locations likely to be dissatisfied by automated service, and use these insights to inform rollout of the program to locations that will be most receptive to it.

New technologies also provide hospitality organizations with an opportunity for increased personalization. Whether they are using beacon technology to push customized offers to guests’ mobile devices based on their physical location within the hotel, targeting guests with special promotions based on their previous purchases, or taking another approach, hotels need to ensure that any new initiative truly has an incremental impact on revenue.

As another example, imagine a hotel were developing a beacon initiative that would send guests a personalized restaurant offer via mobile app when they are in the proximity of the hotel restaurant. While the offer will likely be relevant, it may be difficult to pinpoint which guests eat at the restaurant as a direct result of receiving the offer. For example, given that those guests were already near the restaurant, they may have eaten there regardless. But by testing different offers with a subset of guests and comparing their behavior to that of a group of similar guests that did not receive the personalized offer, the hotel could measure the true impact of the beacon initiative and refine it for maximum impact.

As hotel chains embrace new technologies to drive value, it is critical that they innovate strategically. By testing new ideas, they can more accurately determine which programs are the right fit in which locations – and which programs aren’t worth rolling out.

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