What's next in hotel tech?
We’ve all experienced staying in hotels at some point. Exactly 5 years ago in 2015, Mariah Summers from Buzzfeed:
How many times have you entered your room at a large chain hotel, thrown your luggage down to relax, and noticed the antiquated stereo system with an iPod dock from three models ago perched on the bedside table? Next to it lies a paper room-service menu and a clunky, ancient telephone to use if you want to order up a late-night snack. And this encounter comes after you've just spent the better part of half an hour waiting in line to show your identification, leave your credit card for incidentals, receive your room key, and navigate your way into a scene straight out of 1999.
Sounds familiar? Unsurprisingly, hotel experience today does not differ that much from 5 years or even a decade ago.
Before going further, let’s consider some of these facts:
70% of travellers with smartphones have done travel research on their smartphone
85% of international tourists have a mobile device with them whilst travelling
76% of travellers say their smartphone is the most important travel companion
42% of people globally have booked a hotel on a mobile device where 70% of last-minute hotel bookings are made on mobile devices
Hotel app and other hotel technology influence the booking decisions of 70% of travellers
These facts reflect the current shift in the world especially in the travel industry, where everything has now gone mobile-first. With more than 3 billion smartphone users globally, by 2021 there are expected 352.9 billion mobile app downloads worldwide. In Indonesia alone there are 355.5 million mobile subscriptions - that is a staggering 133% MORE than the total population! With more than 5 billion mobile apps downloaded every year and US$313.6 million consumer spending on mobile apps.
Now, try to compare those with the common hotel stay experience globally as mentioned earlier. While everything outside has shifted into mobile, hotels still rely on legacy systems and most of them don’t (yet) have any ideal tools and system to cope with all the uprising changes in the travel industry. Most hotels have now come into realisation of this as noted in one of the key takes of South East Asia Hotel Investors Summit (SEAHIS) 2019 which is that “the (hotel) industry has to embrace a new generation of digital native travellers who will evolve the sector further”.
The direct effect to the hotel industry is the ever-increasing hotel booking traffic coming from Online Travel Agents (OTA). A regular 4-star hotel in Indonesia records an approximate number of 40-60% booking traffic coming from mobile OTAs while for lower star hotels, the number would be far higher. Although this has proven to boost hotels’ occupancy rate and make it more stable, on the other hand, this also means that hotels now need to pay out more in terms of room commission fees to OTAs. To note, the SEAHIS 2019 outlook earlier showed a “wide range of commissions paid, from a low of 8% to a high of 25%”.
So where should hotels start with then? All the mentioned facts above have actually shown that the one key basic strategy that hotels need to do first in terms of tech would be to embrace the MOBILE FIRST idea. Many hotels, especially large hotel chains have tried to “go mobile” offering their very own hotel app. Unfortunately, most of the available hotel apps in the market right now still focus solely on room bookings, since most hotels’ main objectives by going mobile is to “compete” with the rising OTAs and redirect some percentage of booking traffic back to their own booking engines within the apps. This is not wrong but it would also not be sufficient for nowadays travellers. There are actually some other key points that hotels can leverage from having their very own mobile applications:
Streamline communications. Some large hotel chains have also introduced Chat feature in their apps that enable hotel guests to always be connected with the hotels during their stay. Guests can stay connected with the hotel 24-7 from anywhere, anytime, also giving them a better sense of security.
Simplify and boost guest transactions during hotel stay. One of the main characteristics of digital native travellers is that they opt to complete tasks via their mobile phones whenever possible. Looking into the context in Indonesia, 93% consumers searched online for a product or service to buy while 76% prefer to make an online purchase via mobile. Imagine if hotels can have all of their in-house services within their mobile apps that provide a much simpler and more convenient way for guests to order while allowing hotels to earn more from guest consumptions.
Local guides. Interestingly, 95% of travellers believe that hotels have a responsibility to introduce them to local culture while 47% of people use their mobile devices first for finding interesting spots, events and restaurants when away from home . Every traveller would love to hear or know more about the surroundings from locals’ perspective. Who else can provide a more trustworthy local guide than the hotel itself via its own mobile app?
By having their very own mobile app platform, hotels are actually providing the very basic “tool” required to enhance their guest experience through tech where further developments and improvements can be prepared.
Mobile check-in, automated key lock, in-app payment, in-room automated control, etc are just some simple examples of possible future developments that can further boost hotel stay experience. As for the development itself, some large international hotel chains have chosen to build their very own mobile apps inhouse, but it would actually make much more sense for hotels to partner up with tech partners that already have launched proven products in the market. This would allow hotels to focus fully on their core competencies, which is hospitality, and let their tech partner provide them with the ideal tech platform that can elevate guest stay experience to the next level.
Gerry Mangentang is the Co-Founder of IZY.ai, a hotel tech startup that provides a flexible mobile concierge platform for hotels that aims to help hotels increase their revenues from guest consumptions. IZY mobile concierge platform enables hotels to offer their in-house services to guests, such as Room Service, Amenities, Spa and Activities as well as enabling hotels to collaborate with external partners and offer more products or services. To date, IZY.ai has onboarded more than 75 hotels in Indonesia with commitments from 8 top hotel chains in Indonesia with properties spread out in Bali, Jakarta, Yogyakarta, and other regions.
IZY.ai joined the Accelerating Asia portfolio in January 2020. If you’re interested in investing alongside us or connecting with IZY.ai, please reach out to us via email.